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CRITICAL DISSERTATION 
 
 OX 
 
 THE NATURE. MEASURES, AND CAUSES 
 
 OK 
 
 VALUE; 
 
 CHIEFLY IN UEFERENCE TO THE WRITINGS 
 
 OP 
 
 MR. RI^ARDO AND HIS FOLLOWERS. 
 
 BY 
 
 THE AUTHOR OF ESSAYS 
 
 ON THE 
 
 FOHiVIATION AND PUBLICATION OF OPINIONS, 
 
 LONDON: 
 
 PRINTED FOR R. HUNTER, 
 
 ST. PAUL'S CHURCHYARD. 
 MDCCCXXV. 
 
LONDON : 
 
 PRINTED BY CHARLES WOOD, 
 Poppiu'g Court, Fleet Street. 
 
330.1 
 
 PREFACE, 
 
 The subject of the following Dissertation is 
 generally allowed to be one, both of high im- 
 portance and of great difficulty. 
 
 " From no source," says Mr. Ricardo, '' do so 
 many errors, and so much difference of opinion 
 in the science of political economy proceed, 
 as from the vao^ue ideas which are attached 
 to the word value.*' And the same eminent 
 writer, in the preface to the third edition of the 
 Principles of Political Economy and Taxation, 
 emphatically terms it a difficult subject. '' In 
 this edition," says he, " I have endeavoured 
 to explain more fully than in the last, my 
 opinion .on the difficult subject of Value." 
 
 a 2 
 
 40631?^ 
 
IV PREFACE. 
 
 It is remarked by another author, that *' he 
 who is fully master of the subject of Value is 
 already a good political economist." " Even 
 for its own sake," he adds, " the subject is a 
 matter of curious speculation : but in relation 
 to Political Economy it is all in all : for most 
 of the errors (and, what is much worse than 
 errors, most of the perplexity) prevailing in 
 this science take their rise from this source*." 
 
 Although much has been written and many 
 efforts have been made to overcome the ob- 
 stacles, which present themselves in this part of 
 economical science, it may be affirmed with 
 little risk of contradiction, that the success 
 has not been in proportion to the labour be- 
 stowed. There appears to have been too little 
 circumspection at the outset. The ground- 
 work of the subject has not been examined 
 
 * The Templars' Dialogues on Political Economy, 
 in the London Magazine for April, 1824, pages 341 
 and 342. 
 
PREFACE. V 
 
 with that minuteness and closeness of attention 
 which are due to its importance. Writers on 
 political economy have generally contented 
 themselves with a short definition of the term 
 value, and a distinction of the property de- 
 noted 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 and discussion the 
 nature of the idea represented by this term, or 
 the inferences which a full perception of its 
 meaning immediately suggests ; and the neg- 
 lect of this preliminary labour has created dif- 
 ferences of opinion and perplexities of thought, 
 which otherwise could never have existed. 
 
 There has been still more laxity, both of 
 thought and expression, regarding the mea- 
 surement of value. The vague manner in 
 which the word measure, necessarily of fre- 
 quent occurrence in the pages of the political 
 
VI PREFACE. 
 
 economist, is constantly employed, would sur- 
 prise even the metaphysician, who is well aware 
 of the extensive prevalence and unbounded in- 
 fluence of the chameleon-like properties of 
 language. No writer (as far as the author of the 
 following pages is acquainted with works on 
 economical science) has ever taken the trouble to 
 analyse the meaning involved in the phrase. To 
 measure value is an expression apparently so 
 simple, so precise, so free from obscurity, that 
 it seems superfluous to bestow a single inquiry 
 on its import. The consequence has been 
 what it generally proves on such occasions : 
 the term has been used without any clear per- 
 ception of a definite sense ; several ideas 
 have been unconsciously and indiscriminately 
 interchanged, and analogies, which had merely 
 an imaginary existence, have been assumed as 
 incontrovertible premises or universally con- 
 ceded postulates^ 
 
PREFACE. VU 
 
 The causes of value have been also too neg- 
 ligently passed over. Little inquiry has been 
 made into the natvire of these causes, or their 
 mode of operation, and to this slightness of 
 examination may be attributed several import- 
 ant errors, manifested in attempts at undue 
 generalization, in perversions of language, 
 and in the rejection of circumstances which 
 have a real and permanent eflfect. 
 
 A singular confusion has also prevailed with 
 regard to the ideas of measuring and causing 
 value, and in the language employed to express 
 them. The perpetual shifting from one notion 
 to the other, the use of common terms for both 
 ideas, and the consequent ambiguity, vacilla- 
 tion, and perplexity, exhibit a remarkable 
 picture of the difficulty of thinking with close- 
 ness, as well as of the defects of language as 
 an instrument of reasoning. 
 
 The confusion and obscurity, which mark the 
 
VIU PREFACE. 
 
 works of some of the most celebrated writers on 
 ^ese momentous topics, are sufficient to make 
 the student abandon his inquiries on the very- 
 threshold of the science. Words used without 
 determinate ideas, terms introduced without 
 proper explanations, definitions abandoned al- 
 most as soon as enunciated, principles assumed 
 without first being examined, verbal instead of 
 real simplifications — such are the obstacles 
 which everywhere meet him. 
 
 That defects of this kind disfigure the science 
 of political economy, no one acquainted with 
 the most recent works on the subject will pro- 
 bably deny, although a difference of opinion 
 may exist regarding the extent to which they 
 prevail. It would be presumptuous in the 
 author of the following treatise to suppose, that 
 he had completely removed them from that 
 part of the science which he has attempted to 
 examine. He trusts, nevertheless, that he has 
 
PREFACE. IX 
 
 done something, if not towards directly effecting 
 that object, at least towards opening the way 
 for subsequent endeavours. If he has not suc- 
 ceeded in putting all his propositions in a clear 
 light, and finally settling the various contro- 
 verted questions which he brings under review^ 
 yet he may hope that he has introduced them 
 in such a manner as will excite in others the 
 interest and attention requisite for their ulti- 
 mate determination. Free, on his own part, 
 from particular attachment to any of the po- 
 sitions which he has maintained, although im- 
 pressed with that clear conviction of their 
 soundness, without which it would be absurd 
 to intrude them on public notice ; and sensible 
 of the thousand ways in which error imposes 
 itself on the understanding in the character of 
 truth, he will be glad of an opportunity of re- 
 considering his opinions, under the guidance of 
 a mind which has reached a his/her point of 
 
PREFACE. 
 
 view than his own ; nor will it greatly surprise 
 him to discover, that he has fallen into errors 
 and misconceptions as deep and as radical as 
 any of those which he has found or fancied in 
 the speculations of others. 
 
 From the defects here imputed to the 
 science, it is evident that in any work, which 
 professes to examine and remove them, the 
 points discussed must be questions as to the 
 use of terms, the distinction of ideas, the lo- 
 gical dependence of arguments, rather than 
 questions of fact or evidence, and that its cha- 
 racter will be essentiallv critical, and even 
 polemic. In endeavouring to define the nature 
 of ideas, to fix the meaning of terms, to in- 
 vestigate first principles, and to determine the 
 real objects and results of inquiry, it was im- 
 possible, it would have been w^orse than use- 
 less, not to advert to the works of preceding- 
 writers, although at the expense perhaps of 
 
PREFACE. XI 
 
 that neatness and elegance of deduction, of 
 which the subject is susceptible ; and certainly 
 at the risk of incurring, if not hostility, at 
 least the utmost severity of examination from 
 the talents and acumen, which such a course 
 necessarily puts on the defensive. In the pre- 
 sent state of political economy, however, a 
 critical reference to the doctrines of preceding 
 and contemporary economists cannot be 
 avoided, and ought not to be avoided if it 
 could. A mere direct expository treatise would 
 be of far inferior utility. However true a 
 doctrine may be, it is of little service until its 
 relation to other doctrines, and its connection 
 with knowledge already extant, has been 
 shown. Embarrassed as the science is with 
 difficulties on which opinion is divided, it 
 is of the utmost importance for its future 
 progress, not only to explain and establish 
 correct principles, but to expose tlie de- 
 
Xll PREFACK. 
 
 lusion which has formerly misled, to trace 
 the process of error, to mark the particular 
 point where inquiry departed from the right 
 path, or where the unperceived fallacy, which 
 has vitiated a train of reasoning, first insinuated 
 itself into the argument. The science cannot 
 yet be exhibited as a regular and perfect 
 structure. The rubbish must be removed, the 
 ground cleared, the scaffolding taken down, 
 and all unnecessary and cumbrous appendages 
 mast be discarded, before the building can rise 
 upon the eye in that simple beauty in which it 
 is destined hereafter to appear. 
 
 The writer, on whose doctrines the following 
 treatise principally animadverts, is generally 
 regarded as the ablest economist of his day. 
 It has been unfortunate, perhaps, for Mr. Ri- 
 cardo's ultimate reputation, and certaiidy for 
 the science which he cultivated, that his ad- 
 mirers have extolled him beyond the sobriety 
 
PREFACE. Xlll 
 
 of truth. Strong powers of mind he un- 
 questionably possessed ; otherwise, he could 
 neither have produced the works which have 
 associated his name with the political measures 
 of the age, nor could he have inspired those 
 sentiments of admiration and deference, which 
 have been so warmly manifested by men, them- 
 selves of no common talents. It is probable, 
 however, that the excess of their admiration 
 has blinded them to his defects ; that they have 
 been too much occupied with the excellence of 
 his speculations to note the errors by which 
 they are disfigured. It would be diflicult, on 
 any other supposition, to account for the ex- 
 travagant praises which have been heaped on 
 his Principles of Political Economy and Tax- 
 ation. One of our most distinguished living 
 economists designates it as a " work rivalling 
 the * Wealth of Nations' in importance, and 
 excelling it in profoundness and originality*." 
 * A Disc, on Pol. Econ.,byJ. R. M*Culloch, Esq.,|).65. 
 
XIV PREFACE. 
 
 " The powers of mind," says the same writer, 
 '' displayed in these investigations — the dex- 
 terity with which the most abstruse and diffi- 
 cult questions are unravelled — the unerring sa- 
 gacity with which the operation of general and 
 fixed principles is investigated — the skill with 
 which they are separated and disentangled 
 from such as are of a secondary and accidental 
 nature — and the penetration with which their 
 remotest consequences are perceived and esti- 
 mated — have never been surpassed ; and will 
 for ever secure the name of Ricardo a high 
 and conspicuous place in the list of those, who 
 have done most to unfold the complex mecha- 
 nism of society, and to carry this science to 
 perfection." 
 
