On Profits

Chapter VI asks what permanently changes the rate of profit, where profit means the capitalist's residual share after paying wages. Ricardo is not mainly asking why one trade is briefly more profitable than another; he is asking why profits across the economy tend to rise or fall together.

Term	Meaning
Profits of stock	The capitalist's residual return after wages and other advances are paid
Wages	The labourer's money income, which Ricardo links to the cost of necessaries such as corn
Corn	Ricardo's shorthand for food and basic subsistence goods, not just one crop
Rent	The landlord's return from superior land once worse land must also be cultivated
Marginal land	The least productive land in use; it regulates corn price because it pays no rent
Permanent variation	A lasting change in the general rate of profit, not a temporary market accident

Ricardo's chapter is a theory of distribution: the same product has to be divided between wages, profits, and rent. His sharp claim is that on the marginal land and in ordinary manufactures, the value to be divided first appears as wages plus profits; rent enters because some land is better than the land that sets the corn price.

Read the diagram from the bottom up. Marginal land regulates the price of corn; better land then earns rent because it produces corn more cheaply. For the capitalist, profit is the part left after the wage bill is paid, so anything that permanently raises necessary wages tends to lower profits.

The mechanism is deliberately simple. If corn becomes harder to produce, corn gets dearer; if workers need corn to live, money wages must rise; if manufactured goods do not rise for the same reason, the manufacturer's profit is squeezed.

The important asymmetry is that corn and manufactured goods need not move together. A rise in corn caused by harder cultivation does not automatically raise the price of cloth, tools, or furniture. If those manufactures still sell for the same money while labour costs more, the profit share falls.

more labour needed for corn
          -->
dearer necessaries
          -->
higher money wages
          -->
lower residual profits

Rent matters because it marks the pressure created by scarcity of fertile land, but Ricardo does not treat rent as the direct cause of low profits. The cause is the higher labour cost of producing necessaries on worse land; rent is the visible surplus on better land once that worse land sets the market price.

This distinction is the chapter's backbone. Landlords may receive more rent as society expands, but Ricardo's causal story runs through the labour required to produce food. Profits fall because wages claim more of the unchanged manufactured value.

A first-time reader can test the argument with one manufacturer. Suppose the manufacturer sells goods for £1,000. If wages are £600, profit is £400. If dearer corn pushes wages to £800, profit falls to £200.

Case	Sale value	Wage bill	Profit	Profit share
Easier corn	£1,000	£600	£400	40%
Dearer corn	£1,000	£800	£200	20%

Nothing mysterious happened to the manufactured good. The sale value stayed fixed. The wage bill rose because subsistence became dearer, and profit absorbed the difference.

This course should eventually turn the whole book into one visual day per chapter. Chapter VI sits after value, rent, and wages because it depends on those pieces: value explains why labour time regulates price, rent explains marginal land, and wages explain how subsistence costs enter the capitalist's accounts.

Chapter I   Value
Chapter II  Rent
Chapter III Mines
Chapter IV  Natural and market price
Chapter V   Wages
Chapter VI  Profits  <-- this skeleton day
Chapter VII Foreign trade
Chapter VIII+ Taxation and policy applications

The expansion path is to keep every chapter beginner-readable, visual, and interactive where the mechanism can be manipulated. Chapter VI's lab is the template: turn Ricardo's verbal model into a small machine the reader can move.

Chapter VI gives Ricardo's compressed engine of capitalist accumulation. Profits are high when necessary wages are low; profits fall when food and other necessaries require more labour and therefore force up the wage bill.

• Profit is the residual after wages, so it moves inversely with necessary wages.
• Corn matters because it anchors subsistence costs in Ricardo's model.
• Rent rises with worse land entering cultivation, but higher rent is not the direct cause of lower profits.
• Manufactures can keep the same price while wages rise, which squeezes manufacturers' profits.
• The chapter prepares the later policy argument about corn laws, trade, and taxation.

A reader is ready to move on when they can explain the causal chain without quoting Ricardo. They should be able to say why dearer corn raises wages, why higher wages reduce profits, and why rent is a signal of the land constraint rather than the immediate cause of the profit squeeze.

• [ ] Can you define profit as the residual share after wages?
• [ ] Can you explain why marginal land regulates corn price?
• [ ] Can you distinguish "rent rises" from "rent causes profits to fall"?
• [ ] Can you use the lab to produce a higher-wage, lower-profit case?
• [ ] Can you place Chapter VI in the larger course path from value and rent to trade and taxation?