It is a prudent step in you to withdraw your concession, for I am sure
that your theory could not stand with it. You find fault with my measure
of value, you say, because it varies with the varying profits of other
commodities. This is, I acknowledge, an imperfection in it when used to
measure other commodities in which there enters more or less of profits
than enters into my measure; but you do not appear to see that against
your measure the same objection holds good, for your measure contains no
profits at all, and therefore never can be an accurate measure of value
for commodities which do contain profits. If I had no other arguments to
offer against your measure, this which I am going to mention _when used
to you_ would be fatal to it. You say that my measure cannot measure
commodities produced by labour alone. Granted; but, if it be true, how
can your measure measure commodities produced with labour and profits
united? You might just as well say that three times two are six and that
twice three are not six, or that a foot measure was a good measure for
a yard but a yard was not a good measure for a foot. If your measure
will measure my commodity accurately, mine must do the same by yours.
These are identical propositions, and I confess I see no answer that can
be made to me. The fact really is that no accurate measure of absolute
value can be found. No one doubts the desirableness of having one; but
all we can ever hope to get is one tolerably well calculated to measure
the greatest number of commodities, and therefore I should have no
hesitation in admitting your measure to be the best, under all
circumstances, if you could show that the greatest number of commodities
were produced by labour alone without the intervention of capital. On
the other hand, if a greater number of commodities are produced under
the circumstances which I suppose to attend the production of the
commodity which I choose for my measure, then mine would be the best
measure. You will understand that in either case I suppose a degree of
arbitrariness in the selection, and I only contend that it would be best
employed in selecting mine.
When you say that my great mistake is in considering commodities made up
of labour alone and not of labour and profits, I think the error is
yours, not mine, for that is precisely what you do; you measure
commodities by labour alone, which have both labour and profits in them.
You surely will not say that my money, produced by labour and capital,
and by which I propose to measure other things, omits profits. Yours
does; what profits are there in shrimps or in gold picked up by daily
labour, on account of the labourer, on the sea-shore? How much more
justly then might this accusation be brought against you!
You object to me that I am inconsistent in wishing to leave the
consideration of the value of money here and in India out of the
question, when speaking of the value of labour and of commodities in
this country and in India. I, you say, to leave out the consideration
of the value of the precious metals, who have proposed a measure formed
of them! There is nothing inconsistent in this. In examining your
proposition which rejects my measure and adopts another, I must try it
by your doctrines and not by mine which you reject. A conclusion founded
on my premises might be a just one, but, if you dispute my premises and
substitute others, the conclusion may no longer be the same; and in
examining your doctrines I must attend only to the conclusions to which
your premises would lead me. You ask: 'Would you really say that cloth
and muslin were not dear in India where they cost four or five times as
much labour as in England?' You know I would not, because I estimate
value by the quantity of labour worked up in a commodity; but by the
cost in labour of cloth and muslin in India you do not mean the quantity
of labour actually employed on their production, but the quantity which
the finished commodity can command in exchange. The difference between
us is this; you say a commodity is dear because it will command a great
quantity of labour, I say it is only dear when a great quantity has been
bestowed on its production. In India a commodity may be produced with
twenty days' labour, and may command thirty days' labour. In England it
may be produced by twenty-five days' labour and command only
twenty-nine. According to you this commodity is dearer in India,
according to me it is dearer in England.
Now here is my objection against your measure as a general measure of
value, that, notwithstanding more labour may be bestowed on a commodity,
it may fall in value estimated in your measure; it may exchange for a
less quantity of labour. This is impossible when you apply your measure
legitimately to those objects only which it is calculated to measure.
Would it be possible, for example, to apply more labour to the
production of shrimps or to pick up grains of gold on the sea-shore,
and yet to sell those commodities for less labour than before? Certainly
not; but it would be quite possible to bestow more labour on the making
of a piece of cloth, and yet for cloth to exchange for a less quantity
of labour than before. This is another argument in my mind conclusive
against the expediency of adopting your measure.
I repeat once more that the same trade precisely would go on between
India and Europe, as far as regards commodities, if no such thing as
money made of gold and silver existed in the world. All commodities
would in that case as well as now command a much larger quantity of
labour in India than in England; and, if we wanted to know how much
more, either of those commodities, as well as money, would enable us to
ascertain. The same thing which makes money of a low value in England
makes many other commodities of a low value there; and the political
economist in accounting for the low value of one accounts at the same
time for the low value of the others. I do not object to accounting for
the low value of gold in particular countries; but I say it is not
material to an enquiry into a general measure of value, particularly if
it be itself objected to as forming any element in that measure.