 Conceding that Mr. Ricardo has displayed 
 considerable originality and power of intellect, 
 we may yet be permitted to doubt, whether this 
 splendid eulogium is not far beyond his real de- 
 serts. It is not easy to conceive by what process 
 
PREFACE. XV 
 
 a superiority above Adam Smith, as a profound 
 and original thinker, can be inferred from their 
 respective works. To raise the science from 
 the condition in which it was found by the lat- 
 ter, to that state of dignity and importance in 
 which it appeared in the Wealth of Nations, 
 seems to an ordinary view to have required a 
 far more comprehensive mind, and greater 
 powers of skilful disquisition, than to discover 
 and to follow out to their consequences the ori- 
 ginal truths, few or many, which distinguish the 
 pages of the Principles of Political Economy and 
 Taxation. The praise, too, of dexterity in unra- 
 velling difficult questions is surely misapplied. 
 The obscurity which is almost universally felt, 
 and felt even by readers accustomed to close- 
 ness of reasoning, and not sparing of vigorous 
 attention, in many of Mr. Ricardo's discussions, 
 incontestably proves, even on the supposition of 
 their perfect accuracy, a want of skill in the ma- 
 
XVI PREFACE. 
 
 nagement of his materials, a defect either in 
 the disposition of his ideas or the employment 
 of his terms. It is the triumph of dexterity in 
 dissertation to present every proposition in 
 such due order and such perspicuous language, 
 as to lead the reader to imagine, that he should 
 himself have expressed the meaning nearly in 
 the same manner and in the same words. There 
 is scarcely a single train of thought in the 
 Wealth of Nations, which a mere tyro would 
 feel it difficult to follow, and of which the aim 
 and connection with the subject would not be 
 perfectly intelligible : but there are many ob- 
 servations in the writings of Mr. Ricardo, which 
 it requires the effort of a vigorous mind to 
 connect with the other propositions amongst 
 which they stand. His ideas are often 
 imperfectly developed, and his reasoning ap- 
 pears elliptical and disjointed ; defects, in- 
 deed, which have possibly elevated rather 
 
PREFACE. XVll 
 
 than lowered his standing in general estima- 
 tion. The 
 
 " omne ignotum pro magnifico' 
 is not without its exemplifications in the field of 
 science, and the reputation of an author for pro- 
 fundity is sometimes enhanced by an intermixture 
 of the unintelligible, many readers tacitly as- 
 cribing unusual sagacity to one, who is able to 
 understand what is incomprehensible to them- 
 selves ; while a lucid arrangement of ideas, a 
 manifest dependence of arguments, and a perspi- 
 cuity of language, such as mark a complete mas- 
 tery of the subject, appear too easy and natural 
 to infuse the slightest suspicion of the depth and 
 vigour of intellect from which they proceed, 
 and of which they are the surest indications. 
 
 The occasional obscurity, which clouds Mr. Ri- 
 cardo's writings, has sometimes been attributed 
 to his style, and sometimes to his ambition of 
 paradox. But if by style we are to under- 
 
 b 
 
XViif PREFACE. 
 
 stand the selection of words, and the mode of 
 combininof them into sentences, the former solu- 
 tion is incorrect, for his language is uncom- 
 monly precise and perspicuous, and the con- 
 struction of his periods is simple and compact. 
 The latter explication is, if possible, still more 
 unfounded, there being an evident simplicity of 
 aim and steady pursuit after truth in his writ- 
 ings, such as are natural to a mind of any ori- 
 ginality, and which exclude the idea that he 
 indulged the contemptible ambition of per- 
 plexing his readers. The defect had a deeper 
 source, and is to be traced, as the following 
 pages will show, to an original perplexity and 
 confusion in some fundamental ideas, from 
 which he was never able to extricate himself. 
 Although Mr. Ricardo possessed remarkable lo- 
 gical powers, he seems to have been less gifted 
 with analytical subtilty ; and hence his writings 
 furnish an instance of what the observer of the 
 
PREFACE. XIX 
 
 human mind must have frequently seen exem- 
 plified, that the strongest powers of reasoning- 
 are an insufficient security against gross error, 
 if unaccompanied by that incessant analysis of 
 terms and propositions, and that intense con- 
 sciousness of intellectual operations, which 
 are the properties of a metaphysical genius. 
 Of this cast of intellect, the most striking 
 instance perhaps which our own times af- 
 ford is to be found in the writings of the late 
 Professor of Moral Philosophy in the univer- 
 sity of Edinburgh, Dr. Thomas Brown; a. man 
 who possessed, in an almost unrivalled deo-ree, 
 the capacity of looking into the mechanism of 
 his own mind, and seeing the impalpable phe- 
 nomena of thought and feeling, as well as the 
 power of flinging to a distance the embarrassing 
 influence of words, and fixing his eye with 
 keen penetration on the things which they re- 
 presented, stripped of the covering of languao-e, 
 
XX PREFACE. 
 
 and freed from every tinge of feeling and asso- 
 ciation *. 
 
 To judge from his writings, Mr. Ricardo 
 possessed little of this faculty ; little conscious- 
 ness of the nature of the operations in which 
 he excelled, and little familiarity with the ana- 
 lysis of terms. His was a sort of natural vigour 
 of reasoning, exerting itself without the ad- 
 vantages of discipline, without much acquaint- 
 
 * The author feels a pleasure in paying this passings 
 tribute to the talents of a philosopher, who has taken 
 a giant-stride in the science to which he devoted him- 
 self, and who will be hereafter considered as one of the 
 most remarkable men of a period prolific in great names. 
 The reputation of writings like his, far in advance of the 
 age in which they appear, making no appeals to the senses, 
 and having no obvious connection with the immediate and 
 palpable affairs of life, is necessarily of slow growth, but 
 it will flourish when hundreds of names, which fill more of 
 the public ear, have passed to that oblivion which certainly 
 awaits them. 
 
PREPACK. XXI 
 
 ance with the instruments employed, or much 
 thought regarding the methods of applying 
 them : and although his logical powers kept 
 him in general to the employment of a term in 
 one uniform sense when he clearly discerned it, 
 yet, in cases where he happened unconsciously 
 to change the meaning, or to be unaware of an 
 ambiguity, his inaptness at analysis precluded 
 all chance of his subsequently correcting any 
 deviation, and the very strictness of his deduc- 
 tions only led him further into error. Startinsf 
 from a given proposition, he would reason from 
 it with admirable closeness, but he seems never 
 to have been sent back, by the strangeness of the 
 results at which he arrived, to a reconsideration 
 of the principle from which he set out, nor to 
 have been roused to a suspicion of some lurk- 
 ing ambiguity in his terms. Hence it might 
 have been predicted, that he would commit 
 oversights in his premises and assumptions, for 
 
XXll PREFACE. 
 
 which no subsequent severity of logic could 
 compensate. 
 
 Perhaps these remarks will serve to explain 
 how it is, that Mr. Ricardo has been eulogized 
 for his inexorable consistency in the use of 
 words, and particularly for his sternly insisting 
 on the true sense of the word value, and on 
 using it only in one sense*. If the author of 
 the following pages has been at all successful, 
 in establishing the justness of the strictures 
 which he has hazarded, this praise must be al- 
 lowed to be unfounded ; for it will be seen, that in 
 the case of the word value he has almost perpe- 
 tually forsaken his own definition : yet an incon- 
 sistency of this sort is by no means incompatible 
 with a general strictness in the employment of 
 terms. If the preceding observations are cor- 
 rect, a writer may be rigorously consistent in 
 
 *'\ 
 
 Templars' Dialogues, Introduction. 
 
PREFACE. XXlll 
 
 the use of his terms throuo^h a Ion gr train of rea- 
 soning, while the whole of his conclusions may 
 be vitiated by an unperceived transition from 
 one meaning to another in the original adjust- 
 ment of his premises, or in the first steps of his 
 argument. 
 
 Besides Mr. Ricardo,the only writerson whom 
 there are any strictures worthy of notice in the 
 following work, are Mr. Malthus, Mr. Mill, 
 and the author of the Templars' Dialogues on 
 Political Economy, published in the London 
 Magazine ; of whom the two latter may be 
 considered as having adopted the doctrines of 
 Mr. Ricardo with little variation. 
 
 Mr. Malthus and Mr. Mill are too well 
 known to the students of political economy, to 
 render it necessary to say any thing in this 
 place as to their general merits, and it can ex- 
 cite no surprise that the writings of either 
 should be subjects of examination in a treatise 
 
XXIV PREFACE. 
 
 of this nature. With the Templars' Dialogues 
 on Political Economy, probably fewer are ac- 
 quainted, from the form in which they came be- 
 fore the public ; and on this account, as well as 
 from their state of incompleteness, they would 
 not have occupied so many of the ensuing pages, 
 had not the writer of the present work regarded 
 them as an exposition of several of Mr. Ri- 
 cardo's principles, peculiarly adapted to try their 
 validity. 
 
 Adopting Mr. Ricardo's doctrines, the author 
 of the Dialogues traces them fearlessly to their 
 legitimate consequences, with a directness of 
 logical deduction which nothing diverts ; with 
 great copiousness and felicity of illustration, 
 great dexterity in putting forward the different 
 parts of his theme, and an occasional humour, 
 which even on a subject of this kind is irresis- 
 tible. It must be obvious that a work of this 
 character, pressing intrepidly forward from the 
 
PREFACE. XXV 
 
 premises to the conclusion, and flinching from 
 no consequences at which it arrives, forms a sort 
 of exyerimentum cruclsy by which the truth or 
 falsity of the principles maintained will be ren- 
 dered manifest, and is the very kind of exposi- 
 tion which an examiner of their correctness 
 would desire. 
 
 It was in fact the clear, able, and uncompro- 
 mising manner in which the author of the Dia- 
 logues explained the principles of Mr. Ricardo, 
 together with the startling and (the present 
 writer must be permitted to say) the extrava- 
 gant consequences to which he pushed them, 
 that first suggested the following treatise, the 
 author of which takes this opportunity of ex- 
 pressing his regret (a regret shared by many 
 others), that discussions so valuable for either 
 confirmingor disproving the doctrines which they 
 enforced, should not have been conducted to their 
 proper and their promised termination. 
 
 c 
 
CONTENTS. 
 
 Page 
 CHAPTER 1. 
 On the Nature of Value 1 
 
 CHAPTER II. 
 On Real and Nominal Value 3/ 
 
 CHAPTER III. 
 On the Value of Labour 4t> 
 
 CHAPTER IV. 
 On Profits 62 
 
 CHAPTER V. 
 
 On comparing Commodities at different Periods, 'l 
 
 CHAPTER VI. 
 On Measures of Value <i4 
 
 CHAPTER VII. 
 On the Measure op Value proposed by Mr. Mal- 
 THus , l,3;» 
 
XXVllI CONTENTS. 
 
 CHAPTER VIII. 
 Ox Methods of estoiating Value 152 
 
 CHAPTER IX. 
 Ox\ THE Distinction between Value and Riches. 162 
 
 CHAPTER X. 
 
 On the Difference between a Measure and a 
 Cause of Value , 170 
 
 CHAPTER XI. 
 On the Causes of Value ., 179 
 
CHAPTER I. 
 
 ON THE NATURE OF VALUE. 
 
 Value, in its ultimate sense, appears to mean 
 the esteem in which any object is held. It de- 
 notes, strictly speaking, an effect produced on the 
 mind ; but as we are accustomed in other cases 
 to give a common name to a feeling and to 
 the cause which has excited it, and to blend 
 them together in our thoughts, so in this case 
 we regard value as a quality of external ob- 
 jects. Colour and fragrance, for example, are 
 words which designate both the cause and the 
 effect, both the material quality which produces 
 the feeling in the mind, and the feeling pro- 
 duced. The philosopher, however, is the only 
 one who discerns the distinction, and colour 
 and fragrance are never thought of by the ge- 
 
 B 
 
^ ON THE NATURE 
 
 nerality of men, but as qualities of external 
 objects. 
 
