THE
MEASURE OF VALUE
STATED AND ILLUSTRATED,
WITH
AN APPLICATION OF IT TO THE ALTERATIONS IN
THE VALUE OF THE ENGLISH CURRENCY
SINCE 1790.
—♦—
BY THE REV. T. R. MALTHUS, M.A. F.R.S.
PROFESSOR OF HISTORY AND POLITICAL ECONOMY IN THE
EAST INDIA COLLEGE, HERTFORDSHIRE.
LONDON:
JOHN MURRAY, ALBEMARLE STREET.
MDCCCXXIII.
London: Printed by C. Roworth,
Bell-yard, Temple-bar.
THE MEASURE OF VALUE.
It is generally allowed that the word value, in common language,
has two different meanings; one, value in use, the other, value in
exchange; the first expressing merely the usefulness of an object in
supplying the most important wants of mankind, without reference to
its power of commanding other objects in exchange; and the second
expressing the power of commanding other objects in exchange, without
reference to its usefulness in supplying the most important wants of
mankind.
It is obviously value in the last sense, not the first, with which the
science of Political Economy is mainly concerned.
But the power of one object to command another in exchange, or in other
words the power of purchasing, may obviously arise either from causes
affecting the object itself, or the commodities against which it is
exchanged.
In the one case, the value of the object itself may properly be said
to be affected; in the other, only the value of the commodities which
it purchases; and if we could suppose any object always to remain of
the same value, the comparison of other commodities with this one would
clearly show, which had risen, which had fallen, and which had remained
the same. The value of any commodity estimated in a measure of this
kind might with propriety be called its absolute or natural value;
while the value of a commodity estimated in others which were liable to
variation, whether they were one or many, could only be considered as
its nominal or relative value, that is, its value in relation to any
particular commodity, or to commodities in general.
That a correct measure of the power of purchasing generally, or
of commanding such important commodities as the necessaries and
conveniences of life, in whatever way such power might arise, would be
very desirable, cannot for a moment be doubted, as it would at once
enable us to form a just estimate and comparison of wages, salaries,
and revenues, in all countries, and at all periods. But when we
consider what such a measure implies, we must feel certain that no one
object exists, or can be supposed to exist, with such qualities as
would fit it to become a standard measure of this kind. It would imply
steadiness of value, not merely in one object, but in a great number,
which is contrary to all theory and experience.
Whether there is any object, which, though it cannot measure the power
of purchasing generally under the varying facilities of production and
varying state of the demand and supply by which different commodities
are affected, may be a correct measure of absolute and natural value as
above described, is the specific object of the present inquiry.
It follows directly, from the principles of Adam Smith, that the
conditions of the supply of the great mass of commodities are, that
the returns should be sufficient to pay the wages, profits and rents
necessary to their production. If these payments be made in money at
the ordinary rates of the time, they form what Adam Smith calls their
natural prices. Money however we know is variable. But if for money we
substitute the objects necessary to give the producer the same power
of production and accumulation as the natural money prices would have
commanded, such returns maybe considered as the natural conditions of
the supply of commodities, and may with propriety be denominated their
natural value, in contradistinction to their natural price.
Of these three conditions of supply, or elements of natural value,
the two first are obviously the most important. They are not only the
sole conditions of supply in those early stages of society before the
appropriation of land has taken place, but they continue to be so in
reference to large classes of objects in the most advanced stages
of improvement; and it is now generally acknowledged that even the
main vegetable food of an improving country, which is the foundation
of wages, must necessarily be of the same value as that part of the
produce which is almost exclusively resolvable into wages and profits,
and pays very little rent.
We cannot therefore essentially err in assuming for the present that
the natural value of objects in their more simple forms is composed of
labour and profits,[A] and the effect of any portion of rent, or of
other ingredients which are sometimes added to these elements, may be
allowed for subsequently.
We may also consider as a postulate which will be readily granted, that
any given quantity of labour must be of the same value as the wages
which command it, or for which it actually exchanges.
Of the two main elements of value, labour and profits, the former,
particularly if we include, as we ought to do, accumulated as well as
immediate labour, is much the largest and most powerful.
The great instrument of production is labour. There is no commodity nor
implement used to assist manual exertions in which it does not enter
as a condition of supply, and very few in which it does not enter very
largely. If in the production of commodities and of the implements
which assist in this production, no other ingredient were required than
labour, and the interval between the exertion of the labour and its
remuneration in the completed commodity were so inconsiderable that it
might be entirely disregarded, it is certain that, as the same quantity
of labour would have a constant tendency to produce commodities in the
same relative proportion to each other, and to the demand for them,
they would be found on an average to exchange with each other according
to the quantity of labour which had been employed to obtain them.
