ON THE DEFINITION AND USE OF TERMS BY THE AUTHOR OF “A CRITICAL
DISSERTATION ON THE NATURE, MEASURE, AND CAUSES OF VALUE.”
It might be thought that I was not called upon to notice the deviations
from the most obvious rules for the use of terms in a _Critical
Dissertation on the Nature, Measure, and Causes of Value_, by an
anonymous writer. But the great importance of the subject itself at the
present moment, when it may be said to be _sub judice_, the tone of
scientific precision in which the dissertation is written,
notwithstanding its fundamental errors, and the impression which it is
understood to have made among some considerable political economists,
seem to call for and justify attention to it.
The author, in his preface, observes, that “Writers on political economy
have generally contented themselves with a short definition of the term
value, and a distinction of the property denoted by it into several
kinds, and have then proceeded to employ the word with various degrees
of laxity. Not one of them has brought into distinct view the nature of
the idea represented by this term, or the inferences which a full
perception of its meaning immediately suggests; and the neglect of this
preliminary has created differences of opinion and perplexities of
thought which otherwise could never have existed.”[52]
Now it appears to me, that the author, at his first setting out, has in
an eminent degree fallen into the very errors which he has here
animadverted upon.
He begins by stating, very justly, that “value, in its ultimate sense,
appears to mean the esteem in which any object is held;” and then
proceeds to state, in the most lax and inconsequent manner, that “It is
only when objects are considered together as subjects of preference or
exchange that the specific feeling of value can arise. When they are so
considered, our esteem for one object, or our wish to possess it, may be
equal to, or greater, or less than our esteem for another; _it may, for
instance, be doubly as great_, or, in other words, we would give one of
the former for two of the latter. So long as we regarded objects singly,
we might feel a great degree of admiration or fondness for them, but we
could not express our emotions in any definite manner. When, however, we
regard two objects, as subjects of choice or exchange, we appear to
acquire the power of expressing our feelings with precision; we say, for
instance, that one _a_ is, in our estimation, equal to two _b_.... The
value of _a_ is expressed by the quantity _b_, for which it will
exchange, and the value of _b_ is, in the same way, expressed by the
quantity of _a_.”[53]
So, then, it appears, as a consequence of value, meaning the esteem in
which an object is held, that if there were two sorts of fruit in a
country, called _a_ and _b_, both very plentiful in the summer, and both
very scarce in the winter; and if in both seasons they were to bear the
same relation to each other, the feelings of the inhabitants with regard
to the fruit _a_ would be _expressed with precision_, by saying that, as
it would always command the same quantity of the fruit _b_, it would
continue to be of the same value—that is, would be held in the same
estimation in summer as in winter.
It appears, further, that in a country where there were only deer, and
no beavers or other products to compare them with, the specific feeling
of value for deer could not arise among the inhabitants; although, on
account of the high esteem in which they were held, any man would
willingly walk fifty miles in order to get one!! These are, to be sure,
very strange conclusions, but they follow directly from the previous
statements.
The author, however, nothing daunted, goes on to say, that “If from any
consideration, or number of considerations, men esteem one _a_ as highly
as two _b_, and are willing to exchange the two commodities in that
ratio, it may be correctly said that _a_ has the power of commanding two
_b_, or that _b_ has the power of commanding half of _a_.”
“The definition of Adam Smith, therefore, that the value of an object
expresses the power of purchasing other goods which the possession of
that object conveys, is substantially correct; and as it is plain and
intelligible, it may be taken as the basis of our subsequent reasonings
without any further metaphysical investigation.”[54]
In a Critical Dissertation on Value, which is introduced with a heavy
complaint against all preceding political economists for neglecting the
preliminary labour necessary to give a full perception of its meaning,
it might naturally have been expected, that previous to the final
adoption of the meaning in which it was intended to use the term,
throughout the dissertation, the consideration, or number of
considerations, which induce men to prefer one object to another, or to
give two _b_ for one _a_, should be carefully investigated. But nothing
of this kind is done. A definition of the value of an object by Adam
Smith, which, as he afterwards clearly shows, requires explanation and
modification, is arbitrarily adopted, or, in the language of the author,
is “taken as the basis of his subsequent reasonings, without any further
metaphysical investigation.”
That this first general description of value in exchange by Adam Smith
does not, without further explanation, convey to the reader the
prevailing meaning which he himself attaches to the term, is obvious in
many passages of his work, and particularly in his elaborate inquiry
into the value of silver during the four last centuries. He there shows,
in the most satisfactory manner, that, in the progress of cultivation
and improvement, there is a class of commodities, such as cattle, wood,
pigs, poultry, &c., which, on account of their becoming comparatively
more scarce and difficult of attainment, necessarily rise in value; yet
he particularly states, that this rise in their value is not connected
with any degradation in the value of silver,[55] although it is obvious
that, other things being the same, a pound of silver would have a
smaller power of purchasing other goods.
Nothing, indeed, can be clearer than that this general description of
value requires further explanation. There is the greatest difference
imaginable between an increased power in any object of purchasing other
goods, arising from its scarcity and the increased difficulty of
procuring it; and the increase of its power to purchase other goods
arising from the increased plenty of such goods and the increased
facility of procuring them. Nor is it easy to conceive any distinction
more vital to the subject of _value_, as the term is generally
understood, or more necessary to “a full perception of its meaning.”
I cannot but think, therefore, that the author, under all the
circumstances of the case, was not justified in adopting this definition
of Adam Smith without further investigation.
But the adoption of this definition by the author in so unceremonious a
manner, though quite inconsistent with the declarations in the preface,
and most unpromising in regard to any improvement of the science which
might have been expected from the dissertation, is by no means the
gravest offence which he has committed in the opening of his subject.
Adam Smith’s definition, taken as it stands, however imperfect it may
be, would still serve as a rough but useful standard of value in those
cases where, in using the most ordinary forms of expression, some kind
of standard is tacitly referred to, and no other more accurate one had
been adopted.
But how is this definition of Adam Smith to be interpreted? If we
understand it in the sense usually conveyed by the terms employed, it is
impossible to doubt that by the power of purchasing other goods is meant
the power of purchasing other goods generally. Who, then, could have
conceived before-hand that the author would have inferred from this
definition that he was justified in representing the power of purchasing
other goods by the power of purchasing any one sort of goods which might
first come to hand?—so that, considering the value of money in this
country to be proportioned to its general power of purchasing, it would
be correct to say that the value of an ounce of silver was proportioned
to the quantity of apples which it would command; and that when it
commanded more apples, the value of silver rose—when it commanded fewer
apples, the value of silver fell.
It is, no doubt, quite allowable to compare any two commodities whatever
together in regard to their value in exchange, and, among others, silver
and apples. It is also allowable to say, though it would in general
sound very strange, that the value of an ounce of silver, _estimated in
apples_, is the quantity of apples it will command, provided that, by
thus using the qualifying expression _estimated in apples_, immediately
after the word value, we distinctly give notice to the reader that we
are not going to speak of the exchangeable value of silver generally,
according to the definition of Adam Smith, but merely in the very
confined sense of its relation to one particular article. But if,
without this distinct notice to the reader, we simply say that the value
of an ounce of silver is expressed by the quantity of apples for which
it will exchange, or, in the words of the author, that “the value of _a_
is expressed by the quantity of _b_, for which it will exchange,”
nothing can be more clear than that we use the term value in a manner
totally unwarranted by the previous definition, that is, in a sense
quite distinct from that in which Adam Smith uses it in the description
of value adopted by the author.
