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• Preface.
• Definitions In Political Economy.
• Chapter I.: Rules For the Definition and Application of Terms In Political Economy.
• Chapter II.: On the Definition of Wealth By the French Economists.
• Chapter III.: On the Definition and Application of Terms By Adam Smith.
• Chapter IV.: Application of the Term Utility By M. Say.
• Chapter V.: On the Definition and Application of Terms By Mr. Ricardo.
• Chapter VI.: On the Definition and Application of Terms By Mr. Mill, In His “elements of Political Economy.”
• Chapter VII.: On the Definition and Application of Terms, By Mr. Macculloch, In His “principles of Political Economy.”
• Chapter VIII.: On the Definition and Use of Terms By the Author of “a Critical Dissertation On the Nature, Measure, and Causes of Value.”
• Chapter IX.: Summary of the Reasons For Adopting the Subjoined Definition of the Measure of Value.
• Chapter X.: Definitions In Political Economy.
• Wealth.
• Utility.
• Value,
• Value In Use,
• Value, Or Value In Exchange.
• Production.
• Product, Produce.
• Sources of Wealth.
• Land.
• Labour.
• Productive Labour.
• Unproductive Labour.
• Industry.
• Stock.
• Capital.
• Fixed Capital.
• Circulating Capital.
• Revenue.
• Accumulation of Capital.
• Saving,
• Rent of Land.
• Money-rent of Land.
• Gross Surplus of the Land.
• Wages of Labour.
• Nominal Wages.
• Real Wages.
• The Rate of Wages.
• The Price of Labour,
• The Amount of Wages.
• The Price of Effective Labour.
• Accumulated Labour.
• Profits of Stock.
• The Rate of Profits.
• The Interest of Money.
• The Profits of Industry, Skill, and Enterprise.
• Monopoly Profits.
• Conditions of the Supply of Commodities.
• Elementary Costs of Production.
• Measure of the Conditions of the Supply, Or of the Elementary Costs of Production.
• The Value, Market Value, Or Actual Value, of a Commodity At Any Place Or Time.
• The Natural Value of a Commodity At Any Place and Time.
• Measure of the Market Or Actual Value of a Commodity At Any Place Or Time.
• Measure of the Natural Value of a Commodity At Any Place and Time.
• The Price, the Market Price, Or Actual Price of a Commodity At Any Place and Time.
• The Natural Price of a Commodity At Any Place and Time.
• Supply of Commodities.
• Demand For Commodities,
• Demand In Regard to Its Extent.
• Demand In Regard to Its Intensity.
• Effectual Demand, In Regard to Its Extent.
• Effectual Demand, In Regard to Its Intensity.
• Measure of the Intensity of the Effectual Demand.
• Excess of the Demand Above the Supply.
• Excess of the Supply Above the Demand, Or Partial Glut.
• General Glut.
• A Given Demand.
• Variations of Prices and Values.
• Consumption.
• Productive Consumption.
• Unproductive Consumption, Or Spending.
• Chapter XI.: Observations On the Definitions.

Chapter VIII.

ON THE DEFINITION AND USE OF TERMS BY THE AUTHOR OF “A CRITICAL DISSERTATION ON THE NATURE, MEASURE, AND CAUSES OF VALUE.”

It might be thought that I was not called upon to notice the deviations from the most obvious rules for the use of terms in a Critical Dissertation on the Nature, Measure, and Causes of Value, by an anonymous writer. But the great importance of the subject itself at the present moment, when it may be said to be sub judice, the tone of scientific precision in which the dissertation is written, notwithstanding its fundamental errors, and the impression which it is understood to have made among some considerable political economists, seem to call for and justify attention to it.

The author, in his preface, observes, that “Writers on political economy have generally contented themselves with a short definition of the term value, and a distinction of the property denoted by it into several kinds, and have then proceeded to employ the word with various degrees of laxity. Not one of them has brought into distinct view the nature of the idea represented by this term, or the inferences which a full perception of its meaning immediately suggests; and the neglect of this preliminary has created differences of opinion and perplexities of thought which otherwise could never have existed.”*

Now it appears to me, that the author, at his first setting out, has in an eminent degree fallen into the very errors which he has here animadverted upon.

He begins by stating, very justly, that “value, in its ultimate sense, appears to mean the esteem in which any object is held;” and then proceeds to state, in the most lax and inconsequent manner, that “It is only when objects are considered together as subjects of preference or exchange that the specific feeling of value can arise. When they are so considered, our esteem for one object, or our wish to possess it, may be equal to, or greater, or less than our esteem for another; it may, for instance, be doubly as great, or, in other words, we would give one of the former for two of the latter. So long as we regarded objects singly, we might feel a great degree of admiration or fondness for them, but we could not express our emotions in any definite manner. When, however, we regard two objects, as subjects of choice or exchange, we appear to acquire the power of expressing our feelings with precision; we say, for instance, that one a is, in our estimation, equal to two b. . . . The value of a is expressed by the quantity b, for which it will exchange, and the value of b is, in the same way, expressed by the quantity of a.”*

So, then, it appears, as a consequence of value, meaning the esteem in which an object is held, that if there were two sorts of fruit in a country, called a and b, both very plentiful in the summer, and both very scarce in the winter; and if in both seasons they were to bear the same relation to each other, the feelings of the inhabitants with regard to the fruit a would be expressed with precision, by saying that, as it would always command the same quantity of the fruit b, it would continue to be of the same value—that is, would be held in the same estimation in summer as in winter.

It appears, further, that in a country where there were only deer, and no beavers or other products to compare them with, the specific feeling of value for deer could not arise among the inhabitants; although, on account of the high esteem in which they were held, any man would willingly walk fifty miles in order to get one!! These are, to be sure, very strange conclusions, but they follow directly from the presvious statements.

The author, however, nothing daunted, goes on to say, that “If from any consideration, or number of considerations, men esteem one a as highly as two b, and are willing to exchange the two commodities in that ratio, it may be correctly said that a has the power of commanding two b, or that b has the power of commanding half of a.”

“The definition of Adam Smith, therefore, that the value of an object expresses the power of purchasing other goods which the possession of that object conveys, is substantially correct; and as it is plain and intelligible, it may be taken as the basis of our subsequent reasonings without any further metaphysical investigation.”*

In a Critical Dissertation on Value, which is introduced with a heavy complaint against all preceding political economists for neglecting the preliminary labour necessary to give a full perception of its meaning, it might naturally have been expected, that previous to the final adoption of the meaning in which it was intended to use the term throughout the dissertation, the consideration, or number of considerations, which induce men to prefer one object to another, or to give two b for one a, should be carefully investigated. But nothing of this kind is done. A definition of the value of an object by Adam Smith, which, as he afterwards clearly shows, requires explanation and modification, is arbitrarily adopted, or, in the language of the author, is “taken as the basis of his subsequent reasonings, without any further metaphysical investigation.”

That this first general description of value in exchange by Adam Smith does not, without further explanation, convey to the reader the prevailing meaning which he himself attaches to the term, is obvious in many passages of his work, and particularly in his elaborate inquiry into the value of silver during the four last centuries. He there shows, in the most satisfactory manner, that, in the progress of cultivation and improvement, there is a class of commodities, such as cattle, wood, pigs, poultry, &c., which, on account of their becoming comparatively more scarce and difficult of attainment, necessarily rise in value; yet he particularly states, that this rise in their value is not connected with any degradation in the value of silver,* although it is obvious that, other things being the same, a pound of silver would have a smaller power of purchasing other goods.

Nothing, indeed, can be clearer than that this general description of value requires further explanation. There is the greatest difference imaginable between an increased power in any object of purchasing other goods, arising from its scarcity and the increased difficulty of procuring it; and the increase of its power to purchase other goods arising from the increased plenty of such goods and the increased facility of procuring them. Nor is it easy to conceive any distinction more vital to the subject of value, as the term is generally understood, or more necessary to “a full perception of its meaning.”

