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• Advertisement to the Second Edition.
• Memoir of Robert Malthus.
• Principles of Political Economy.
• Introduction.
• Book I
• Chapter I.: Of the Definitions of Wealth and of Productive Labour.
• Section I.—: On the Definitions of Wealth.
• Section II.—: On Productive Labour.
• Chapter II.: On the Nature, Causes, and Measures of Value.
• Section I.—: On the Different Sorts of Value.
• Section II.—: Of Demand and Supply As They Affect Exchangeable Value.
• Section III.—: Of the Cost of Production As Affected By the Demand and Supply, and On the Mode of Representing Demand.
• Section IV.—: Of the Labour Which Has Been Employed On a Commodity Considered As a Measure of Its Exchangeable Value.
• Section V.—: Of the Labour Which a Commodity Will Command, Considered As a Measure of Value In Exchange.
• Section VI.—: On the Practical Application of the Measure of Value, and Its General Use and Advantages.
• Section VII.—: On the Variations In the Value of Money In the Same, and Different Countries.
• Chapter III.: Of the Rent of Land.
• Section I.—: Of the Nature and Causes of Rent.
• Section II.—: On the Necessary Separation of the Rent of Land From the Profits of the Cultivator and the Wages of the Labourer.
• Section III.—: Of the Causes Which Tend to Raise Rents In the Ordinary Progress of Civilized and Improved Societies.
• Section IV.—: Of the Causes Which Tend to Lower Rents.
• Section V.—: On the Dependance of the Actual Quantity of Produce Obtained From the Land, Upon the Existing Prices of Produce, and Existing Rents, Under the Same Agricultural Skill and the Same Value of Money.
• Section VI.—: Of the Connexion Between Great Comparative Wealth, and a High Comparative Price of Raw Produce.
• Section VII.—: On the Causes Which May Mislead the Landlord In Letting His Lands, to the Injury Both of Himself and the Country.
• Section VIII.—: On the Strict and Necessary Connection of the Interests of the Landlord and of the State.
• Section IX.—: General Remarks On the Surplus Produce of the Land.
• Chapter IV.: Of the Wages of Labour.
• Section I.—: On the Definition of the Wages of Labour, and Their Dependance Upon Supply and Demand.
• Section II.—: Of the Causes Which Principally Affect the Habits of the Labouring Classes.
• Section III.—: Of the Causes Which Principally Influence the Demand For Labour, and the Increase of the Population.
• Section IV.—: A Review of the Corn Wages of Labour From the Reign of Edward III.
• Section V.—: On the Conclusions to Be Drawn From the Preceding Review of the Prices of Corn and Labour During the Five Last Centuries.
• Chapter V.: Of the Profits of Capital.
• Section I.—: Of the Nature of Profits, and the Mode In Which They Are Estimated.
• Section II.—: Of the Limiting Principle of Profits.
• Section III.—: Of the Regulating Principle of Profits.
• Section IV.—: Of Profits As Affected By the Causes Practically In Operation.
• Section V. —: Remarks On Mr. Ricardo’s Theory of Profits.
• Chapter VI.: Of the Distinction Between Wealth and Value.
• Book II.
• Chapter I.: On the Progress of Wealth.
• Section I.—: Statement of the Particular Object of Inquiry.
• Section II.—: Of the Increase of Population Considered As a Stimulus to the Continued Increase of Wealth.
• Section III.—: Of Accumulation, Or the Saving From Revenue to Add to Capital, Considered As a Stimulus to the Increase of Wealth.
• Section IV.—: Of the Fertility of the Soil, Considered As a Stimulus to the Continued Increase of Wealth.
• Section V.—: Of Inventions to Save Labour, Considered As a Stimulus to the Continued Increase of Wealth.
• Section VI.—: Of the Necessity of a Union of the Powers of Production With the Means of Distribution, In Order to Ensure a Continued Increase of Wealth.
• Section VII.—: Of the Distribution Occasioned By the Division of Landed Property Considered As the Means of Increasing the Exchangeable Value of the Whole Produce.
• Section VIII.—: Of the Distribution Occasioned By Commerce, Internal and External, Considered As the Means of Increasing the Exchangeable Value of Produce.
• Section IX.—: Of the Distribution Occasioned By Personal Services and Unproductive Consumers, Considered As the Means of Increasing the Exchangeable Value of the Whole Produce.
• Section X.—: Application of Some of the Preceding Principles to the Distresses of the Labouring Classes Since 1815, With General Observations.