Putting the corn and the circulating medium of a country out of the
question, the relations of which to labour and the costs of producing
various commodities are tolerably well known, I think no one, in
ordinary conversation, has ever been heard to express the general power
of purchasing by the power of purchasing some one particular commodity.
I certainly, at least, myself never recollect to have heard these two
very distinct meanings confounded. It would, indeed, sound very strange,
if a person returning from India, on being asked what was the value of
money in that country, were to mention the quantity of English broad
cloth which a given quantity of money would exchange for, and to infer,
in consequence, that the value of money was lower in India than in
England.
In regard to the opinions and practice of other writers on political
economy, most of them have considered the general power of purchasing,
and the power of purchasing a particular commodity as so essentially
distinct, that they have given them different names. The only authority
quoted with approbation by the author, is Colonel Torrens, whose views,
as to the nature of value, appear to him, he says, to be sounder than
those of any other writer. Yet, what does Colonel Torrens say on this
subject?—“The term exchangeable value expresses the power of purchasing
with respect to commodities in general. The term price denotes the same
power with respect to some particular commodity, the quantity of which
is given. Thus, when I speak of the _exchangeable value_ of cotton as
rising or falling, I imply, that it will purchase a greater or less
quantity of corn, and wine, and labour, and other marketable
commodities; but when I talk of the _price_ of cotton as rising or
falling, I mean, that it will purchase a greater or less quantity of
some one particular commodity, such as corn, or wine, or labour, or
money, which is either expressed or understood. Exchangeable value may
rise, while price falls, or fall while price rises. For example; if
cotton were, from any cause, to acquire twice its former power of
purchasing, with respect to goods in general, while gold, the particular
commodity in which the price of cotton is expressed, rose in a still
higher ratio, and acquired four times its former power in the market,
then, though the exchangeable value of cotton would be doubled, its
price would fall one half. Again; if cotton would purchase only half the
former quantity of commodities, while it purchased twice the quantity of
some particular commodity, such as corn, or wine, or labour, or money,
then its exchangeable value would have sunk one half, while its price,
as expressed in corn, or wine, or labour, or money, became double. And
again; if cotton, and the particular commodity in which price is
expressed, should rise or fall in the same proportion with each other,
then the exchangeable value of cotton, or its general power of
purchasing, would fluctuate, while its price remained stationary.”[56]
It appears then, that, whether Colonel Torrens’s view of value be quite
correct or not, he draws the most marked line of distinction possible
between the power of purchasing generally, and the power of purchasing a
particular commodity, and is decidedly of opinion, that the latter,
which is the sense in which the author uses the term value, should not
be called value, but price. The authority of Colonel Torrens, therefore,
whose views on the subject of value the author considers as so sound, is
directly against him.
But not only does Colonel Torrens attach a very different meaning to the
term value, from that in which it is used by the author throughout the
greatest part of his work, but the author himself, in his notes and
illustrations,[57] has given extracts from almost all the distinguished
writers in political economy, expressly for the purpose of showing the
universality of an opinion respecting the nature and measure of value
directly opposed to his own. The writers to whom he refers, are Adam
Smith, Sir James Stuart, Lord Lauderdale, M. Storch, M. Say, Mr.
Ricardo, myself, Colonel Torrens, Mrs. Marcet, Mr. Mill, the Templar’s
Dialogues, and Mr. Blake.
In the case of a proposition the nature of which admits of a logical
proof, authority is of no consequence; but in a question which relates
to the meaning to be attached to a particular term, it is quite
incredible that any person should thus have ventured to disregard it.
Much, however, of inconsistency, of illogical inference, and disregard
of authority, might have been forgiven, if the proposed change in the
meaning of the term value would introduce a much greater degree of
clearness and precision into the language of political economy, and, in
that way, be eminently useful to the progress of the science.
But, what would be the consequence of adopting the meaning which the
author attaches to the term value, and of allowing, according to his own
words, that “the value of _a_ is expressed by the quantity of _b_ for
which it will exchange, and the value of _b_ is, in the same way,
expressed by the quantity of _a_?”[58] One of these consequences is
strikingly described in the following passage of the author’s chapter on
_Real and Nominal Value_, a distinction which he is pleased to call
unmeaning. “The value of a commodity denoting its relation in exchange
to some other commodity, we may speak of it as money-value, corn-value,
cloth-value, according to the commodity with which it is compared: and
hence there are a thousand different kinds of value, as many kinds of
value as there are commodities in existence, and all are equally real
and equally nominal.”[59]
This is precision with a vengeance. Now, though I am very far from
intending to say that the writers on political economy have been
sufficiently agreed as to the precise meaning which they attach to the
terms _value of a commodity_, when no express reference is made to the
object with which it is to be compared, yet, by drawing a marked line of
distinction between what has been called the real value of commodities
and their nominal value, or, more correctly, between their _value_ and
their _price_, they have avoided the prodigious confusion which would
arise from a commodity having a thousand or ten thousand different
values at the same time. Whenever they use the term value of a commodity
alone, and speak of its rising or falling, if they do not mean
money-price, they refer either to its power of purchasing generally, or
to something expressive of its elementary cost of production.
In either case, some general and very important information is
communicated; but the value of a commodity, in the sense understood by
the author, might be expressed a hundred different ways, without
conveying a rational answer to any person who had inquired about it.
Further; the use of the term _value_, in the sense understood by the
author, is entirely superfluous. It has exactly the same meaning as the
term _price_, except that the term price has this very decided advantage
over it, namely, that when the price of a commodity is mentioned,
without an express reference to any other object in which it is to be
estimated, political economists have universally agreed to understand it
as referring to money. This is a prodigious advantage in favour of the
term price, and tends greatly to promote both facility and precision in
the language of political economy. When I ask, what is the _price_ of
wheat in Poland? no one has the least doubt about my meaning, and I
should, without fail, get the kind of answer I intended. But if I asked,
what was the _value_ of wheat in Poland? I might, according to the
author, be answered in a thousand different ways, all equally proper,
and yet not one of the answers be of the kind I wanted. Of course,
whether I use the term value or price, if I always expressly subjoin the
object to which I mean to refer, it will be quite indifferent to which
term I resort. But it is vain to suppose that the public will submit to
such constant and unnecessary circumlocution. It would quite alter the
language of political economy; and the kind of abbreviation which has
taken place in application to the term price could not take place in
regard to value, according to the doctrines of the author; because, when
the _value_ of a commodity is used alone, like the price of a commodity,
no one object rather than another is entitled to a preference for the
expression of that value. The author says distinctly in a note,[60] that
money-value has no greater claim to the general term _value_ than any
other kind of value. It is quite clear, therefore, that if the term
value is only to be applied in the sense in which it is applied by the
author, it would be much better to exclude it at once from the
vocabulary of political economy as utterly useless, and only calculated
to produce confusion.
It may be further observed, that the sense in which the author proposes
to apply the term value, is so different from the sense in which it is
understood in ordinary conversation, and among the best writers, that it
would be quite impossible to maintain it with consistency. The author
himself, however obstinately, at times, he seems to persevere in the
peculiar meaning which he has given to the term value, frequently uses
it by itself, without reference to any particular article in which he
proposes to express it. Even in the titles of some of his chapters he
does this; and when in Chapter XI. he discusses _the distinction between
value and riches_, and in Chapter XI. _the causes of value_, we are
entitled to complain, that he has not acted according to the
instructions which he has given to others, and told us, either
expressly, or by implication, in what article the value here mentioned
is to be expressed.