I cannot but think, therefore, that the author, under all the circumstances of the case, was not justified in adopting this definition of Adam Smith without further investigation.

But the adoption of this definition by the author in so unceremonious a manner, though quite inconsistent with the declarations in the preface, and most unpromising in regard to any improvement of the science which might have been expected from the dissertation, is by no means the gravest offence which he has committed in the opening of his subject.

Adam Smith’s definition, taken as it stands, however imperfect it may be, would still serve as a rough but useful standard of value in those cases where, in using the most ordinary forms of expression, some kind of standard is tacitly referred to, and no other more accurate one had been adopted.

But how is this definition of Adam Smith to be interpreted? If we understand it in the sense usually conveyed by the terms employed, it is impossible to doubt that by the power of purchasing other goods is meant the power of purchasing other goods generally. Who, then, could have conceived before-hand that the author would have inferred from this definition that he was justified in representing the power of purchasing other goods by the power of purchasing any one sort of goods which might first come to hand?—so that, considering the value of money in this country to be proportioned to its general power of purchasing, it would be correct to say that the value of an ounce of silver was proportioned to the quantity of apples which it would command; and that when it commanded more apples, the value of silver rose—when it commanded fewer apples, the value of silver fell.

It is, no doubt, quite allowable to compare any two commodities whatever together in regard to their value in exchange, and, among others, silver and apples. It is also allowable to say, though it would in general sound very strange, that the value of an ounce of silver, estimated in apples, is the quantity of apples it will command, provided that, by thus using the qualifying expression estimated in apples, immediately after the word value, we distinctly give notice to the reader that we are not going to speak of the exchangeable value of silver generally, according to the definition of Adam Smith, but merely in the very confined sense of its relation to one particular article. But if, without this distinct notice to the reader, we simply say that the value of an ounce of silver is expressed by the quantity of apples for which it will exchange, or, in the words of the author, that “the value of a is expressed by the quantity of b, for which it will exchange,” nothing can be more clear than that we use the term value in a manner totally unwarranted by the previous definition, that is, in a sense quite distinct from that in which Adam Smith uses it in the description of value adopted by the author.

Putting the corn and the circulating medium of a country out of the question, the relations of which to labour and the costs of producing various commodities are tolerably well known, I think no one, in ordinary conversation, has ever been heard to express the general power of purchasing by the power of purchasing some one particular commodity. I certainly, at least, myself never recollect to have heard these two very distinct meanings confounded. It would, indeed, sound very strange, if a person returning from India, on being asked what was the value of money in that country, were to mention the quantity of English broad cloth which a given quantity of money would exchange for, and to infer, in consequence, that the value of money was lower in India than in England.

In regard to the opinions and practice of other writers on political economy, most of them have considered the general power of purchasing, and the power of purchasing a particular commodity as so essentially distinct, that they have given them different names. The only authority quoted with approbation by the author, is Colonel Torrens, whose views, as to the nature of value, appear to him, he says, to be sounder than those of any other writer. Yet, what does Colonel Torrens say on this subject?—“The term exchangeable value expresses the power of purchasing with respect to commodities in general. The term price denotes the same power with respect to some particular commodity, the quantity of which is given. Thus, when I speak of the exchangeable value of cotton as rising or falling, I imply, that it will purchase a greater or less quantity of corn, and wine, and labour, and other marketable commodities; but when I talk of the price of cotton as rising or falling, I mean, that it will purchase a greater or less quantity of some one particular commodity, such as corn, or wine, or labour, or money, which is either expressed or understood. Exchangeable value may rise, while price falls, or fall while price rises. For example; if cotton were, from any cause, to acquire twice its former power of purchasing, with respect to goods in general, while gold, the particular commodity in which the price of cotton is expressed, rose in a still higher ratio, and acquired four times its former power in the market, then, though the exchangeable value of cotton would be doubled, its price would fall one half. Again; if cotton would purchase only half the former quantity of commodities, while it purchased twice the quantity of some particular commodity, such as corn, or wine, or labour, or money, then its exchangeable value would have sunk one half, while its price, as expressed in corn, or wine, or labour, or money, became double. And again; if cotton, and the particular commodity in which price is expressed, should rise or fall in the same proportion with each other, then the exchangeable value of cotton, or its general power of purchasing, would fluctuate, while its price remained stationary.”*

It appears then, that, whether Colonel Torrens’s view of value be quite correct or not, he draws the most marked line of distinction possible between the power of purchasing generally, and the power of purchasing a particular commodity, and is decidedly of opinion, that the latter, which is the sense in which the author uses the term value, should not be called value, but price. The authority of Colonel Torrens, therefore, whose views on the subject of value the author considers as so sound, is directly against him.

But not only does Colonel Torrens attach a very different meaning to the term value, from that in which it is used by the author throughout the greatest part of his work, but the author himself, in his notes and illustrations,† has given extracts from almost all the distinguished writers in political economy, expressly for the purpose of showing the universality of an opinion respecting the nature and measure of value directly opposed to his own. The writers to whom he refers, are Adam Smith, Sir James Stuart, Lord Lauderdale, M. Storch, M. Say, Mr. Ricardo, myself, Colonel Torrens, Mrs. Marcet, Mr. Mill, the Templar’s Dialogues, and Mr. Blake.

In the case of a proposition the nature of which admits of a logical proof, authority is of no consequence; but in a question which relates to the meaning to be attached to a particular term, it is quite incredible that any person should thus have ventured to disregard it.

Much, however, of inconsistency, of illogical inference, and disregard of authority, might have been forgiven, if the proposed change in the meaning of the term value would introduce a much greater degree of clearness and precision into the language of political economy, and, in that way, be eminently useful to the progress of the science.

But, what would be the consequence of adopting the meaning which the author attaches to the term value, and of allowing, according to his own words, that “the value of a is expressed by the quantity of b for which it will exchange, and the value of b is, in the same way, expressed by the quantity of a?”* One of these consequences is strikingly described in the following passage of the author’s chapter on Real and Nominal Value a distinction which he is pleased to call unmeaning. “The value of a commodity denoting its relation in exchange to some other commodity, we may speak of it as money-value, corn-value, cloth-value, according to the commodity with which it is compared: and hence there are a thousand different kinds of value, as many kinds of value as there are commodities in existence, and all are equally real and equally nominal.”†

This is precision with a vengeance. Now, though I am very far from intending to say that the writers on political economy have been sufficiently agreed as to the precise meaning which they attach to the terms value of a commodity, when no express reference is made to the object with which it is to be compared, yet, by drawing a marked line of distinction between what has been called the real value of commodities and their nominal value, or, more correctly, between their value and their price, they have avoided the prodigious confusion which would arise from a commodity having a thousand or ten thousand different values at the same time. Whenever they use the term value of a commodity alone, and speak of its rising or falling, if they do not mean money-price, they refer either to its power of purchasing generally, or to something expressive of its elementary cost of production.

In either case, some general and very important information is communicated; but the value of a commodity, in the sense understood by the author, might be expressed a hundred different ways, without conveying a rational answer to any person who had inquired about it.