 It is precisely in the same way, that value is 
 regarded as a quality belonging to the objects 
 around us. We lose sight of the feeling of the 
 mind, and consider only the power which the 
 object possesses of exciting it, as something 
 external and independent. 
 . It is not, however, a simple feeling of esteem, 
 to which the name of value, as used by the po- 
 litical economist, can be given. When we con- 
 sider objects in themselves, without reference 
 to each other ; the emotion of pleasure or sa- 
 tisfaction, with which we regard their utility or 
 beauty, can scarcely take the appellation of 
 value. 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 VALUE. 
 
 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. But this is not the expression of positive, 
 but of relative esteem ; or, more correctly, of 
 the relation in which a and b stand to each 
 other in our estimation. This relation can be 
 denoted only by quantity. 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. Hence the 
 value of A may be termed the power whfch it 
 possesses or confers of purchasing b, or com- 
 manding B in exchange. If, from any consi- 
 deration, or any number of considerations, men 
 esteem one a as highly as two b, and are wil- 
 ling to exchange the two commodities in that 
 
 b 2 
 
4 ON THE NATURE 
 
 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 substan- 
 tially correct ; and as it is plain and intelligible, 
 it may be taken as the basis of our subsequent 
 reasonings, without any farther metaphysical 
 investigation. 
 
 According to this definition, it is essential 
 to value, that there should be two objects 
 brought into comparison*. It cannot be pre- 
 dicated of one thing considered alone, and with- 
 out reference to another thino-. If the value of 
 an object is its power of purchasing, there must 
 be something to purchase. Value denotes 
 consequently nothing positive or intrinsic, but 
 
 * " We cannot express value, or a variation of value, 
 without a comparison of two commodities." Inquiry into 
 the Nature and Origin of Public Wealth, by the Earl of 
 Lauderdale, p. 19, second edition. 
 
OF VALUE. 5 
 
 merely the relation in which two objects stand 
 to each other as exchangeable commodities. 
 
 In the circumstance, that it denotes a rela- 
 tion between two objects, and cannot be predi- 
 cated of any commodity without an express or 
 implied reference to some other commodity, 
 value bears a resemblance to distance. As we 
 cannot speak of the distance of any object 
 without implying some other object, between 
 which and the former this relation exists, so we 
 cannot speak of the value of a commodity but 
 in reference to another commodity compared 
 with it. A thing cannot be valuable in itself 
 without reference to another thing, any more 
 than a thing can be distant in itself without re- 
 ference to another thing. 
 
 It follows from this view of value as a rela- 
 tion, that it cannot alter as to one of the objects 
 compared, without altering as to the other. It 
 would be an absurdity to suppose, that the value 
 of A to B could alter, and not the value of b to 
 A ; that A could rise in value to b, and b re- 
 main stationary in value to a ; an absurdity of 
 much the same kind as supposing, that the dis- 
 
6 ON THE NATURE 
 
 tance of the earth from the sun could be al- 
 tered, while the distance of the sun from the 
 earth remained as before. 
 
 Suppose that at some former period, when the 
 value of commodities was determined by the 
 quantity of labour required to produce them, 
 A and B were the only exchangeable commo- 
 dities in existence, and that they were of 
 equal value. If, from any circumstances, a 
 should, at a subsequent period, require double 
 the quantity of labour for its production, while 
 B continued to require only the same, a 
 would become of double value to b ; or, in 
 other words, one a would exchange for two B. 
 But although b continued to be produced by 
 the same labour, it would not continue of the 
 same value, for it would exchange for only 
 half the quantity of a, the only commodity, 
 by the supposition, with which it could be com- 
 pared. 
 
 It may be objected to this representation of 
 the relative nature of value, that when we say 
 the value of a is equal to the value of b, the 
 expression implies a quality intrinsic and abso- 
 
OF VALUE. 
 
 lute in each ; for otherwise, how could we 
 affirm that an equality existed between these 
 two values ? If the term value denotes merely 
 a relation between a and b, would it not be 
 absurd to talk of the equality of their values, 
 just as it would be absurd in speaking of the 
 distance between the sun and the earth, to talk 
 of an equality of their distances from each 
 other ? 
 
 In reply to this objection, if we exariiine the 
 real import of our expression, when we affirm 
 the value of a to be equal to the value of b, 
 we shall find Ito mean neither more nor less 
 than this, tha ia will exchange for b. This 
 simple proposition contains the whole amount 
 of meaning coached under the phrase, and 
 it obviously expresses or includes no intrinsic 
 or absolute quality in either commodity, but 
 merely states a relation in which they stand to 
 each other. 
 
 The phrase, the value of a is equal to the 
 value of B, is in this view of the subject not 
 altogether accurate ; that is to say, if we 
 speak only of two objects, without reference to 
 
8 ON THE NATURE 
 
 any others. But it will be found, that, in speak- 
 ing of the value of a being equal to the value 
 of B, we are led to use the expression by the 
 constant reference which we unavoidably make 
 to the relations of these commodities to other 
 commodities, particularly to money, and the 
 import of our language, in its whole extent, is, 
 that A and b bear an equal relation to a third 
 commodity, or to commodities in general. 
 
 It is from this circumstance of constant re- 
 ference to other commodities, or to money, 
 when we are speaking of the relation between 
 any two commodities, that the notion of value, 
 as something intrinsic and absolute, has arisen. 
 When we compare objects with each other as 
 exchangeable commodities, two relations ne- 
 cessarily mix themselves in our comparison — 
 the mutual relation of the objects,, and their re- 
 lations to other objects ; and it is these latter 
 which occasion the semblance of absolute 
 value, because they seem independent of the 
 former, which is the immediate object of our 
 attention. Indeed, it is generally by their re~ 
 lation to a third commodity, that we can at all 
 
OF VALUE. 9 
 
 ascertain the mutual relation of two commodi- 
 ties which we are desirous of comparing. If we 
 wish to know whether a and b are equal in 
 value, we shall in most cases be under the ne- 
 cessity of finding the value of each in c ; and 
 when we affirm that the value of a is equal to 
 the value of b, we mean only that the ratio of 
 A to c is equal to the ratio of b to c. 
 
 The relative nature of value has not, it ap- 
 pears to me, been distinctly seen or uniformly 
 kept in view by our best writers on the subject. 
 Mr. Ricardo, for instance, who agrees with 
 Dr. Smith in his definition of value, asserts, that 
 if any one commodity could be found, which 
 now and at all times required precisely the 
 same quantity of labour to produce it, that 
 commodity would be of an unvarying value*. 
 
 * Principles of Pol. Econ. p. 10, 2d ed. Mr. Ricardo 
 lias withdrawn this sentence in his 3d edition, and pre- 
 sented his readers with a new section, in which his doc- 
 trines are considerably modified. The alterations, how- 
 ever, do not, as will be shown immediately, at all affect 
 the justness of the strictures in the text. And it may also 
 
10 ox THE NATURE 
 
 If value, however, denotes merely a relation, 
 this proposition cannot be true. We may ask, 
 to what would this commodity bear an in- 
 variable value? What is the correlative? 
 Would it bear the same value to all other com- 
 modities ? It might do so, it is true, but cer- 
 tainly not in consequence of being produced 
 by an unvarying quantity of labour : for while 
 the labour, in this instance, remained a fixed 
 quantity, yet if the labour in other commodities 
 were increased or diminished, the relations of 
 value between this one commodity, and all 
 others, would, on Mr. Ricardo's own principle, 
 be instantly altered. 
 
 If corn, for example, always required pre- 
 cisely the same quantity of labour to produce 
 it, but all other commodities whatever came to 
 
 be remarked, that notwithstanding the suppression of the 
 sentence above cited, he retains another but slightly dif- 
 ferent in expression. '* That commodity," says he (chap. 
 XX, on Value and Riches), " is alone invariable, which at 
 all times requires the same sacrifice of toil and labour to 
 produce it." 
 
OF VALUE. 11 
 
 be produced by half the labour formerly ex- 
 pended upon them, the value of corn could in 
 no sense be said to remain the same. In proof 
 of this, take Mr. Ricardo's own definition of 
 value, " the power of purchasing other goods, 
 which the possession of an object conveys." 
 To say that a commodity is of unvarying value, 
 is, according to this definition, equivalent to 
 saying that its power of purchasing other goods 
 remains constantly uniform ; or, to vary the 
 language, that the quantity of other goods for 
 which it will exchange never alters. But, in 
 the example we have adduced, the same quan- 
 tity of corn would exchange for an increased 
 quantity of any other commodity ; and conse- 
 quently, by Mr. Ricardo's own definition, would 
 have risen in value. 
 
 It may possibly be alleged, that it is not the 
 corn, but other commodities which have varied 
 in value, and therefore Mr. Ricardo's language 
 is correct. If value were a positive or intrinsic 
 quality, this might be true; but since it denotes 
 a mere relation between two objects, to suppose 
 any alteration could take place in this relation 
 
12 ON THE NATURE 
 
 as to one and not as to the other ; to suppose 
 that the value of a to b could be altered, and 
 not the value of b to a, would, as I have al- 
 ready remarked, be as absurd, as supposing 
 that the distance of the sun from the earth 
 could be increased or decreased, while the dis- 
 tance of the earth from the sun remained as 
 before. 
 
 The truth intended to be conveyed by saying 
 that B remains of the same value is, that the 
 cause of the altered relation between a and b 
 is in the former, and not in the latter ; and to 
 determine where the change originated is in 
 fact the whole object of those who endeavour 
 to show what commodities have remained 
 stationary in value, and what have varied. 
 
 It is so important to bear in mind, in these 
 cases of rising and falling, that as a rises, b 
 necessarily falls ; or, to speak with greater pre- 
 cision, that the value of a cannot increase in 
 I'elation to b, without the value of b decreasing 
 in relation to a, that I may be pardoned for 
 still further shewing the impropriety, or at least 
 the danger, of using the terms rise and fall in 
 
OF VALUE. 13 
 
 a way which implies, that when a rises or falls, 
 B remains stationary. If a, in consequence of 
 additional labour expended upon it, or any 
 other cause, were to increase in value relatively 
 to the mass of commodities, which may be 
 represented under the letters b c d, it would be 
 said, by most economists, that b c d had not 
 fallen, but remained stationary ; although they 
 would evidently have fallen, or become of less 
 value, in relation to a. The assertion of their 
 remaining stationary, can mean only stationary 
 to each other ; and in this sense it is perfectly 
 correct, but the correctness of the language as 
 to B, c, or D individually, evidently depends 
 on the existence of some other commodity to 
 which its relation remains undisturbed. Were 
 there only two commodities in question, the 
 phrase " remaining stationary " would be alto- 
 gether erroneous ; and when there are more 
 than two, when there are a number of commo- 
 dities concerned, some of which have varied 
 in the circumstances of their production, while 
 others have undergone no change, this phrase- 
 ology becomes destitute of all precision, and 
 
14 ON THE NATURE 
 
 leads either to vague and nugatory propositions, 
 or to positive error. 
 
