5.Ricardo' s wording of the law of diminishing return was inexact.It is however probable that the inaccuracy was due not to careless thinking but only to careless writing.In any case he would have been justified in thinking that these conditions were not of great importance in the peculiar circumstances of England at the time at which he wrote, and for the special purposes of the particular practical problems he had in view.Of course he could not anticipate the great series of inventions which were about to open up new sources of supply, and, with the aid of free trade, to revolutionize English agriculture; but the agricultural history of England and other countries might have led him to lay greater stress on the probability of a change.(14*)He stated that the first settlers in a new country invariably chose the richest lands, and that as population increased, poorer and poorer soils were gradually brought under cultivation, speaking carelessly as though there were an absolute standard of fertility.But as we have already seen, where land is free, everyone chooses that which is best adapted for his own purpose, and that which will give him, all things considered, the best return for his capital and labour.He looks out, therefore, for land that can be cultivated at once, and passes by land that has any weak links in the chain of its elements of fertility, however strong it may be in some other links.But besides having to avoid malaria, he must think of his communication with his markets and the base of his resources; and in some cases the need for security against the attacks of enemies and wild beasts outweighs all other considerations.It is therefore not to be expected that the lands which were first chosen, should turn out always to be those which ultimately come to be regarded as the most fertile.
Ricardo did not consider this point, and thus laid himself open to attacks by Carey and others, which, though for the greater part based on a misinterpretation of his position, have yet some solid substance in them.
The fact that, in new countries, soils which an English farmer would regard as poor, are sometimes cultivated before neighbouring soils which he would regard as rich, is not inconsistent, as some foreign writers have supposed, with the general tenor of Ricardo's doctrines.Its practical importance is in relation to the conditions under which the growth of population tends to cause increased pressure on the means of subsistence: it shifts the centre of interest from the mere amount of the farmer's produce to its exchange value in terms of the things which the industrial population in his neighbourhood will offer for it.(15*)6.Ricardo, and the economists of his time generally were too hasty in deducing this inference from the law of diminishing return; and they did not allow enough for the increase of strength that comes from organization.But in fact every farmer is aided by the presence of neighbours whether agriculturists or townspeople.(16*) Even if most of them are engaged like himself in agriculture, they gradually supply him with good roads, and other means of communication: they give him a market in which he can buy at reasonable terms what he wants, necessaries, comforts and luxuries for himself and his family, and all the various requisites for his farm work: they surround him with knowledge:
medical aid, instruction and amusement are brought to his door;his mind becomes wider, and his efficiency is in many ways increased.And if the neighbouring market town expands into a large industrial centre, his gain is much greater.All his produce is worth more; some things which he used to throw away fetch a good price.He finds new openings in dairy farming and market gardening, and with a larger range of produce he makes use of rotations that keep his land always active without denuding it of any one of the elements that are necessary for its fertility.
Further, as we shall see later on, an increase of population tends to develop the organization of trade and industry; and therefore the law of diminishing return does not apply to the total capital and labour spent in a district as sharply as to that on a single farm.Even when cultivation has reached a stage after which each successive dose applied to a field would get a less return than the preceding dose, it may be possible for an increase in the population to cause a more than proportional increase in the means of subsistence.It is true that the evil day is only deferred: but it is deferred.The growth of population, if not checked by other causes, must ultimately be checked by the difficulty of obtaining raw produce; but in spite of the law of diminishing return, the pressure of population on the means of subsistence may be restrained for a long time to come by the opening up of new fields of supply, by the cheapening of railway and steamship communication, and by the growth of organization and knowledge.
Against this must be set the growing difficulty of getting fresh air and light, and in some cases fresh water, in densely peopled places.The natural beauties of a place of fashionable resort have a direct money value which cannot be overlooked; but it requires some effort to realize the true value to men, women and children of being able to stroll amid beautiful and varied scenery.