Further; the use of the term value, in the sense understood by the author, is entirely superfluous. It has exactly the same meaning as the term price, except that the term price has this very decided advantage over it, namely, that when the price of a commodity is mentioned, without an express reference to any other object in which it is to be estimated, political economists have universally agreed to understand it as referring to money. This is a prodigious advantage in favour of the term price, and tends greatly to promote both facility and precision in the language of political economy. When I ask, what is the price of wheat in Poland? no one has the least doubt about my meaning, and I should, without fail, get the kind of answer I intended. But if I asked, what was the value of wheat in Poland? I might, according to the author, be answered in a thousand different ways, all equally proper, and yet not one of the answers be of the kind I wanted. Of course, whether I use the term value or price, if I always expressly subjoin the object to which I mean to refer, it will be quite indifferent to which term I resort. But it is vain to suppose that the public will submit to such constant and unnecessary circumlocution. It would quite alter the language of political economy; and the kind of abbreviation which has taken place in application to the term price could not take place in regard to value, according to the doctrines of the author; because, when the value of a commodity is used alone, like the price of a commodity, no one object rather than another is entitled to a preference for the expression of that value. The author says distinctly in a note,* that money-value has no greater claim to the general term value than any other kind of value. It is quite clear, therefore, that if the term value is only to be applied in the sense in which it is applied by the author, it would be much better to exclude it at once from the vocabulary of political economy as utterly useless, and only calculated to produce confusion.

It may be further observed, that the sense in which the author proposes to apply the term value, is so different from the sense in which it is understood in ordinary conversation, and among the best writers, that it would be quite impossible to maintain it with consistency. The author himself, however obstinately, at times, he seems to persevere in the peculiar meaning which he has given to the term value, frequently uses it by itself, without reference to any particular article in which he proposes to express it. Even in the titles of some of his chapters he does this; and when in Chapter xi. he discusses the distinction between value and riches, and in Chapter xi.the causes of value, we are entitled to complain, that he has not acted according to the instructions which he has given to others, and told us, either expressly, or by implication, in what article the value here mentioned is to be expressed.

Again; when he mentions the value of that corn which is produced on lands paying rent, and when he speaks, as he frequently does, of the value of capital,* he does not tell us in what he means to express the value of corn, or of capital, although he thinks that such a reference, either expressed or implied, is always necessary, and particularly says, “In the preceding pages it has been shown, that we can express the value of a commodity only by the quantity of some other commodity for which it will exchange.”*

The meaning, therefore, which he gives to the term value is such, that he cannot and does not maintain it consistently himself, much less can he expect that others should so maintain it.

It appears, then, that the author has arbitrarily adopted a meaning of the term value quite unwarranted by the usage of ordinary conversation, directly opposed to the authority of the best writers on political economy, pre-eminently and conspicuously useless; and of such a nature that it cannot be maintained with consistency.

And what does he do with his definition after so adopting it?

He applies it to try the truth of a number of propositions advanced by different writers, who, according to his own showing, have used the term in a very different sense.

This, I own, appears to me much the same kind of proceeding as if a person were to define a straight line to be something essentially different from a line lying evenly between its two extremes, and then were gravely to apply it to one proposition after another of Euclid, and show, as might easily be done, granting the definition, that the conclusions of the Grecian geometer were all wrong.

The perseverance with which the author proceeds gravely to apply his peculiar definition of value to other writers, who have defined it differently, is truly curious, and must be allowed to be a great waste of time and labour. If, as he says he has repeatedly stated, “to know the value of an article at any period is merely to know its relation in exchange to some other commodity;”* and if, as I believe, no previous writer, in referring to the value of an article at any period ever thought or said that it could be expressed by its relation in exchange to any other contemporary commodity indifferently, it might at once be presumed, without further trouble, that almost all former propositions involving the term value would turn out to be either false or futile. It was quite unnecessary for him, therefore, to go into the detail; but as he has done so, it may be useful to follow him in some of his conclusions, as it may assist in drawing attention to a subject which lies at the bottom of many of the difficulties in political economy, and has not been sufficiently considered.

One of the first effects of the author’s definition is to destroy the distinction between what many writers of great authority have called real value, and nominal value. I have already had occasion to observe, that Adam Smith, by applying the term real wages to express the necessaries and conveniencies of life earned by the labourer, had precluded himself from the power of applying it consistently to the value of a commodity, in order to express its power of commanding labour; because it is well known that the same quantity of labour will both produce and command, at different times and under different circumstances, a very different quantity of the necessaries and conveniencies of life. But putting aside for the present this acknowledged inconsistency of Adam Smith, and taking real value as distinguished from nominal in the sense in which the writers who have so applied it intended, the author’s observations on these writers are not a little extraordinary.

After noticing the doctrines of Adam Smith, Mr. Ricardo, and myself, on the subject of real and nominal value, he says, “After the disquisition on the nature of value in the preceding chapter, the distinction of it in this way must appear to be merely arbitrary and incapable of being turned to any use. What information is conveyed or what advance in argument is effected, by telling us that value estimated in one way is real, but in another, is nominal?”* He afterwards goes on to say, in reference to a passage in the Templar’s Dialogues, “It would not, however, probably have been written, had the author attended to the simple fact, that value must always imply value in something, and unless that something is indicated, the word conveys no information. Now, as the terms nominal and real do not denote anything in this way, they convey no precise information, and are liable to engender continual disputes, because their meaning is arbitrarily assumed.”†

These appear to me, I confess, to be very extraordinary observations. It must surely be allowed, that to compare a commodity either with the mass of other commodities, or with the elementary costs of production, is most essentially distinct from comparing it with some particular commodity named. And if so, writers are bound so to express themselves as to convey to their readers, which of the two they intend to refer to. Whether these writers have chosen the very best terms to express these ideas is another question; but that the ideas themselves are quite different, and that it is essential to the language of political economy that they should be distinguished by different terms, cannot admit of a doubt. It appears to me, therefore, almost inconceivable that the author should say, “What information is conveyed, or what advance in argument is effected, by telling us, that value estimated in one way is real, but in another, is nominal?” It might as well be said, that, in speaking of our planetary system, no information is conveyed by using different adjuncts to the term distance, in order to distinguish between the distances of the planets from the sun, and the relations of their distances to each other. And supposing it had been the habit of most writers to call the first distances real and the second relative, would it not be most strange to say that the distinction in this way of distance into two kinds is incapable of being turned to any use, as all distance is relative?

The author is repeatedly dwelling upon the relative nature of value, as if he alone had considered it in this light; but no other writer that I have met with has ever appeared to me to use the term value without an intelligible reference expressed or implied to something else; and when the author says, in the passage above quoted, that value must always imply value in something which ought to be indicated, and that the terms nominal and real do not denote anything in this way, he appears to me, I own, to assert what is entirely without foundation. M. Say, for instance, in a passage quoted by the author in his notes,* observes, “There is this difference between a real and a relative variation of price; that the former is a change of value arising from an alteration of the changes of production; the latter a change arising from an alteration in the ratio of value of one particular commodity to other commodities. Now is it possible to say with truth, that the real and relative values here described do not both refer to other objects, and that these objects are not so different as to require to be distinguished?

The author may, perhaps, say, that if both expressions are meant to be relative, why use the terms real, positive, or absolute? The answer is, that the usage of our language allows it, and that nothing is more common than the use of the terms real, positive, and absolute, in contradistinction to relative, when the former terms have relation to some more general object, particularly to anything which is considered as a standard, whether accurate or inaccurate.

Thus, in the illustration before adverted to, although all distances are relative, it would be quite justifiable to say, that if the earth was moving towards the farthest part of her orbit, her positive, absolute, or real distance from the sun was increasing, although her distance relatively to that of some other planet or comet, moving from the sun with greater velocity, was diminishing. Tall and short, rich and poor, are relative terms: yet surely we should be warranted in saying, that Peter was not only taller than his three brothers, but, really or positively, a tall man. In the first case he is said to be tall in relation to three individuals; but a stranger, knowing nothing of the height of these individuals, would obtain very little information from the statement. He would not know whether Peter was four feet, five feet, or six feet high: in the latter case, Peter is said to be tall in relation to the average or standard height of the race of men spoken of; and though the stranger might not have in his mind a perfectly accurate notion of this standard, yet he would immediately have before him the height of Peter within a few inches, instead of a few feet.

