The Online Library of Liberty

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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 IX.

SUMMARY OF THE REASONS FOR ADOPTING THE SUBJOINED DEFINITION OF THE MEASURE OF VALUE.

As a preliminary, it may be proper to state, that it seems absolutely essential to the language of political economy, that the expression value of a commodity, like the expression price of a commodity, should have some fixed and determined sense attached to it. Every person who has either written or talked on the subject of political economy, has been constantly in the habit of using the term without specifically expressing the object of comparison intended: and if it were true, that we might with equal propriety suppose any one of a thousand different objects referred to, it might easily be shown, that all past writers who had used the term value had talked the greatest nonsense; and all future writers must abound in the most tedious circumlocutions and the most futile propositions.

But the author of the Critical Dissertation on Value has certainly done injustice to the writers who have gone before him, in supposing that when they have used the term value of a commodity, no reference was implied, if it was not expressed. As I stated before, they must be considered as referring, in some form or other, either to its general power of purchasing, or, to the estimation in which it was held, determined by the state of its supply compared with the demand, and, on an average, by the elementary costs of production; and as it would be perfectly ridiculous to suppose, that when the values of commodities, at different periods, are spoken of generally, by respectable writers, they could mean to refer to individual commodities not intended to represent, more or less accurately, the above objects of reference; it is obvious, that the ultimate reference implied must be confined to one of these, or their equivalents.

I have already given my reasons for thinking it more correct and useful to refer to the estimation in which a commodity is held, determined as above described, rather than to its general power of purchasing; but, as others may be of a different opinion, it may be useful to include among the reasons for adopting labour as a measure of value, its qualities as a measure of the general power of purchasing.

Supposing, then, that the exchangeable value of a commodity were defined to be its general power of purchasing, this must refer to the power of purchasing the mass of commodities; but this mass is quite unmanageable, and the power of purchasing it can never be ascertained. With a view, therefore, to its practical application, it would unquestionably be our endeavour to fix upon some object, or set of objects, which would best represent an average of the general mass. Now, of any one object, it cannot for a moment be denied that labour best represents an average of the general mass of productions. There is no commodity considered by society as wealth, for which labour is not, in the first instance, exchanged; there are very few for which it is not exchanged in great quantities: and this can be said of no other object, except labour, and the circulating medium which represents it. It is, at once, the first, the universal, and the most important object given in exchange for all commodities; and if to this we add, that while there is one large class of commodities, such as raw products, which in the progress of society tends to rise as compared with labour, there is another large class of commodities, such as manufactured articles, which at the same time tends to fall; it may not be far from the truth to say, that the portion of the average mass of commodities which a given quantity of labour will command in the same country, during the course of some centuries, may not very essentially vary.

Allowing, however, that it would vary, and that labour is an imperfect measure of the general power of purchasing; yet, if some sort of standard more applicable than the mass of commodities be required, and labour appears to be beyond comparison the best representative of this mass, there will be a very powerful reason for adopting labour as the practical measure of value, even among those who may persevere in thinking that the best definition of value in exchange is the general power of purchasing.

To those, however, who hold the opinion that the variations in the exchangeable value of a commodity and the variations in its power of purchasing are not identical, and that a commodity increases in exchangeable value only when it will command a greater value in exchange, while its power of purchasing may increase merely because it will command a greater quantity of commodities which have confessedly fallen in value, the reasons for adopting labour as the measure of value will be found to increase tenfold in force.

There are various ways of describing value in the sense here understood; and the slightest examination of them will show that the labour which a commodity will command can alone be the measure of such value.