Again; when he mentions the value of that corn which is produced on
lands paying rent, and when he speaks, as he frequently does, of the
value of capital,[61] he does not tell us in what he means to express
the value of corn, or of capital, although he thinks that such a
reference, either expressed or implied, is always necessary, and
particularly says, “In the preceding pages it has been shown, that we
can express the value of a commodity only by the quantity of some other
commodity for which it will exchange.”[62]
The meaning, therefore, which he gives to the term value is such, that
he cannot and does not maintain it consistently himself, much less can
he expect that others should so maintain it.
It appears, then, that the author has arbitrarily adopted a meaning of
the term value quite unwarranted by the usage of ordinary conversation,
directly opposed to the authority of the best writers on political
economy, pre-eminently and conspicuously useless; and of such a nature
that it cannot be maintained with consistency.
And what does he do with his definition after so adopting it?
He applies it to try the truth of a number of propositions advanced by
different writers, who, according to his own showing, have used the term
in a very different sense.
This, I own, appears to me much the same kind of proceeding as if a
person were to define a straight line to be something essentially
different from a line lying evenly between its two extremes, and then
were gravely to apply it to one proposition after another of Euclid, and
show, as might easily be done, granting the definition, that the
conclusions of the Grecian geometer were all wrong.
The perseverance with which the author proceeds gravely to apply his
peculiar definition of value to other writers, who have defined it
differently, is truly curious, and must be allowed to be a great waste
of time and labour. If, as he says he has repeatedly stated, “to know
the value of an article at any period is merely to know its relation in
exchange to some other commodity;”[63] and if, as I believe, no previous
writer, in referring to the value of an article at any period ever
thought or said that it could be expressed by its relation in exchange
to any other contemporary commodity indifferently, it might at once be
presumed, without further trouble, that almost all former propositions
involving the term value would turn out to be either false or futile. It
was quite unnecessary for him, therefore, to go into the detail; but as
he has done so, it may be useful to follow him in some of his
conclusions, as it may assist in drawing attention to a subject which
lies at the bottom of many of the difficulties in political economy, and
has not been sufficiently considered.
One of the first effects of the author’s definition is to destroy the
distinction between what many writers of great authority have called
_real value_, and _nominal value_. I have already had occasion to
observe, that Adam Smith, by applying the term _real_ wages to express
the necessaries and conveniencies of life earned by the labourer, had
precluded himself from the power of applying it consistently to the
_value_ of a commodity, in order to express its power of commanding
labour; because it is well known that the same quantity of labour will
both produce and command, at different times and under different
circumstances, a very different quantity of the necessaries and
conveniencies of life. But putting aside for the present this
acknowledged inconsistency of Adam Smith, and taking real value as
distinguished from nominal in the sense in which the writers who have so
applied it intended, the author’s observations on these writers are not
a little extraordinary.
After noticing the doctrines of Adam Smith, Mr. Ricardo, and myself, on
the subject of real and nominal value, he says, “After the disquisition
on the nature of value in the preceding chapter, the distinction of it
in this way must appear to be merely arbitrary and incapable of being
turned to any use. What information is conveyed or what advance in
argument is effected, by telling us that value estimated in one way is
real, but in another, is nominal?”[64] He afterwards goes on to say, in
reference to a passage in the Templar’s Dialogues, “It would not,
however, probably have been written, had the author attended to the
simple fact, that value must always imply value in something, and unless
that something is indicated, the word conveys no information. Now, as
the terms nominal and real do not denote anything in this way, they
convey no precise information, and are liable to engender continual
disputes, because their meaning is arbitrarily assumed.”[65]
These appear to me, I confess, to be very extraordinary observations. It
must surely be allowed, that to compare a commodity either with the mass
of other commodities, or with the elementary costs of production, is
most essentially distinct from comparing it with some particular
commodity named. And if so, writers are bound so to express themselves
as to convey to their readers, which of the two they intend to refer to.
Whether these writers have chosen the very best terms to express these
ideas is another question; but that the ideas themselves are quite
different, and that it is essential to the language of political economy
that they should be distinguished by different terms, cannot admit of a
doubt. It appears to me, therefore, almost inconceivable that the author
should say, “What information is conveyed, or what advance in argument
is effected, by telling us, that value estimated in one way is real, but
in another, is nominal?” It might as well be said, that, in speaking of
our planetary system, no information is conveyed by using different
adjuncts to the term distance, in order to distinguish between the
distances of the planets from the sun, and the relations of their
distances to each other. And supposing it had been the habit of most
writers to call the first distances real and the second relative, would
it not be most strange to say that the distinction in this way of
distance into two kinds is incapable of being turned to any use, as all
distance is relative?
The author is repeatedly dwelling upon the relative nature of value, as
if he alone had considered it in this light; but no other writer that I
have met with has ever appeared to me to use the term value without an
intelligible reference expressed or implied to something else; and when
the author says, in the passage above quoted, that value must always
imply value in something which ought to be indicated, and that the terms
nominal and real do not denote anything in this way, he appears to me, I
own, to assert what is entirely without foundation. M. Say, for
instance, in a passage quoted by the author in his notes,[66] observes,
“There is this difference between a real and a relative variation of
price; that the former is a change of value arising from an alteration
of the changes of production; the latter a change arising from an
alteration in the ratio of value of one particular commodity to other
commodities.” Now is it possible to say with truth, that the real and
relative values here described do not both refer to other objects, and
that these objects are not so different as to require to be
distinguished?
The author may, perhaps, say, that if both expressions are meant to be
relative, why use the terms real, positive, or absolute? The answer is,
that the usage of our language allows it, and that nothing is more
common than the use of the terms real, positive, and absolute, in
contradistinction to relative, when the former terms have relation to
some more general object, particularly to anything which is considered
as a standard, whether accurate or inaccurate.
Thus, in the illustration before adverted to, although all distances are
relative, it would be quite justifiable to say, that if the earth was
moving towards the farthest part of her orbit, her positive, absolute,
or real distance from the sun was increasing, although her distance
relatively to that of some other planet or comet, moving from the sun
with greater velocity, was diminishing. Tall and short, rich and poor,
are relative terms: yet surely we should be warranted in saying, that
Peter was not only taller than his three brothers, but, really or
positively, a tall man. In the first case he is said to be tall in
relation to three individuals; but a stranger, knowing nothing of the
height of these individuals, would obtain very little information from
the statement. He would not know whether Peter was four feet, five feet,
or six feet high: in the latter case, Peter is said to be tall in
relation to the average or standard height of the race of men spoken of;
and though the stranger might not have in his mind a perfectly accurate
notion of this standard, yet he would immediately have before him the
height of Peter within a few inches, instead of a few feet.
On the same principle, would it not be most ridiculous for any person
gravely to propose that as rich and poor are relative terms, no one
should ever call a man rich without mentioning at the same time the
individual in relation to whom he was rich? It is perfectly well known,
that when, in any particular place or country, a man is said to be a
rich man, the term refers to a sort of loose standard, expressing either
a certain command over the goods of this life, or a certain superiority
in this respect over the mass of the society, which superiority it had
been the custom to mark by this expression. In either case, it would be
allowable to call the man really or positively rich. But if the proposed
change were adopted, and instead of saying that Mr. John Doe was a rich
man, we could only say that he was rich in relation to Mr. Richard Roe,
as poor Richard might be little better than a pauper, Mr. Doe might,
after all, be in very narrow circumstances.