 An illustration of these remarks may be 
 found in a passage of Mr. Ricardo's w^ork, 
 where he maintains, in opposition to M. Say, 
 that if, in consequence of increased facility 
 in producing other commodities, cloth should 
 exchange for a double quantity of them, 
 compared to what it did before, we ought to 
 say, that cloth retained its former value, and that 
 the commodities, compared with it, had fallen 
 to half their former value.* This language, 
 
 * " According to M. Say, if the difficulty of producing 
 cloth were to double, and consequently cloth was to ex- 
 change for double the quantity of the commodities for 
 which it exchanged before, it would be doubled in value, 
 to which I give ray fullest assent ; but if there were any 
 peculiar facility in producing the commodities, and no in- 
 creased difficulty in producing cloth, and cloth should in 
 consequence exchange as before for double the quantity of 
 commodities, M. Say would still say that cloth had doubled 
 in value ; whereas, according to my view of the subject, he 
 should say, that cloth retained its former value, and those 
 particular commodities had fallen to half their former 
 value." — Principles of Political Economy, chap, xx, p. 328, 
 3d edit. 
 
OF VALUE. 15 
 
 however, would be evidently incorrect, unless 
 the value of an object were something" intrinsic, 
 and independent of other commodities ; but 
 since value, as I have shown, is essentially rela- 
 tive, if any commodities had fallen in relation 
 to cloth, cloth must have acquired additional 
 value, or have risen in relation to those com- 
 modities. 
 
 Mr. Ricardo's proposition might, indeed, be 
 true, if he meant by other commodities only a 
 certain number of other commodities. These, 
 for convenience, may be termed Class 1, and 
 all commodities not included in Class 1 may 
 be referred to Class 2. Now if Mr. Ricardo 
 meant, that when Class 1 came to be produced 
 with increased facility, so as to exchange for 
 half the quantity of cloth, while Class 2, in 
 point of facility of production, remained as be- 
 fore, cloth would retain its former value in 
 relation to Class 2, he would be perfectly 
 correct; but if this had been his meaning, 
 there could have been no point of dispute be- 
 tween him and the author on whose language 
 he is animadverting ; and that it was not what 
 
16 ON THE NATURE 
 
 he intended, the connection and tenour of the 
 whole passage sufficiently evince. 
 
 The contradiction involved in affirming the 
 stationary or invariable value of any object 
 amidst the variations of other things, is so di- 
 rect and palpable, that it may be instructive to 
 point out the way in which a writer of such 
 powers of reasoning, as Mr. Ricardo un- 
 questionably possessed, has been led into so 
 strange and manifest an error. 
 
 Since value denotes a relation between two 
 objects, no arguments are required to prove, 
 that it cannot arise from causes affecting only 
 one of the objects, but must proceed from 
 two causes, or two sets of causes respectively 
 operating on the objects between wbich the 
 relation exists*. If a is equal in value to b, 
 
 * Value implying, as I have before shown, a mental 
 afifection, and consequently all causes of value being, in 
 reality, circumstances affecting the mind, it might be more 
 correct to speak of the causes operating on the mind with 
 regard to an object, than of the causes operating on the 
 object itself: but the latter is a shorter mode of expres- 
 sion, sufficiently intelligible, and not likely to lead into 
 error. 
 
OF VALUE. 17 
 
 this must be owing not only to causes operating 
 on A, but also to causes operating on b. The 
 fact of a pound of gold exchanging for fifteen 
 times the quantity of com that can be obtained 
 for a pound of silver, cannot be referred to 
 causes operating on the corn, but to a difference 
 in the causes operating on gold and silver. 
 Hence, how constant or uniform soever a cause 
 affecting one commodity may be, it cannot 
 make that object of constant value, without the 
 concurrence of other invariable causes acting 
 upon the commodity with which it is compared. 
 It is precisely this essential circumstance, 
 which has escaped the notice of Mr. Ricardo. 
 When he asserts, that a commodity would be of 
 invariable value, if it were always produced by 
 the same quantity of labour, he overlooks one 
 half of the causes concerned in the determination 
 of value; for a moment's consideration will 
 teach us, that such a commodity could be of 
 invariable value, in relation to those commodi- 
 ties alone, of which the producing labour had 
 also remained a constant quantity. Not ad- 
 
18 ox THE NATURE 
 
 verting to this, Mr. Ricardo appears to have 
 reasoned, that because the quantity of labour 
 (according- to his doctrine) is the cause of 
 value, if the cause in any one commodity re- 
 mains the same, the eflfect must necessarily be 
 the same. But granting his doctrine, that the 
 quantity of labour determines value, it must 
 be the quantity requisite for the production of 
 each commodity compared, and not the quan- 
 tity requisite for that of only one. The value 
 of both, or their relation to each other, must 
 necessarily vary with every change in the quan- 
 tity of producing labour required for either. 
 
 To assert indeed, that the value of an object, 
 or its relation to another object, was invariable, 
 because whatever alteration had taken place in 
 the latter object, the former had undergone no 
 change in the conditions of its production, 
 would be as absurd as to assert the unvarying 
 likeness of a portrait to the original, because, 
 however the man had altered in feature, the 
 portrait itself had retained precisely the same 
 lineaments. The relation of value, as well as 
 
OF VALUE. 19 
 
 the resemblance between two objects, depends 
 upon both, and changes with a change in either 
 of them, 
 
 Mr. Ricardo's modifications of his doctrine 
 of the invariable value of a commodity pro- 
 duced by the same quantity of labour, make no 
 difference in the force and applicability of the 
 preceding remarks. For he still asserts, that a 
 commodity produced by a uniform quantity of 
 labour, would be of invariable value in relation 
 to commodities produced under the same cir- 
 cumstances as itself*, as to the proportions of 
 fixed and circulating capital, the durability of 
 the fixed capital, and the time required to bring 
 the commodity to market. If a commodity, 
 for instance, were produced solely by labour, and 
 always required the same quantity to produce it, 
 it would be of invariable value in regard to such 
 commodities as were produced by labour alone. 
 Mr. Ricardo, indeed, so far agrees with the view 
 here taken, as to maintain the impossibility 
 of finding any commodity of invariable value. 
 
 * Principles of Pol. Econ. p. 43, third edit. 
 
 C 2 
 
20 ON THK NATURE 
 
 His reason for this opinion is not, however, that 
 the value of this commodity would necessarily 
 vary with the value of the commodities com- 
 pared with it, but that no commodity could be 
 found, which is not itself exposed to the same 
 causes of fluctuation as all other commodities. 
 My proposition is, that if the causes affecting 
 any one commodity continued unaltered, this 
 commodity would not be invariable in value, 
 unless the causes affecting all commodities 
 compared with it, continued unaltered. Mr. 
 Ricardo, on the contrary, maintains, that pro-, 
 vided the causes affecting one commodity were 
 always the same, the commodity would be of 
 invariable value, in regard to commodities pro- 
 duced under the same circumstances, notwith- 
 standing any changes in the causes affecting 
 them, provided those changes did not extend 
 to the proportions betwixt the fixed and circu- 
 lating capital, the durability of the fixed capi- 
 tal, or the length of time required to bring the 
 commodity to market. What I assert is, that 
 if all commodities were produced under ex- 
 
OF VALUE. 21 
 
 actly the same circumstances, as for instance, 
 by labour alone, any commodity, which always 
 required the same quantity of labour, could 
 not be invariable in value, while every other 
 commodity underwent alteration : he asserts, on 
 the other hand, that such a commodity would 
 be invariable, and, according to his doctrine 
 hereafter to be examined, would form a perfect 
 measure of other things. 
 
 Clear and definite ideas on the present sub- 
 ject are so essential to the political economist, 
 that it will not be a vain labour to point out the 
 mistakes of another eminent writer concern- 
 ing it. Mr. Malthus has not avoided those of 
 Mr. Ricardo. After defining value, in accord- 
 ance with that writer, as expressing the power 
 of commanding other objects in exchange; he 
 proceeds to say, thatthis power "may obviously 
 arise either from causes affecting the object 
 itself, or the commodities against which it 
 is exchanged"^. In the one case, the value of 
 
 * In this passage there is a palpable inaccuracy in ex- 
 pression. Mr. Malthus has not even succeeded in bring- 
 
22 ox THE NATURE 
 
 the object itself may properly be said to be af- 
 fected; in the other, only the value of the 
 commodities which it purchases; and if we 
 
 ing out his own meaning. He states two cases ; in one, 
 the power of purchasing, possessed by any object, is said 
 to arise from causes aflfecting the object itself; in the other, 
 its power of purchasing is said to arise from causes af- 
 fecting the commodities against which it is exchanged. He 
 then proceeds to observe, that in the first case " the value 
 of the object itself may properly be said to be affected :" 
 i. e. " if the power of purchasing possessed by any 
 object arises from causes affecting the object itself, the 
 value of the object itself may properly be said to be af- 
 fected." This must be allowed to be a very unmeaning 
 proposition. Mr. Malthus evidently intended to say, 
 not that the power of purchasing possessed by any object, 
 but that a change in its power of purchasing, might arise 
 either from causes affecting that object, or from causes af- 
 fecting the commodities compared with it. 
 
 Many similar instances of negligence and inaccuracy of 
 expression disfigure the pages of Mr. Malthus's pamphlet, 
 the more unpardonable, not only because he is master, 
 when he chooses, of an excellent and perspicuous style, 
 but because such passages form serious impediments to 
 the progress of a science, which requires the utmost clear- 
 ness and precision of language, both for its improvement 
 and its diffusion. 
 
OF VALUE. 23 
 
 could suppose any object always to remain of 
 the same value, the comparison of other com- 
 modities with this one would clearly show 
 which had risen, which had fallen, and which 
 had remained the same. The value of any 
 commodity estimated in a measure of this kind, 
 might with propriety be called its absolute or 
 natural value; while the value of a commodity 
 estimated in others which were liable to varia 
 tion, whether they were one or many, could 
 only be considered as its nominal or relative 
 value, that is, its value in relation to any par- 
 ticular commodity, or to commodities in ge- 
 neral*." 
 
 We have here invariable, absolute, natural, 
 nominal, and relative value ; but, throughout 
 the whole of the passage, the notion of value 
 as something intrinsic or absolute is apparent. 
 Departing at once from his own definition, he 
 maintains, that the value of an object may be 
 affected without affecting the value of the com- 
 
 * The Measure of Value stated and illustrated, p. 1, 
 et seq. 
 
24 ON THE NATURE 
 
 modities for which it is exchanged : that is, 
 that the power of a in commanding b in ex- 
 change may be altered, while the power of b 
 in commanding a remains as before. Mr. 
 Malthus has fallen into the same error, which 
 we have already noticed in Mr. Ricardo ; the 
 error of supposing, that if a commodity con- 
 tinued the same in the circumstances of its 
 production, it would retain the same value 
 amidst the fluctuations of other commodities. 
 The inconsistency of this with the definition of 
 value, has already been sufficiently exposed; 
 and as it is the basis of Mr. Malthus's notion 
 of absolute value, that notion necessarily falls to 
 the ground. The very term absolute value, im- 
 plies the same sort of absurdity as absolute dis- 
 tance ; while the invariable value of one object, 
 amidst the fluctuations of all other thing-s, is 
 as self-contradictory a notion as the invariable 
 resemblance of a picture, to the natural scenery 
 from which it was taken, amidst all the vi- 
 cissitudes of the seasons, the touches of time, 
 and the encroachments of art. 
 
