"A rise in wages, from an alteration in the value of money, produces a general effect on price, and for that reason it produces no real effect whatever on profits"
About this Quote
Ricardo is doing something quietly radical here: stripping away the comforting story that “higher wages” automatically mean workers are winning and owners are losing. If wages rise because money itself has changed value (inflation, debasement, a shift in the currency standard), then everyone is bargaining in distorted units. Prices climb to match, and the apparent generosity of a pay raise dissolves into a cost-of-living mirage. The point isn’t that wages don’t matter; it’s that nominal wages are a noisy signal. Real wages - what a paycheck can actually buy - are the metric that bites.
The subtext is a warning against mistaking monetary turbulence for social progress. A society can congratulate itself on rising pay while living standards stay flat, and Ricardo is insisting we don’t confuse a change in the measuring stick for a change in the measured object. That’s also why he says profits are unaffected “whatever”: if both output prices and input wages rise proportionally, the capitalist’s margin can stay intact. Inflation, in this frame, is not a moral event; it’s accounting fog.
Context matters. Writing amid Britain’s early industrialization and fierce debates over currency, Ricardo is defending the emerging classical obsession with real variables: productivity, distribution between wages and profits, and the forces that actually move them. It’s an argument aimed as much at policymakers and pamphleteers as at workers: don’t legislate based on nominal optics. If you want profits to fall or labor to gain, you need shifts in bargaining power, technology, or scarcity - not just more expensive money.
The subtext is a warning against mistaking monetary turbulence for social progress. A society can congratulate itself on rising pay while living standards stay flat, and Ricardo is insisting we don’t confuse a change in the measuring stick for a change in the measured object. That’s also why he says profits are unaffected “whatever”: if both output prices and input wages rise proportionally, the capitalist’s margin can stay intact. Inflation, in this frame, is not a moral event; it’s accounting fog.
Context matters. Writing amid Britain’s early industrialization and fierce debates over currency, Ricardo is defending the emerging classical obsession with real variables: productivity, distribution between wages and profits, and the forces that actually move them. It’s an argument aimed as much at policymakers and pamphleteers as at workers: don’t legislate based on nominal optics. If you want profits to fall or labor to gain, you need shifts in bargaining power, technology, or scarcity - not just more expensive money.
Quote Details
| Topic | Money |
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