It is clear, therefore, not only that the terms real and positive may be
legitimately applied in contradistinction to relative, when a relation
to some more general object or standard is intended; but that the
difference between the two sorts of relations is of the utmost
importance, and ought to be carefully distinguished. It is not easy to
conceive, therefore, how any writer could suppose that the language of
political economy would be improved by a definition which would destroy
this distinction, and make as many kinds of value as there are
commodities, all equally real and equally nominal. In reference to all
other political economists, whenever they have used the term value of a
commodity, without specifically mentioning the object in which they
intended to estimate it, I have always felt myself authorised,
consistently with their general language, to consider them as referring
tacitly either to the mass of commodities, to the state of the supply
compared with the demand, or to the elementary costs of production. But
when the author of the Critical Dissertation uses the term value, which
he does frequently without specific application, his general doctrine
must leave the reader quite at a loss to conjecture what he means.
Proceeding on the same strange misapprehension or perversion of the
language of other writers, the author says of the writer of the
Templar’s Dialogues, “Following Mr. Ricardo, he appears entirely to lose
sight of the relative nature of value, and, as I have remarked in the
preceding chapter, to consider it as something positive and absolute; so
that if there were only two commodities in the world, and they should
both, by some circumstances or other, come to be produced by double the
usual quantity of labour, they would both rise in real value, although
their relation to each other would be undisturbed. According to this
doctrine every thing might at once become more valuable by requiring at
once more labour for its production; a position utterly at variance with
the truth, that value denotes the relation in which commodities stand to
each other as articles of exchange. Real value, in a word, is on this
theory considered as the independent result of labour; and,
consequently, if under any circumstances the quantity of labour is
increased, the real value is increased. Hence the paradox, that it is
impossible for _a_ continually to increase in value—in real value
observe, and yet command a continually decreasing quantity of _b_, and
this although they were the only two commodities in existence. For it
must not be supposed that the author means that _a_ might increase in
value in relation to a third commodity _c_, while it commanded a
decreasing quantity of _b_; a proposition which is too self-evident to
be insisted on; but he means that _a_ might increase in a kind of value
called real, which has no reference to any other commodity whatever.”
Apply to the position of this author the rule recommended in the last
chapter; inquire, when he speaks of value, value in what? and all the
possible truth on the subject appears in its naked simplicity. He adds
afterwards again, “value must be value in something, or in relation to
something.”[67]
Now let the reader recollect that this passage was written by a person
who sets out with saying that value in its ultimate sense appears to
mean the esteem in which any object is held, and it will appear most
remarkable.
In the first place, what can the author possibly mean by speaking of the
kind of value here called _real_, as if it had no relation to any thing
else? The Templar, it must surely be allowed, has explained himself with
sufficient clearness that by real value he means value in relation to
the producing labour.
Secondly, I would ask the writer, who says that the value of a commodity
means the esteem in which it is held, whether the labour required to
produce a commodity does not, beyond all comparison, express more nearly
the esteem in which the commodity is held, than a reference to some
other commodity the producing labour of which is utterly unknown, and
may therefore be one day or one thousand days?
I have already stated that I decidedly differ from Mr. Ricardo, and it
follows of course that I differ equally from the Templar, in thinking
that the value of a commodity may be correctly expressed by referring to
the producing labour alone; but compared with the expression of value
proposed to be substituted by the author of the Critical Dissertation,
it has a prodigious superiority. Let us try both, for instance, by the
touch of the talisman recommended by the author himself. Let the
question be the value of silver before the discovery of the American
mines; and let us ask, as directed, value in relation to what? The
Templar would answer, value in relation to the producing labour; and
though in this answer a material ingredient of elementary value is
omitted, yet I should collect from it some tolerable notion of the
esteem in which silver was held at that time; and if I found, on
comparison, that the producing labour was now three or four times less,
I should be able, with tolerable certainty, to infer, that silver had
grown more plentiful; and that four centuries ago a given quantity of
silver was held in much greater esteem, that is, people would make a
much greater sacrifice in order to obtain it, than at present.
On the other hand, if the author of the Critical Dissertation should
speak of the value of silver before the discovery of the American mines,
and we should ask, value in relation to what? the answer would be, “I
have repeatedly stated that to know the value of an article at any
period is merely to know its relation in exchange to some other
commodity;” consequently, we should know the value of silver in the
fifteenth century, or the esteem in which it was held, by comparing it
with calicoes, although we might know nothing at all about the
difficulty or facility of obtaining calicoes at that time. And if we
were to proceed, as in the former case, and, with a view to ascertain
the esteem in which silver was held in the fifteenth century, as
compared with the esteem in which it is held in the nineteenth, were to
mark the relation of silver to calicoes in the two periods, it would
appear, that as, owing to the improvements in the cotton machinery, a
given quantity of silver would command more calicoes now than formerly,
silver should be considered as being held in higher estimation now than
four centuries ago. Yet no person, I believe, not even the author
himself, would agree to this conclusion. He would probably say that the
comparison was merely between silver and calicoes, and had nothing to do
with anything else. If this be all he means, why does he confuse his
readers by stating that value means the esteem in which a commodity is
held? and why does he say that to know the value of an article at any
period is merely to know its relation in exchange to some other
commodity? If all he means by the value of a commodity is its relation
to some other, why did he not at once say, without ever talking about
esteem, that the value of one commodity in relation to any other was
expressed by the quantity of that other for which the first would
exchange; and that, when the first rose in relation to the other, the
other would always fall proportionably in relation to the first? If he
had so expressed himself, his proposition would have obtained universal
consent; it would have been a truism which had never been denied. But as
long as he continues to talk of the esteem in which commodities are
held, his readers must consider him as peculiarly inconsistent, if, on
the supposition of there being only two commodities in existence, he
prefers measuring the esteem in which one of them is held by its
relation to the other, rather than by its relation to the producing
labour. And they must further think, that while he continues to state
that “to know the value of an article at any period is merely to know
its relation in exchange to some other commodity,” he is stating a
proposition which, according to the usual sense in which the word value
is understood when so placed, is totally unfounded. No man, I believe,
but the author would venture to say that he should know the value of
silver four hundred years ago by knowing the quantity of calicoes which
an ounce of silver would then command.
The sixth chapter of the author is entitled “On Measures of Value;” and
the discussion of this subject leads him to such strange conclusions,
that one cannot but feel the greatest surprise at his not seeing that he
must have been proceeding in a wrong course. He ridicules the notion of
its being necessary that a commodity should possess invariable value, in
order to form a perfect measure of value. Such a notion, which he says
in a note has been entertained by all the most distinguished writers in
political economy, he civilly calls an utter absurdity. According to the
doctrines and language of the author, no relation exists between the
value of a commodity at one time and the value of the same sort of
commodity at another; and “the only use of a measure of value, in the
sense of a medium of comparison, is between commodities existing at the
same time.”[68]
“If this be so, it is, no doubt, quite absurd in political economists to
look for anything approaching towards an invariable measure of value, or
even to talk of one commodity or object being more steady or constant in
its value than another. At the same moment, bags of hops are as good a
measure of the relative value of commodities as labour or money. With
regard to money, indeed, the author particularly observes, that from the
relations between corn and money, at two different periods, no other
relation can be deduced; we do not advance a step beyond the information
given. * * We cannot deduce the relation of value between corn at the
first, and corn at the second period, because no such relation exists,
nor, consequently, can we ascertain their comparative power over other
commodities. If we made the attempt, it would be, in fact, endeavouring
to infer the quantities of corn which exchanged for each other at two
different periods of time, a thing obviously absurd. And further, money
would not be here discharging a particular function any more than the
other commodity. We should have the value of corn in money and the value
of money in corn, but one would be no more a measure or medium of
comparison than the other.”[69]
From all this it follows necessarily that we must on no account say,
that butter has been rising during the last month; if we do, we shall be
convicted of the absurdity of proposing to exchange the butter which was
consumed three weeks ago with the butter now on our table, in order to
ascertain that a pound of the former will command less than a pound of
the latter. For the same reason, we must not on any account say, that
the value of wheat fell very greatly from 1818 to 1822, and rose
considerably from 1822 to 1826. We must not venture to compare the value
of the advances of a master manufacturer with the value of his returns;
or, in estimating the rate of his profits, presume to prefer money,
which generally changes slowly and inconsiderably in its power of
setting labour to work, to hops, which change so rapidly and greatly,
&c. &c. In short, the whole of the language and inferences of the
business of buying and selling, and making money, must be altered and
adapted to the new definitions and doctrines.