On the same principle, would it not be most ridiculous for any person gravely to propose that as rich and poor are relative terms, no one should ever call a man rich without mentioning at the same time the individual in relation to whom he was rich? It is perfectly well known, that when, in any particular place or country, a man is said to be a rich man, the term refers to a sort of loose standard, expressing either a certain command over the goods of this life, or a certain superiority in this respect over the mass of the society, which superiority it had been the custom to mark by this expression. In either case, it would be allowable to call the man really or positively rich. But if the proposed change were adopted, and instead of saying that Mr. John Doe was a rich man, we could only say that he was rich in relation to Mr. Richard Roe, as poor Richard might be little better than a pauper, Mr. Doe might, after all, be in very narrow circumstances.

It is clear, therefore, not only that the terms real and positive may be legitimately applied in contradistinction to relative, when a relation to some more general object or standard is intended; but that the difference between the two sorts of relations is of the utmost importance, and ought to be carefully distinguished. It is not easy to conceive, therefore, how any writer could suppose that the language of political economy would be improved by a definition which would destroy this distinction, and make as many kinds of value as there are commodities, all equally real and equally nominal. In reference to all other political economists, whenever they have used the term value of a commodity, without specifically mentioning the object in which they intended to estimate it, I have always felt myself authorised, consistently with their general language, to consider them as referring tacitly either to the mass of commodities, to the state of the supply compared with the demand, or to the elementary costs of production. But when the author of the Critical Dissertation uses the term value, which he does frequently without specific application, his general doctrine must leave the reader quite at a loss to conjecture what he means.

Proceeding on the same strange misapprehension or perversion of the language of other writers, the author says of the writer of the Templar’s Dialogues, “Following Mr. Ricardo, he appears entirely to lose sight of the relative nature of value, and, as I have remarked in the preceding chapter, to consider it as something positive and absolute; so that if there were only two commodities in the world, and they should both, by some circumstances or other, come to be produced by double the usual quantity of labour, they would both rise in real value, although their relation to each other would be undisturbed. According to this doctrine every thing might at once become more valuable by requiring at once more labour for its production; a position utterly at variance with the truth, that value denotes the relation in which commodities stand to each other as articles of exchange. Real value, in a word, is on this theory considered as the independent result of labour; and, consequently, if under any circumstances the quantity of labour is increased, the real value is increased. Hence the paradox, that it is impossible for a continually to increase in value—in real value observe, and yet command a continually decreasing quantity of b, and this although they were the only two commodities in existence. For it must not be supposed that the author means that a might increase in value in relation to a third commodity c, while it commanded a decreasing quantity of b; a proposition which is too self-evident to be insisted on; but he means that a might increase in a kind of value called real, which has no reference to any other commodity whatever. Apply to the position of this author the rule recommended in the last chapter; inquire, when he speaks of value, value in what? and all the possible truth on the subject appears in its naked simplicity. He adds afterwards again, “value must be value in something, or in relation to something.”*

Now let the reader recollect that this passage was written by a person who sets out with saying that value in its ultimate sense appears to mean the esteem in which any object is held, and it will appear most remarkable.

In the first place, what can the author possibly mean by speaking of the kind of value here called real, as if it had no relation to any thing else? The Templar, it must surely be allowed, has explained himself with sufficient clearness that by real value he means value in relation to the producing labour.

Secondly, I would ask the writer, who says that the value of a commodity means the esteem in which it is held, whether the labour required to produce a commodity does not, beyond all comparison, express more nearly the esteem in which the commodity is held, than a reference to some other commodity the producing labour of which is utterly unknown, and may therefore be one day or one thousand days?

I have already stated that I decidedly differ from Mr. Ricardo, and it follows of course that I differ equally from the Templar, in thinking that the value of a commodity may be correctly expressed by referring to the producing labour alone; but compared with the expression of value proposed to be substituted by the author of the Critical Dissertation, it has a prodigious superiority. Let us try both, for instance, by the touch of the talisman recommended by the author himself. Let the question be the value of silver before the discovery of the American mines; and let us ask, as directed, value in relation to what? The Templar would answer, value in relation to the producing labour; and though in this answer a material ingredient of elementary value is omitted, yet I should collect from it some tolerable notion of the esteem in which silver was held at that time; and if I found, on comparison, that the producing labour was now three or four times less, I should be able, with tolerable certainty, to infer, that silver had grown more plentiful; and that four centuries ago a given quantity of silver was held in much greater esteem, that is, people would make a much greater sacrifice in order to obtain it, than at present.

On the other hand, if the author of the Critical Dissertation should speak of the value of silver before the discovery of the American mines, and we should ask, value in relation to what? the answer would be, “I have repeatedly stated that to know the value of an article at any period is merely to know its relation in exchange to some other commodity;” consequently, we should know the value of silver in the fifteenth century, or the esteem in which it was held, by comparing it with calicoes, although we might know nothing at all about the difficulty or facility of obtaining calicoes at that time. And if we were to proceed, as in the former case, and, with a view to ascertain the esteem in which silver was held in the fifteenth century, as compared with the esteem in which it is held in the nineteenth, were to mark the relation of silver to calicoes in the two periods, it would appear, that as, owing to the improvements in the cotton machinery, a given quantity of silver would command more calicoes now than formerly, silver should be considered as being held in higher estimation now than four centuries ago. Yet no person, I believe, not even the author himself, would agree to this conclusion. He would probably say that the comparison was merely between silver and calicoes, and had nothing to do with anything else. If this be all he means, why does he confuse his readers by stating that value means the esteem in which a commodity is held? and why does he say that to know the value of an article at any period is merely to know its relation in exchange to some other commodity? If all he means by the value of a commodity is its relation to some other, why did he not at once say, without ever talking about esteem, that the value of one commodity in relation to any other was expressed by the quantity of that other for which the first would exchange; and that, when the first rose in relation to the other, the other would always fall proportionably in relation to the first? If he had so expressed himself, his proposition would have obtained universal consent; it would have been a truism which had never been denied. But as long as he continues to talk of the esteem in which commodities are held, his readers must consider him as peculiarly inconsistent, if, on the supposition of there being only two commodities in existence, he prefers measuring the esteem in which one of them is held by its relation to the other, rather than by its relation to the producing labour. And they must further think, that while he continues to state that “to know the value of an article at any period is merely to know its relation in exchange to some other commodity,” he is stating a proposition which, according to the usual sense in which the word value is understood when so placed, is totally unfounded. No man, I believe, but the author would venture to say that he should know the value of silver four hundred years ago by knowing the quantity of calicoes which an ounce of silver would then command.

The sixth chapter of the author is entitled “On Measures of Value;” and the discussion of this subject leads him to such strange conclusions, that one cannot but feel the greatest surprise at his not seeing that he must have been proceeding in a wrong course. He ridicules the notion of its being necessary that a commodity should possess invariable value, in order to form a perfect measure of value. Such a notion, which he says in a note has been entertained by all the most distinguished writers in political economy, he civilly calls an utter absurdity. According to the doctrines and language of the author, no relation exists between the value of a commodity at one time and the value of the same sort of commodity at another; and “the only use of a measure of value, in the sense of a medium of comparison, is between commodities existing at the same time.”*

If this be so, it is, no doubt, quite absurd in political economists to look for anything approaching towards an invariable measure of value, or even to talk of one commodity or object being more steady or constant in its value than another. At the same moment, bags of hops are as good a measure of the relative value of commodities as labour or money. With regard to money, indeed, the author particularly observes, that from the relations between corn and money, at two different periods, no other relation can be deduced; we do not advance a step beyond the infirmation given. * * We cannot deduce the relation of value between corn at the first, and corn at the second period, because no such relation exists, nor, consequently, can we ascertain their comparative power over other commodities. If we made the attempt, it would be, in fact, endeavouring to infer the quantities of corn which exchanged for each other at two different periods of time, a thing obviously absurd. And further, money would not be here discharging a particular function any more than the other commodity. We should have the value of corn in money and the value of money in corn, but one would be no more a measure or medium of comparison than the other.”*

From all this it follows necessarily that we must on no account say, that butter has been rising during the last month; if we do, we shall be convicted of the absurdity of proposing to exchange the butter which was consumed three weeks ago with the butter now on our table, in order to ascertain that a pound of the former will command less than a pound of the latter. For the same reason, we must not on any account say, that the value of wheat fell very greatly from 1818 to 1822, and rose considerably from 1822 to 1826. We must not venture to compare the value of the advances of a master manufacturer with the value of his returns; or, in estimating the rate of his profits, presume to prefer money, which generally changes slowly and inconsiderably in its power of setting labour to work, to hops, which change so rapidly and greatly, &c. &c. In short, the whole of the language and inferences of the business of buying and selling, and making money, must be altered and adapted to the new definitions and doctrines.

