“This section, which Ricardo added to his third edition, bears witness to his honesty which so essentially distinguishes him from the vulgar economists.” (p 555)
Ricardo says that there was nothing he had written on the subject, which he wanted to retract. But, Ricardo was also an MP. He had made a speech in parliament in which he had denied that machinery reduces the demand for labour. It was this view that he had now come to disavow. He had always seen the application of machinery as a general good, accompanied only with inconvenience for capital and labour involved in the movement from one sphere to another. Marx comments,
“This inconvenience is great enough for the worker, if, as in modern production, it is perpetual.” (p 555)
Ricardo sets out the benefit of machinery as he sees it. The machine reduces the value of commodities. For the capital that first introduces a particular machine, it initially benefits from higher profits, as its costs are reduced. But, as other firms introduce the machine, the market value of the particular commodity is reduced, and along with it, the excess profits of the firms that first introduced the machine are competed away. The consequence of the reduced value of the commodity/ies, resulting from the use of the machines, means that landlords' rent buys more of them, and so does the capitalists' profit, and the workers' wages. That means either more of these commodities can be bought, or they create a demand for some new type of commodity. Ricardo assumes that there is no reduction in money rents, profit and wages.
Ricardo assumed that the capital and labour released from the production of commodities, where machines had been introduced, would be automatically employed in some other sphere.
“As, then, it appeared to me that there would be the same demand for labour as before, and that wages would be no lower, I thought that the labouring class would, equally with the other classes, participate in the advantage, from the general cheapness of commodities arising from the use of machinery.
“These were my opinions, and they continue unaltered, as far as regards the landlord and the capitalist; but I am convinced, that the substitution of machinery for human labour, is often very injurious to … the class of labourers” (l.c., pp. 466–68).” (p 556)
Marx points out that Ricardo assumes that these machines are introduced into industries that were already capitalist. That was not initially the case. For a long time, production in areas such as spinning and weaving was still undertaken by labourers using their own means of production. That was the case with the “putting out system”, but also even under manufacture, these handicraft workers essentially continued on this basis, simply having been brought under one factory roof. That is why Marx, in Capital I, talks about these workers still effectively acting as individuals, and it is why there continued, for some time, a discussion by economists of workers selling their output to the factory owner, rather than selling their labour-power itself. It is essentially the difference between labour that is formally subordinated to capital and labour that is really subordinated to capital.
But, what the introduction of machines does is to make the means of production, owned by the handicraft producer redundant. It effectively loses all value, and ability to function as means of production.
“In this case, not only is the labourer displaced, but his instrument of production too ceases to be capital (in the Ricardian sense). This entire or complete devaluation of the old capital also takes place when machinery revolutionises manufacture previously based on the simple division of labour. It is ridiculous to say in this case that the “old capital” continues to make the same demand for labour as before.
The “capital” which was employed by the hand-loom weaver, hand spinner etc. has ceased to exist.” (p 556)
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