It is quite astonishing that these consequences should not have startled
the author, and made him turn back. If he had but adhered to his first
description of value, namely, the esteem in which an object is held; or
even if he had interpreted his second definition of value, namely, “the
power of purchasing other goods,” according to the ordinary and natural
meaning of the expression, he could never have been led into the strange
mistake of supposing, that when people have talked of the value of a
commodity at one period, compared with the value of the same kind of
commodity at another, they could only refer to the rate at which they
would actually exchange with each other, which, as no exchange could in
such a case take place, would be absurd. What then did they mean? They
obviously meant either to compare the esteem in which a commodity was
held at one period with the esteem in which it was held at another,
founded on the state of its supply compared with the demand, and
ordinarily on its costs of production; or to compare the general power
of purchasing which a commodity possessed at one period with its general
power of purchasing at another period. And will the author venture to
assert, that there are not some objects better calculated than others to
measure this esteem, or measure this general power of purchasing at
different periods? Will the author maintain, that if, in reference to
two periods in the same country, a commodity of a given kind will in the
second period command double the quantity of labour that it did in the
first, we could not with much more certainty infer that the esteem for
it had greatly increased, than if we had taken calicoes or currants as
the medium of comparison? Or would the author, upon a little reflection,
repeat again what he says in the passage last quoted, that from the
relations between corn and money in two successive seasons, we can
deduce no other relation, * * “money would not be here discharging a
particular function any more than the other commodity. We should have
the value of corn in money and the value of money in corn, but one would
be no more a measure or medium of comparison than the other.”[70]
To me, at least, these statements appear utterly unfounded. If the
money-price of corn has risen this year to double what it was in the
last, I can infer, with almost absolute certainty, that corn is held in
much higher estimation than it was. I can be quite sure that the
relation of corn to other articles, besides money, has most essentially
changed, and that a quarter of corn will now command a much greater
quantity of labour, a much greater quantity of cloth, a much greater
quantity of hardware, a much greater quantity of hats and shoes, than it
did the year before: in short, that it will command nearly double the
quantity of all other commodities which are in their natural and
ordinary state, and have not been essentially affected by the causes
which have operated upon the price of corn.
Where then is the truth of saying, that from the altered relation
between corn and money we deduce no other relation? It is perfectly
obvious that we _can_ deduce and _do_ deduce a great number of other
most important relations; and, in fact, _do_ ascertain, though not with
perfect accuracy, yet with a most desirable and useful approach to it,
the degree of increase in the power of corn to command in exchange the
mass of other commodities.
On the other hand, from the diminished power of money in relation to
corn, we _cannot_ infer that money has fallen nearly in the same
proportion in relation to other commodities. If an ounce of silver will
now command only half a bushel of wheat, instead of a whole bushel, we
can by no means infer that an ounce of silver will therefore command
only about half the quantity of labour, half the quantity of cloth, half
the quantity of hardware, half the quantity of hats and shoes, and of
all those commodities which are in their natural and ordinary state. To
all these objects money will probably bear nearly the same relation as
before.
Where, then, is the truth of saying, that money would not be here
discharging a particular function more than the other commodity? Broad,
glaring, and incontrovertible facts show, that for short periods money
_does_ perform the function of measuring the variations in the general
power of purchasing possessed by the corn; but that the corn does _not_
measure the variations in the general power of purchasing possessed by
the money. This is one of the instances of that extraordinary
inattention to facts which, most unfortunately for the science of
political economy, the professors of it have lately indulged themselves
in.
The author has said a great deal in good set phrase about the false
analogy involved in the application of the term _measure_ to the value
of commodities at different periods; and gravely states the difference
between measuring length at different periods and measuring value.
I was not aware that people were ignorant of this difference. As I said
before, whenever mention is made of the value of a commodity at
different periods, I have always thought that a reference has been
intended either to its general power of purchasing, or to something
calculated to express the estimation in which it was held at these
different periods, founded on the state of its supply compared with the
demand, or the elementary costs of its production.
But if the term has been generally understood in this way, people must
have been fully aware that value was essentially different from length:
they would know perfectly well that a piece of cloth of a yard long
would continue to be a yard long when it was sent to China; but that its
value, that is, its general power of purchasing in China, or the
estimation in which it was held there, would probably be essentially
altered. But allowing this most marked distinction, and that the value
of a commodity cannot be so well defined, and its variations so
accurately measured, as the length of a commodity—where is the false
analogy of endeavouring to measure these variations as well as we can?
We cannot certainly describe the wealth of a merchant, nor measure the
increase of his wealth during the last four years, with the same
exactness as we can describe the height of a boy, and measure the amount
of his growth during the same period. We can perform the latter
operation with the most perfect precision by means of a foot-rule. The
nature of wealth, and the best instruments used to measure its increase,
are such, that the same precision is unattainable; but there is no false
analogy involved in the process of measuring the wealth of a merchant at
one time with his wealth four years before, by the number of pounds
sterling which he possesses now, as compared with the number of pounds
sterling he possessed at the former period. What false analogy is
involved in applying money to measure the value of the advances of a
manufacturer, as compared with the value of his returns, in order to
estimate his profits? and what can the author mean by saying, that no
relation of value can exist between commodities at different
periods;[71] and that it is a case where money has no function to
perform?
Notwithstanding such assertions, we see every day the most perfect
conviction prevailing among all agriculturists, merchants,
manufacturers, and shopkeepers, and among all writers on political
economy, except the author, that to estimate the relation of
commodities, at different periods, in regard to their general power of
purchasing, and particularly the power of purchasing labour, the main
instrument of production, is a most important function, which it is
peculiarly desirable to have performed; and that, for moderately short
periods, money _does_ perform this function with very tolerable
accuracy. And for this specific reason; that, for moderately short
periods, a given quantity of money will represent, more nearly than any
other commodity, the general power of purchasing, and particularly the
power of setting labour in motion, so vital to the capitalist. It will
approach, in short, more nearly than any other commodity, to that
invariability which the author thinks so utterly useless in a measure of
value, and the very mention of which seems to excite his
indignation.[72]
It is, in fact, by means of this same steadiness of value in the
precious metals, which they derive from their great durability, and the
consequent uniformity of their supply in the market, that they are
enabled to perform their most important functions. Hops, or corn, as
before stated, will measure the relative values of commodities at the
same time and place; but let the author or reader attempt to estimate
the profits of a capitalist in hops or corn, by the excess of the value
of his advances above the value of his returns so estimated, and he will
soon be bewildered. If a very plentiful year of corn were to succeed to
a comparatively scarce one, the farmer, estimating both his outgoings
and incomings in the corn of each year, might appear to gain above fifty
per cent., while, in reality, he might have lost, and might not be able,
without trenching on his capital, to employ as many men on his farm as
the year before. On the other hand, if a comparatively scarce year were
to succeed to a plentiful one, his profits, estimated in corn, might
appear to be less than nothing, and yet he might have been an unusual
gainer, in reference to his general power of purchasing labour and other
commodities, except corn. If the hop-planter were to estimate his
advances and returns in hops, it is obvious that the results would be of
the same kind, but aggravated in degree.
