437.: ricardo to trower1[Reply to 435.—Answered by 445] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 9 Letters 1821-1823 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 9 Letters 1821-1823.
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
First published by Cambridge University Press in 1951. Copyright 1951, 1952, 1955, 1973 by the Royal Economic Society. This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
ricardo to trower
[Reply to 435.—Answered by 445]
Gatcomb Park Minchinhampton 4 July 1821
My Dear Trower
Before I left London I gave directions to Mr. Mitchell, at the Vote Office, to send you a copy of the printed minutes of Evidence of the Agricultural Committee as soon as it should be obtainable, which I have no doubt he will do. I hope that you are satisfied with a great part of the Report, there are some absurdities and contradictions in it, but considering how the committee was formed, and the opposition which was given to sound principles by the landed gentlemen, I think it on the whole creditable to the Committee.
I am glad that you think I have vindicated my book against Malthus’s attacks, in my notes:—if I have not, it is owing to my weakness, and not to his strength, for I am quite sure that his book abounds with inconsistencies and contradictions. I am not surprised that you should not agree with me in my definition of exchangeable value, but when you say that “the labour expended upon a commodity is the measure by which the accuracy of its exchangeable value is ascertained and constantly regulated” you admit all I contend for. I do not, I think, say that the labour expended on a commodity is a measure of its exchangeable value, but of its positive value. I then add that exchangeable value is regulated by positive value, and therefore is regulated by the quantity of labour expended.
You say if there were no exchange of commodities they could have no value, and I agree with you, if you mean exchangeable value, but if I am obliged to devote one month’s labour to make me a coat, and only one weeks labour to make a hat, although I should never exchange either of them, the coat would be four times the value of the hat; and if a robber were to break into my house and take part of my property, I would rather that he took 3 hats than one coat. It is in the early stages of society, when few exchanges are made, that the value of commodities is most peculiarly estimated by the quantity of labour necessary to produce them, as stated by Adam Smith.
I confess I do not rightly understand what meaning you attach to the words “exchangeable value,” when you say that “the labour which a commodity can command is what actually constitutes its exchangeable value.” A yard of super-fine cloth we will suppose can command a month’s labour of one man, but in the course of a year, from some cause, it commands only a fortnight’s labour of one man, you are bound to say that the exchangeable value of cloth has fallen one half. You are bound to say this whether the cloth be produced with a great deal less labour in consequence of the discovery of improved machinery, or the food and some of the other necessaries of the labourer be produced with so much difficulty that wages rise and therefore labour rises as compared with cloth and many other things. You would say then cloth has fallen one half in exchangeable value although it should exchange for precisely the same quantity of gold, silver, iron, lead, hats, tea, sugar and a thousand other things and you would use precisely the same language if by the discovery of machinery cloth was produced with great additional facility and consequently would exchange for only one half the same quantity of gold, silver, iron, lead, hats, tea, sugar and a thousand other things. Now the difference between you and me is this: in the latter case I should say with you that cloth had fallen to half its former exchangeable value and my proof would be that it would exchange for only half the former quantity of labour and of all other things, but in the other case I should say cloth has not altered in exchangeable value because it will exchange for precisely the same quantity of all other things. It is true it will exchange for more labour, and why? because labour has fallen in exchangeable value, and the proof is it will exchange for only half the quantity of gold, silver, lead, iron and all other things, excepting perhaps corn and some other necessaries, which have also fallen in value. I cannot approve of your saying that cloth has fallen in exchangeable value merely because it will exchange for less labour, no more than I can approve of the same terms being applied to the fact of its exchanging for less salt, or for less sugar. Surely such a use of the words exchangeable value tends to perplex and mislead. Labour rising in value is one thing, commodities falling in value is another, but once admit your language and these 2 different things are confounded. It would be quite accurate to say in both cases that cloth had fallen in exchangeable value estimated in labour, as it would be to say it had fallen in value estimated in salt if such should be the fact, but then the medium by which you measure exchangeable value is named and you only express a fact—this is very different however from saying that cloth has fallen in exchangeable value without mentioning the medium in which its alteration in value is specifically confined.
In what I have said respecting natural and market price I have obviated your objections in regard to the difference between cost and value. Cost is an ambiguous word and sometimes includes the profit of stock, and sometimes excludes it. In the way you use it, and I think properly use it, there is no ambiguity, you include in it the profits of stock.
I cannot but flatter myself with the hopes of a continuance of peace in Europe—the agitations which at present exist will I think subside, and we shall witness a general course of prosperity. When our purses are again filled indeed, we may as usual become quarrelsome, but I hope nations are becoming wiser, and are every day more convinced that the prosperity of one country is not promoted by the distress of another—that restrictions on commerce are not favorable to wealth, and that the particular welfare of each country, as well as the general welfare of all, is best encouraged by unbounded freedom of trade, and the establishment of the most liberal policy. I must do our ministers the justice to say that I believe they view these questions in their true light and would make great improvements in our commercial code if they were not thwarted and opposed by the narrow and selfish policy of the particular interests which are so powerfully exerted in the H. of Commons to check improvement and support monopolies.—
Mrs. Ricardo unites with me in best regards to Mrs. Trower and yourself.
Ever Truly Yrs