First; The author of the Critical Dissertation on Value has commenced his work by a description of it, in which I entirely agree with him. He says, as I have before stated, that “value, in its ultimate sense, appears to mean the esteem in which any object is held. But it is obvious that the degree of this esteem cannot be measured by comparing it with another commodity about which we know as little as of the first. The comparison with money would leave us as much in the dark as ever, if we did not previously know the estimation in which money was held.* Even the mere relative values of two commodities cannot be inferred by putting them side by side, and looking at them for any length of time. Before we can attain even this partial conclusion, we must refer each of them to the desires of man, and the means of production; that is, we must make a previous comparison, in order to ascertain the value of each before we can venture to say what relation one bears to the other. It is this primary comparison which, independently of any secondary comparison, determines the estimation in which the commodity is held. And as this primary comparison can only be represented by the exchange with labour, it is certain that, if we define the value of a commodity to be the estimation in which it is held, the quantity of labour which it will command can alone measure this estimation.

Secondly: Locke, most justly looking to the foundation of all value, considers the value of commodities as determined by the proportion of their quantity to their vent, or of the supply to the demand; but the varying vent or demand for one commodity cannot possibly be represented by the varying quantity of another commodity for which it is exchanged, unless the second commodity remain steady in regard to labour. If at one time I give two pounds of hops for a yard of cloth, and at another time only one, it does not at all follow that the demand for cloth has diminished; on the contrary, it may be increased, and in giving the value of one pound of hops, I may have enabled the cloth manufacturer to set more men to work, and to obtain higher profits than when I gave the value of two pounds. But the demand for a commodity, though not proportioned to the quantity of any other commodity which the purchaser is willing and able to give for it, is really proportioned to the quantity of labour which he will give for it; and for this reason: the quantity of labour which a commodity will ordinarily command, represents exactly the effectual demand for it; because it represents exactly that quantity of labour and profits united necessary to effect its supply;* while the actual quantity of labour which a commodity will command when it differs from the ordinary quantity, represents the excess or defect of demand arising from temporary causes. If then looking to the foundation of all value, namely, the limitation of the supply as compared with the wants of mankind, we consider the value of commodities at any time or place as proportioned to the state of their supply compared with the demand at that time and place, it is evident that the quantity of labour of the same time and place which any commodity, or parcels of commodities, will command, can alone represent and measure the state of the supply of them as compared with the demand,* and their values as founded on this relation.

Thirdly: It has often been stated that the value of a commodity is determined by the sacrifice which people are willing to make in order to obtain it; and this seems to be perfectly true. But the question recurs, how are we to measure this sacrifice? It is obvious that we cannot measure it by the quantity of another commodity which we are willing to give in exchange for it. When I give more calicoes, or more potatoes, than I did before, for a certain quantity of hardware, it does not at all follow that I make a greater sacrifice in order to obtain what I want. On the contrary, if calicoes and potatoes had both fallen in price, the one from improved machinery and the other from the abundance of the season, my sacrifice might even have been less rather than greater. Even the quantity of money which is given for a commodity is no measure of the sacrifice made to obtain it. Though it is an excellent measure of the variations in the sacrifice made, at the same time and place; yet without further information, it will tell us nothing either about the amount, or the variations at different places and times. The giving of an ounce of silver was a very different sacrifice in the time of Edward I. from what it is at present. It is obvious, therefore, that the sacrifice which we are willing to make, in order to obtain a particular commodity, is not proportioned to the quantity of any other commodity for which it will exchange, but to the difficulty with which such quantity, whether more or less, is attained. Now labour can measure this difficulty, but nothing else can. If, then, the value of a commodity be determined by the sacrifice which people are willing to make in order to obtain it, it is the labour given for a commodity, and labour alone, which can measure this sacrifice.

Fourthly: In the Measure of Value Stated and Illustrated, I considered the value of commodities as, on an average, determined by the natural and necessary conditions of their supply. These conditions I stated to be the accumulated and immediate labour worked up in commodities with the ordinary profits upon the whole advances for the time that they were advanced. And it appeared, both in the early part of the discussion, and in the Table, that the quantity of labour which a commodity would ordinarily command must represent and measure the quantity of labour worked up in it with the addition of profits. It was certainly a very remarkable fact, that when Mr. Ricardo chose the labour worked up in commodities “as, under many circumstances, an invariable standard,” and rejected the labour which they would ordinarily purchase as subject to as many fluctuations as the commodities compared with it,* he should not have seen that the labour which a commodity will ordinarily command, necessarily involves his own proposition, with that addition to it merely which can alone make it correct; and that it is precisely because the labour which a commodity will ordinarily command measures the labour actually worked up in it with the addition of profits, that it is justifiable to consider it as a measure of value. If then the ordinary value of a commodity be considered as determined by the natural and necessary conditions of its supply, it is certain that the labour which it will ordinarily command is alone the measure of these conditions.