It must be allowed, then, that the commercial world have acted most
wisely in selecting, for their practical measure of value, a commodity
which is not only peculiarly convenient in its form, but is, in general,
subject only to slow changes of value; and possesses, therefore, that
steadiness in its power of purchasing labour and commodities, without
which, all confidence in carrying on mercantile enterprises, of any
duration, would be at an end.
But though the precious metals are a very useful and excellent measure
of value for those periods, within which almost all mercantile
transactions are begun and completed; yet, as Adam Smith very justly
observes, they are not so for very long periods; not because there is no
function for them to perform, but because, in the course of four hundred
years, they are found to lose that uniformity of value, which, in
general, they retain so well during four years.
I can by no means, therefore, agree with the author, when he says,
speaking of the precious metals, that, “in regard to measuring or
comparing value, there is no operation that can be intelligibly
described, or consistently imagined, but may be performed by the media
of which we are in possession.”[73] Surely, to measure the relative
power of a commodity over labour and the mass of other commodities, at
different and distant times, is an operation which may be both
consistently imagined, and intelligibly described; yet it is quite
certain, that, in regard to distant periods, the precious metals will
not perform this well. Would the author himself venture to say, that the
general power of purchasing possessed by an ounce of silver in the time
of Edward the Third, was not very much greater than the general power of
purchasing possessed by an ounce of silver in the time of George the
Fourth; or, that the same quantity of agricultural labour, at these two
periods, would not much more nearly have represented the same general
power of purchasing? The author seems equally unfortunate when he
launches out in praise of the precious metals as a measure of value, as
when he says that they do not perform this function better than corn.
It will be observed that, in speaking of the values of commodities, at
different periods, as meaning their different powers of purchasing at
those periods, the kind of value referred to is, exclusively, value in
exchange. And, in reference to value in exchange, exclusively, it
appears to be of the utmost importance to the language of political
economy, to distinguish between the power of purchasing generally, and
the power of purchasing any one commodity.
But it must not be imagined that when the estimation in which a
commodity is held at different periods is referred to, as determined at
the time by the state of the supply compared with the demand, and
ordinarily by the natural and necessary conditions of its supply, or by
the elementary costs of its production, which are equivalent
expressions, that value in exchange is lost sight of. Yet the author is
continually falling into this kind of misapprehension, and into a total
forgetfulness of his first account of the meaning of value, in his
examination of Mr. Ricardo’s views, as to the uses of a measure of
value, in which, he says, a singular confusion of thought is to be
discovered.[74]
“Suppose, he observes, that we had such a commodity as Mr. Ricardo
requires for a standard: suppose, for instance, all commodities to be
produced by labour alone, and silver to be produced by an invariable
quantity of labour. In this case, silver would be, according to Mr.
Ricardo, a perfect measure of value. But in what sense? What is the
function performed? Silver, even if invariable in its producing labour,
will tell us nothing of the value of other commodities. Their relations
in value to silver, or their prices, must be ascertained in the usual
way; and, when ascertained, we shall certainly know the values of
commodities in relation to each other; but in all this, there is no
assistance derived from the producing labour of silver being a constant
quantity.”[75]
I have already described the function which silver would have to perform
in this case, namely, either to measure the different powers of
purchasing possessed by commodities at different periods, or to measure
the different degrees of estimation in which they were held at these
different periods.
Now, in the first place, with regard to the general power of purchasing,
can it be denied for a moment, that, granting all the premises, as the
author does hypothetically, silver, so produced, would be, beyond
comparison, a better measure of the power of purchasing generally, than
silver as it has been actually produced? It would be secured from that
greatest source of variation in the general power of purchasing
occasioned by the variation in its own producing labour; and an ounce of
such silver would command much more nearly the same quantity of labour
and commodities, for four or five hundred years together, than an ounce
of silver derived from mines of greatly varying fertility.
Secondly, with regard to the estimation in which a commodity is held, it
is not easy to conceive a more complete measure. If all commodities were
produced by labour alone, and exchanged with each other according to the
producing labour; and if silver were produced by an invariable quantity
of labour, the quantity of silver given for a commodity in the market at
different periods, would express almost accurately the relative
estimation in which it was held at these periods; because it would
express at once the relative sacrifice which people were willing to
make, in order to obtain such a commodity at these different periods;
the relative conditions of the supply, or elementary costs of
production, of such commodity at these periods; and the proportion of
the produce to the producer, or the relative state of the demand, as
compared with the supply of such commodity at these different periods.
And if the value of a commodity means, as the author has told us in the
first sentence of his book, the esteem in which it is held, Mr.
Ricardo’s measure would certainly do all which he proposed it should do;
and this specifically on account of its invariability in relation to the
estimation in which it was held.
It would not merely indicate, as the author states, in which of two
commodities varying in relation to each other, at different periods, the
variation had taken place;[76] but it would express the precise amount
of the variation; that is, if it appeared by documents that the price of
a yard of cloth of a certain quality four hundred years ago was twenty
shillings, and its price at present was only ten shillings, it would
follow, that the estimation in which it was held, or its value, had
fallen one-half; because, as all commodities are, by the supposition,
produced by labour alone, the sacrifice with which it could be obtained,
the necessary conditions of its supply, or the elementary costs of its
production, had diminished one-half.
The variations of a commodity, in relation to this kind of standard,
would further show, with great exactness, the variations in its power of
commanding all those commodities which had not altered in the conditions
of their supply, or the elementary costs of production. If a commodity
rose or fell in this standard price, at different periods, it would
necessarily rise or fall exactly in the same proportion in its power of
commanding, in exchange, all those commodities which had not altered in
the conditions of their supply, or their elementary costs of production.
But still, it will be readily acknowledged, that, even granting all that
the author has granted hypothetically to Mr. Ricardo, it is not true
that such silver would be an _accurate_ measure of the general power of
purchasing. Although the circumstance of its invariability, in regard to
its producing labour, would give it a prodigious superiority over all
other commodities even in this respect, yet, as the producing labour of
many commodities may vary in the progress of society, it is quite
impossible that the same quantity of any one object can, through
successive periods, represent the same general power of purchasing. This
is universally allowed; and as it would be clearly desirable to have
_one_ rather than _two_ definitions of value, the question is, whether,
both on this account, and on account of the universal language and
practice of society, for short periods, it would not be decidedly better
to confine the term value of a commodity, when used generally, to the
estimation in which it is held, determined by the state of the supply
compared with the demand, and ordinarily by the elementary costs of
production, rather than to its general power of purchasing. There is
very nearly an accurate measure of the former; it is universally
acknowledged that there cannot be an accurate measure of the latter; and
further, it is most important to remark that, in adopting the former,
our language would much more nearly coincide with the ordinary language
of society in referring to variations of value, than if we adopted the
latter.
As a matter of fact, when a rise in the value of hops or of corn is
spoken of, who ever thinks about the changes which may have taken place
in the values of iron, flax, or cabbages? For short periods, we consider
money as nearly a correct measure of the values of commodities, as well
as of their prices; and if hops and corn have risen in this measure, we
do not hesitate to say that their values have risen, without the least
reference to cloths, calicoes, or cambrics. This is a clear proof that,
in general, when we speak of the variations in the values of
commodities, we do not measure them by the variations in their general
power of purchasing, but by some sort of standard which we think better
represents the varying estimation in which they are held, determined at
all times by the state of the supply compared with the demand, and, on
an average, by the elementary costs of production.