OF VALUE. 25 
 
 The same error runs through the whole of 
 Mr. Malthus s pamphlet, entitled '^ The Mea- 
 sure of Value stated and illustrated;' and is 
 involved in the position which it is the object 
 of that pamphlet to establish. He maintains, 
 after Adam Smith, that labour is always of the 
 same value ; that is, according to his own defi- 
 nition, always retains the same power of com- 
 manding other objects in exchange; and yet, 
 in the same treatise, he speaks of the labourer 
 earning a greater or smaller quantity of money 
 or necessaries, and insists that it is not the value 
 of the labour which varies, but the value of the 
 money or the necessaries. As if produce or 
 money could change in value relatively to la- 
 bour, without labour changing in value rela- 
 tively to produce or money. But we need not 
 be surprised at any implied inconsistency in 
 Mr. Malthus, when, after having set out with the 
 definition which we have already quoted, that 
 value is " the power of commanding other ob- 
 jects in exchange," or, in other words, " the 
 power of purchasing," he subsequently makes 
 
26 ON THE NATURE 
 
 the direct assertion, that " although money 
 may increase in its power of purchasing, it does 
 not necessarily increase in value *." If Mr. 
 Malthus thus abandons his own definition, what 
 other w^ill he put in its place ? 
 
 I have already shown, that the power of pur- 
 chasing, or the power of commanding other 
 objects in exchange, can be expressed only by 
 quantity. In other words, the value of one 
 commodity can be expressed only by the quan- 
 tity of some other object for which it will ex- 
 change. When a hat is said to be twenty 
 shillings in value, it is obvious that the value of 
 the hat is expressed by the quantity of silver : 
 when a yard of cloth is said to be worth two 
 bushels of wheat, the value of the cloth is ex- 
 pressed by the quantity of wheat. It is im- 
 possible to designate, or express the value of 
 a commodity, except by a quantity of some 
 other commodity. 
 
 The power of purchasing, or the value of an 
 object in relation to some other object, admits 
 
 * Page 62. 
 
OF VALUE. 27 
 
 of degrees ; it may be greater or less ; which 
 means, that the former object may command a 
 greater or smaller quantity of the latter. In 
 no other sense can the power of one commo- 
 dity to purchase another be said to increase or 
 decrease. As the value of an object a, can be 
 expressed only by the quantity of some other 
 object B, so an increase in the value of a, can 
 be expressed only by an increase in the quan- 
 tity of B. 
 
 Simple as these conclusions appear to oe, 
 and directly flowing from the definition of 
 value universally adopted, Mr. Ricardo has 
 drawn contrary inferences. Although he agrees 
 with Dr. Smith, in defining value to express the 
 power of purchasing, and although, in the very 
 first proposition in his book, he speaks of the 
 value of a commodity as synonymous with the 
 quantity of any other commodity, for which it 
 will exchange *, yet in another chapter of his 
 
 * " The value of a commodity, or the quantity of any 
 other commodity for which it will exchange, depends on the 
 
28 ON THE NATURE 
 
 work he says, ^' I cannot agree with M. Say in 
 estimating the value of a commodity by the 
 abundance of other commodities, for which it 
 will exchano;e *." In accordance with the de- 
 finition, this means that he cannot agree with 
 M. Say in estimating the power of a commo- 
 dity to purchase other commodities, by the 
 quantity of the latter, which it will purchase. 
 But if the power of a commodity to purchase be 
 not measured by the quantity purchased, what 
 other mode of estimation can be found ? It is 
 no great degree of boldness to challenge the 
 whole body of economists to produce a differ- 
 ent meaning of the word power, or a different 
 measure of its degrees. 
 
 One of the most accomplished of Mr. Ri- 
 cardo's disciples, the author of the Templars' 
 Dialogues on Political Economy, whose writings 
 
 relative quantity of labour which is necessary for its pro- 
 duction, and not on the greater or less compensation which 
 is paid for that labour." See title of Section i, Chap. 1 . 
 * Page 333, third edition. 
 
OF VALUE. 29 
 
 can seldom be read without both pleasure and in- 
 struction, is still more explicit on this subject, 
 and more unmeasured in his language than 
 Mr. Ricardo himself. He asserts, in terms to 
 which nothing can lend additional positive- 
 ness, " that there is no necessary connection at 
 all, or of any kind, between the quantity com- 
 manded, and the value commanding * :" and 
 again, " I presume, that in your use, and in 
 every body's use of the word value, a high 
 value ought to purchase a high value, and that 
 it will be very absurd if it should not. But as 
 to purchasing a great quantity, that condition 
 is surely not included in any mans idea of 
 value f." 
 
 The plausibility of this passage will disap- 
 pear on a little reflection. An article of high 
 value. A, will truly enough purchase another 
 article of equally high value, b, but these two 
 articles will not be high in relation to each 
 other : the term high, in this connection, must 
 
 * London Magazine for May 1824, page 552. 
 t Ibid, page 557- 
 
30 ox THE NATURE 
 
 be used to denote their value in relation to a 
 third commodity, or to commodities generally; 
 and the precise reason why a and B are said to 
 be high in relation to a third commodity, is, 
 that a small quantity of them commands in 
 exchange a large quantity of the latter. Gold 
 is said to be fifteen times more valuable than 
 silver, because an ounce of gold, no matter 
 from w^hat cause, will command fifteen ounces of 
 silver. So far, therefore, from quantity being 
 excluded from any man's idea of value, it is es- 
 sential to it, and to express value, except by 
 quantity, is impossible. The mistake, both in 
 this writer and in Mr. Ricardo, evidently arises 
 from an inaccurate apprehension of the true na- 
 ture of value. Instead of regarding value as a 
 relation between two objects, they seem to con- 
 sider it as a positive result produced by a defi- 
 nite quantity of labour. If the quantity of la- 
 bour necessary for the production of an object 
 is always the same, the value according to 
 them is always the same, however other objects 
 may have varied ; so that, in fact, the circum- 
 
OF VALUE. 31 
 
 stance of its being produced by a certain quan- 
 tity of labour constitutes its value, indepen- 
 dently of any other circumstances. Whatever 
 variations there might be in the quantities of 
 other things which this object commanded, 
 it vs^ould be still of the same value, because pro- 
 duced by the same labour. 
 
 These authors appear to have had an un- 
 steady apprehension of a sufficiently distinct 
 proposition, and one, too, on which they have 
 largely insisted, namely, that the values of com- 
 modities are in the same ratio as the quantities 
 of labour bestowed upon them. Sometimes 
 they have apparently construed this to mean, 
 that the value of any one commodity is in pro- 
 portion to the labour employed upon it. Be- 
 cause the values of a and b, accordinof to their 
 doctrine, are to each other as the quantities of 
 producing labour, or, as it is sometimes ex- 
 pressed, are determined by the quantities of pro- 
 ducing labour, they appear to have concluded^ 
 that the value of a alone, without reference to 
 any thing else, is as the quantity of its pro- 
 
32 ON THE NATURE 
 
 ducing labour. There is no meaning certainly 
 in this last proposition, but there is so much of 
 the appearance of it, that the most cautious in- 
 vestigator might be led astray by the semblance. 
 
 After these critical strictures, it is a plea- 
 sure to cite a passage from an author, whose 
 views as to the nature of value appear to me 
 to be sounder than those of any other writer. 
 
 *^ Even if a commodity," says he, ^^ could 
 be found, which always required the same ex- 
 penditure for its production, it would not there- 
 fore be of invariable exchangeable value, so as 
 to serve as a standard for measuring the value 
 of other things. Exchangeable value is deter- 
 mined, not by the absolute, but by the relative 
 cost of production. If the cost of producing 
 gold remained the same, while the cost of pro- 
 ducing all other things should be doubled, then 
 would gold have a less power of purchasing all 
 other things than before ; or, ih other words, 
 its exchangeable value would fall one half; 
 and this diminution in its exchangeable value 
 would be precisely the same in effect, as if the 
 
OF VALUE. 33 
 
 cost of all other things remained unaltered, 
 while that of producing gold had been reduced 
 one half. In the very term, exchangeable 
 value, a relative and not an absolute quantity is 
 implied. If gold should have a greater or a 
 less power of purchasing all other things, then 
 all other things would have a greater or less 
 power of purchasing gold. It is impossible to 
 increase the exchangeable value of one set of 
 commodities, without at the same time diminish- 
 ing the exchangeable power of the other set 
 of commodities with which the first is com- 
 pared *." 
 
 The following propositions may be stated as 
 the results of the investigation in which we 
 have been employed. Simple as they appear, 
 we have seen that it is possible to overlook 
 them. 
 
 1. Inasmuch as the term value denotes a 
 relation between two objects, a commodity can- 
 not be said to possess value, or to alter in value, 
 
 * An Essay on the Production of Wealth, by R. Torrens, 
 Esq. 
 
34 ON THE NATURE 
 
 without an express or implied reference to some 
 other commodity. Its value must be value in 
 something, or in relation to something. 
 
 2. This relation between two objects cannot 
 alter as to one, without altering as to the other. 
 If A rises in relation to b, b cannot remain 
 stationary, but must fall in relation to a. 
 
 3. The value of a commodity can be ex- 
 pressed only by a quantity of some other com- 
 modity. 
 
 4. A rise in the value of a commodity a , means, 
 that an equal quantity of this commodity ex- 
 changes for a greater quantity than before of 
 the commodity b, in relation to which it is said 
 to rise. 
 
 5. A fall in the value of a, means, that an 
 equal quantity of it exchanges for a smaller 
 quantity of b. 
 
 In the examination of the present subject, as 
 discussed by those writers on whose doctrines 
 I have ventured to animadvert, I have been 
 forcibly struck with the vagueness, the incon- 
 sistencies, and the errors, which have arisen 
 
DF VALLE. 35 
 
 from speaking of value as a sort of general 
 and independent property; and I cannot too 
 strongly recommend the student of political 
 economy never to let the word value pass be- 
 fore him without putting the question, " value 
 in what?" or, "in relation to what?" The value 
 of a commodity must be its value in something, 
 and whenever the term is used with any defi- 
 nite meaning, that something may be assigned. 
 If it cannot be assigned, the reader may rest 
 assured that the author, whoever he be, is 
 writing without any determinate ideas. Who- 
 ever resolutely applies this rule in reading our 
 economical writers, will be surprised and pleased 
 at the light which it will pour over their pages. 
 
 The most difficult and obscure passages will 
 frequently brighten into perspicuity, and the 
 sum of their truth as well as of their error will 
 stand apparent. The brilliant paradox, the in- 
 genious fallacy, the seemingly profound ob- 
 servation, will separate into two distinct parts, 
 one exhibiting the gaudy fragments of sophis- 
 try and delusion, the other the simple truth, 
 
 D 2 
 
36 ON THE NATURE OF VALUE. 
 
 which they only served to hide with their cum- 
 brous splendour. We may apply to the ri- 
 gorous exaction of a uniform sense, from the 
 terms employed in discussions of this nature, 
 what an eloquent writer has said of the detec- 
 tion of a fallacy in a fundamental maxim. 
 
 " To discover error in axioms," says he, " or 
 in first principles grounded on facts, is like the 
 breaking of a charm. The enchanted castle, the 
 steep rock, the burning lake disappear : and the 
 paths that lead to truth, which we imagined to 
 be so long, so embarrassed, and so difficult, show 
 as they are, short, open, and easy ''^.'^ 
 
 * Of the True Use of Retirement and Study, by Lord 
 Bolingbroke. 
 