Fifthly: The values of commodities are often said to be determined by the costs of production. When the costs of production do not refer to money, but to those simple elements of production, without an adequate quantity of which, whatever may be their price in money, the commodity cannot be produced, they are precisely the same as the natural and necessary conditions of the supply. The elementary costs of production, excluding rents and taxes, are the labour and profits required to produce a commodity. Of these it has been already shown, that the labour which the commodity will ordinarily command is alone the measure; and allowing that we could obtain with tolerable exactness the average price of common agricultural labour at different times and in different countries, and that when the prices of all other sorts of labour were once established, they would (as assumed by Adam Smith and Mr. Ricardo) continue to bear nearly the same relation to each other in the further progress of cultivation and improvement, it is certain that the quantity of common agricultural labour which a commodity would ordinarily command at any place and time would measure, with a near approach to accuracy, the elementary costs of production at that place and time; so that commodities, which at two different periods in the same country wuld ordinarily command the same quantity of agricultural labour, might fairly be said to be equal to each other in their elementary costs of production, and, of course, in their values, if their values be determined by their elementary costs of production.

Sixthly: It may be said that the value of a commodity must be proportioned to its supply compared with the number of its producers. This appears, indeed, to be strikingly the case in the early periods of society when many commodities are obtained, almost exclusively, by labour. If fruits are to be procured, or game killed or caught, by labour alone, or assisted only by capital of very little value, the quantity obtained, on an average, by a day’s labour must represent, with a great approach to accuracy, the degree of scarcity in which commodities exist compared with the producers of them working for a certain time. But the degree in which the supply of a commodity is limited, as compared with the numbers, powers, and wants of those who wish to obtain it, is the foundation of all value. Here the producers are both the effectual demanders and the consumers; and the produce obtained on an average by a single producer must represent the supply compared with the numbers, powers, and wants of the demanders. If a large quantity of produce be obtained by a producer, the commodity will be in abundance, and will be considered as of comparatively little value; if a small quantity be obtained by a producer, the commodity will be scarce, and will be considered as of comparatively great value. If it be the custom of the country for the producers to work only four hours a-day instead of ten or twelve, the commodities produced will bear a comparatively small proportion to the numbers of the producers and effectual demanders, and will consequently be of much higher value, than in those countries where it is the custom to work for the greater number of hours; and, on the other hand, if the producers, besides working ten or twelve hours a-day, are aided by ingenious instruments and great skill in the use of them, the commodities produced will be in unusual plenty compared with the producers, and will be considered as proportionally of low value. In all these cases the value of the commodity is evidently determined by the relation between its quantity and the number of its producers.

Now though, in the more advanced stages of society, the producer is not always at the same time the demander and consumer; yet the effectual demand for commodities must, on an average, be proportioned to the productive services set in motion to obtain them;* and when the different kinds of producers are reduced to a common denominator, such as common agricultural day-labour, and profits are deducted as the remuneration of the capitalist, and rent as the remuneration of the landowner, the proportion which the remaining produce bears to the number of such producers must represent, exactly in the same manner as in the early periods of society, the degree of scarcity in which the commodity exists compared with the producers; and therefore the value of the commodity is measured by the quantity of it which will command a day’s common labour. In fact, if it be once allowed that when labour is exclusively concerned, the number of days’ labour necessary to produce a commodity at any place and time represents the natural value of the commodity at that place and time* , then, as it is quite certain that the value in exchange of any other commodity compared with the first, will be accurately in proportion to the respective quantities of the same kind of labour which they will command, it follows necessarily, that the value of the second commodity must always be in proportion to the quantity of labour it will command, however its value may have been affected by profits, rents, taxes, monopolies, or the accidental state of its supply compared with the demand.