Section VI.—

On the Practical Application of the Measure of Value, and its general Use and Advantages.

The practical application of the measure of value proposed, will not in general be difficult. In this respect it has a prodigious superiority over the general power of purchasing, a measure which it is impossible practically to apply with any approach towards precision. But when we confine our view to the power of purchasing arising from intrinsic causes, we are able to measure the variations in this power, by the varying quantity of a specific object for which it will exchange; and the practical application of this object is rendered easy, by referring to the money prices of commodities and labour.

Thus, if the relations of two or three commodities in exchange, such as cloth, silver, and corn, for instance, have altered in this country, since the time of Henry VII., and we wish to know, in which, and to what extent in each, a change of value has taken place, we must begin by inquiring what were the money prices of cloth, wheat, and of common labour in the time of Henry VII. compared with what they are now.

It appears from a statute passed in the fourth of Henry VII. that the ordinary price of a broad yard of the finest scarlet grained, or other grained cloth of the finest make, was 16 shillings, and 16 shillings at that time contained the same quantity of silver as 24 of our shillings, before the late new coinage. At present there is reason to believe that cloth of the same, or probably of superior quality, could be obtained for 20 shillings. But the proportion between 24 and 20 would express merely the relation between cloth and silver at these different periods, and would give us no sort of information as to the relative difficulty with which each of these objects was obtained, or the degree in which one or both had altered in value. For this purpose we must refer to the money prices of standard labour. The money price of common agricultural labour in the time of Henry VII. was 4 pence a day, containing as much silver as 6 pence of our present money. If we take the present money wages of common labour at 10 shillings a week, or 20 pence a day, and compare the price of cloth with this price of labour, it will appear that a yard of fine cloth in the time of Henry VII. would command 48 days labour, and a yard of fine cloth at the present time 12 days labour; from which we may safely infer, that supposing these prices to have been what Adam Smith calls natural prices, the difficulty of obtaining cloth of the same quality, or the ordinary supply of cloth compared with the demand, had increased four times.

Comparing in the same manner silver with labour, it appears that as in the time of Henry VII. 6 pence would command the same quantity of labour of the same character, as 20 pence at the present time, silver will appear to have fallen in value 3⅓ times. And further, if we compare corn and labour at these two periods, it will appear that wheat instead of falling in value like cloth and money, had risen very considerably. In the time of Henry VII. the price of labour as before stated was 4 pence a day, and the average price of the quarter of wheat was 6s. 3¼d. from which it appears that a quarter of wheat would only purchase 18⅘ days labour, whereas taking labour at 20 pence a day, and the present price of wheat at 60 shillings a quarter, the quarter will command 36 days labour. The labourer in the time of Henry VII. could purchase a peck and of a peck by a day’s labour; at present he can only purchase of a peck; and altogether the value of wheat has risen in the proportion of 10 to above 19, or has nearly doubled.*

We must of course proceed in the same manner in estimating the values, and the changes in the values of commodities in different countries.

It is proper, however, to mention, that in taking the average money price of labour in different countries, and at different times, a caution is necessary similar to that which is given by Adam Smith, in speaking of the general equality of wages. He very justly observes, that they must be in their natural and ordinary state, and the sole or principal support of the labourer; and particularly remarks, that the labour of cotters will often be cheaper in appearance than it is in reality. In the cotter system, the labourers receive a certain portion of land from a landlord or farmer, which is paid for in labour, at a very low additional remuneration when that labour is called for. During the greater part of the year, however, their labour is not wanted, and the cultivation of their own little portion of land not being sufficient to occupy the time which is left at their own disposal, they are generally willing to offer their labour for a very small recompense to any body who will employ them. But it is evident that the daily or weekly recompense which such labourers receive in money, either from their proper masters or others, is not the whole price of their labour, though, as Adam Smith observes, it has been considered as the whole of it by many writers; and in consequence the wages of labour have been in these cases represented as much below the truth. This was the state of things not long since in Scotland; and it still prevails very generally in Ireland.