Thus if ten mackerel were, on an average, obtained by the same quantity
of labour as two soals, it would be necessary, in order to continue
the supply of both in the market, that the value of a soal should be
five times as great in the power of purchasing similar commodities,
as the value of a mackerel; because if it were less, none would apply
themselves to the catching of soals; and though it is quite certain
that at any given period the relative value of soals and mackerel
would be exclusively determined by the state of the demand and
supply of each; and that they would, in consequence, often vary very
considerably; yet it is as certain, that on the supposition of the
hypothesis being correct, and that they both continued to be brought
to market, each would on an average be supplied in such a quantity,
compared with the demand for it, that a soal would ordinarily exchange
for five mackerel, and the different quantities of labour required to
produce them would, in this case, be a correct measure both of their
natural and relative value in exchange.
Now supposing that the skill and power of the labourers were so to
increase, that, in the same time and with the same personal exertions,
they could obtain three soals and fifteen mackerel, it is obvious that
the relative value of soals to mackerel would remain the same, but they
would both have essentially altered their value compared with all those
commodities which still required the same quantity of labour to produce
the same supply of them. With regard to such commodities, soals and
mackerel would have become of less value, and consequently they would
have become of less value with regard to a given quantity of labour.
The correct language in this case would be, not that labour had become
dearer, but that soals and mackerel had become cheaper. And if the
same increase of skill and power could be conceived to extend to all
other commodities, and all commodities were similarly circumstanced
as to their mode of production and bringing to market; it cannot be
doubted, that though they might retain the same relative value compared
with each other, they would all become more plentiful with regard to
the wants of the society, and any given quantity of labour. And the
correct language would still be, not that labour had become dearer, but
that all commodities had become cheaper. This fall would be a fall in
the absolute and natural value of commodities; and as long as labour
alone was concerned in their production, and they were brought to
market immediately, it would be allowed that the different quantities
of labour employed upon them would be a correct measure both of their
relative value compared with each other, and of their absolute and
natural value in reference to the conditions of their supply. Their
natural values would be exactly represented by the different quantities
of labour worked up in them; while their natural prices would be these
different quantities of labour estimated in money, according to the
money price of the labour employed.
But at a very early period of society a considerable interval must
elapse between the exertion of some sorts of labour and the completion
of the article on which they are employed. And the next simplest form
of production, beyond the result of mere labour, is that, where, in
addition to the labour employed directly on the commodity and on the
simple tools necessary to its production, the condition of the supply
requires that a certain compensation be made in the final remuneration
for the time which has elapsed from the period of the advances of
the labour, to the period when the labourer, or capitalist, can be
remunerated. This compensation, which equally applies to the formation
of the capital, as to the products to be obtained by it, is the profit
which must be paid on the advances of the labour, and is absolutely
necessary to the encouragement of such advances.
But in this state of things commodities would cease to exchange with
each other according to the quantity of labour employed upon them. Some
commodities, on which the same quantity of accumulated and immediate
labour had been employed, would be of a different exchangeable value,
on account of the different quantity of profits which had entered into
their composition; while others, on which different quantities of
accumulated and immediate labour had been employed, might be of the
same exchangeable value, on account of the greater quantity of profits
of which they were composed being balanced by the smaller quantity of
labour advanced to produce them.
In the earliest stages of society accumulations of capital are very
rare, and profits may be extremely high, perhaps forty or fifty per
cent. If under these circumstances the construction of a war canoe
were to take two years before it were fit for use, it is evident that
its value in exchange would be prodigiously enhanced by such profits.
Compared with a number of deer which might have cost exactly the same
quantity of accumulated and immediate labour to bring to market, the
canoe would be seventy or eighty per cent. of greater value; and on
the fall of profits from forty or fifty per cent. to ten per cent. in
the progress of society, an object of this kind might fall in value
sixty or seventy per cent. compared with such objects as deer or fish,
without any difference in the quantity of labour employed upon either.
It is observed by Adam Smith that corn is an annual crop, butchers’
meat a crop which requires four or five years to grow; and
consequently, if we compare two quantities of corn and beef which are
of equal exchangeable value, it is certain that a difference of three
or four additional years profit at fifteen per cent. upon the capital
employed in the production of the beef would, exclusively of any
other considerations, make up in value for a much smaller quantity of
labour, and thus we might have two commodities of the same exchangeable
value, while the accumulated and immediate labour of the one was forty
or fifty per cent. less than that of the other. This is an event of
daily occurrence in reference to a vast mass of the most important
commodities in the country; and if profits were to fall from fifteen
per cent. to eight per cent. the value of beef compared with corn
would fall above twenty per cent.