It is quite astonishing that these consequences should not have startled the author; and made him turn back. If he had but adhered to his first description of value, namely, the esteem in which an object is held; or even if he had interpreted his second definition of value, namely, “the power of purchasing other goods,” according to the ordinary and natural meaning of the expression, he could never have been led into the strange mistake of supposing, that when people have talked of the value of a commodity at one period, compared with the value of the same kind of commodity at another, they could only refer to the rate at which they would actually exchange with each other, which, as no exchange could in such a case take place, would be absurd. What then did they mean? They obviously meant either to compare the esteem in which a commodity was held at one period with the esteem in which it was held at another, founded on the state of its supply compared with the demand, and ordinarily on its costs of production; or to compare the general power of purchasing which a commodity possessed at one period with its general power of purchasing at another period. And will the author venture to assert, that there are not some objects better calculated than others to measure this esteem, or measure this general power of purchasing at different periods? Will the author maintain, that if, in reference to two periods in the same country, a commodity of a given kind will in the second period command double the quantity of labour that it did in the first, we could not with much more certainty infer that the esteem for it had greatly increased, than if we had taken calicoes or currants as the medium of comparison? Or would the author, upon a little reflection, repeat again what he says in the passage last quoted, that from the relations between corn and money in two successive seasons, we can deduce no other relation, * * “money would not be here discharging a particular function any more than the other commodity. We should have the value of corn in money and the value of money in corn, but one would be no more a measure or medium of comparison than the other.”*

To me, at least, these statements appear utterly unfounded. If the money-price of corn has risen this year to double what it was in the last, I can infer, with almost absolute certainty, that corn is held in much higher estimation than it was. I can be quite sure that the relation of corn to other articles, besides money, has most essentially changed, and that a quarter of corn will now command a much greater quantity of labour, a much greater quantity of cloth, a much greater quantity of hardware, a much greater quantity of hats and shoes, than it did the year before: in short, that it will command nearly double the quantity of all other commodities which are in their natural and ordinary state, and have not been essentially affected by the causes which have operated upon the price of corn.

Where then is the truth of saying, that from the altered relation between corn and money we deduce no other relation? It is perfectly obvious that we can deduce and do deduce a great number of other most important relations; and, in fact, do ascertain, though not with perfect accuracy, yet with a most desirable and useful approach to it, the degree of increase in the power of corn to command in exchange the mass of other commodities.

On the other hand, from the diminished power of money in relation to corn, we cannot infer that money has fallen nearly in the same proportion in relation to other commodities. If an ounce of silver will now command only half a bushel of wheat, instead of a whole bushel, we can by no means infer that an ounce of silver will therefore command only about half the quantity of labour, half the quantity of cloth, half the quantity of hardware, half the quantity of hats and shoes, and of all those commodities which are in their natural and ordinary state. To all these objects money will probably bear nearly the same relation as before.

Where, then, is the truth of saying, that money would not be here discharging a particular function more than the other commodity? Broad, glaring, and incontrovertible facts show, that for short periods money does perform the function of measuring the variations in the general power of purchasing possessed by the corn; but that the corn does not measure the variations in the general power of purchasing possessed by the money. This is one of the instances of that extraordinary inattention to facts which, most unfortunately for the science of political economy, the professors of it have lately indulged themselves in.

The author has said a great deal in good set phrase about the false analogy involved in the application of the term measure to the value of commodities at different periods; and gravely states the difference between measuring length at different periods and measuring value.

I was not aware that people were ignorant of this difference. As I said before, whenever mention is made of the value of a commodity at different periods, I have always thought that a reference has been intended either to its general power of purchasing, or to something calculated to express the estimation in which it was held at these different periods, founded on the state of its supply compared with the demand, or the elementary costs of its production.

But if the term has been generally understood in this way, people must have been fully aware that value was essentially different from length: they would know perfectly well that a piece of cloth of a yard long would continue to be a yard long when it was sent to China; but that its value, that is, its general power of purchasing in China, or the estimation in which it was held there, would probably be essentially altered. But allowing this most marked distinction, and that the value of a commodity cannot be so well defined, and its variations so accurately measured, as the length of a commodity—where is the false analogy of endeavouring to measure these variations as well as we can? We cannot certainly describe the wealth of a merchant, nor measure the increase of his wealth during the last four years, with the same exactness as we can describe the height of a boy, and measure the amount of his growth during the same period. We can perform the latter operation with the most perfect precision by means of a foot-rule. The nature of wealth, and the best instruments used to measure its increase, are such, that the same precision is unattainable; but there is no false analogy involved in the process of measuring the wealth of a merchant at one time with his wealth four years before, by the number of pounds sterling which he possesses now, as compared with the number of pounds sterling he possessed at the former period. What false analogy is involved in applying money to measure the value of the advances of a manufacturer, as compared with the value of his returns, in order to estimate his profits? and what can the author mean by saying, that no relation of value can exist between commodities at different periods;* and that it is a case where money has no function to perform?

Notwithstanding such assertions, we see every day the most perfect conviction prevailing among all agriculturists, merchants, manufacturers, and shopkeepers, and among all writers on political economy, except the author, that to estimate the relation of commodities, at different periods, in regard to their general power of purchasing, and particularly the power of purchasing labour, the main instrument of production, is a most important function, which it is peculiarly desirable to have performed; and that, for moderately short periods, money does perform this function with very tolerable accuracy. And for this specific reason; that, for moderately short periods, a given quantity of money will represent, more nearly than any other commodity, the general power of purchasing, and particularly the power of setting labour in motion, so vital to the capitalist. It will approach, in short, more nearly than any other commodity, to that invariability which the author thinks so utterly useless in a measure of value, and the very mention of which seems to excite his indignation.*

It is, in fact, by means of this same steadiness of value in the precious metals, which they derive from their great durability, and the consequent uniformity of their supply in the market, that they are enabled to perform their most important functions. Hops, or corn, as before stated, will measure the relative values of commodities at the same time and place; but let the author or reader attempt to estimate the profits of a capitalist in hops or corn, by the excess of the value of his advances above the value of his returns so estimated, and he will soon be bewildered. If a very plentiful year of corn were to succeed to a comparatively scarce one, the farmer, estimating both his outgoings and incomings in the corn of each year, might appear to gain above fifty per cent., while, in reality, he might have lost, and might not be able, without trenching on his capital, to employ as many men on his farm as the year before. On the other hand, if a comparatively scarce year were to succeed to a plentiful one, his profits, estimated in corn, might appear to be less than nothing, and yet he might have been an unusual gainer, in reference to his general power of purchasing labour and other commodities, except corn. If the hop-planter were to estimate his advances and returns in hops, it is obvious that the results would be of the same kind, but aggravated in degree.

It must be allowed, then, that the commercial world have acted most wisely in selecting, for their practical measure of value, a commodity which is not only peculiarly convenient in its form, but is, in general, subject only to slow changes of value; and possesses, therefore, that steadiness in its power of purchasing labour and commodities, without which, all confidence in carrying on mercantile enterprises, of any duration, would be at an end.