Seventhly: It has been stated that the values of commodities must be proportioned to the causes of value operating upon them. The author of the Critical Dissertation has a chapter on the causes of value, and, at the conclusion of it, adverting to the variety of considerations operating upon the human mind, which he thinks have been overlooked by political economists, he observes, “these considerations are the causes of value; and the attempt to proportion the quantities in which commodities are exchanged for each other to the degree in which one of these considerations exists, must be vain and ineffectual. All, in reality, that can be accomplished on this subject, is to ascertain the various causes of value; and, when this is done, we may always infer, from an increase or diminution of any of them, an increase or diminution of the effect.”*

These remarks, it must be allowed, are justly applicable to those who propose to measure the values of commodities by the quantity of labour actually bestowed upon them; but in no degree to those who propose to measure them by the quantity of labour which they will command. We have already shown that the labour which commodities will command measures that paramount cause of value which includes every other; namely, the state of the supply as compared with the demand. Whatever may be the number and variety of considerations operating on the mind in the interchange of commodities, whether merely the common elementary costs of production, or whether these costs have been variously modified by taxes, by portions of rent, by monopolies strict or partial, and by temporary scarcity or abundance, the result of the whole must appear in the state of the supply compared with the demand; and in the case of an individual article, the supply of which may be considered as given, the demand must be proportioned to the sacrifice which the purchasers are able and, under all the circumstances, willing to make in order to attain it.

But it has already been shown that it is the command of labour which the purchasers are able and willing to transfer to the sellers, and not any particular commodity, except in proportion as it will command labour, that can alone represent the sacrifice of the purchasers. The labour, therefore, which a commodity will command, or which the purchasers are willing to give for it, measures the result of all the causes of value acting upon it,—of all the various considerations operating upon the mind in the interchange of commodities.

Whether then we consider the value of a commodity at any place and time as expressed by the estimation in which it is held; whether we consider it as founded entirely on the state of the supply as compared with the demand; whether we consider it as determined by the sacrifice which people are willing to make in order to obtain it; or by the natural and necessary conditions of its supply; or by the elementary costs of its production; or by the number of its producers; or by the result of all the causes of value operating upon it, it is plain that the labour which it will ordinarily command in any place will measure its natural and ordinary value; and the labour which it will actually command will measure its market value.

It must always be recollected, however, that in any sense in which we can use the term value of a commodity, there must be a reference, either expressed or implied, to some place and time, in the same manner as when we use the term price of a commodity. We all well know that the price of the same kind of commodity of the same quality, weight, and dimensions, is very different in different places and at different times; and this must be equally true in regard to the value of a commodity. It follows that, from the very nature of the thing, the value of a commodity cannot be expressed or measured independently of place and time. It is this quality which so essentially distinguishes the value of a commodity from its length or weight; but it does not necessarily destroy its capability of being measured.

It is true, however, that a very general opinion has prevailed among political economists, even since the publication of Adam Smith’s work, that from the very nature of value, so essentially different from length or weight, it cannot admit of a regular and definite measure.* This opinion seems to me to have arisen principally from two causes.

First—a proper distinction has seldom been made between the definitions of wealth and value. Though the meanings of these two terms have by no means always been considered as the same, yet the characteristics of one of them have been continually allowed to mix themselves with the characteristics of the other. This appears even in Adam Smith himself. When he says, that a man is rich or poor according to the quantity of the necessaries, conveniencies, and luxuries of life which he can command, he gives a most correct definition of wealth; but when he afterwards says, that he is rich or poor according to the quantity of labour which he can command, he evidently confounds wealth with value. The former is a definition of wealth; and of this, or of the general power of purchasing, which too much resembles it, there is no measure. The latter is his own definition or expression of real value; and of this the very terms which he uses show that there is a measure. The measure is distinctly expressed in the terms.

