ricardo to malthus
[Reply to 540.—Answered by 545]
Gatcomb Park, Minchinhampton 15 Augt. 1823
My Dear Malthus
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 argument 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 3 times 2 are 6, and that twice 3 are not 6,—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 shew that the greater 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 chuse 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 20 days labour and may command 30 days labour. In England it may be produced by 25 days labour and command only 29. 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 qrs. of wheat and an increase of also in his cattle and implements, would not his profits be 10 pct. whatever might be the price of labour the following year? If the 110 qrs. could command no more labour than the 100 qrs. 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 £100, he would have 10 pct. profit if the value of his produce was £110. 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 favor 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 £110 than when they had £100, although the larger sum may not when it is realised 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 8, 7, or 6 divisions it will always be divided into two portions, variable portions, but always 2. If the division be in 8 the portions may be 6 and 2, 5 and 3, 4 and 4, 7 and one. If 7 they may be 6 and 1, 5 and two, 4 and 3, 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 8, 7 or 6? 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 10 bushels of wheat for the same quantity of his labour for which at another time I give him 8 bushels: Wheat according to you falls in the proportion of 10 to 8: 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 10 bushels at one time to 8 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 shew the connection by any thing 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 that 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 enter 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 Yrs.