only by entering in a greater degree into the cost of production of some things than of others, that they can have any influence on value.

For example, we have seen that there are causes which necessitate a permanently higher rate of profit in certain employments than in others. There must be a compensation for superior risk, trouble, and disagreeableness. This can only be obtained by selling the commodity at a value above that which is due to the quantity of labour necessary for its production. If gunpowder exchanged for other things in no higher ratio than that of the labour required from first to last for producing it, no one would set up a powder-mill. Butchers are certainly a more prosperous class than bakers, and do not seem to be exposed to greater risks, since it is not remarked that they are oftener bankrupts. They seem, therefore, to obtain higher profits, which can only arise from the more limited competition, caused by the unpleasantness, and to a certain degree, the unpopularity of their trade. But this higher profit implies that they sell their commodity at a higher value than that due to their labour and outlay. All inequalities of profit which are necessary and permanent, are represented in the relative values of the commodities.

§ 5. Profits, however, may enter more largely into the conditions of production of one commodity than of another, even though there be no difference in the rate of profit between the two employments. The one commodity may be called upon to yield profit during a longer period of time than the other. The example by which this case is usually illustrated is that of wine. Suppose a quantity of wine, and a quantity of cloth, made by equal amounts of labour, and that labour paid at the same rate. The cloth does not improve by keeping; the wine does. Suppose that, to attain

the desired quality, the wine requires to be kept five years. The producer or dealer will not keep it, unless at the end of five years he can sell it for as much more than the cloth, as

amounts to five years' profit, accumulated at compound interest. The wine and the cloth were made by the same original outlay. Here then is a case in which the natural values, relatively to one another, of two commodities, do not conform to their cost of production alone, but to their cost of production plus something else. Unless, indeed, for the sake of generality in the expression, we include the profit which the wine-merchant foregoes during the five years, in the cost of production of the wine: looking upon it as a kind of additional outlay, over and above his other advances, for which outlay he must be indemnified at last.

All commodities made by machinery are assimilated, at least approximatively, to the wine in the preceding example. In comparison with things made wholly by immediate labour, profits enter more largely into their cost of production. Suppose two commodities, A and B, each requiring a year for its production, by means of a capital which we will on this occasion denote by money, and suppose to be 1,0007. A is made wholly by immediate labour, the whole 1,0007. being expended directly in wages. B is made by means of labour which cost 500l. and a machine which cost 500l., and the machine is worn out by one year's use. The two commodities will be exactly of the same value; puted in money, and if profits are 20 per cent per annum, will be 1,2001. But of this 1,200l., in the case of A, only 2007., or one-sixth, is profit: while in the case of B there is not only the 2007., but as much of 500l. (the price of the machine,) as consisted of the profits of the machine-maker; which, if we suppose the machine also to have taken a year for its production, is again one-sixth. So that in the case of A only one-sixth of the entire return is profit, whilst in B the element of profit comprises not only a sixth of the whole, but an additional sixth of a large part.

which, if com

The greater the proportion of the whole capital which consists of machinery, or buildings, or material, or anything else which must be provided before the immediate labour

can commence, the more largely will profits enter into the cost of production. It is equally true, though not so obvious at first sight, that greater durability in the portion of capital which consists of machinery or buildings, has precisely the same effect as a greater amount of it. As we just supposed one extreme case, that of a machine entirely worn out by a year's use, let us now suppose the opposite and still more extreme case, of a machine which lasts for ever, and requires no repairs. In this case, which is as well suited for the purpose of illustration as if it were a possible one, it will be unnecessary that the manufacturer should ever be repaid the 500l. which he gave for the machine, since he has always the machine itself, worth 500l.: bút he must be paid, as before, a profit on it. The commodity B, therefore, which in the case previously supposed was sold for 1,2001. of which sum 1,000l. were to replace the capital and 2007. were profit, can now be sold for 700l., being 500l. to replace wages, and 2007. profit on the entire capital. Profit, therefore, enters into the value of B in the ratio of 2001. out of 7007., being twosevenths of the whole, or 284 per cent., while in the case of A, as before, it enters only in the ratio of one-sixth, or 16 per cent. The case is of course purely ideal, since no machinery or other fixed capital lasts for ever; but the more durable it is, the nearer it approaches to this ideal case, and the more largely does profit enter into the return. If, for instance, a machine worth 500l. loses one-fifth of its value by each year's use, 100l. must be added to the return to make up this loss, and the price of the commodity will be 8001. Profit therefore will enter into it in the ratio of 2001. to 8007., or one-fourth, which is still a much higher proportion than one-sixth, or 2007. in 1,2007., as in case A.