The only variations in the general power of a commodity to purchase,
which are susceptible of a distinct and definite measure, are those
which arise from causes which affect the commodity itself, and not from
the causes which affect the innumerable articles against which it is
capable of being exchanged. In speaking, therefore, of the variations in
the value of particular commodities, it is not only more accordant with
the accustomed meaning attached to the expression, but absolutely
necessary with a view to precision, to consider them as exclusively
proportioned to, and measured by, the amount of the causes of value
operating upon themselves.
Mr. Ricardo, therefore, quite consistently with his own hypothesis,
considers a commodity, the producing labour of which has doubled, as
having increased to double its former value. It has increased in
relation to a standard which, according to him, is the sole cause of
value; it will command just double the quantity of all those commodities
which have not altered in their producing value; and if it will not
command just double the quantity of other commodities, it is not because
it will not command just double the _value_ which it did before, but
because, on account of the changes in the producing labour of the other
commodities, double the quantity of them has become more or less than
double the value.
On the same principle, Adam Smith considers the value of cattle as
rising in the progress of cultivation and improvement, although the
value of land, the value of wood, the value of poultry, &c., might rise
still higher, and, consequently, a given quantity of cattle might, with
regard to some commodities or sets of commodities, have its power of
purchasing diminished. But in saying that the value of cattle rises in
the progress of cultivation, he means to say, that it rises in relation
to a standard, namely, the labour a commodity will command, which
represents at different periods the state of the supply of cattle
compared with the demand, and, on an average, the elementary costs of
their production; and, consequently, much better represents the
estimation in which they are held than any commodity or set of
commodities. “Labour,” he observes, “it must always be remembered, and
not any particular commodity, or set of commodities, is the real measure
of the value both of silver and of all other commodities.”[77]
Even the author himself has a chapter on the causes of value; and here
he finds it absolutely necessary to estimate the causes affecting one
commodity as distinct from the causes affecting another; although,
according to his previous doctrine, the value of one commodity might be
just as powerfully affected by causes operating upon another commodity
as by causes operating upon itself: If _a_ and _b_ be compared, the
value of _a_ will be equally doubled, whether the elementary cost of _a_
be doubled or the elementary cost of _b_ be diminished one half; and so
no doubt it would, if the relation of _a_ to _b_ were alone considered.
But what does this prove? not that the value of _a_ is not very
differently affected in the two cases, according to the most ordinary,
the most useful, and the most correct acceptation of the term value; but
that to confine the term value, as the author does, to the mere relation
of any one commodity to any other, is to render it pre-eminently futile
and useless.
In first separating value in exchange from value in use, it may be
allowable to distinguish it by the title of the power of purchasing
other goods, as Adam Smith has done, though never to interpret this
power as the power of purchasing any one sort of goods, as the author
has done. But the moment we come to inquire into the variations of the
values of commodities at different periods, we must, with any view to
precision and utility, draw a marked line of distinction between a
variation in the power of purchasing derived from causes affecting the
particular purchasing commodities, and the variations in the power of
purchasing which may arise from causes operating upon the purchased
commodities. We must confine our attention exclusively to the former;
and for this purpose refer to some standard which will best enable us to
estimate the variations in the elementary costs of production, and in
the state of the demand and supply of these commodities, as the best
criterion of their varying value, or the varying estimation in which
they are held at different periods.
On these grounds, Mr. Ricardo, consistently with his peculiar theory,
measures the varying values of commodities at different periods by their
producing labour.
And Adam Smith, consistently with his more just and applicable theory,
measures the values of commodities at different periods by the labour
which they will command.
Among the author’s chapters is one (the seventh) entitled “On the
Measure of Value proposed by Mr. Malthus.”
In order to prepare himself for the refutations intended, he sums up his
principal doctrines respecting value; and as they are here brought into
a small compass, I cannot resist the temptation of quoting them in his
own words.
He says, “It has been shown that the value of labour, like that of any
other exchangeable article, is denoted by the quantity of some other
commodity for which a definite portion of it will exchange, and must
rise or fall as that quantity becomes greater or smaller, these phrases
being only different expressions of the same event. Hence, unless labour
always exchanges for the same quantity of other things, its value cannot
be invariable, and, consequently, the very supposition of its being, at
one and the same time, invariable, and capable of measuring the
variations of other commodities, involves a contradiction.”
“It has also been shown, that to term anything immutable in value,
amidst the fluctuations of other things, implies that its value at one
time may be compared with its value at another time, without reference
to any other commodity, which is absurd, value denoting a relation
between two things at the same time; and it has likewise been shown,
that in no sense could an object of invariable value be of any peculiar
service in the capacity of a measure.
“These considerations,” he says, “are quite sufficient to overturn the
claims of the proposed measure, as maintained by its advocate.”[78]
I am most ready to acknowledge that they are amply sufficient for the
purpose, if they are true. But is it possible that doctrines can be
true, which, having no other foundation than a most arbitrary and
unwarranted interpretation of a definition of Adam Smith, lead directly
to the subjoined conclusions?
First; That the value of labour rises or falls as a given portion of it
will exchange for a greater or less quantity of silk or any other
commodity, however unconnected with the labourer’s wants; so that if
silks were to fall to one-half their price, the value of labour would be
doubled.
Secondly; That the value of corn in one year cannot be compared with the
value of corn in another, because value denotes only a relation between
two things at the same time.
And thirdly, That the comparative steadiness in the value of the
precious metals, for short periods, is of no service to them in the
capacity of a measure of value.
The decision of the question, as to the truth of doctrines necessarily
leading to such conclusions, may be safely left to the reader. But to
return to the main subject of the chapter, namely, the measure of value
proposed by me.
In a publication entitled “_The Measure of Value stated and
illustrated_,” I had given reasons, which appeared to me convincing, for
adopting labour, in the sense in which it is generally understood and
applied by Adam Smith, as the measure of value; and further to
illustrate the subject, and bring into one view the results of different
suppositions respecting the varying fertility of the soil and the
varying quantity of corn paid to the labourer, I added a table in which
different suppositions of this kind are made.
In reference to this table the author observes, that “In the same way
any article might be proved to be of invariable value, for instance, ten
yards of cloth. For whether we gave 5_l._ or 10_l._ for the ten yards,
the sum given would always be equal in value to the cloth for which it
was paid, or, in other words, of invariable value in relation to cloth.
But that which is given for a thing of invariable value must itself be
invariable, whence the ten yards of cloth must be of invariable
value.”[79]
This comparison shows either a most singular want of discrimination, or
a purposed disregard of the premises on which the table is founded.
These premises are, that the natural and necessary conditions of the
supply of the great mass of commodities, or, in other words, their
elementary costs of production, are, the accumulated and immediate
labour necessary to produce them, with the addition of the ordinary
profits upon the whole advances for the time they have been advanced;
and that the ordinary values of commodities at different periods,
according to the most customary application of the term, are determined
by the elementary costs of production at those periods, that is, by the
labour and profits worked up in them.
If these premises be just, the table correctly illustrates all that it
was intended to illustrate. If the premises be false, the whole falls to
the ground.