The second principal cause which has prevented labour from being received, according to the language of Adam Smith, as “alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared,”* is, that in different periods, and in different countries, it is not really true, as stated by him, that the labourer in working “lays down the same portion of his ease, his liberty, and his happiness.”* There is the best reason to believe that the labourer in India, and in many other countries, neither exerts himself so much while he is working, nor works for so many hours a day as an English labourer. A day’s labour, therefore, is not invariable either in regard to intensity or time. But still it appears to me that, for the reasons before stated, that is, because the labour of each place and time measures at that place and time the estimation in which a commodity is held, the state of its supply compared with the demand, the elementary costs of its production, the natural and necessary conditions of the supply, the proportion of the produce to the producers, &c. it must be considered as measuring, with a fair approach towards accuracy, the values of commodities at these places and times, so as to answer the question,—what was the value of broad-cloth of a certain description in the time of Edward III. in England? or, what is the value of money at present in China? The nature of the measure, and the reason why the varying intensity of the labour and the different number of hours employed in the day, do not disqualify it from performing its functions, may perhaps be illustrated by the following comparison:—

Let us suppose that the heights of men in different countries were extremely different, varying from six feet to six inches, and that the trees, shrubs, houses, utensils, and every other product or article were all in proportion, and that the foot-rule in each country bore the same relation to the race of human beings which inhabited it as the English foot-rule does to Englishmen: then, though it is obvious that the length of ten feet in one nation might extend over a much larger portion of space than ten feet in another nation; yet the foot of each nation would measure with accuracy the relative estimation in which men and things were held in regard to height, length, breadth, &c. It would determine whether a man was tall or short in the estimation of his fellow-citizens; whether his shoulders were broad or narrow; whether his circumference was great or small; and not only whether Mr. Pike’s nose was longer than Mr. Chub’s, but whether it was not, in the accustomed language of the country, absolutely a long nose, although perhaps it might not extend to a quarter of an English inch. On the other hand, if, instead of referring to the measure of each country, we were to refer always to an English foot, though we should be able to ascertain the relative portions of space which all the men to whom we applied our measure occupied, we should make sad havoc with the estimates which they and their countrymen had formed of their own heights, and many certainly would be considered as very short who had before always been considered as very tall. Now it must be allowed that the value of a commodity, as it changes with place and time, and depends upon the wants and caprices of man and the means of satisfying them, resembles more the estimate of tall or short, broad or narrow, than a portion of space capable of being ascertained by a measure unchangeable by time and place.

When we speak of the value of silver in China, we cannot possibly mean the value of an ounce of Chinese silver brought to London, where, if it were pure, it would be precisely of the same value as an ounce of pure silver which had been in London from time immemorial. What alone we can correctly mean is, the estimation in which the ounce of silver is held in China, determined, at the time, by the state of the supply compared with the demand, and ordinarily by the quantity of Chinese labour and profits necessary to produce it; and if this be what we mean by the value of an ounce of silver in China, there can be no doubt that Chinese labour, and Chinese labour alone, can measure it. Even, however, if we mean the relation of an ounce of silver to all the commodities in China in succession, it would be impossible practically to form any approximation towards a just notion of the result, except by referring the silver to Chinese labour.

It might be allowed, perhaps, that labour would be a still more satisfactory measure of value, in all countries and at all times, if the physical force exerted in a day’s labour were always the same; and probably this is sometimes not far from being the case in a few countries as compared with each other, and more frequently in the same country at different periods. The English agricultural labourers in the time of Edward III., though probably less skilful, worked, I should conceive, for nearly the same number of hours, and exerted nearly the same physical force, as our labourers at present. Under such circumstances, and in the same country, agricultural labour seems to be a measure of value from century to century calculated to satisfy the scruples of the most fastidious. But even when it is acknowledged, that the labourer at different times and in different countries does not always lay down the same portion of his ease, his liberty, and happiness, the quality of labour, as a measure of value, is not essentially impaired; and it appears to me always true, that when commodities in different countries and at different times have been found to command the same quantity of the agricultural labour of each country and time, they may with propriety be said to have been held in the same estimation, and considered as of the same value.

