4: Natural and Market Price
Some distinction is to be made between the "natural" price of a good, which reflects the amount of effort required to produce it, and the "market" price of a good, which reflects the amount of money that can be had in exchange for it, given the levels of supply and demand.
While the amount of labor to create a good does not change significantly over short periods of time, the approximation of supply and demand are in constant flux, and there are variations in price based not on the actual supply, but on the buyer's estimation of supply.
The author considers such fluctuations to be "accidental and temporary" in that demand for a good that outstrips its supply elevates profits to those who provide it, and supply of a good in excess of demand decreases profits. Hence "capital is either encouraged to entire into or warned to depart from the particular employment ... whilst every man is free to employ his capital where he pleases, he will naturally seek for it that employment which is the most advantageous."
There is also a mention of production on credit ... "perhaps no manufacturer, however rich, limits his business to the extent that his funds alone will allow." As such the decision to withdraw capital from production of linen is not the decision of the weaver alone, but of the bankers and capitalists from whom he borrows money to finance his trade. He then manages his operations based on the working capital he is able to gather to either employ more workers and buy more materials, or fewer of both.
There is, I think, the implication that there exists a natural price for a product, and that the reality of the market place will tend to evolve toward it, though buffeted by forces that interrupt or encourage trade and production.
An example: suppose that fashion changed to prefer silk over wool. The natural price (labor to produce) is not changed. The market price of silk would rise and profits to the makers increase, while the price and profit of wool would fall. Investors would move their capital from the wool producers to silk producers, workers would move from one manufacture to the other. This would continue until the supply of silk met market demand, and the prices of both materials would return to their natural price and usual profits.
It is by this mechanism that the desire of the capitalist to choose the investment with the greatest return and the desire of the buyer to choose the supplier with the lowest price balance against one another and, unrestricted, prevent an unusual level of profit or an unusual scarcity of goods to perpetuate for very long.
Ricardo lists a number of factors that also have temporary effects in price, referring to Chapter 7 of Wealth of Nations, which are left entirely out of consideration here - they are all regarded to be among these accidental causes of imbalance that have but a temporary effect in swaying the market price of a good from its natural price.