When commodities are obtained by the assistance of a large proportion
of fixed capital of a very durable nature, the advances are only
consumed in part, and the whole produce of the accumulated and
immediate labour employed must be considered as composed of the new
produce obtained, together with the remainder of the fixed capital
which is unconsumed.[B] In reference to the separate value of the new
produce, this will be the same as if to the labour actually worked up
in such produce were added the profits of the whole capital advanced.
It sometimes happens that the proportion of value arising from these
profits is very considerable; and commodities so produced will
necessarily have much less labour worked up in them, and will be much
more affected in their value by a rise or fall of profits, than those
which are composed mainly of immediate labour.
Thus, if a commodity were produced by the aid of accumulated labour
in machinery worth £2,000, the annual wear and tear of which was
one-twentieth, or £100, and the labour employed on cheap materials and
in the working of the machinery were worth £200, while profits were
20 per cent. then the value of the labour worked up in the commodity
would be £100 added to £200, equal to £300; and the whole capital
advanced being £2,300, the profits upon it would be £460, which, added
to £300 would make the whole value of the produce £760. Compared with a
commodity of equal value which had been produced without fixed capital,
and had yet been brought to market in the same time and with the same
rate of profits, it would contain less than half of the labour worked
up in it; while, if profits were to fall from 20 per cent. to 10 per
cent. the value of the commodity would fall in the proportion of from
£760 to £530, or, if profits had been 10 per cent. and were to rise to
20 per cent. the value of the commodity would rise in the proportion
of from £530 to £760, or above 42 per cent., without any change in the
quantity of labour employed.[C]
It must be allowed, then, that whenever two elements are necessary to
the supply, and enter into the composition of commodities, their value
cannot depend exclusively upon one of them, except by accident, or
when the other can be considered as a given or common quantity. But
it is universally acknowledged, that the great mass of commodities
in civilized and improved countries is made up at the least of two
elements--labour and profits; consequently, the exchangeable value of
commodities into which these two elements enter as the conditions of
their supply, will not depend exclusively upon the quantity of labour
employed upon them, except in the very peculiar cases when both the
returns of the advances and the proportions of fixed and circulating
capitals are exactly the same.
It cannot, then, be said with any thing like an approximation towards
correctness, that the labour worked up in commodities is the measure of
their exchangeable value.
But if to the accumulated and immediate labour worked up in
commodities, we add the profits upon the whole advances for the time
that they are advanced, we shall then make the proper allowance for
the other element of value, and may expect to obtain a more accurate
measure. If we had estimated the value of the labour advanced in money,
or any other medium, we should of course estimate the profits in the
same medium, and the natural price of the commodity estimated in such
medium, would obviously be equal to the price of the accumulated and
immediate labour expended on the commodity, together with the ordinary
profits estimated upon such advances. But if, with a view to the
natural conditions of supply, we consider only the quantity of labour
advanced, without reference to any other medium, we must of course
estimate the profits in quantity of labour also, which will give us an
amount of labour in proportion to which commodities will be found to
exchange with each other, just in the same way as they would exchange
with each other according to the quantity of labour employed on them,
if labour had been the sole ingredient which had entered into their
composition.
Thus, if a hundred days labour were employed upon a commodity, at two
shillings a day, and the average interval between the advance of such
wages and the period when the commodity could be brought to sale were
a year, and profits were 20 per cent. the price of the commodity would
be £12, while the price of a commodity which had cost the same quantity
of labour of the same kind, and could be brought to market immediately,
would be only £10. And it is equally certain, that, if putting money
or any other medium of exchange out of the question, we had estimated
the profits for a year upon the advances of the hundred days labour
actually employed, we should obtain a quantity of labour which,
compared with the labour employed on the commodity sold immediately,
would be in the proportion of 120 to 100, and expressing the relative
conditions of supply, would accurately measure the rate at which the
two commodities obtained under these different circumstances would
exchange with each other.
It appears, then, that in the same country, and at the same time,
the exchangeable value of those commodities which can be resolved
into labour and profits alone, would be accurately measured by the
quantity of labour which would result from adding to the accumulated
and immediate labour actually worked up in them the varying amount
of the profits on all the advances estimated in labour. But this
must necessarily be the same as the quantity of labour which they
will command, as appears from the instances above stated, and will
be more fully shown farther on; and where the precious metals may be
considered for short periods as of a uniform value, the conformity of
this measure with the proportions of money prices at which commodities
would be exchanging all around us, might daily be brought to the test
of experience and be established beyond the possibility of doubt.
It will be said, perhaps, that in the same place, and at the same
time, almost every commodity may be considered as an accurate measure
of the relative value of others, and that what is true of labour in
this respect is true of cloth, cotton, iron, or any other article. Any
two commodities which, at the same time, and in the same place, will
purchase or command the same quantity of cloth, cotton, or iron, of a
given quality, will have the same relative value, or will exchange with
each other.
