543.: ricardo to mcculloch1[Reply to 541] - 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.
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ricardo to mcculloch
[Reply to 541]
My Dear Sir
As you express some interest in the discussion going on between Malthus and myself I send you 2 more letters. Return them at your convenience. I will write shortly in answer to your observations on value.—
Gatcomb Park 15 Aug 1823
[The following unfinished draft of a letter to McCulloch was probably written on 15 Aug. 1823, but on that day Ricardo confined himself to sending to McCulloch the above short letter with its enclosures; a full reply went only with letter 544 of 21 August which includes most, though not all, the arguments contained in this draft. Hitherto unpublished; MS in Mill-Ricardo papers.
My Dear Sir
I sent you a few days ago a letter which Mr. Malthus wrote to me, in answer to one which I had written to him, and my reply to it, by which you will be able to judge of the controversy between him and me respecting the merits of the measure of value which he proposes. I find by your letter that you adhere to the proposition that value is to be estimated by quantities of labour, but I cannot help thinking, that, even according to your statement, that language is not quite accurate. The continued agency of a machine worth only 2/may, after a very long period, produce a commodity worth £100, but surely strictly speaking there is no more labour in the commodity than what was originally bestowed on the two shilling machine. We all acknowledge that 2/, with its annual accumulations, at a compound rate of interest or profit, will at last yield £100, and perhaps there would be no difficulty in shewing that a commodity so produced is not therefore precluded from being accurately measured by a commodity which has an equal capital employed on it in the support of labour. But the real difficulty is this: here are two commodities both produced by labour and by labour only; one has been produced and brought to market in one day, the other in 365 days. One is worth a pound but the other is worth much more than £365. If profits are 5 pct., it is worth £383. 5–; if 10 pct. £401. 10–which of these shall be our measure of value? If we chuse the former, which is Mr Malthus’ measure, and suppose the gold from which his money is made to be picked up by daily labour on the sea shore, the relative price of a commodity produced by the same quantity of labour, in one year, when profits are 5 pct., will be as I have just said £383. 5. Let every thing remain the same, except profits, which shall rise to 10 pct., and the commodity immediately rises to £401. 10. But if we chuse a commodity for our measure, gold for example which we will suppose cannot be brought to market in less than a year although it has precisely the same quantity of labour in it as Mr Malthus’s gold then though a commodity produced in a day may be still worth £1, and the gold produced in a year 383 times and a quarter that value, yet when profits rise to 10 pct. gold does not alter in value and still is not 383 times and a quarter times the value of the commodity produced by daily labour, nor yet 401 times and a half.
A commodity produced in two years with the same quantity of labour that another is produced in one is more valuable than the commodity produced in one, and a commodity produced with the labour of one man for 52 weeks is more valuable than a commodity produced by the labour of 52 men for one week. I know how you explain this you say you estimate the value of the commodity not by the quantity actually worked up in the commodity but by the capital which employs it, and therefore if equal capitals are employed you have a right to say equal quantities of labour are employed, and a capital employed for two years though of precisely the same amount as one employed for one year may be said to employ more labour than a capital employed for one, but this is adopting Torrens view and saying that commodities are valuable in proportion to the capitals employed upon them and not in proportion to the actual labour employed. And there are great difficulties to get over even if we admitted this language. You and I are both manufacturers, you produce your commodity in two years I mine in one—we employ equal capitals. Suppose your commodity to be two and a ¼ times the value of mine and that nothing occurs to interfere with the facility or difficulty of producing either commodity but that labour rises and profits fall. If your commodity is the measure of value mine will rise, if mine is yours will fall. The two commodities change in relative value and yours is no longer two and a quarter times the value of mine. Can it be said that the proportions of capital we employ are in any way altered? or the proportion of labour? certainly not, nothing has altered but the rate of distribution between employer and employed and this affects us differently—profits have fallen and there is a larger proportion of profits in your commodity than in mine—this and this only is the reason why they alter in relative value. Now if you said “of all commodities I know, or can conceive, one, in which labour enters for a certain time, and which always requires the same quantity of labour to be bestowed upon it, is the best measure of value[”], that I should understand, but it is quite a different proposition from the one which you actually maintain. But then you must not say that it is a perfect or an accurate measure of value for if you did Malthus might retort on you as I do on him and ask you how your measure could be an accurate measure for his shrimps, if his shrimps were not also an accurate measure for yours when he withdrew, from his shrimps, the only cause of variation which you acknowledge. The fact is there is not any measure of absolute value which can in any degree be deemed an accurate one. When we measure the length of a piece of linen it is one simple element only we measure—the length of the linen nor of the measure is not liable to alter with the weight or with any other of the properties either of the linen or of its measure —not so with its value—value is made up of two elements, wages and profits, and therefore can be measured accurately only by a commodity (having value) in which these elements are mixed up in precisely the same proportions as in the linen itself. To speak rigidly what is fit to measure one commodity is fit to measure but few others, but if we are not in want of this great nicety we shall make the nearest approximation to a correct measure of value by chusing a commodity for our measure which is produced under circumstances with respect to time nearly approaching to those under which the greatest number of commodities are produced, (for it is time only which makes any difference in the proportions in which profits and wages enter into the value of different commodities) and which shall itself be invariable as far as variations may be caused by variable quantities of labour being employed on its production.
You estimate value by the quantity of labour bestowed on the agent of production and not by the quantity bestowed on the thing produced—this I repeat is Torrens mode of estimating value for it is in fact saying that commodities are valuable according to the value of the capital employed on production and the time for which it is employed. This is however a very different thing from saying that commodities are valuable according to the quantity of labour worked up in them. But what means have you of ascertaining the equal value of these agents? If all men employed the same agents of production they might be compared, their proportional quantities would indicate their proportional values, but one man employs wine of last year as a capital, which he proposes to sell with a year’s profit at the end of this,—another employs food and clothing for the same period,—the relative values of food and clothing and of wine just made alter on account perhaps of a demand for labour, which unequally affects the value of these commodities. These then are no longer equal capitals, but what has made them unequal? not any thing connected with the quantity of labour necessary to produce them, for that is just the same as before. They both command less labour than before, but in unequal degrees. Shall we estimate their value by this power over labour? we then adopt Malthus measure. Though one has fallen 10 pct. more than the other estimated in labour, it has fallen only 5 pct. more estimated in some other thing, and there may be some perhaps in which one has not varied at all. How are we to measure these differences and say which of all these commodities is to be the measure by which all shall be referred, and which shall be itself declared to be invariable. What are the circumstances which are to give it this character of invariability. This is the test to which I would bring all your speculations, and if you propose a commodity as a measure of value I should ask you to tell me on what grounds you advanced the pretensions of its being itself an invariable commodity, and if you made no such pretensions for it I should then ask what circumstances would in your opinion make it such?]