CHAPTER II. 
 
 ON REAL AND NOMINAL VALUE. 
 
 A DISTINCTION of value into real and nomi- 
 nal, has been made by several of our most 
 eminent economical writers. Accordinof to 
 Adam Smith, the real value or price of a com- 
 modity is the labour which it will command, 
 while the nominal value is the money for which 
 it will exchange. As this definition of real 
 value is evidently inapplicable to labour itself, 
 he proceeds to say, that the real value or price 
 of labour '' may be said to consist in the 
 quantity of the necessaries and conveniences of 
 life which are given for it; its nominal price in 
 the quantity of money*." 
 
 Mr. Malthus, in his Principles of Political 
 Economy, has adopted similar, if not precisely 
 the same distinctions. '^ The most proper de^ 
 * Wealth of Nations, Book i, Chap. v. 
 
38 ON REAL AND 
 
 finition," he says, " of real value in exchange, 
 in contradistinction to nominal value in ex- 
 change, is the power of commanding the 
 necessaries and conveniences of life, as dis- 
 tinguished from the power of commanding the 
 precious metals *." 
 
 Mr. Ricardo also makes a distinction, in the 
 case of labour, between real and nominal value. 
 ^' Wages," he says, " are to be estimated by 
 their real value, namely, by the quantity of la- 
 bour and capital employed in producing them, 
 and not by their nominal value, either in coats, 
 hats, money, or cornf." 
 
 After the disquisition on the nature of value 
 in the preceding chapter, the distinction of it 
 in this way, into two kinds, must appear to be 
 merely arbitrary, and incapable of being turned 
 to any use. What information is conveyed, or 
 
 * Principles of Pol. Econ. p. 62. 
 
 t Principles of Pol. Econ. and Taxation, p. 50. He does 
 not, however, confine his idea of real value to the case of 
 labour only. — For a more particular examination of the 
 use which he makes of this term, see the Notes and Illus- 
 trations at the end of the present Treatise, Note A. 
 
NOMINAL VALUE. 39 
 
 what advance in argument is effected by 
 telling us, that value estimated in one v^^ay is 
 real, but in another nominal? The value of any 
 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. We gain nothing in 
 perspicuity or precision by the use of these 
 latter terms, but, on the contrary, they entail 
 upon us a heavy incumbrance of vagueness 
 and ambiguity and unproductive discussion. 
 
 Of the latter we have a good exemplification 
 in the Templars' Dialogues on Political Econo- 
 my, dialogue the fourth, which contains much 
 ingenious reasoning, founded altogether on this 
 distinction. It would not probably have been 
 written, however, had the author attended to 
 the simple fact, that value must always imply 
 value in something, and unless that something 
 
40 ON REAL AND 
 
 is indicated, the word conveys no information. 
 Now as the terms nominal and real do not de- 
 note any thing in this way, they stand in the 
 predicament just mentioned, they convey no 
 precise information, and are liable to engender 
 continual disputes, because their meaning is ar- 
 bitrarily assumed. 
 
 In a subsequent chapter on the value of labour, 
 I shall probably have an opportunity of ex- 
 amining some of the positions of this writer, 
 founded on his doctrine of the real value of 
 wages. At present it will be sufficient to confine 
 ourselves to the value of commodities. Follow- 
 ing 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 from 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 
 
NOMINAL VALUE. 41 
 
 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 commodi- 
 ties stand to each other as articles of exchange. 
 Real value, in a word, is on this theory con- 
 sidered as being the independent result of la- 
 bour; and consequently, if under any circum- 
 stances the quantity of labour is increased, the 
 real value is increased. Hence the paradox, 
 " that it is possible for a continually to in- 
 crease in value — in real value observe — and 
 yet command a continually decreasing quantity 
 of B*:'' and this although they were the only 
 commodities in existence. For it must not be 
 supposed that the author means, that a might in- 
 crease 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 in- 
 
 * Templars' Dialogues, in London Magazine for May, 
 1824, p. 551. 
 
48 ON REAL AND 
 
 crease 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: in- 
 quire, when he speaks of value, value in what ? 
 and all the possible tmth on the subject appears 
 in its naked simplicity. The touch of this talis- 
 man will show, that the paradox above quoted, 
 
 * Unless it be to an imaginary commodity, to which, in 
 assertions of this kind, there seems to be a latent refer- 
 ence ; a commodity namely, always produced by the same 
 labour. It is no matter, on this theory, whether such a 
 commodity exists or not. An object a is tried by this 
 ideal standard, and if it is found that it would have risen 
 in relation to it, had the standard existed, a is pronounced 
 to have risen in real value — so that any one in a jocular 
 mood might be tempted to define real value, " value esti- 
 mated by a standard which has only an imaginary existence." 
 Nor is the reference to such a standard always a merely 
 tacit or latent one. Mr. Ricardo assigns as a reason for 
 calling an alteration in wages a fall, that it would appear 
 to be a fall if the value of labour were estimated in an hy- 
 pothetical standard of this kind. 
 
NOMINAL VALUE. 43 
 
 and which is asserted by its author to be ^' true 
 in such away and degree, as to oblige him who 
 denies it to maintain an absurdity," is either a 
 palpable contradiction in terms, or a mere truism 
 scarcely worth a word of illustration, much less 
 that display of logical dexterity which he has 
 exhibited in its support. Since value must be 
 value in something, or in relation to something, 
 if there is any meaning at all in the proposition, 
 " that it is possible for a continually to increase 
 in value, and yet command a continually de- 
 creasing quantity of b," it must be either, (1) 
 that A may increase in value in relation to b, 
 and yet command a continually decreasing 
 quantity of this very b ; or (2) that a may 
 continually increase in value in relation to 
 other commodities, or what amounts to the same 
 thing, to a third commodity c, while the said a 
 commands a continually decreasing quantity of 
 b. These are the only possible interpretations 
 which can be given of the proposition, accord- 
 ing to the received definition of value. Now in 
 the first sense, the proposition is palpably absurd, 
 
44 ON HEAL AND 
 
 if tried by the principle laid down in our last 
 chapter, '^ that a rise in the value of a commo- 
 dity means, that an equal quantity of it ex- 
 changes for a greater quantity than before, of 
 the commodity in relation to which it is said to 
 rise." To maintain, therefore, that a increases 
 in value to b, and at the same time that it com- 
 mands a smaller quantity of B, is to affirm a 
 rise and fall in a at the same moment. 
 
 In the second sense the proposition, as I have 
 already remarked, is too self-evident to require 
 any proof; and as the author of the Dialogues 
 has expended so much labour and dialectical 
 skill in explaining and supporting it, we might 
 fairly infer that this is not the sense in which 
 he meant it to be interpreted, even if he had 
 not put the matter beyond dispute by his doc- 
 trine, so frequently and strongly expressed, 
 " that there is no necessary connection at all, or 
 of any kind, between the quantity commanded 
 and the value commanding "*." 
 
 The eminent writers on whose doctrines I 
 
 * Ibid., p. 552. 
 
NOMINAL VALUE. 45 
 
 have hazarded the preceding observations, 
 agree in defining value to be the power 
 of an object to purchase or command other ob- 
 jects in exchange. Adhering to this defini- 
 tion, it is difficult to conceive what propriety 
 they could have discerned in their use of the 
 words real and nominal. A real power of pur- 
 chasing implies, if it means any thing, that it 
 is not a false or pretended power; while the 
 counter phrase, a nominal power of purchasing, 
 intimates that the power is only in name ; that 
 it is not what it professes to be. But the ap- 
 plicability of these epithets can have no de- 
 pendence on the nature of the commodities in 
 relation to which the power is possessed, nor on 
 the causes affecting the production of the com- • 
 modity in which the power resides. Accord- 
 ing to all proper usage, the epithets refer not to 
 any thing in the power itself, but to the quality 
 of the affirmation that the power exists, charac- 
 terizing that affirmation as true or false. 
 
CHAPTER III. 
 
 ON THE VALUE OF LABOUR. 
 
 Unless we change the meaning- of value in 
 the case of labour from that which it bears 
 when applied to any thing else, the value of la- 
 bour must signify the power of commanding 
 other things in exchange. The term in refer- 
 ence to labour, as in all other cases, denotes a 
 relation, and the relation, in this instance, must 
 be between labour and commodities. Labour, 
 therefore, is high in value when it commands a 
 large, and low when it commands a small quan- 
 tity of commodities ; and when labour is said 
 to rise or fall in value, the expression implies, 
 that a definite portion of it, a day's labour for 
 example, exchanges for a larger or a smaller 
 quantity of commodities than before. This is 
 
VALUE OF LABOUR. 47 
 
 obviously the only interpretation of which the 
 terms rise and fall of labour admit, consistently 
 with the definition of value. 
 
 Before proceeding to apply these positions 
 to the current doctrines of the day, it w411 be 
 necessary to call the reader's attention to a 
 comparison of the terms " value of labour,"* 
 and '' wages," and to the way in which they 
 are employed. The value of labour, as we 
 have just seen, signifies the relation in which 
 labour stands to commodities. The term wasfes 
 has the same meaning — for we may say indif- 
 ferently the wages of labour are three shillings 
 a day, or the value of labour is three shillings 
 a day ; but it is often employed with greater 
 laxity of signification. 
 
 Mr. Ricardo, for example, talks of ^^ the 
 labour and capital employed in producing 
 wages," and of ^' the real value of wages * ;' 
 in which instances it is impossible to substitute 
 
 * " Wages are to be estimated by tbeir real value, viz, 
 by the quantity of labour and capital employed in producing- 
 them." Pol. Econ., p. 50. 
 
48 ON THE VALUE 
 
 the term value of labour instead of wages, as 
 might be done if the two expressions were 
 used as synonymous and equivalent. We could 
 not speak with propriety of '^ the labour and 
 capital employed in producing the value of 
 labour," or of *' the real value of the value of 
 labour." 
 