This will be readily granted, if we take the same time and place
exactly, and consider only relative value; but not if either any
latitude be allowed as to time and place, or if we consider, as it
is our object to do, not merely relative, but absolute and natural
value. Cloth, cotton, iron, and similar commodities, are subject to
vary most essentially in a single year, or even month, so that the
manufacturer who could obtain for his goods the same quantity of cloth
as he could the year before, would be very little likely to obtain the
same quantity of other articles. But even supposing that these articles
and the product of the capitalist were to continue of the same relative
value to each other, he might still be quite unable to carry on his
business. The conditions of the supply of commodities do not require
that they should retain always the same relative values, but that each
should retain its proper _natural_ value, or the means of obtaining
those objects which will continue to the producer the same power of
production and accumulation. If the advances of capitalists consisted
specifically in cloth, then these advances would always have the effect
required in production; and as profits are calculated upon the advances
necessary to production, whatever they may be, the quantity of cloth
advanced, with the addition of the ordinary profits estimated also in
quantity of cloth, would represent both the natural and relative value
of the commodity. But the specific advances of capitalists do not
consist of cloth, but of labour; and as no other object whatever can
represent a given quantity of labour, it is obvious that labour stands
quite alone in this respect, and that it is the quantity of _labour_
which a commodity will command, and not the quantity of any other
commodity, which can represent the conditions of its supply, or its
natural value.[D]
It will be allowed, then,
First, that when commodities are obtained by labour alone, and sold
immediately, they will, on an average, exchange with each other
according to the quantity of labour employed upon them.
Secondly, that when profits are concerned, and differ either in rate or
quantity, commodities can no longer exchange with each other, according
to the quantity of labour employed upon them, except by accident.
Thirdly, that the quantity of accumulated and immediate labour applied
to their production, must, in all the less complex cases, form the
advances on which profits may be correctly calculated.
And, fourthly, that when profits are calculated upon these advances,
a quantity of labour is obtained, according to which it is found, by
experience, that commodities do exchange with each other in the same
country; and, further, that this quantity of labour not only expresses
correctly their value in exchange with each other, but their absolute
and natural value in reference to the conditions of their supply.
* * * * *
In proceeding to consider what takes place in different countries where
the value of the precious metals is very different, it will readily be
acknowledged, that the rate at which commodities exchange with each
other is not proportioned to the labour which has been employed upon
them, with the addition of profits. And it is quite certain, that
they cannot be proportioned to the quantity of labour alone of which
they are composed. We know, from experience, that the commodities of
different countries are actually exchanged with each other according to
their money prices at the time. These prices must be determined partly
by those natural elements of value which determine the rate at which
commodities exchange with each other, and the natural conditions of
their supply in each country, and partly by the different value of the
precious metals in different situations, which must necessarily have
a most powerful effect on the rate at which foreign commodities are
exchanged.
Knowing then the elements of the natural and relative value of
commodities in the same country, if we knew also the difference in the
value of money in different countries, we should know at once the rate
at which the commodities of different countries would exchange with
each other.
Now there is no supposition but one, relating to the value of money in
different countries, which, combined with the natural elements of the
value of produce in each, would constitute the present natural prices
of commodities in these countries, or the rates at which they actually
exchange with each other. This is the supposition that the differences
in the value of money in different countries are proportioned to the
differences in the money prices of agricultural labour.[E]
The conditions of the supply of an Indian commodity are the advance and
consumption of a certain quantity of Indian labour, with the profits
on all the advances for the time that they are employed. Thus, if for
the production of an Indian commodity, a fixed capital consisting of
accumulated labour and profits, equal to 300 days, were advanced for a
year, and a quantity of accumulated and immediate labour, consisting
of the wear and tear of the machinery, the materials to be worked up,
and direct labour, equal to 1500 days, were consumed on the commodity
in the same time, profits being 20 per cent., the natural value of such
commodity in India would be equal to the 1500 days labour consumed,
with a profit of 20 per cent. upon 1800 days labour, which would amount
to 1860 days labour.
If labour in India were fourpence a day, the fixed money capital in
this case would equal £5, the labour advanced and consumed £25, and
the labour consumed, together with the profits on the whole advances,
would be equal to £31. And this would evidently be the natural price
at which the commodity would circulate, and according to which it would
exchange with any foreign commodity brought to India.