A similar observation applies in those cases where the wages of labour are paid in part out of the Parish rates. The money which the labourer receives from his employer is not the whole of what goes to the maintenance of himself and his family. It would not fulfil the necessary conditions of the supply of such labour, and cannot therefore be considered as its natural remuneration in the district in which it is employed.

A further caution to be noticed is, that in estimating the price of agricultural labour in any district, it must be the labour which is actually and with average constancy employed and paid, and not that the price of labour which in a temporary deficiency or excess in the demand for labour, may fall so low, or rise so high, that it cannot be maintained. It must not in short be the average yearly wages of those who are only half employed, or the daily wages of a time of harvest.

When these circumstances, however, have been properly attended to, and the wages we take as the ordinary wages of any particular country or district are the whole of the natural and necessary conditions of the supply of labour, we may fairly presume, that whether the quantity of money, or of necessaries paid to the labourer be great or small, the value of this quantity will be the same.

In general where the facility of production is great, the labourer will obtain a large quantity of them, as in new colonies favourably circumstanced, and in the United States of America. On the other hand, where from the demand of a greatly increased population, cultivation is pushed upon poor land, and production is difficult, the labourer, though he may obtain a larger proportion of what he produces, will receive a smaller quantity of produce. But it is obvious that the smaller quantity in the latter case is obtained with just as much difficulty as the greater quantity in the former case.

There are, however, instances where it may at first sight appear that what the labourer receives as wages is produced with facility, and yet the quantity he receives is very small; but it must always be recollected, that the labour actually employed in the production of wages, is never the sole element of their value. Profits are universally another element, and in some cases, taxes and unnatural rents may raise the value of produce in an unusual proportion beyond the labour employed in its production. In those countries where the sovereign is the proprietor of the soil, if he requires an exorbitant proportion of the produce from all the land that is cultivated, he may leave the poor cultivator only what is just sufficient to support him, although the last land taken into cultivation may be fertile. In this case many of the effects of natural exhaustion and barrenness are produced artificially. Much good land is left uncultivated, and the population presses hard against the limits of that quantity of necessaries which can alone be obtained by the labourer. To earn a very scanty support, he must make a great sacrifice; and a small quantity of produce thus becomes of great value, owing to the limitation of the supply compared with the demand, notwithstanding the real facility of production. Some parts of India have unquestionably at times exemplified this state of things;* and such instances form no exception to the general rule, that the value of the wages given to the labourer in any country can only be measured by the quantity of the ordinary labour of that country which he gives in exchange for them.

But the Indian labourer receives a smaller quantity of money as well as of necessaries for his day’s work; and this is because money also is very difficult of attainment in India, the manufactures sent abroad to purchase it, having cost a great mass of labour, profits, and rent.

It follows that in measuring the value of money at any time and place, and the rise or fall of this value at different times and in different places, we have only to refer, with the cautions above mentioned, to the money price of common agricultural labour. In every country, this sort of labour, as I have said, may be considered as the standard into which every other kind of labour is resolvable, and no difficulty will arise from the acknowledged fact that a great part of the labour of every country is of a higher value than the standard. If the labour of a common journeyman watchmaker be paid at the rate of ten shillings a day, and that of a common agricultural labourer at twenty-pence, the only effect will be that each day’s labour employed on the watch, will communicate to that watch a value in exchange arising from intrinsic causes equivalent to that of six days of the standard labour; and the power of the standard labour to measure the difficulty of obtaining the watch will in no degree be impaired. This observation applies to all commodities by whatever kind of labour they are produced. In short, if we are entitled to assume, as I think we are, from what has been said in the preceding sections, that in the natural and ordinary state of things, a given quantity of standard labour applied to the production of any commodity, communicates to it a given value in exchange arising from intrinsic causes; and if by value in exchange, when nothing else is added to the term, we mean value in exchange arising from intrinsic causes, it follows, that, contrary to the usual impressions on the subject, there must be a measure of the values, of commodities however composed, and that measure can only be labour.

