I may be wrong, but I don't believe it was meant to be a real argument, because the Squire was "winking on the rest of the company, to prepare us for the sport..." I thought it ultimately showed the mean-spirited nature of the Squire, since he was making a prolonged joke at the expense of young Moses. I don't think we are supposed to know what they are arguing about, because the Squire apparently makes some of this stuff up, i.e., "...the first part of my enthymem deficient secundum quoad, or quoad minus,..." Yikes!

I thought it quite funny that in the closing paragraph of chapter 7, Olivia has read a "great deal of controversy," including Thwackum and Square (characters who I remember from the Tom Jones group read). I suspect that this chapter is making fun of high-toned philosophers. If there is another interpretation, I'd love to read it, because this was a little difficult to follow.