On the same principle, if for the production of an English commodity,
300 days labour were advanced in fixed capital for a year, and 1500
days labour were consumed on the commodity in the same time, while
profits were 10 per cent., the natural value of such commodity, or the
conditions of its supply, would be 1500 days labour, with a profit
of 10 per cent. upon 1800, which together would equal 1680: and if
labour were two shillings a day, the natural price at which the
commodity would circulate, and according to which it would exchange
with any foreign commodity brought to England, would be £168. This
prodigious difference in the natural prices of two commodities in
England and India, the natural values of which in each country were
nearly the same, could only arise from a difference in the value of
money occasioned by the very superior efficiency of English labour in
the purchase of the precious metals, owing to the energy, skill, and
situation of English labourers and capitalists, compared with those
of India. But in estimating this difference in the value of money in
England and India, it is quite obvious, that if, after ascertaining
the natural conditions of the supply of a commodity in each country,
we were to estimate the value of money either by its general power of
purchasing, by a mean between corn and labour,[F] or by the quantity
of labour alone which had been actually employed in bringing the
money from the mine to the market, or by any other measure whatever,
except the labour which it would command, we should not account for
the natural prices which are found actually to prevail in the two
countries, and according to which Indian and English commodities are
found to exchange with each other by experience.
Consequently, as no other supposition will suit the actual phenomena,
and as it has already appeared that the value of commodities in the
same country is determined by the quantity of labour which they will
command, we may safely conclude that the value of the precious metals
in different countries is determined by the same measure, or by the
different quantities of common agricultural labour, taking the average
of summer and winter wages, which a given portion of them will command.
* * * * *
When we come to consider the varying value of commodities at distant
periods in the same country, or the rise or fall of produce in the
progress of cultivation and improvement, we are necessarily deprived
of the test of an actual exchange. We know, however, that at different
periods in the same country both the value of the precious metals, and
the rate of profits and corn wages, may alter most essentially.
The effect of the varying value of the precious metals, when we have
once obtained a measure of value, will be easily estimated. The most
important point at present is, to consider the effects which must be
produced upon the value of commodities in the progress of society, by
the changes which necessarily take place in the profits of stock and
the corn wages of labour.
On the supposition of high profits at an early period of society, and
a considerable fall of them subsequently, how are we to measure and
compare the value of commodities at these different periods? With
regard to those which had continued to cost the same quantity of
accumulated and immediate labour, we could not say that they were of
the same value, unless we were prepared to assert that the value of
commodities is determined solely by the labour employed upon them,
not only when the rate of profits is the same but when it is totally
different;[G] a proposition which no one can venture to assert in the
case of foreign commodities, and which there is as little reason to
assert in comparing the commodities of distant periods.
If profits were 50 per cent. five hundred years ago, and are 10 per
cent. now, the question is, whether a piece of cloth which had cost
the same quantity of labour at these different periods would be of the
same value. By the supposition it was composed of a greater quantity
of profits in the earlier period, and having cost the same quantity of
labour, we should naturally conclude that it would be of a higher value.
It is said, however, that, although it cost the same quantity of
labour, yet that the labour in the former period was of much less
value, which would counterbalance the greater quantity of profits, and
leave the value obtained by the same quantity of labour the same. But
when we are thus referred to the lower value of labour, the principle
of compensation which had before been applied is quite forgotten. The
corn which pays the labourer is indeed obtained by a smaller quantity
of labour, on account of the superior fertility of the soil from which
it is raised, but it is sold as the cloth is sold, at a profit of 50
per cent.; and if it be said that, in the case of the cloth, the low
value of wages which is supposed to be the result of superior fertility
counteracts the high profits and keeps the value of cloth the same,
surely it may be said, in the case of the corn which pays the wages,
that the smaller quantity of labour necessary to produce it is made up
by the greater rate of profits at which it is sold, and the value of
wages is thus kept the same.
If 100 quarters of corn be obtained in the different periods of society
by the labour of a different number of men, such as 7, 8 and 9, each
paid at the rate of 10 quarters a year, the value of the 100 quarters
of corn, or the value of the wages of any one of the men employed,
estimated in the labour advanced, with the addition of the profits
upon such advances, must obviously always be the same.
At an early period of society, when the soil was very fertile and the
labour of 7 men only was necessary to produce 100 quarters of corn
on land which paid little or no rent, the advances in labour being 7
men, or in corn 70 quarters, and the return 100 quarters, the rate of
profits would be 42-6/7 per cent., and the advances of the labour of
7 men increased by a profit of 42-6/7 would equal the labour of 10
men, or the quantity of labour which the whole return would command.
At a more advanced period, when the last land taken into cultivation
was less fertile, and the labour of 8 men was necessary to obtain the
return of 100 quarters, the advances in labour being 8 men, or in corn
80 quarters, the rate of profits would be 25 per cent., and the labour
of 8 men increased by 25 per cent. would exactly equal the labour of
10 men. On the same principle, if at a still later period 9 men were
necessary to produce the 100 quarters, the rate of profits would be
11-1/9 per cent., and the quantity of labour employed increased by the
profits would still be equal to the labour of 10 men.