The specific reason, as it appears to me, why it has been generally supposed that there cannot be anything like a standard measure of value, is, that the principal founder of the science of political economy, Adam Smith, has given a definition of value in exchange,* not only different from that meaning in which it is practically, and most frequently, applied, but quite inconsistent with the specific measure of value which he has himself proposed. If by the value of an object in exchange, be meant, as Adam Smith has stated, the power of purchasing other goods which the possession of that object conveys, then, as it is quite certain that such power may increase from the facility of producing other goods as well as from the difficulty of producing the object in question, it is equally certain that there can be no measure of the value of such object; and that when in the same page he speaks of the real measure of this exchangeable value, and afterwards distinctly proposes the labour which a commodity will command at that measure, and enters upon an elaborate inquiry into the value of silver during the four last centuries, he proceeds upon a principle in the application of which he contradicts at every step his first definition. These contradictions were no doubt calculated to produce impressions unfavourable to the existence of a standard measure of value. Such at least were the impressions produced on myself. If, however, he had limited his definition of the exchangable value of a commodity to its power of purchasing arising from intrinsic causes, or the estimation in which it is held determined by the state of the supply compared with the demand, and, ordinarily, by the elementary costs of its production, which is unquestionably the sense in which he applies it himself, and in which it is most frequently applied by others, the measure he has proposed would have been consistent with his definition, and both would have been just.

The question, therefore, of the existence of a measure of value depends upon the sense in which we understand the term value in exchange; and I have fully given my reasons for thinking, not only that the limited sense just adverted to is the sense in which the term is most frequently applied, but that it is the sense in which it is most useful and important to know the exchangeable value of an object, and the only sense in which we can arrive at any practical conclusions approaching towards distinctness and precision, when we speak of a rise or fall in the values of commodities.

It is not a little discreditable to a branch of knowledge which claims to be called a science, that the meaning of a term which is constantly met with in every work on political economy, and constantly heard in every conversation on the subject, should not yet be settled. But while it is most frequently used in a sense different from that in which it has been most frequently defined, it must be allowed that the question relating to the most correct and useful definition of it, is still open for discussion; and though it is well known from experience that those who have once publicly supported particular opinions are not likely to change them; yet looking to the future when it is scarcely possible to suppose that the point should not be settled, every effort to contribute to what is conceived to be a just and useful decision on the very elements of the science must be fully warranted.

The language of political economy has been much facilitated, and much indistinctness and unnecessary circumlocution has been prevented by the definite meaning which has been given to the term price, or nominal value. Though it is allowable to say price in corn, price in cloth, or price in any other article named; yet, when the term price occurs, as it generally does, without any such adjunct, it is universally understood to mean money price.

A similar advantage would be gained, if, when the term value of a commodity, or its value in exchange, were made use of, as it generally is, without any adjunct, it were universally understood to mean value in exchange arising from intrinsic causes, which value it has been shown may be measured by labour.

It cannot be too often repeated, that for short periods when the value of money is considered as nearly constant, we uniformly measure the variations of value, as well as the variations of price by money; and it is quite certain that money, under these circumstances, can only measure the variations in the value of a commodity arising from intrinsic causes, and has nothing to do with causes which are extrinsic.

It may indeed sometimes be desirable to know how far a particular commodity, or a certain quantity of money may go in the purchase of other goods; but even in this case, if it were possible to conceive an article which would represent the mass of all others, it may be doubted whether the power of commanding such an article would give the information wanted. When such inquiries are made, it is generally with a view to the power of the incomes of particular classes to enable them to live in the way they wish.*

The most interesting and useful inquiry of this kind is to ascertain the amount of necessaries, and of ordinary conveniences and luxuries which can be obtained in different countries by the money wages of labour. But if the value of the money wages received by the labourer could be measured by some article which would represent the mass of all purchasable commodities, as such a measure would be affected by a large quantity of commodities unconnected with the wants of the poorer classes of purchasers, it would not give us the information required respecting the condition of the labourer.

On the other hand, if the inquiry related to the power of an income of three thousand a year in different countries, the prices of many of those commodities which only tended to render the measure incorrect in the former case, would probably be the most important in the latter.