From the unequal proportion in which in different employments profits enter into the advances of the capitalist, and therefore into the returns required by him, two consequences follow in regard to value. One is, that commodities do not exchange in the ratio simply of the quantities of

labour required to produce them; not even if we allow for the unequal rates at which different kinds of labour are permanently remunerated. We have already illustrated this by the example of wine: we shall now further exemplify it by the case of commodities made by machinery. Suppose, as before, an article A made by a thousand pounds worth of immediate labour. But instead of B, made by 500l. worth of immediate labour and a machine worth 500l., let us suppose C, made by 500l. worth of immediate labour with the aid of a machine which has been produced by another 500l. worth of immediate labour: the machine requiring a year for making, and worn out by a year's use; profits being as before 20 per cent. A and C are made by equal quantities of labour, paid at the same rate: A costs 1,000l. worth of direct labour; C, only 500l. worth, which however is made up to 1,000l. by the labour expended in the construction of the machine. If labour, or its remuneration, were the sole ingredient of cost of production, these two things would exchange for one another. But will they do so? Certainly not. The machine having been made in a year by an outlay of 5001., and profits being 20 per cent, the natural price of the machine is 6007.: making an additional 1007. which must be advanced, over and above his other expenses, by the manufacturer of C, and repaid to him with a profit of 20 per cent. While, therefore, the commodity A is sold for 1,2007, C cannot be permanently sold for less than 1,3201.

A second consequence is, that every rise or fall of general profits will have an effect on values. Not indeed by raising or lowering them generally, (which, as we have so often said, is a contradiction and an impossibility): but by altering the proportion in which the values of things are affected by the unequal lengths of time for which profit is due. When two things, though made by equal labour, are of unequal value because the one is called upon to yield profit for a greater number of years or months than the other; this difference of value will be greater when profits are greater, and less when they

are less. The wine which has to yield five years' profit more than the cloth, will surpass it in value much more if profits are 40 per cent, than if they are only 20. The commodities A and C, which, though made by equal quantities of labour, were sold for 1,2001. and 1,3201., a difference of 10 per cent, would if profits had been only half as much, have been sold for 1100l. and 11557., a difference of only 5 per cent.

It follows from this that even a general rise of wages, when it involves a real increase in the cost of labour, does in some degree influence values. It does not affect them in the manner vulgarly supposed, by raising them universally. But an increase of the cost of labour, lowers profits; and therefore lowers in natural value the things into which profits enter in a greater proportion than the average, and raises those into which they enter in a less proportion than the average. All commodities in the production of which machinery bears a large part, especially if the machinery is very durable, are lowered in their relative value when profits fall; or, what is equivalent, other things are raised in value relatively to them. This truth is sometimes expressed in a phraseology more plausible than sound, by saying that a rise of wages raises the values of things made by labour, in comparison with those made by machinery. But things made by machinery, just as much as any other things, are made by labour, namely the labour which made the machinery itself: the only difference being that profits enter somewhat more largely into the production of things for which machinery is used, though the principal item of the outlay is still labour. It is better, therefore, to associate the effect with fall of profits than with rise of wages; especially as this last expression is extremely ambiguous, suggesting the idea of an increase of the labourer's real remuneration, rather than of what is alone to the purpose here, namely, the cost of labour to its employer.

§ 6. Besides the natural and necessary elements in cost