It appears then that when the labourer continues to be paid the same
corn wages, the value of the whole corn produce, or the value of each
man’s wages estimated in the usual way in labour and profits, must
obviously remain constant, and that it must be most erroneous to infer
that labour rises in value because it requires more labour in the
progress of cultivation to produce the wages of 10 men or one man, if
at the same time it requires such a diminished value of profits as
exactly to balance it.
But in the progress of cultivation, the corn wages of labour do not
continue the same, and corn must consequently be liable to great
variation of value, both on account of temporary variations in the
state of the supply compared with labour, and on account of the more
permanent state of the demand and supply of corn compared with labour,
owing to the increasing difficulty of production.
It may be laid down, however, as a general proposition, liable to no
exception, that when the value of any produce can be resolved into
labour and profits, then as the _proportion_ of such produce which goes
to labour increases, the proportion which goes to profits must decrease
in the same degree, and as the _proportion_ which goes to labour
decreases, the proportion which goes to profits must increase in the
same degree.[H]
Thus if ¾ of the produce, whatever that produce may be, go to labour, ¼
will remain for profits; if ⅚ go to labour, ⅙ will remain for profits;
and if ½ only go to labour, ½ will remain for profits.
In reference to corn or commodities in general, compared with each
other at different periods in the progress of cultivation, it is
obvious that neither an increase in the quantity of labour required to
produce them, nor an increase in the quantity of produce awarded to
the labourer, can ever determine the proportion of the whole produce
which goes to labour and affect profits accordingly; because if the
quantity of labour required to produce them increases, the effect of
this upon profits may be totally destroyed by a diminution at the same
time of the quantity of produce awarded to the labourer; or if a larger
quantity of produce be awarded to the labourer, it may be only in
consequence of a smaller quantity of labour being necessary to obtain
the same produce, in which case profits may remain undiminished, or
even rise, at the same time that corn wages rise.
But if instead of referring to commodities generally, we refer to the
variable quantity of produce which, under different circumstances,
forms the wages of a given number of labourers, we shall find that the
variable quantity of labour required to obtain this produce will always
exactly agree with the proportion of the whole produce which goes to
labour; because, however variable may be the amount of this produce, it
will be divided into a number of parts equal to the number of labourers
which it will command, and as the first set of labourers who produced
these wages may be considered as having been paid at the same rate as
the second set, whose labour the produce commands; it is obvious that
if to obtain the produce which commands ten labourers, 6, 7, 8, or
9 labourers be required, the proportion of the produce which goes to
labour, in these different cases, will be 6/10, 7/10, 8/10, or 9/10,
leaving 4/10, 3/10, 2/10, or 1/10, for profits.
It is impossible to refer what is proposed as a standard to any
_other_ measure, because, in that case, the other measure would be the
standard. But if it can be shown, that any object, the value of which
is composed of two elements, is of such a nature that while the value
of one of these elements increases, the value of the other decreases
exactly in the same degree, such object must be of a constant value.
If the values of two variable quantities, _X_ and _Y_, be equal to the
constant value _A_, it follows that, in all the variations to which
_X_ and _Y_ are subject, whatever value _X_ gains must be lost by _Y_,
and whatever value _Y_ gains must be lost by _X_. The converse of this
proposition must also be true, that is, if the value of any object be
made up of the variable values of two other objects, and it can be
shown that, from the nature of these two objects, whatever increase
of value one of them gains, must necessarily be lost by the other,
and vice versâ, it follows that the value of the object, to which the
two others are equal, must be constant. Now it has appeared that the
variable values of the labour and of the profits which compose the
value of the variable quantity of corn awarded in wages to a given
number of labourers, must necessarily be such, that, as the quantity
of labour required to produce them increases, either from difficulty
of production or from the greater quantity of produce awarded to the
labourer, all the value thus gained by labour is lost by profits; and
as the quantity of labour required to produce them is diminished,
either by facility of production or the small quantity of produce
awarded to the labourer, all the value which is gained by profits is
lost by labour. Consequently, the value of the variable quantity of
produce which, under different circumstances, forms the wages of a
given number of men, being composed of the values of the two elements,
labour and profits, varying as above described, must be constant, and
may therefore, with propriety, be proposed as a standard measure.
I have entered at some length into the details which show the necessary
constancy of the value of labour, on account of its great importance;
but, in reality, it follows directly from the manner in which the
natural value of commodities and of wages is estimated, that when the
labourer earns a greater or a smaller quantity of money or necessaries,
it is not the value of labour which varies, but, as Adam Smith says,
“it is the goods which are cheap in the one case and dear in the other.”