But though the precious metals are a very useful and excellent measure of value for those periods, within which almost all mercantile transactions are begun and completed; yet, as Adam Smith very justly observes, they are not so for very long periods; not because there is no function for them to perform, but because, in the course of four hundred years, they are found to lose that uniformity of value, which, in general, they retain so well during four years.

I can by no means, therefore, agree with the author, when he says, speaking of the precious metals, that, “in regard to measuring or comparing value, there is no operation that can be intelligibly described, or consistently imagined, but may be performed by the media of which we are in possession.”* Surely, to measure the relative power of a commodity over labour and the mass of other commodities, at different and distant times, is an operation which may be both consistently imagined, and intelligibly described; yet it is quite certain, that, in regard to distant periods, the precious metals will not perform this well. Would the author himself venture to say, that the general power of purchasing possessed by an ounce of silver in the time of Edward the Third, was not very much greater than the general power of purchasing possessed by an ounce of silver in the time of George the Fourth; or, that the same quantity of agricultural labour, at these two periods, would not much more nearly have represented the same general power of purchasing? The author seems equally unfortunate when he launches out in praise of the precious metals as a measure of value, as when he says that they do not perform this function better than corn.

It will be observed that, in speaking of the values of commodities, at different periods, as meaning their different powers of purchasing at those periods, the kind of value referred to is, exclusively, value in exchange. And, in reference to value in exchange, exclusively, it appears to be of the utmost importance to the language of political economy, to distinguish between the power of purchasing generally, and the power of purchasing any one commodity.

But it must not be imagined that when the estimation in which a commodity is held at different periods is referred to, as determined at the time by the state of the supply compared with the demand, and ordinarily by the natural and necessary conditions of its supply, or by the elementary costs of its production, which are equivalent expressions, that value in exchange is lost sight of. Yet the author is continually falling into this kind of misapprehension, and into a total forget-fulness of his first account of the meaning of value, in his examination of Mr. Ricardo’s views, as to the uses of a measure of value, in which, he says, a singular confusion of thought is to be discovered.*

Suppose, he observes, that we had such a commodity as Mr. Ricardo requires for a standard: suppose, for instance, all commodities to be produced by labour alone, and silver to be produced by an invariable quantity of labour. In this case, silver would be, according to Mr. Ricardo, a perfect measure of value. But in what sense? What is the function performed? Silver, even if invariable in its producing labour, will tell us nothing of the value of other commodities. Their relations in value to silver, or their prices, must be ascertained in the usual way; and, when ascertained, we shall certainly know the values of commodities in relation to each other; but in all this, there is no assistance derived from the producing labour of silver being a constant quantity.”*

I have already described the function which silver would have to perform in this case, namely, either to measure the different powers of purchasing possessed by commodities at different periods, or to measure the different degrees of estimation in which they were held at these different periods.

Now, in the first place, with regard to the general power of purchasing, can it be denied for a moment, that, granting all the premises, as the author does hypothetically, silver, so produced, would be, beyond comparison, a better measure of the power of purchasing generally, than silver as it has been actually produced? It would be secured from that greatest source of variation in the general power of purchasing occasioned by the variation in its own producing labour; and an ounce of such silver would command much more nearly the same quantity of labour and commodities, for four or five hundred years together, than an ounce of silver derived from mines of greatly varying fertility.

Secondly, with regard to the estimation in which a commodity is held, it is not easy to conceive a more complete measure. If all commodities were produced by labour alone, and exchanged with each other according to the producing labour; and if silver were produced by an invariable quantity of labour, the quantity of silver given for a commodity in the market at different periods, would express almost accurately the relative estimation in which it was held at these periods; because it would express at once the relative sacrifice which people were willing to make, in order to obtain such a commodity at these different periods; the relative conditions of the supply, or elementary costs of production, of such commodity at these periods; and the proportion of the produce to the producer, or the relative state of the demand, as compared with the supply of such commodity at these different periods. And if the value of a commodity means, as the author has told us in the first sentence of his book, the esteem in which it is held, Mr. Ricardo’s measure would certainly do all which he proposed it should do; and this specifically on account of its invariability in relation to the estimation in which it was held.

It would not merely indicate, as the author states, in which of two commodities varying in relation to each other, at different periods, the variation had taken place;* but it would express the precise amount of the variation; that is, if it appeared by documents that the price of a yard of cloth of a certain quality four hundred years ago was twenty shillings, and its price at present was only ten shillings, it would follow, that the estimation in which it was held, or its value, had fallen one-half; because, as all commodities are, by the supposition, produced by labour alone, the sacrifice with which it could be obtained, the necessary conditions of its supply, or the elementary costs of its production, had diminished one-half.

The variations of a commodity, in relation to this kind of standard, would further show, with great exactness, the variations in its power of commanding all those commodities which had not altered in the conditions of their supply, or the elementary costs of production. If a commodity rose or fell in this standard price, at different periods, it would necessarily rise or fall exactly in the same proportion in its power of commanding, in exchange, all those commodities which had not altered in the conditions of their supply, or their elementary costs of production.

But still, it will be readily acknowledged, that, even granting all that the author has granted hypothetically to Mr. Ricardo, it is not true that such silver would be an accurate measure of the general power of purchasing. Although the circumstance of its invariability, in regard to its producing labour, would give it a prodigious superiority over all other commodities even in this respect, yet, as the producing labour of many commodities may vary in the progress of society, it is quite impossible that the same quantity of any one object can, through successive periods, represent the same general power of purchasing. This is universally allowed; and as it would be clearly desirable to have one rather than two definitions of value, the question is, whether, both on this account, and on account of the universal language and practice of society, for short periods, it would not be decidedly better to confine the term value of a commodity, when used generally, to 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 production, rather than to its general power of purchasing. There is very nearly an accurate measure of the former; it is universally acknowledged that there cannot be an accurate measure of the latter; and further, it is most important to remark that, in adopting the former, our language would much more nearly coincide with the ordinary language of society in referring to variations of value, than if we adopted the latter.

As a matter of fact, when a rise in the value of hops or of corn is spoken of, who ever thinks about the changes which may have taken place in the values of iron, flax, or cabbages? For short periods, we consider money as nearly a correct measure of the values of commodities, as well as of their prices; and if hops and corn have risen in this measure, we do not hesitate to say that their values have risen, without the least reference to cloths, calicoes, or cambrics. This is a clear proof that, in general, when we speak of the variations in the values of commodities, we do not measure them by the variations in their general power of purchasing, but by some sort of standard which we think better represents the varying estimation in which they are held, determined at all times by the state of the supply compared with the demand, and, on an average, by the elementary costs of production.

The only variations in the general power of a commodity to purchase, which are susceptible of a distinct and definite measure, are those which arise from causes which affect the commodity itself, and not from the causes which affect the innumerable articles against which it is capable of being exchanged. In speaking, therefore, of the variations in the value of particular commodities, it is not only more accordant with the accustomed meaning attached to the expression, but absolutely necessary with a view to precision, to consider them as exclusively proportioned to, and measured by, the amount of the causes of value operating upon themselves.

Mr. Ricardo, therefore, quite consistently with his own hypothesis, considers a commodity, the producing labour of which has doubled, as having increased to double its former value. It has increased in relation to a standard which, according to him, is the sole cause of value; it will command just double the quantity of all those commodities which have not altered in their producing value; and if it will not command just double the quantity of other commodities, it is not because it will not command just double the value which it did before, but because, on account of the changes in the producing labour of the other commodities, double the quantity of them has become more or less than double the value.