We may now proceed to the definition of some of the most important terms in common use among political economists, particularly those which have been most controverted. Whenever it has been thought necessary either to deviate from the general rule of employing terms according to their ordinary meaning, or to determine between two meanings both of which have some authorities in their favour, I have always been guided in my choice by what appeared to me the superior practical utility of the meaning selected in explaining the causes of the wealth of nations.*

The reader will be aware, from the manner in which I have treated the subject, and the discussions into which I have allowed myself to enter, that what I consider as the main obstacle to a more general agreement among political economists, is rather the differences of opinion which have prevailed as to the classes of objects which are to be separated from each other by appropriate names, than as to the names which these classes should receive. It seems indeed to be pretty generally and most properly agreed, that the principal names which have been so long in use should remain. It would certainly be an Herculean task to change them, nor would any change which could be adopted in the present state of things remove the real difficulties. It has been most justly observed by Bacon, that “to say, where notions cannot be fitly reconciled, that there wanteth a term or nomenclature for it, is but a shift of ignorance.” When some people think that every sort of gratification, whether arising from immaterial or material objects, from spiritual comfort or comfortable clothing, should be designated by the same appropriate term; while others think it of great use and importance that they should be distinguished, it is obvious that such different notions cannot be reconciled by a new nomenclature. The grand preliminary required is, that the notions should be fitly reconciled; and till this is done, a change of names would be perfectly futile. Preserving therefore, generally, the old names, the great practical question is, what they are to include and what they are to exclude?

[* ] If in a foreign country, in which the relation of money to men and labour was unknown to us, we were told that a quarter of corn was selling for four ounces of silver, we should not know whether there was a famine, and corn was held in the highest estimation, or whether there was a glut of corn, and it was held in the lowest estimation. The very term estimation, as applied to commodities, must of necessity refer to man and labour.

[* ] It is a truth fruitful in important consequences, that the labour which commodities will command when in their natural state, by representing accurately the quantity of labour and profits necessary to produce them, must represent accurately the effectual demand for them. And this holds good at different places and times, referring of course to the labour of the same description at each place and time.

[* ] What could give us any information respecting the scarcity of a commodity in China, or the state of its supply as compared with the demand, but a reference to Chinese labour?

[* ] Principles of Polit. Econ., c. i. s. i. p. 5. 3d edit.

[* ] M. Say’s comprehensive expression, “Services productifs,” includes profits and rents as well as labour; but it is certain that labour will measure accurately the value of the whole amount of these services.

[* ] If this concession be once made, the whole question respecting labour as a measure of value is at once decided.

[* ] c. xi. p. 232.

[* ] I own that I was myself for a very long time of this opinion; but I am now perfectly convinced that I was wrong, and that Adam Smith was quite right in the prevailing view which he took of value, though he did not always strictly adhere to it. I am also convinced that it would be a great improvement to the language of political economy, if, whenever the term value, or value in exchange, is mentioned without specific reference, it should always be understood to mean value in exchange for labour,—the great instrument of production, and primary object given in exchange for every thing that is wealth; in the same manner as, when the price of a commodity is mentioned without specific reference, it is always understood to mean price in money—the universal medium of exchange, and practical measure of relative value. I am further convinced that the view of value here taken throws considerable light on the nature of demand and the means of expressing and measuring it, and that just view of value is absolutely necessary to a correct explanation of rents, profits, and wages. These convictions on my mind, which have acquired increase of strength the longer I have considered the subject, must be my apology to the reader for dwelling on it longer than, in considering it cursorily, he may think it deserves.

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

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

[* ] It is specifically on this ground that I think the meaning of the term Wealth should be confined to material objects; that productive labour should be confined to that labour alone which is directly productive of wealth; and that value, or value in exchange, when no specific object is referred to, should mean value in exchange for the means of production, of which labour, the great instrument of production, is alone the representative.