If labour alone, without any capital, were employed in procuring the
fruits of the earth, the greater facility of procuring one sort of them
compared with another, would not, it is acknowledged, alter the value
of labour, or the exchangeable value of the whole produce obtained by a
given quantity of exertion. We should, without hesitation, allow that
the difference was in the cheapness or dearness of the produce, not of
the labour.
In the same manner it will follow, that when capital and profits enter
into the computation of value, and the demand for labour varies, the
high or low reward of labour estimated in produce, implies a change in
the value of the produce, not a change in the value of the labour.
If the increased reward of the labourer takes place without an increase
of produce, this cannot happen without a fall of profits, as it is
a self-evident truth, that given the quantity of the produce to be
divided between labour and profits, the greater the portion of it which
goes to labour the less will be left for profits. What then will be
the result? It will appear that the value of the produce has fallen,
and the value of wages, or of labour, will have remained the same. To
obtain any given portion of the produce the same quantity of labour is
necessary as before, but profits being diminished, the value of the
produce is decreased; while this diminution of profits in reference to
the value of wages is just counterbalanced by the increased quantity
of labour necessary to procure the increased produce awarded to the
labourer, leaving the value of labour the same as before.
Perhaps in the case just supposed, the result may be said to be
occasioned by a fall in the value of the produce, without what could
properly be called an increased demand for labour. But if we suppose
that a considerable number of labourers were sent out of the country,
or swept off by a plague, there could then be no doubt of a great
demand for labour, yet the result would be similar. A larger quantity
of produce would necessarily be awarded to the labourer, and profits
would fall. A given quantity of produce obtained by the same quantity
of labour as before, would fall in value on account of the fall of that
part of its value which consisted of profits, while the fall of profits
on the increased wages would be balanced by the increased labour
necessary to obtain them.
If instead of labourers being sent out of the country, labourers were
imported, the result would be just opposite. A smaller quantity of
produce would be awarded to the labourer and profits would rise. A
given quantity of produce, which had been obtained by the same quantity
of labour as before, would rise in value on account of the rise of
profits, while this rise of profits, in reference to the wages of the
labourer, would be balanced by the smaller quantity of labour necessary
to obtain the diminished produce awarded to the labourer.
In the former case of the demand for labour, it appeared that the
greater earnings of the labourer were occasioned, not by a rise in the
value of labour, but by a fall in the value of the produce for which
the labour was exchanged. And in the latter case of the abundance
of labour, it appeared that the small earnings of the labourer were
occasioned by a rise in the value of the produce, and not by a fall in
the value of the labour.
The result would be similar, if instead of supposing the same quantity
of produce to be obtained by the same quantity of labour, we were to
suppose the greatest variations to take place in the fertility of
the soil, and, consequently, in the productive power of labour. In
all cases it would still be found that, as Adam Smith says, it is
the produce which varies in value, not the labour for which it will
exchange; and if money were obtained in the way in which its value
would unquestionably be the most constant, all these variations would
appear in the money prices of commodities, whenever the demand for
labour varied; while the money price of a given quantify of labour
would remain the same.[I]
The following Table will further illustrate the necessary constancy
in the value of labour, and some of its most important results, in a
clearer manner and in a shorter compass than if each case were taken
separately.
The first column represents the varying fertility of the soil, by the
varying quantity of corn which can be obtained by the labour of a given
number of men.
The second column represents the yearly corn wages of each labourer,
determined by the state of the demand and supply of produce compared
with labour.
The third column represents the variable advances of produce, in the
form of corn wages, which, according to the rate at which the labourers
are paid, are necessary to obtain the produce of the first column.
The fourth column represents the rate of profits determined in the
common way, by the proportion which the excess of the produce in the
first column above the produce paid to the labourers in the third,
bears to these advances.
The fifth and sixth columns represent the quantity of labour required
to produce the varying corn wages of the given number of men, with the
profits estimated also in quantity of labour; and the reader will see
at once that these two columns must necessarily, from the manner in
which profits and wages are estimated, make up the constant quantity
and value of labour which appears in the seventh column.
The eighth and ninth columns show the value of a given quantity of
corn, and the value of the produce of a given number of men under the
varying circumstances supposed.
_Table illustrating the invariable Value of Labour and its Results._
KEY:
1. Quarters of Corn produced by Ten Men, of varying Fertility of the
Soil.
2. Yearly Corn Wages to each Labourer, determined by the Demand and
Supply.
3. Advances in Corn Wages, or variable Produce commanding the Labour
of Ten Men.
4. Rate of Profits under the foregoing Circumstances.
5. Quantity of Labour required to produce the Wages of Ten Men under
the foregoing Circumstances.
6. Quantity of Profits on the Advances of Labour.
7. Invariable Value of the Wages of a given Number of Men.
8. Value of 100 Quarters of Corn under the varying Circumstances
supposed.
