malthus to ricardo
[Reply to 531.—Answered by 536]
[St. Catherine’s, Bath, ca. 21 July 1823]
My dear Ricardo,
I am much obliged to you for your letter, and am glad to find that you are engaged to give the subject of value a good deal of consideration during your holidays. Under these circumstances you will not probably consider as an interruption any remarks which may have a tendency, however slight, to throw light on the general question.
I cannot agree with you in thinking it essential to a good measure of value that it should be produced under circumstances similar to the commodities which it is to measure. In the case in question, it appears to me that if the rate of profits be allowed to affect the value of commodities, that is, if as you have elsewhere stated, the value of a commodity is composed of labour and profits, it is impossible that a commodity which consists partly of capital employed for a certain period can ever properly measure the variations in the natural and absolute values of commodities, arising from the variations of profits. Supposing cloth and gold for instance to be produced under the same circumstances, that is with the same quantity of labour and capital employed for the same time, and profits to fall from 20 to 10 per cent, it is quite obvious that your money measure, or the gold, would not express the quantity of labour and profits worked up in the cloth. A considerable change would have taken place in this quantity which would not in the slightest degree be ma[t]ched by your measure, though it would be accurately estimated by mine.
The whole therefore seems to depend upon the question, whether the natural and absolute values of commodities in the place and at the time in which they are produced, are, or are not, composed of the accumulated and immediate labour worked up in them with the profits upon that labour for the time that it has been employed. And that they must be so composed, seems to follow necessarily and unavoidably from the general concession that where labour is concerned without capital or time, the natural and absolute values of commodities will be determined by the quantity of labour employed on them. Because, if in any place the commodities produced without capital have their natural and absolute values determined by the labour worked up in them, the other commodities produced with capital and time, and the same quantity of labour, must exceed the former commodities in natural and absolute value exactly by the profits for the time the advances have been made, and these profits can only be reckoned in labour because the advances consist only of labour. But if the natural and absolute values of commodities must be determined by labour and profits, whenever time is concerned, and if further it clearly appears that the labour which a commodity will command must be precisely the same as the labour worked up in it with the addition of the profits, it follows incontestably that a given quantity of labour must always be of the same natural and absolute value, that is, if we estimate its value in the same way as we estimate the value of all other commodities, a given quantity of labour will always be composed of the same quantity of labour and profits united.
I quite agree with you that I have no right to choose a particular object for my measure and to estimate every thing by it, unless I can shew its peculiar and preeminent fitness for the purpose. But this, it appears to me, I have done to those who with the requisite preliminary knowledge, will impartially give due attention to the subject. Indeed I think I have done it in the short statement just made, to which I own, after all that I have heard since my pamphlet has been published, I am quite unable to anticipate a valid objection.
The general concession that the value of commodities is determined by the quantity of labour employed upon them, when time is not concerned, is the foundation on which I rest. This foundation once allowed, puts an end at once to all idea of arbitrary selection in taking labour as a measure. The other steps follow as strictly as any proposition in Euclid. The proof which may be said almost to be of the class called intuitive is in reality complete without the table or the parts immediately connected with it. These parts merely supply a further confirmation of the truth by answering the following question. How comes it about that labour should remain of the same value in the progress of society, when it is known that it must require more labour to produce it? And the answer to this question is, that as profits depend upon the proportion of the whole produce which goes to labour, it must necessarily happen that rease of value occasioned by the additional quantity of labour will be exactly counterbalanced by the diminution in the amount of profits, leaving the value of the labour the same.
I own it appears to me rather odd that you and Maculloch should particularly object to my doctrine on account of its making the same quantity of labour of the same value while the condition of the labourer is very different, when according to your own doctrines the value of labour in America is actually lower than the value of labour in the Netherlands. I however expressed myself without sufficient care, when I intimated that if any number of labourers were imported or exported the value of labour would remain the same. This will only be true after the supply comes to be affected by the increased or diminished number of labourers. If the corn obtained by 20 men be divided among ten, then the value of the wages of 10 men will be much less than the quantity of labour employed to produce them with the addition of profits, and vice versa. The truth of my proposition requires as I have elsewhere stated (p. 30.) that the wages of the labourers who produce the wages to be advanced should be the same as the wages advanced; which will always be the case except in very violent and unnatural changes, and would be the case in the instances supposed after the first year.
The only difficulty in the doctrine, as it appears to me, arises from the different efficiency of labour in different countries and at different periods. It is certainly true that upon the principle of demand and supply which is the foundation of all value, the commodities of different countries do not exchange with each other according to their natural and absolute values in each country. They must be affected both by the greater abundance arising from greater efficiency, and by the influence of the practical measure of value chosen by the commercial world. The distribution of the precious metals which goes so far in regulating the rate at which commodities practically exchange with each other, is greatly though not wholly influenced by the different efficiency of labour. It may be said indeed to be wholly influenced by it, if we add—(efficiency) in the purchase of the precious metals.
But all these influences are fully taken into consideration in the following propositions. The natural and absolute value of every commodity in the country and at the time at which it is produced is determined by the labour and profits required to produce it in that place and at that time. And the exchangeable values of all commodities, whenever an exchange can be effected, either in distant countries or in different parts of the same country are universally determined by their natural and absolute values multiplied into the excess of the value of money in one place above the other,—on the supposition of the value of money being estimated by the quantity of labour and profits necessary to purchase it at each place; and I own I do not see how we can estimate the value of money at any particular place or time in any other way, with any approach towards correctness. I cannot help considering these two propositions respecting natural and exchangeable value as very simple and useful. Of course when the value of money is the same, the natural value will also be the exchangeable value.
You are quite right in what you say about India. No mode of procuring the precious metals can ever maintain them of the same value in different countries. And it is for this very reason that I would on no account substitute money for labour.
I fear I must have dreadfully tired you. We leave St Catharines for Town on friday next. I must be at the College on monday. We are much obliged to you for your kind invitation, but as usual towards the end of a vacation we are hurried, and are unable to accept it.
Mrs M joins in kind regards to Mrs Ricardo.
Ever truly Yrs
T R Malthus.
P.S. At different periods in the same country as no exchange can be effected, we can only refer to natural and absolute value; and then estimate the relative value of money, not with a view to an exchange, but to the different power of money at each period in reference to commodities which have not changed in natural value.