It is obvious, therefore, that a measure representing the mass of commodities, or the general power of purchasing, even if attainable, which, however, is impossible, would not only, as formerly stated, fail entirely in reference to the main characteristic* of value, but would be very unsatisfactory in the inquiries above mentioned. And in such cases we ought never to use the term value, or value in exchange by itself, but add specifically the kind of articles, in the purchase of which the incomes would be chiefly spent.

When, therefore, the value of a commodity at any place and time is spoken of, without expressing some object or objects with which it is intended to compare it, we may safely understand by it that value which arises from intrinsic causes; and if labour, applied in the mode proposed, be considered as the measure of such value, it follows necessarily that neither money, nor any other commodity, can ever correctly perform the functions of such a measure, except while it continues to bear the same relation to labour.

It has been justly stated by Adam Smith, that corn is a better measure of value from century to century, than money, and the specific reason which he gives for it is, that its relation to labour is more constant than that of any other commodity.† But if this be the reason why corn at distant periods may be considered as a better measure of value than any other product of labour, it implies distinctly that it cannot be so good a measure of value as labour itself.

It is not a little surprising that the Marquis de Garnier, M. Say, and some other writers, seeing the impossibility of applying the mass of commodities as a measure of value, and wishing, therefore, to refer to someone object which might make the nearest approach to it, should have preferred referring to corn instead of labour, when it is well known that corn not only varies greatly in the difficulty of obtaining it, from temporary abundance, or scarcity, but that very great alterations may take place for fifty or sixty years together in the same country, and in different countries, at different periods in the progress of cultivation, for a much longer period.

Adam Smith himself, in his “Digression concerning the value of silver during the four last centuries,” by referring most unaccountably to the prices of corn, instead of to the measure which he had himself proposed, has fallen into the very gross error of making the value of silver rise in the proportion of from two to three in the interval between the middle of the fourteenth, and the end of the fifteenth century, instead of falling in the proportion of from three to two, which would have been the just conclusion, if he had applied labour as his measure instead of corn; and surely he was bound to do this, after saying “Labour, it must always be remembered, and not any commodity, or set of commodities, is the measure not only of silver, but of all other commodities.”* In the instance of error to which I have referred, corn had so essentially altered in its relation to labour for fifty or sixty years together, and had fallen so much in value, that a day’s labour would purchase nearly two pecks of wheat instead of one. The same quantity of wheat, therefore, instead of representing nearly the same quantity of labour from century to century, as intimated by Adam Smith, represented very little more than the half of that quantity, and his inference respecting the rise in the value of silver was quite reversed.

Of the doctrine that the term value of a commodity ought never to be used without at the same time specifying distinctly the article with which it is intended to be compared, and that any one article measures this value as well as any other; it need only be observed that in this case the term value becomes perfectly superfluous and useless. It has exactly the same meaning as price, or nominal value, that is, the value of one commodity in any other commodity named; and if value admits of no other meaning than this, it would certainly be much better to discard it at once from the vocabulary of political economy, as only tending to create confusion. We ought in this case, however, to invent some other term to express what is so much wanted, namely, the relation which commodities bear to the difficulty of obtaining them, or the estimation in which they are held at different times, and in different countries. But as this is the most usual sense in which the term value is now practically applied, we cannot surely do better than retain it in this sense.

[* ] The reader should be aware that this refers only to a particular period, from about 1444 to 1509, when wheat seems to have been unusually plentiful, and low in value. Taking a century earlier, wheat was of about the same value as at present, and a century later it was of much higher value, and the labourer was much worse off than at present.

[* ] It is said that under Hyder Ally and Tippoo Sultan, ⅔ of the produce were often taken as rent. If this were general, much fertile land might be kept out of cultivation, and the labourer might be paid miserably, although the productiveness of labour on the poorest land cultivated was great.

[* ] “The word value, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods, which the possession of that object conveys. The one may be called value in use, the other value in exchange.” Book I. ch. iv. p. 42, 6th edition.

[* ] When it is said that the exchangeable value of a commodity is determined by its power of purchasing other goods, it may most reasonably be asked, what goods? It would be absolutely impossible to apply all goods as a measure.

[* ] The quantity of goods which a commodity will command, does not ascertain the difficulty of getting possession of it.

[† ] Book I. ch. v. p. 54, 6th edit.

[* ] Book I. ch. xi. p. 291, 6th edit.