[B.] Machinery [Ricardo and Barton on the Influence of Machines on the Conditions of the Working Class]
[1. Ricardo’s Views]
Suppose, Ricardo says, wages amount to £5,000, and that a machine with a life of a year, which can replace the employed workers, also costs £5,000. A capitalist will be indifferent as to whether to employ the workers or the machine. But, if the wages for 100 workers rise to £5,500, the capitalist will buy the machine, and thereby save £500 of costs. Ricardo deals with the suggestion that the price of the machine would rise, due to the rise in wages, and additional demand for the machine. Basically, Ricardo responds, that ignores the fact that the value of the machine does not consist only of wages. It consists also of profit. It also consists of materials etc., but Ricardo fails to acknowledge that.
““Suppose … a machine which could in any particular trade be employed to do the work of one hundred men for a year, and that it would last only for one year. Suppose too, the machine to cost £5,000, and the wages annually paid to one hundred men to be £5,000, it is evident that it would be a matter of indifference to the manufacturer whether he bought the machine or employed the men. But suppose labour to rise, and consequently the wages of one hundred men for a year to amount to £5,500, it is obvious that the manufacturer would now no longer hesitate, it would be for his interest to buy the machine and get his work done for £5,000. But will not the machine rise in price, will not that also be worth £5,500 in consequence of the rise of labour? It would rise in price if there were no stock employed on its construction, and no profits to be paid to the maker of it. If for example, the machine were the produce of the labour of one hundred men, working one year upon it with wages of £50 each, and its price were consequently £5,000; should those wages rise to £55, its price would be £5,500, but this cannot be the case; less than one hundred men are employed or it could not be sold for £5,000, for out of the £5,000 must be paid the profits of stock which employed the men. Suppose then that only eighty-five men were employed at an expense of £50 each, or £4,250 per annum, and that the £750 which the sale of the machine would produce over and above the wages advanced to the men, constituted the profits of the engineer’s stock. When wages rose 10 per cent he would be obliged to employ an additional capital of £425 and would therefore employ £4,675 instead of £4,250, on which capital he would only get a profit of £325 if he continued to sell his machine for £5,000; but this is precisely the case of all manufacturers and capitalists; the rise of wages affects them all. If therefore the maker of the machine should raise the price of it in consequence of a rise of wages, an unusual quantity of capital would be employed in the construction of such machines, till their price afforded only the common rate of profits. We see then that machines would not rise in price, in consequence of a rise of wages.” (p 551)
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