CHAPTER 2

THE POSTULATES OF THE CLASSICAL ECONOMICS

Most treatises on the theory of Value and Productionare primarily concerned with the distribution of a givenvolume of employed resources between different usesand with the conditions which, assuming the employ-ment of this quantity of resources, determine theirrelative rewards and the relative values of their pro-ducts.1

The question, also, of the volume of the availableresources, in the sense of the size of the employablepopulation, the extent of natural wealth and the ac-cumulated capital equipment, has often been treateddescriptively. But the pure theory of what determinesthe actual employment of the available resources hasseldom been examined in great detail. To say that ithas not been examined at all would, of course, beabsurd. For every discussion concerning fluctuationsof employment, of which there have been many, hasbeen concerned with it. I mean, not that the topichas been overlooked, but that the fundamental theory

1 This is in the Ricardian tradition. For Ricardo expressly repudiatedany interest in the amount of the national dividend, as distinct from itsdistribution. In this he was assessing correctly the character of his owntheory. But his successors, less clear- sighted, have used the classical theoryin discussions concerning the causes of wealth. Vide Ricardo's letter toMalthus of October 9, 1820:“Political Economy you think is an enquiryinto the nature and causes of wealth—I think it should be called an enquiryinto the laws which determine the division of the produce of industryamongst the classes who concur in its formation. No law can be laid downrespecting quantity, but a tolerably correct one can be laid down respectingproportions. Every day I am more satisfied that the former enquiry is vainand delusive, and the latter only the true objects of the science.”

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