On the same principle, Adam Smith considers the value of cattle as rising in the progress of cultivation and improvement, although the value of land, the value of wood, the value of poultry, &c., might rise still higher, and, consequently, a given quantity of cattle might, with regard to some commodities or sets of commodities, have its power of purchasing diminished. But in saying that the value of cattle rises in the progress of cultivation, he means to say, that it rises in relation to a standard, namely, the labour a commodity will command, which represents at different periods the state of the supply of cattle compared with the demand, and, on an average, the elementary costs of their production; and, consequently, much better represents the estimation in which they are held than any commodity or set of commodities. “Labour,” he observes, “it must always be remembered, and not any particular commodity, or set of commodities, is the real measure of the value both of silver and of all other commodities.”*

Even the author himself has a chapter on the causes of value; and here he finds it absolutely necessary to estimate the causes affecting one commodity as distinct from the causes affecting another; although, according to his previous doctrine, the value of one commodity might be just as powerfully affected by causes operating upon another commodity as by causes operating upon itself. If a and b be compared, the value of a will be equally doubled, whether the elementary cost of a be doubled or the elementary cost of b be diminished one half; and so no doubt it would, if the relation of a to b were alone considered. But what does this prove? not that the value of a is not very differently affected in the two cases, according to the most ordinary, the most useful, and the most correct acceptation of the term value; but that to confine the term value, as the author does, to the mere relation of any one commodity to any other, is to render it pre-eminently futile and useless.

In first separating value in exchange from value in use, it may be allowable to distinguish it by the title of the power of purchasing other goods, as Adam Smith has done, though never to interpret this power as the power of purchasing any one sort of goods, as the author has done. But the moment we come to inquire into the variations of the values of commodities at different periods, we must, with any view to precision and utility, draw a marked line of distinction between a variation in the power of purchasing derived from causes affecting the particular purchasing commodities, and the variations in the power of purchasing which may arise from causes operating upon the purchased commodities. We must confine our attention exclusively to the former; and for this purpose refer to some standard which will best enable us to estimate the variations in the elementary costs of production, and in the state of the demand and supply of these commodities, as the best criterion of their varying value, or the varying estimation in which they are held at different periods.

On these grounds, Mr. Ricardo, consistently with his peculiar theory, measures the varying values of commodities at different periods by their producing labour.

And Adam Smith, consistently with his more just and applicable theory, measures the values of commodities at different periods by the labour which they will command.

Among the author’s chapters is one (the seventh) entitled “On the Measure of Value proposed by Mr. Malthus.”

In order to prepare himself for the refutations intended, he sums up his principal doctrines respecting value; and as they are here brought into a small compass, I cannot resist the temptation of quoting them in his own words.

He says, “It has been shown that the value of labour, like that of any other exchangeable article, is denoted by the quantity of some other commodity for which a definite portion of it will exchange, and must rise or fall as that quantity becomes greater or smaller, these phrases being only different expressions of the same event. Hence, unless labour always exchanges for the same quantity of other things, its value cannot be invariable, and, consequently, the very supposition of its being, at one and the same time, invariable, and capable of measuring the variations of other commodities, involves a contradiction.”

“It has also been shown, that to term anything immutable in value, amidst the fluctuations of other things, implies that its value at one time may be compared with its value at another time, without reference to any other commodity, which is absurd, value denoting a relation between two things at the same time; and it has likewise been shown, that in no sense could an object of invariable value be of any peculiar service in the capacity of a measure.

“These considerations,” he says, “are quite sufficient to overturn the claims of the proposed measure, as maintained by its advocate.”*

I am most ready to acknowledge that they are amply sufficient for the purpose, if they are true. But is it possible that doctrines can be true, which, having no other foundation than a most arbitrary and unwarranted interpretation of a definition of Adam Smith, lead directly to the subjoined conclusions?

First; That the value of labour rises or falls as a given portion of it will exchange for a greater or less quantity of silk or any other commodity, however unconnected with the labourer’s wants; so that if silks were to fall to one-half their price, the value of labour would be doubled.

Secondly; That the value of corn in one year cannot be compared with the value of corn in another, because value denotes only a relation between two things at the same time.

And thirdly, That the comparative steadiness in the value of the precious metals, for short periods, is of no service to them in the capacity of a measure of value.

The decision of the question, as to the truth of doctrines necessarily leading to such conclusions, may be safely left to the reader. But to return to the main subject of the chapter, namely, the measure of value proposed by me.

In a publication entitled “The Measure of Value stated and illustrated,” I had given reasons, which appeared to me convincing, for adopting labour, in the sense in which it is generally understood and applied by Adam Smith, as the measure of value; and further to illustrate the subject, and bring into one view the results of different suppositions respecting the varying fertility of the soil and the varying quantity of corn paid to the labourer, I added a table in which different suppositions of this kind are made.

In reference to this table the author observes, that “In the same way any article might be proved to be of invariable value, for instance, ten yards of cloth. For whether we gave 5l. or 10l, for the ten yards, the sum given would always be equal in value to the cloth for which it was paid, or, in other words, of invariable value in relation to cloth. But that which is given for a thing of invariable value must itself be invariable, whence the ten yards of cloth must be of invariable value.”*

This comparison shows either a most singular want of discrimination, or a purposed disregard of the premises on which the table is founded. These premises are, that the natural and necessary conditions of the supply of the great mass of commodities, or, in other words, their elementary costs of production, are, the accumulated and immediate labour necessary to produce them, with the addition of the ordinary profits upon the whole advances for the time they have been advanced; and that the ordinary values of commodities at different periods, according to the most customary application of the term, are determined by the elementary costs of production at those periods, that is, by the labour and profits worked up in them.

If these premises be just, the table correctly illustrates all that it was intended to illustrate. If the premises be false, the whole falls to the ground.

Now, I would ask the author, what sort of resemblance there is between ten yards of cloth and ten days’ labour? Is cloth the universal and the main instrument of production? Is the advance of an adequate quantity of cloth the natural and necessary condition of the supply of all commodities? Has any one ever thought of calling cloth and profits the elementary costs of production? or has it ever been proposed to estimate the values of commodities at different periods by the different quantities of cloth and profits worked up in them?

If these questions cannot be answered in the affirmative, it is obvious that what may be true and important with regard to labour, may be perfectly false or futile in regard to any product of labour.* The whole depends upon the mode of estimating the values of commodities.

It would, no doubt, be an absurd tautological truism merely to state, that the varying wages of a given quantity of labour will always command the same quantity of labour; but if it were previously shown that the quantity of labour which a commodity commands represents exactly the quantity of labour worked up in it, with the profits upon the advances, and does therefore really represent and measure those natural and necessary conditions of the supply, those elementary costs of production which determine value; then the truism that the varying wages of a given quantity of labour always command the same quantity of labour, must necessarily involve the important truth, that the elementary costs of producing the varying wages of a given quantity of labour must always be the same.

It is obvious to any person inspecting the table, that the uniform numbers in the seventh column, illustrating the invariable value of the wages of a given number of men, might, with perfect certainty, have been stated without the intermediate steps; but if they had been so stated, no conclusion respecting the constancy of the value of such wages could have been drawn. The intermediate steps, which show that the value of the wages of ten men is there estimated by the causes which had been previously shown to determine the values of all commodities, can alone warrant the conclusion that the uniform numbers in the seventh column imply uniformity of value in the wages.

Mr. Ricardo had stated repeatedly, that the value of the wages of labour must necessarily rise in the progress of society. He builds, indeed, the whole foundation of his theory of profits on the rise and fall of the value of labour. The table shows that, if we estimate the value of wages by the labour worked up in them, that is, by one element of value, Mr. Ricardo is right, and the value of wages will really rise as poorer land is taken into cultivation; but that, if we estimate the value of wages by the labour and profits worked up in them, that is, by the two elementary ingredients of value, the value of wages will remain the same.