 The term wages, when thus used, appears in- 
 tended to denote the commodities or money 
 given to the labourer in exchange for his la- 
 bour — not the value of his labour in money, but 
 the money itself. This is either an unwarrant- 
 able use of the term, or there is a double mean- 
 ing in it as I think a little consideration will show, 
 although the distinction, which I shall attempt 
 to make, may seem on a first glance to be a dis- 
 tinction without a difference. It will be ac- 
 knowledged, that the value of labour can be ex- 
 pressed only by the quantity of some commodity 
 given for a definite portion of it. Thus, if silver 
 is that commodity, the value of a day's labour is 
 expressed by the quantity of silver, or, what is 
 the same thing, the number of shillings which 
 
OF LABOUR. 49 
 
 the labourer receives. This quantity of silver 
 expresses the value of his labour, in the same 
 way that a certain quantity of silver expresses 
 the value of a yard of cloth. Now the quan- 
 tity of silver by which the value of a yard of 
 cloth is expressed, we term the price of the 
 cloth, and, in a manner strictly analogous, the 
 quantity of silver by which the value of a day's 
 labour is expressed, we term the wages of la- 
 bour. The price of cloth and the wages of labour 
 are so far exactly correspondent expressions. 
 But when I speak of the price of cloth as the 
 subject of causation or change, I do not intend 
 the silver itself. The price of the cloth may 
 be twenty shillings, but what causes the price 
 is not what causes that quantity of silver. To 
 consider the price as being or consisting in the 
 actual silver itself, is an error of the same kind 
 as to consider the length of a piece of timber 
 as consisting in the instrument which we em- 
 ploy to measure it. Were I to speak of the real 
 value of the price of cloth, or of the labour and 
 capital employed in producing the price of 
 
 E 
 
50 ON THE VALUE 
 
 cloth, I should be thought to make us^e of 
 strange language. Could any meaning be at- 
 tached to the latter expression, it would be the 
 labour and capital employed in producing the 
 cloth itself, and not in producing the silver in 
 which I expressed the value of the cloth. The 
 same remarks must equally apply to the use of 
 the term wages, if it has only one meaning. If I 
 speak of the labour and capital employed in pro- 
 ducing wages, it is in this case equivalent 
 to speaking of the labour and capital employed 
 in producing labour itself, and not in producing 
 the silver or any other commodity given for 
 labour. Mr. Ricardo, however, by this phraseo- 
 logy, evidently means the labour and capi- 
 tal employed in the production of the money, 
 or of the commodities in which the value of 
 labour is expressed — a singular perversion of 
 terms, arising probably from an unconscious 
 identification of two distinct ideas ; or, if it is 
 not a perversion of terms, there are evidently 
 two senses in which the same word is used. 
 Hence Mr. Ricardo, ingeniously enough, 
 
OF LABOUR. 51 
 
 avoids a difficulty, which, on a first view, threatens 
 to encumber his doctrine, that value depends 
 on the quantity of labour employed in produc- 
 tion. If this principle is rigidly adhered to, it 
 follows, that the value of labour depends on 
 the quantity of labour employed in producing 
 it — which is evidently absurd. By a dexter- 
 ous turn, therefore, Mr. Ricardo makes the 
 value of labour depend on the quantity of la- 
 bour required to produce wages, or, to give 
 him the benefit of his own language, he main- 
 tains, that the value of labour is to be estirnated 
 by the quantity of labour required to produce 
 wages, by which he means, the quantity of la- 
 bour required to produce the money or commo- 
 dities given to the labourer. This is similar to 
 saying, that the value of cloth is to be esti- 
 mated, not by the quantity of labour bestowed 
 on its production, but by the quantity of labour 
 bestowed on the production of the silver, for 
 which the cloth is exchanged. 
 
 From the preceding observations it appears, 
 
 E 2 
 
52 ON THE VALUE 
 
 that either the term wages has two meanings, or 
 it has been used with improper laxity. In 
 order to avoid any ambiguity which might 
 arise from it, I shall in general employ in its 
 stead the expression, value of labour, by 
 which, in consonance with the usual definition 
 of value, I mean the power which a definite 
 portion of labour possesses, of commanding in 
 exchange any other commodity compared with it. 
 
 It has been already stated, that when labour 
 is said to rise or fall in value, the expression 
 implies, that a definite portion of it exchanges 
 for a larger or smaller quantity of some com- 
 modity or commodities than it did before. This 
 however is not the view taken by Mr. Ricardo 
 of the value of labour; for he enters into 
 various details to show, that although the la- 
 bourer might receive more commodities in ex- 
 change for his labour, yet the value of his 
 labour, notwithstanding, might have fallen. 
 
 '' It is not," says he, " by the absolute quan- 
 tity of produce obtained by either class, that 
 
OF LABOUR. 53 
 
 we can correctly judge of the rate of profit, 
 rent, and wages, but by the quantity of labour 
 required to obtain that produce. By improve- 
 ments in machinery and agriculture, the whole 
 produce may be doubled ; but if wages, rent, 
 and profit be also doubled, these three will bear 
 the same proportions to one another as before, 
 and neither could be said to have relatively 
 varied. But if wages partook not of the whole 
 of this increase ; if they, instead of being 
 doubled, were only increased one half; if rent, 
 instead of being doubled, were only increased 
 three-fourths, and the remaining increase went 
 to profit, it would, I apprehend, be correct for 
 me to say, that rent and wages had fallen while 
 profits had risen ; for if we had an invariable 
 standard by which to measure the value of this 
 produce, we should find that a less value had 
 fallen to the class of labourers and landlords, 
 and a greater to the class of capitalists, than 
 had been given before. We might find, for 
 example, that though the absolute quantity of 
 commodities had been doubled, they were the 
 
54 ON THE VALUE 
 
 produce of precisely the former quantity of 
 labour. Of every hundred hats, coats, and 
 quarters of corn produced, if 
 
 The labourers had before .... 25 
 
 The landlords 25 
 
 And the capitalists 50 
 
 100 
 
 And if, after these commodities were double 
 
 the quantity, of every 100 
 
 The labourers had only 22 
 
 The landlords . 22 
 
 And the capitalists 56 
 
 100 
 
 In that case I should say, that wages and rent 
 had fallen, and profits risen ; though, in conse- 
 quence of the abundance of commodities, the 
 quantity paid to the labourer and landlord 
 would have increased in the proportion of 25 
 to 44. Wages are to be estimated by their 
 real value, viz. by the quantity of labour and 
 
OF LABOUR. 55 
 
 capital employed in producing them, and not 
 by their nominal value, either in coats, hats, 
 money, or corn. Under the circumstances I 
 have just supposed, commodities w^ould have 
 fallen to half their former value, and if money 
 had not varied, to half their former price also. 
 If then in this medium, which had not varied 
 in value, the wages of the labourer should be 
 found to have fallen, it will not the less be a 
 real fall, because they might furnish him with 
 a greater quantity of cheap commodities than 
 his former wages*." 
 
 In this passage may be noted several of those 
 errors on which I have already animadverted 
 in the preceding chapters. In one part he sup- 
 poses the possibility of an invariable standard 
 of value amidst universal fluctuation, a suppo- 
 sition which has been shown to involve contra- 
 dictory conditions : in another part, he makes 
 the unmeaning distinction of real and nominal 
 value, and in another he asserts, that if all 
 commodities were produced in double quantity 
 
 * Principles of Pol. Econ. and Taxation, p. 49, third edit. 
 
56 ON THE VALUE 
 
 by the same labour, they would fall to half 
 their former value, the correctness of which 
 will be hereafter examined in the chapter on 
 the methods of estimating value. 
 
 The error, however, which it belongs to the 
 purpose of the present chapter to point out, is 
 a departure from his own definition of value. 
 Instead of regarding labour as rising or falling 
 according as it commands a greater or smaller 
 quantity of the commodities exchanged for it, 
 which is a direct corollary from the definition 
 of value as the power of purchasing or com- 
 manding other objects in exchange, he repre- 
 sents it as rising or falling only when a larger 
 or smaller proportion of the commodity pro- 
 duced goes to the labourer. This variation in 
 the proportion of the product is undoubtedly 
 one source of variation in the value of labour, 
 but it is not the sole source. As value, when 
 applied to labour, denotes its relation to other 
 things, that value must vary, not only from 
 causes which affect labour, but from causes 
 which affect the commodities received in ex- 
 change for it. To take Mr. Ricardo's own 
 
OF LABOUR. 57 
 
 case in the preceding extract. He says, that if 
 by improvements in machinery and agriculture, 
 the whole produce of a country were doubled, 
 while the quantity of labour employed con- 
 tinued the same, and if before this increase of 
 produce, of every hundred hats, coats, and 
 quarters of corn, the labourer received 25, and 
 after the increase only 22, then wages would 
 have fallen, although the labourer actually re- 
 ceived 44, where he before received only 25. 
 But if by a fall of wages is meant a fall in the 
 value of labour ; if, further, by value we mean 
 the power of commanding other things in ex- 
 change, and if the degrees of that power are in 
 proportion to the quantity commanded, then it 
 is evident, that so far from wages falling they 
 would have risen, inasmuch as a definite por- 
 tion of labour would command in exchange an 
 increased quantity of hats, coats, and corn. 
 
 I have said, that an alteration in the propor- 
 tion of the product assigned to the labourer is 
 one cause of variation in the value of labour : 
 for it is manifest, that if out of a fixed quantity 
 of hats, coats, and corn, the labourer receives 
 
58 ON THE VALUE 
 
 at one time a quarter, and at another time half, 
 his labour at the latter period will be doubled 
 in value in relation to these commodities. 
 Mr. Ricardo's error, it deserves to be repeated, 
 lies in considering this change in the propor- 
 tion to be the only cause of change, or rather 
 the only case of change in the value of labour^. 
 
 * Mr. Ricardo's inference is a legitimate deduction from 
 his premises, if we concede certain postulates. Grant 
 him the kind of value called real, which has no relation to 
 the quantity of commodities commanded, but solely to the 
 quantity of producing- labour, and it inevitably follows, that 
 there could be no alteration in the real value of labour, 
 but from an alteration in the proportion of the product 
 which went to the labourer. Neither, if money were al- 
 ways produced by a uniform quantity of labour, could 
 there be any other alteration in the money-value of labour. 
 But to say in this case, that although the labourer obtained 
 a larger quantity of hats, coats, and corn, yet if he ob- 
 tained less money, the value of his labour would have 
 fallen, is altogether nugatory. Money-value has no 
 greater claim to the general term '' value, ''^ than any 
 other kind of value ; and the simple state of the case 
 would be, that labour had risen in value in relation to hats, 
 coats, and corn, and fallen in relation to money. As to 
 real value, the last chapter has shown that it is a nonentity. 
 
OF LABOUR. 59 
 
 His assertion in another place, that '^ the la- 
 bourer is only paid a really high price for his 
 labour, when his wages will purchase the pro- 
 duce of a great deal of labour*," is only an- 
 other mode of stating the same doctrine, and 
 amounts to this, that wages are high only 
 when a great proportion of the article pro- 
 duced falls to the labourer. For wages at the 
 same period being on a level in the different 
 branches of industry, if a man's wages (to use 
 Mr. Ricardo's language) will purchase the pro- 
 duce of a great deal of labour, they will pur- 
 chase the produce of a great deal of any sort 
 of labour, consequently the produce of a great 
 deal of his own labour, that is, the proportion 
 falling to him of the produce of his own labo ur 
 will be great. 
 
 The author of the Templars' Dialogues, who 
 pushes Mr. Ricardo's doctrines to their re- 
 motest consequences, and thus, if they are un- 
 true, necessarily exposes their incorrectness by 
 
 * Principles of Pol. Econ, and Taxation, p. 322, 3ded. 
 
60 ON THE VALUE 
 
 the paradoxes into which he falls, has not 
 failed to drive this doctrine of the value of la- 
 bour to an extravagant result. " Wages," says 
 he, " are at a high real value, when it requires 
 much labour to produce wages ; and at a low 
 real value, when it requires little labour to 
 produce wages : and it is perfectly consistent 
 with the high real value — that the labourer 
 should be almost starving ; and perfectly con- 
 sistent with the low real value — that the la- 
 bourer should be living in great ease and com- 
 fort ^^^^Z' 
 
 Well might the author's friend Philoebus 
 exclaim at this extraordinary passage, " this 
 may be true : but you must allow, that it 
 sounds extravagant." 
 
