First, when the fixed and circulating capitals were in different proportions, suppose that instead of 100l. fixed capital and 100l. circulating capital, the hunter should employ 150l. fixed capital and 50l. circulating capital, and that the fisherman should on the contrary employ only 50l. fixed capital and 150l. circulating capital.
| If profits be 10 per cent., the hunter must sell his goods for 79l. 8s. For, | |
| To replace his circulating capital of 50l. with a profit of 10 per cent. would require a value of | 55l. |
| To replace his fixed capital with 10 per cent. profit, the present value of an annuity for ten years of 24.4l. at 10 per cent. being 150l. | 24.4l. |
| —— | |
| 79.4l. | |
| If profits be 10 per cent., the fisherman must sell his goods for 173l. 2s. 7d. | |
| To replace his circulating capital of 150l. with a profit of 10 per cent. would require a value of | 165l. |
| To replace his fixed capital with 10 per cent. profit, one-third of the hunter' | 8.13 |
| ——— | |
| 173.13l. | |
Now if wages rise, although neither of these commodities should require more labour for their production, yet their relative value will be altered. Suppose wages to rise 6 per cent., the hunter would not require more than an increase of 3l. to his capital, to employ the same number of men, and obtain the same quantity of game; the fisherman would require three times that sum, or 9l. The profits of stock would fall to 4 per cent., the hunter would be obliged to sell his game for 73l. 12s. 2d.
| To replace his circulating capital of 53l. with a profit of 4 per cent. | 55.12l. |
| To replace fixed capital, annually wasted, the present value of an annuity of 18.49l. for ten years, being 150l. | 18.49 |
| —— | |
| £73.61 | |
| —— | |
| The fisherman would sell his fish for 171l. 11s. 5d. viz. | |
| To replace his circulating capital of 159l. with a profit of 4 per cent. | £165.360 |
| To replace fixed capital annually wasted, the present value of an annuity of 6.163l., for ten years at 4 per cent., being 50l. | 6.163 |
| ———— | |
| £171.523 | |
| Game was to fish before | as 100 to 218. |
| It would now be | as 100 to 233. |
Thus we see, that with every rise of wages, in proportion as the capital employed in any occupation consists of circulating capital, its produce will be of greater relative value than the goods produced in another occupation, where a less proportion of circulating, and a greater proportion of fixed capital are employed.
Secondly, suppose the proportions of fixed capital to be the same; but of different degrees of durability. In proportion as fixed capital is less durable, it approaches to the nature of circulating capital. It will be consumed in a shorter time, and its value reproduced in order to preserve the capital of the manufacturer. We have just seen, that in proportion as circulating capital preponderates in a manufacture, when wages rise, the value of commodities produced in that manufacture, is relatively higher than that of commodities produced in manufactures where fixed capital preponderates. In proportion to the less durability of fixed capital, and its approach to the nature of circulating capital, the same effect will be produced by the same cause.
Suppose that an engine is made, which will last for a hundred years, and that its value is 20,000l.. Suppose too, that this machine, without any labour whatever, could produce a certain quantity of commodities annually, and that profits were 10 per cent.: the whole value of the goods produced would be annually 2,000l. 2s. 11d.; for the profit of 20,000l.
| at 10 per cent. per annum, isat 10 per cent. per annum, is | £2,000 |
| And an annuity of 2s. 11d. will, at the end of that period, replace a capital of 20,000l. | 2 11 |
| ——— | |
| Consequently the goods must sell for | £2000 2 11 |
If the same amount of capital, viz. 20,000l., be employed in supporting productive labour, and be annually consumed and reproduced, as it is when employed in paying wages, then to give an equal profit of 10 per cent. on 20,000l. the commodities produced must sell for 22,000l. Now suppose labour so to rise, that instead of 20,000l. being sufficient to pay the wages of those employed in producing the latter commodities, 20,952l. is required; then profits will fall to 5 per cent.: for as these commodities would sell for no more than before,
| viz. | £22,000 |
| and to produce them | £20,952 would be requisite, |
| ——— | |
| there would remain no more than | £1,048 |
on a capital of 20,952l. If labour so rose, that 21,153l. were required, profits would fall to 4 per cent. and if it rose, so that 21,359l. was employed, profits would fall to 3 per cent.
But, as no wages would be paid by the owner of the machine, which would last 100 years, when profits fell to 5 per cent. the price of his goods must fall to 1007l. 13s. 8d. viz. 1000l. to pay his profits, and 7l. 13s. 8d. to accumulate for 100 years at 5 per cent. to replace his capital of 20,000l. When profits fell to 4 per cent. his goods must sell for 816l. 3s. 2d., and when at 3 per cent. for 632l. 16s. 7d. By a rise in the price of labour then, under 7 per cent., which has no effect on the prices of commodities wholly produced by labour, a fall of no less than 68 per cent. is effected on those commodities wholly produced by machinery. If the proprietor of the machine sold his goods for more than 632l. 16s. 7d., he would get more than 3 per cent., the general profit of stock; and as others could furnish themselves with machines at the same price of 20,000l. they would be