The author says that, from the remarks he has made, the reader will perceive that Mr. Malthus’s “Table illustrating the invariable value of labour,” absolutely proves nothing;* and he concludes his chapter with observing, that his “cursory review evinces that the formidable array of figures in the table yields not a single new or important truth.*

I was not aware that it was ever expected from a tabular arrangement, that it should afford logical proofs of new propositions; but, if the author means that, taking the whole publication together, it contains nothing new or important, though I may be bound to believe it in relation to his own reading and his own views, I cannot help doubting it a little in regard to the reading and views of many others; and I am quite certain that, with regard to myself, the view I there took of the subject of value, and of the reasons for adopting labour as its measure, was, in many of its parts, quite new to me a year before the publication.

In the first place; I had nowhere seen it stated, that the ordinary quantity of labour which a commodity will command must represent and measure the quantity of labour worked up in it, with the addition of profits. But, as soon as my attention was strongly drawn to his truth, the labour which a commodity would ordinarily command appeared to me in a new light. I had before considered labour as the most general and the most important of all the objects given in exchange, and, therefore, by far the best measure of the general power of purchasing of any one object; but after I became aware that, by representing the labour worked up in a commodity, with the profits, it represented the natural and necessary conditions of its supply, or the elementary costs of its production, its importance, as a measure, appeared to me very greatly increased.

Secondly; I had nowhere seen it stated that, however the fertility of the soil might vary, the elementary costs of producing the wages of a given quantity of labour must always necessarily be the same. Colonel Torrens, in adverting to a measure of value, says, “In the first place, exchangeable value is determined by the cost of production; and there is no commodity, the cost of producing which is not liable to perpetual fluctuation. In the second place, even if a commodity could be found which always required the same expenditure for its production, it would not, therefore, be of invariable exchangeable value, so as to serve as a standard for measuring the value of other things. Exchangeable value is determined, not by the absolute, but by the relative, cost of production.”*

I had been convinced, however, that, with a view to superior accuracy and utility, and a more complete conformity to the language and practice of society, in estimating the varying values of commodities for short periods, it was necessary to separate the variations in the power of a commodity to purchase, into two parts; the first, derived from causes operating upon the commodity itself; the second, from causes operating upon other commodities; and, in speaking of the variations in the exchangeable value of a commodity, to refer only to the former. In this case it is obvious that, according to Colonel Torrens, we should possess a measure of value if we could find an object the cost of producing which was always the same.

Now it is shown, in the “Measure of value stated and illustrated,” that the conditions of the supply of labour, or the elementary costs of producing the corn wages of a given number of men, estimated just in the same way as we should estimate the elementary costs of producing cloth, linens, hardware, or any other commodity, must of necessity always remain the same.

I own that these two necessary qualities of the labour, which commodities will ordinarily command, were practically new to me; and, when forced on my attention, and accompanied by the conviction above described, as to the most correct and useful definition of value, made me view labour as a measure of value, so far approaching towards accuracy, considering the nature of the subject, that it might fairly be called a standard.

The publication was also marked by another peculiarity, which I cannot but consider as of some importance: namely, the constant use of the term labour and profits, instead of the customary one, labour and capital.

It must be allowed that the expression labour and capital is essentially tautological. In every definition of capital I have met with, the means of commanding labour are included; and there can be no doubt that machinery and raw materials require labour for their production of the same general description, and usually in as large a proportion, as the labour advanced by the last capitalist. Speaking loosely, we may indeed use the expression labour and capital, meaning by capital, when so used, all that part of the general description of capital which does not consist of the means of commanding the immediate labour required. But when we are engaged in an inquiry into the elements of value, nothing can be more unphilosophical than to talk of labour and capital. Excluding rent and taxes, the only elements concerned in regulating the value of commodities are labour and profits, including, of course, in such labour, the labour worked up in the raw materials, and that portion of the machinery worn out in the production; and including in the profits, the profits of the producers of the raw materials and machinery. To say that the values of commodities are regulated or determined by the quantity of capital and labour necessary to produce them is essentially false. To say that the values of commodities are regulated by the quantities of labour and profits necessary to produce them is, I believe, essentially true. And if so, it was a point of some importance to substitute the expression labour and profits for the customary one of labour and capital.

I have been detained longer than I intended by the Critical Dissertation on the Nature, Measures, and Causes of Value. There is still matter of animadversion remaining; but were I to go on I should tire my readers, if I have not done it already.

The author, when not under the influence of his peculiar definitions, makes some very just observations; and the work is exceedingly well written; which makes it a matter of greater surprise that its main proposition should be so strikingly adverse to the principle of utility, and so peculiarly calculated to retard the progress of that science which it must have been intended to promote.

I do not think it necessary to the object I have in view, to proceed further with these remarks on the definition and use of terms among political economists. What I have already said, if just, will be sufficient to show that much uncertainty has arisen from our* negligence on this important point, and much improvement might be expected from greater attention to it. I shall now, therefore, proceed to define some of the principal terms in political economy, as nearly as I can, according to the rules laid down. But before I begin, I think it may be useful to give a summary of the reasons for adopting the subjoined definition of the measure of value.

[* ] Preface, p. 5.

[* ] Dissertation on Value, c. 1. p. 3.

[* ] Dissertation on Value, c. 1. p. 4.

[* ] Wealth of Nations, b. i. c. xi.

[* ] Production of Wealth, c. i. p. 49.

[† ] p. 242.

[* ] Dissertation on Value, c. i. p. 3.

[† ] c. ii. p. 39.

[* ] Dissertation on Value, c. iii. p. 58.

[* ] Dissertation on Value, c. xi. p. 194, 224. In the question between Colonel Torrens and Mr. Mill, “Whether the value of commodities depends upon capital as the final standard,” the author decides against Mr. Mill, but surely without reason. Mr. Mill cannot be wrong in thinking, that no progress whatever is made towards tracing the value of a commodity to its elements, by saying, that its value is determined by the value of the capital employed to produce it. The question still remains, how is the value of the capital determined? As to what the author says, p. 202, about the amount of capital, unless this amount be estimated in money, which quite alters the question, it is entirely inapplicable as a standard.

[* ] c. viii. p. 160.

[* ] c. vi. p. 135.

[* ] Dissertation on Value, c. ii. p. 58.

[† ] Id. p. 39.

[* ] p. 240.

[* ] Dissertation on Value, c. ii. p. 40.

[* ] Dissertation on Value, c. vi. p. 117.

[* ] Dissertation on Value, c. vi. p. 117.

[* ] Dissertation on Value, c. vi. p. 117.

[* ] Dissertation on Value, c. vi. p. 113, et seq.

[* ] Dissertation on Value, c. vi. p. 110.

[* ] Dissertation on Value, c. vi. p. 102.

[* ] Dissertation on Value, c. vi. p. 120.

[* ] Dissertation on Value, c. vi. p. 122.

[* ] Dissertation on Value, c. vi. p. 121.

[* ] Wealth of Nations, b. i. c. xi. p. 291, 6th edit.

[* ] Dissertation on Value, c. vii. p. 140.

[* ] Dissertation on Value, c. vi. p. 145.

[* ] It has always been a matter of great surprise to me that I should have been accused of arbitrarily adopting labour as the measure of value. If there be not a most marked and characteristic distinction between labour and any product of labour, I do not know where a characteristic distinction between two objects is to be found; and surely I have stated this distinction often enough, and brought forward the peculiar qualities of labour as my reasons for thinking that it may be taken as a measure of value. Opinions may differ as to the sufficiency of these reasons, or as to the degree of accuracy with which it will serve the purpose of a measure. But how it can be said that I have adopted it arbitrarily, is quite unintelligible to me. If I had merely stated, that I had adopted it because it was the main element in the natural costs of production, there could have been no ground for such a charge.

[* ] Dissertation on Value, c. vii. p. 148.

[* ] Dissertation on Value, c. vii. p. 150.

[* ] On the Production of Wealth, c. i. p. 56.

[* ] I am very ready to include myself among those political economists who have not been sufficiently attentive to this subject.