9. Value of the Product of the Labour of Ten Men under the
Circumstances supposed.
+---------+--------+---------+-----------+------+------+----+------+-------+
| 1. | 2. | 3. | 4. | 5. | 6. | 7. | 8. | 9. |
+---------+--------+---------+-----------+------+------+----+------+-------+
| 150 qrs.| 12 qrs.| 120 qrs.| 25 pr. Ct.| 8 | 2 | 10 | 8.33 | 12.5 |
| 150 | 13 | 130 | 15.38 | 8.66 | 1.34 | 10 | 7.7 | 11.53 |
| 150 | 10 | 100 | 50 | 6.6 | 3.4 | 10 | 10 | 15 |
| 140 | 12 | 120 | 16.66 | 8.6 | 1.4 | 10 | 7.14 | 11.6 |
| 140 | 11 | 110 | 27.2 | 7.85 | 2.15 | 10 | 9.09 | 12.7 |
| 130 | 12 | 120 | 8.3 | 9.23 | 0.77 | 10 | 8.33 | 10.8 |
| 130 | 10 | 100 | 30 | 7.7 | 2.3 | 10 | 10 | 13 |
| 120 | 11 | 110 | 9 | 9.17 | 0.83 | 10 | 9.09 | 10.9 |
| 120 | 10 | 100 | 20 | 8.33 | 1.67 | 10 | 10 | 12 |
| 110 | 10 | 100 | 10 | 9.09 | 0.91 | 10 | 10 | 11 |
| 110 | 9 | 90 | 22.2 | 8.18 | 1.82 | 10 | 11.1 | 12.2 |
| 100 | 9 | 90 | 11.1 | 9 | 1 | 10 | 11.1 | 11.1 |
| 100 | 8 | 80 | 25 | 8 | 2 | 10 | 12.5 | 12.5 |
| 90 | 8 | 80 | 12.5 | 8.88 | 1.12 | 10 | 12.5 | 11.25 |
+---------+--------+---------+-----------+------+------+----+------+-------+
The first and most important truth illustrated in the table is, that,
from the division of value into labour and profits, and the mode in
which profits are always estimated, it follows necessarily, that the
quantity of labour required to produce the wages of a given number of
men, with the addition of the profits upon these advances estimated
in labour, must always be exactly the same as the quantity of labour
which the wages will command, and must together always make up the
constant quantity which appears in the seventh column. But the quantity
of labour required to produce the varying wages of ten men is, under
the different circumstances supposed, very different, as appears in
the fifth column; and it is obvious, that while the numbers in the
fifth column vary, the numbers in the seventh column, or the quantity
of labour and profits united, cannot be constant, unless, as the
quantity of labour required to produce the wages of ten men increases,
the quantity of profits estimated in labour diminishes exactly in the
same degree. But this, from what has before been stated, must, under
the circumstances supposed, be the case. And it follows, that if the
natural value of a commodity may be estimated by the labour and profits
of which it is composed, the natural value of the corn wages of a
given number of men must always be the same. But such wages, according
to the postulate with which we commenced, must necessarily be equal to
the quantity of labour for which they will exchange. Consequently the
value of a given quantity of labour must, under every variety which can
take place in the fertility of the soil and the corn wages of labour,
be always constant. It is, however, of the greatest importance to
remark, that an exact balance of labour, and of profits estimated in
labour, so as to yield always a constant quantity, cannot take place in
the production of any one commodity or given portion of a commodity;
because any one commodity, or given portion of a commodity, is liable
to vary in relation to labour, and such variation will either increase
or decrease the amount of the labour and profits united. It is only the
varying wages of a given number of men bearing, as the terms imply, a
constant relation to labour, which, under any changes in the quantity
of labour required to produce them, can still continue of the same
natural value. And it is precisely this necessary constancy in the
natural value of the varying corn wages of labour, which renders the
labour which a commodity will command, a standard measure both of its
natural and exchangeable value.
2dly. It appears from the Table, that given the produce obtained by ten
men, then as corn wages rise, the value of the produce will fall, or
command less labour; and the constant value of the advances in labour
absorbing a larger proportion of the value of the produce, profits will
fall in proportion. But when more is produced by the same number of
persons, then unless the corn wages rise so high as exactly to balance
it, the value of the whole produce is increased, and the rate of
profits and corn wages may both rise at the same time. Thus while the
produce is 130 quarters, as labour rises from ten to twelve quarters,
profits fall in an opposite direction from 30 per cent. to 8.3. per
cent.; but if we compare the wages of labour when the produce is 130
quarters, with the wages of labour when the produce is 150, it appears
that labour may rise from twelve to thirteen quarters, at the same time
that profits rise from 8.3. to 15.38.