Suppose a farmer to have a certain quantity of cattle and implements and
a hundred quarters of wheat,--that he expends this wheat in supporting a
certain quantity of labour, and that the result is 110 quarters of wheat
and an increase of one-tenth also in his cattle and implements; would
not his profits be 10 per cent. whatever might be the price of labour
the following year? If the 110 quarters could command no more labour
than the 100 quarters could command before, he would, according to you,
have made no profits; and you are right if we admit that yours is a
correct measure of value; he would have a profit in kind but no profit
in value. If wheat was the measure of value, he would have a profit in
kind, and the same profit in value. If money was the correct measure of
value and he commenced with L100, he would have 10 per cent. profit if
the value of his produce was L110. All these results leave the question
of a measure of value undecided, and prove nothing but the convenience,
in your estimation, of adopting one in preference to another. The
labourer, however, who lived by his labour would find it difficult to be
persuaded that his labour was of the same value at two periods, in one
of which he had abundance of food and clothing, and in another he was
absolutely starving for want. What he might think would certainly not
affect the philosophy of the question; but it would be at least as good
a reason against the measure you propose as that of the farmer in favour
of it, when he found that he had no profits because he had no greater
command of labour, although he might have more corn or more money. You
call every increase of value nominal which is not an increase in the
measure you propose. I do not object to your doing so; but those who do
not agree with you in the propriety of adopting this measure may argue
very consistently in saying they are possessed of more value when they
have L110 than when they had L100, although the larger sum may not when
it is realized command so much labour as the smaller sum did before,
because they not only admit but contend that labour may rise and fall in
value, and therefore in respect to labour he may be poorer, although he
possesses a greater value.
I have said that the value of most commodities is made up of labour and
profits. If this be so, you observe, 'it is as clear as the sun that the
variable wages which command the same quantity of labour must be of the
same value, _because_ they will always cost in their production the same
quantity of labour with the addition of the profits upon that labour.' I
confess that I cannot see the connection of this conclusion with the
premises. Whether you divide a commodity in eight, seven, or six
divisions, it will always be divided into two portions, variable
portions, but always two. If the division be in eight, the portions may
be six and two, five and three, four and four, seven and one. If seven,
they may be six and one, five and two, four and three, and so on. Now
this is my admission. What we want to know is what the number of those
divisions are, or what the value of the commodity is, whether eight,
seven, or six? And have I come a bit nearer to this knowledge by
admitting that whatever the value may be it will be divided between two
persons? Whatever you give to the labourer is made up of labour and
profits, and therefore the value of labour is constant! This is your
proposition. To me it wants every quality of clearness. I find that at
one time I give a man ten bushels of wheat for the same quantity of his
labour for which at another time I give him eight bushels. Wheat,
according to you, falls in the proportion of ten to eight. I ask why?
And your answer is, because 'as the positive value of the labour worked
up in the wages increases, the positive value of the profits (the other
component part of their whole value) diminishes exactly in the same
degree.' Now does this positive value refer to the same quantity of
wheat? Certainly not, but to two different quantities, to ten bushels at
one time, to eight at another. You add: 'If these two propositions[']
(namely the one I have just mentioned and the invariability of labour as
a measure of value) 'can properly be considered as having no connection
with each other, I must have quite lost myself on these subjects, and
can hardly hope to show the connection by anything which I can say
further[']. I hope you do not suspect me of shutting my eyes against
conviction; but, if this proposition is so very clear as it is to you, I
cannot account for my want of power to understand it. I still think that
the invariability of your measure is the _definition_ with which you
set out, and not the _conclusion_ to which you arrive by any legitimate
argument. My complaint against you is that you claim to have given us an
accurate measure of value, and I object to your claim, not that I have
succeeded and you have failed, but that we have both failed, that there
is not and cannot be an accurate measure of value, and that the [most
th]at any man can do is to find out a measure of value applicable in a
great many cases, and not very far deviating from accuracy in many
others. This is all I have pretended to do, or now pretend to have done;
and, if you advanced no higher claims, I would be more humble; but I
cannot allow that you have succeeded in the great object you aimed at.
In answering you I am really using those weapons by which alone you say
you can be defeated, and which are I confess equally applicable to your
measure and to mine, I mean the argument of the non-existence of any
measure of absolute value. There is no such thing; your measure as well
as mine will measure variations arising from more or less labour being
required to produce commodities, but the difficulty is respecting the
varying proportions which go to labour and profits. The alteration in
these proportions alters the relative value of things in the degree that
more or less of labour or profit enters into them; and for these
variations there has never been, and I think never will be, any perfect
measure of value.
I have lost no time in answering your letter, for I am just now warm in
the subject, and cannot do better than disburthen myself on paper.
Ever, my dear Malthus,
Truly yours,
DAVID RICARDO.