Now, I would ask the author, what sort of resemblance there is between
ten yards of cloth and ten days’ labour? Is cloth the universal and the
main instrument of production? Is the advance of an adequate quantity of
cloth the natural and necessary condition of the supply of all
commodities? Has any one ever thought of calling cloth and profits the
elementary costs of production? or has it ever been proposed to estimate
the values of commodities at different periods by the different
quantities of cloth and profits worked up in them?
If these questions cannot be answered in the affirmative, it is obvious
that what may be true and important with regard to labour, may be
perfectly false or futile in regard to any _product_ of labour.[80] The
whole depends upon the mode of estimating the values of commodities.
It would, no doubt, be an absurd tautological truism merely to state,
that the varying wages of a given quantity of labour will always command
the same quantity of labour; but if it were previously shown that the
quantity of labour which a commodity commands represents exactly the
quantity of labour worked up in it, with the profits upon the advances,
and does therefore really represent and measure those natural and
necessary conditions of the supply, those elementary costs of production
which determine value; then the truism that the varying wages of a given
quantity of labour always command the same quantity of labour, must
necessarily involve the important truth, that the elementary costs of
producing the varying wages of a given quantity of labour must always be
the same.
It is obvious to any person inspecting the table, that the uniform
numbers in the seventh column, illustrating the invariable value of the
wages of a given number of men, might, with perfect certainty, have been
stated without the intermediate steps; but if they had been so stated,
no conclusion respecting the constancy of the value of such wages could
have been drawn. The intermediate steps, which show that the value of
the wages of ten men is there estimated by the causes which had been
previously shown to determine the values of all commodities, can alone
warrant the conclusion that the uniform numbers in the seventh column
imply uniformity of value in the wages.
Mr. Ricardo had stated repeatedly, that the value of the wages of labour
must necessarily rise in the progress of society. He builds, indeed, the
whole foundation of his theory of profits on the rise and fall of the
value of labour. The table shows that, if we estimate the value of wages
by the labour worked up in them, that is, by one element of value, Mr.
Ricardo is right, and the value of wages will really rise as poorer land
is taken into cultivation; but that, if we estimate the value of wages
by the labour and _profits_ worked up in them, that is, by the two
elementary ingredients of value, the value of wages will remain the
same.
The author says that, from the remarks he has made, the reader will
perceive that Mr. Malthus’s “Table illustrating the invariable value of
labour,” absolutely proves nothing;[81] and he concludes his chapter
with observing, that his “cursory review evinces that the formidable
array of figures in the table yields not a single new or important
truth.”[82]
I was not aware that it was ever expected from a tabular arrangement,
that it should afford logical proofs of new propositions; but, if the
author means that, taking the whole publication together, it contains
nothing new or important, though I may be bound to believe it in
relation to his own reading and his own views, I cannot help doubting it
a little in regard to the reading and views of many others; and I am
quite certain that, with regard to myself, the view I there took of the
subject of value, and of the reasons for adopting labour as its measure,
was, in many of its parts, quite new to me a year before the
publication.
In the first place; I had nowhere seen it stated, that the ordinary
quantity of labour which a commodity will command must represent and
measure the quantity of labour worked up in it, with the addition of
profits. But, as soon as my attention was strongly drawn to this truth,
the labour which a commodity would ordinarily command appeared to me in
a new light. I had before considered labour as the most general and the
most important of all the objects given in exchange, and, therefore, by
far the best measure of the general power of purchasing of any one
object; but after I became aware that, by representing the labour worked
up in a commodity, with the profits, it represented the natural and
necessary conditions of its supply, or the elementary costs of its
production, its importance, as a measure, appeared to me very greatly
increased.
Secondly; I had nowhere seen it stated that, however the fertility of
the soil might vary, the elementary costs of producing the wages of a
given quantity of labour must always necessarily be the same. Colonel
Torrens, in adverting to a measure of value, says, “In the first place,
exchangeable value is determined by the cost of production; and there is
no commodity, the cost of producing which is not liable to perpetual
fluctuation. In the second place, even if a commodity could be found
which always required the same expenditure for its production, it would
not, therefore, be of invariable exchangeable value, so as to serve as a
standard for measuring the value of other things. Exchangeable value is
determined, not by the absolute, but by the relative, cost of
production.”[83]
I had been convinced, however, that, with a view to superior accuracy
and utility, and a more complete conformity to the language and practice
of society, in estimating the varying values of commodities for short
periods, it was necessary to separate the variations in the power of a
commodity to purchase, into two parts; the first, derived from causes
operating upon the commodity itself; the second, from causes operating
upon other commodities; and, in speaking of the variations in the
exchangeable value of a commodity, to refer only to the former. In this
case it is obvious that, according to Colonel Torrens, we should possess
a measure of value if we could find an object the cost of producing
which was always the same.
Now it is shown, in the “_Measure of value stated and illustrated_,”
that the conditions of the supply of labour, or the elementary costs of
producing the corn wages of a given number of men, estimated just in the
same way as we should estimate the elementary costs of producing cloth,
linens, hardware, or any other commodity, must of necessity always
remain the same.
I own that these two necessary qualities of the labour, which
commodities will _ordinarily_ command, were practically new to me; and,
when forced on my attention, and accompanied by the conviction above
described, as to the most correct and useful definition of value, made
me view labour as a measure of value, so far approaching towards
accuracy, considering the nature of the subject, that it might fairly be
called a standard.
The publication was also marked by another peculiarity, which I cannot
but consider as of some importance: namely, the constant use of the term
_labour and profits_, instead of the customary one, _labour and
capital_.
It must be allowed that the expression _labour and capital_ is
essentially tautological. In every definition of capital I have met
with, the means of commanding labour are included; and there can be no
doubt that machinery and raw materials require labour for their
production of the same general description, and usually in as large a
proportion, as the labour advanced by the last capitalist. Speaking
loosely, we may indeed use the expression _labour and capital_, meaning
by capital, when so used, all that part of the general description of
capital which does not consist of the means of commanding the immediate
labour required. But when we are engaged in an inquiry into the elements
of value, nothing can be more unphilosophical than to talk of labour and
capital. Excluding rent and taxes, the only elements concerned in
regulating the value of commodities are labour and profits, including,
of course, in such labour, the labour worked up in the raw materials,
and that portion of the machinery worn out in the production; and
including in the profits, the profits of the producers of the raw
materials and machinery. To say that the values of commodities are
regulated or determined by the _quantity_ of _capital and labour_
necessary to produce them is essentially false. To say that the values
of commodities are regulated by the quantities of labour _and profits_
necessary to produce them is, I believe, essentially true. And if so, it
was a point of some importance to substitute the expression _labour and
profits_ for the customary one of _labour and capital_.
I have been detained longer than I intended by the Critical Dissertation
on the Nature, Measures, and Causes of Value. There is still matter of
animadversion remaining; but were I to go on I should tire my readers,
if I have not done it already.
The author, when not under the influence of his peculiar definitions,
makes some very just observations; and the work is exceedingly well
written; which makes it a matter of greater surprise that its main
proposition should be so strikingly adverse to the principle of utility,
and so peculiarly calculated to retard the progress of that science
which it must have been intended to promote.
I do not think it necessary to the object I have in view, to proceed
further with these remarks on the definition and use of terms among
political economists. What I have already said, if just, will be
sufficient to show that much uncertainty has arisen from our[84]
negligence on this important point, and much improvement might be
expected from greater attention to it. I shall now, therefore, proceed
to define some of the principal terms in political economy, as nearly as
I can, according to the rules laid down. But before I begin, I think it
may be useful to give a summary of the reasons for adopting the
subjoined definition of the measure of value.