 Let us examine it by the test before given : 
 let us ask, value in what ? If the labourer is 
 starving, in relation to what is his labour of 
 high value? In relation to corn? If so, he 
 would obtain a large quantity of corn in ex- 
 
 * London Magazine for May 1824, p. 557- 
 
OF LABOUR. 61 
 
 change for his labour, and could not starve. 
 It will be replied, perhaps, that corn is high 
 too, and therefore, although labour is high, the 
 labourer obtains little corn. But if corn and 
 labour are both affirmed to be high, the asser- 
 tion must mean, that they are high in relation 
 to other commodities, as it is an absurdity to 
 say, that they are both at once high in relation 
 to each other. If therefore the labourer ob 
 tains little corn, labour must be low in relation 
 to corn. 
 
 The same result will be obtained if the defi- 
 nition of value is substituted for the term. 
 The author's proposition then would be, ^^ it is 
 perfectly consistent with a great power of com- 
 manding commodities in exchange for his la- 
 bour, that the labourer should be almost starv- 
 ing, and perfectly consistent with a small 
 power, that the labourer should be living in 
 great ease and comfort." This is asserting 
 power to be in an inverse ratio to the effects 
 produced *, 
 
 * See Note B. 
 
CHAPTER IV. 
 
 ON PROFITS. 
 
 • 
 
 In the last chapter I endeavoured to explain 
 the true meaning of the value of labour, and 
 to show, that a rise or fall of labour implies an 
 increase or decrease in the quantity of the 
 commodity given in exchange for it. 
 
 A rise or fall of profits is sometimes spoken 
 of as analogous to a rise or fall of labour or of 
 wages. But profits cannot be regarded as 
 analogous to wages. Labour is an exchange- 
 able thing, or one which commands other 
 things in exchange ; but the term profits de- 
 notes only a share or proportion of commodi- 
 ties, not an article which can be exchanged 
 aofainst other articles. When we ask whether 
 
ON PROFITS. 63 
 
 wages have risen, we mean, whether a definite 
 portion of labour exchanges for a greater quan- 
 tity of other things than before ; but when we 
 ask whether profits have risen, we do 7iot mean 
 whether a definite portion of some article 
 called profits will exchange for a greater quan- 
 tity of other things than before, but whether 
 the gain of the capitalist bears a higher ratio 
 to the capital employed. 
 
 Mr. Ricardo appears to have considered 
 wages, or the value of labour, and profits as 
 equally shares or proportions of the commodity 
 produced, and hence his doctrine, that as 
 wages rise, or, in other words, the value of la- 
 bour rises, profits must fall. " Whatever," he 
 says, " increases wages, necessarily reduces 
 profits ;" and again, " nothing can affect profits 
 but a rise in wages." 
 
 It has been shown, however, in the last 
 chapter, that wages, or the value of labour, 
 and profits may both rise together, because the 
 value of labour does not entirely depend on 
 the proportion of the whole produce, which is 
 given to the labourers in exchange for their 
 
64 ON PROFITS. 
 
 labour, but also on the productiveness of the 
 labour ; because, in fact, a rise of profits and a 
 rise in labour are essentially distinct in their 
 nature, the one signifying an increase of pro- 
 portion, the other an increase in the quantity 
 which a definite portion of labour will com- 
 mand. 
 
 The proposition, that when labour rises pro- 
 fits must fall, is true only when its rise is not 
 owing to an increase in its productive powers. 
 If labour rises while these productive powers 
 remain the same, profits will inevitably fall. 
 This may be easily proved from the principles 
 already advanced ; for if labour rises in value, 
 whoever purchases labour must give a greater 
 quantity of other things for it, and as the capi- 
 talist purchases labour, he must pay more for 
 it. It will be said, perhaps, that he may raise 
 the value of his goods, that is, he may require 
 a greater quantity of other commodities than 
 before, in exchange for his own. But the capi- 
 talist who produces these other commodities 
 is in the same predicament, and they cannot 
 both raise their goods. If a raises the value of 
 
ON PROFITS. 65 
 
 his cloth, sells it at an advanced price, and pur- 
 chases corn, or exchanges it directly for corn, 
 the result is, that he gets more corn for the same 
 quantity of cloth than he did before. If b the 
 grower of corn does the same with his produce, 
 he gets more cloth. But a cannot obtain from 
 B more corn for the same quantity of cloth, at 
 the same time that b obtains from a more cloth 
 for the same quantity of corn. Consequently 
 the value of goods cannot rise. Moreover, if 
 all commodities rise, they must rise in relation 
 to something, and as it is manifestly absurd 
 that all commodities should at once rise in re- 
 lation to each other, this something must be 
 labour. But, by the supposition, labour itself 
 rises in relation to all commodities; whence it 
 is a contradiction to maintain, that a universal 
 rise in the value of labour can increase the 
 value of commodities. 
 
 It may be necessary to repeat the qualifica- 
 tion with which the doctrine, that if labour rise 
 in value profits must fall, is to be received. 
 It is true only when the productive power 
 
66 ON PROFITS. 
 
 of labour continues the same, for if this pro- 
 ductive power be augmented, that is, if the same 
 labour produce more commodities in the same 
 time, labour may rise in value w^ithout a fall, nay 
 even v^ith a rise of profits. This has been al- 
 ready shown in treating of the possibility of 
 labour rising, although the proportion of the pro- 
 duce assigned to the labourer were diminished. 
 In the case there stated it is supposed, that the 
 whole produce of a country becomes doubled, 
 while the quantity of labour remains the same ; 
 and that of every 100 hats, coats, and quar- 
 ters of corn, the labourer before the increase re- 
 ceived 25, and after the increase 22, so that at 
 the latter period he would receive 44 for the 
 same quantity of labour which before obtained 
 25. The capitalist for his share, before the in- 
 crease, is supposed to receive 50 per cent, and 
 after the increase 56 per cent, making 112, 
 where he before obtained only 50. In this 
 case, while the value of labour in relation to 
 hats, coats, and corn, is evidently increased, 
 that is, while a definite portion of labour ex- 
 
ON PROFITS. 67 
 
 changes for a larger quantity of those articles, 
 the proportion assigned to the capitalist, or the 
 rate of profits, is also augmented. 
 
 It may be asked, whether not only the pro- 
 portion is raised, but the value of the same pro- 
 portion? If the capitalist, for instance, receive 
 100 hats, coats, and quarters of corn at the lat- 
 ter period for every 50 at the former, would not 
 the value of his profits have risen, although the 
 proportion were left undisturbed ? 
 
 A question whether the value of profits has 
 risen, can have only one of three meanings : 
 1 . Whether the proportion of the produce ob- 
 tained by the capitalist has increased ? 2. Whe- 
 ther the aggregate value of his share is greater, 
 estimated in some of the commodities pro- 
 duced? 3. Whether the aggregate value has 
 risen, estimated in labour? 
 
 1. The inquiry which I have supposed to be 
 made, cannot be in the first sense, because one 
 of the conditions is that the proportion remains 
 the same. 
 
 2. If it be intended to ask whether he 
 
 V 2 
 
68 ON PROFITS. 
 
 value of the share has risen, estimated in 
 any of the articles produced, the value of pro- 
 fits has undoubtedly risen. Suppose, for in- 
 stance, the value to be estimated in quarters of 
 corn, and that at the first period the whole 
 share of the capitalist was an aggregate of 1000 
 coats, hats, and quarters of corn"^ ; and suppose 
 further a quarter of corn to exchange for a coat 
 or a hat, then his share estimated in corn would 
 -be worth 1000 quarters of corn; but after the 
 produce was doubled, his share would be an 
 aggregate of 2000 coats, hats, and quarters of 
 corn, and would consequently be worth 2000 
 quarters of corn, or double its former value in corn. 
 3. If it is meant to inquire whether, when the 
 product of labour was doubled, the profits of 
 the capitalist would rise in their aggregate value 
 estimated in labour, the reply is, evidently not. 
 For as the labourer, by the supposition, obtains 
 double the former quantity of commodities, 
 double the quantity of commodities must be 
 given for the same quantity of labour, and of 
 * See Chapter viii, on the Methods of Estimating Value. 
 
ON PROFITS. 69 
 
 course the share of the capitalist would com- 
 mand only the same labour as before. There 
 could be a change in the value of profits esti- 
 mated in labour only from an alteration in 
 the proportions assigned to the capitalist and 
 labourers. This is easily shown. Whatever 
 the produce of the labour of six men might 
 be, whether 100 or 200 or 300 quarters of 
 corn, yet so long as the proportion of the capi- 
 talist was one fourth of the produce, that fourth 
 part estimated in labour would be invariably 
 the same. Were the produce 100 quarters, 
 then, as 75 quarters would be given to 6 men, 
 the 25 accruing to the capitalist would com- 
 mand the labour of 2 men: if the produce 
 were 300 quarters, the 6 men would obtain 
 225 quarters, and the 75 falling to the capitalist 
 would still command 2 men and no more. Thus 
 a rise in the proportion which went to the capi- 
 talist would be the same as an increase of the 
 value of profits estimated in labour, or, in other 
 words, an increase in their power of command- 
 ing labour. 
 
70 ON PROFITS. 
 
 Should it be objected to the doctrine of pro- 
 fits and the value of labour rising at the same 
 time, that as the commodity produced is the 
 only source whence the capitalist and the la- 
 bourer can obtain their remuneration, it neces- 
 sarily follows that what one gains the other 
 loses, the reply is obvious. So long as the 
 product continues the same, this is undeniably 
 true ; but it is equally undeniable, that if the 
 product be doubled the portion of both may be 
 increased, although the proportion of one is 
 lessened and that of the other augmented. 
 Now it is an increase in the portion of the pro- 
 duct assigned to the labourer which constitutes 
 a rise in the value of his labour ; but it is an in- 
 crease in the proportion assigned to the capi- 
 talist which constitutes a rise in his profits; 
 whence it clearly follows, that there is nothing 
 inconsistent in the supposition of a simulta- 
 neous rise in both* . 
 
 *>SeeNoteC. 
 
CHAPTER V. 
 
 ON COMPARING COMMODITIES AT DIF- 
 FERENT PERIODS. 
 
 Perhaps no part of their investigations has 
 perplexed political economists more than their 
 attempts to compare the value of the same 
 object at different periods of time. 
 
 It is a direct inference from the explanation 
 of value in the preceding chapters, as de- 
 noting a relation between two commodities, a 
 relation incapable of existing when there is 
 only one commodity, that it cannot exist be- 
 tween a commodity at one period and the same 
 commodity at another period. We cannot 
 ascertain the relation of cloth at one time to 
 cloth at another, as we can ascertain the re- 
 lation of cloth to corn in the present day. All 
 
72 ON COMPARING COMMODITIES 
 
 that we can do is to compare the relation in 
 which cloth stood at each period to some other 
 commodity. When we say, that an article in a 
 former age was of a certain value, we mean, 
 that it exchanged for a certain quantity of 
 some other commodity. But this is an in- 
 applicable expression in speaking of only one 
 commodity at two diiFerent periods. We can- 
 not say, that a pair of stockings in James the 
 First's reign would exchange for six pair in our 
 own day ; and we therefore cannot say, that a 
 pair in James the First's reign was equal in 
 value to six pair now, without reference to 
 some other article. 
 
 Value is a relation between contemporary 
 commodities, because such only admit of being 
 exchanged for each other ; and if we compare 
 the value of a con^odity at one time with its 
 value at another, it is only a comparison of the 
 relation in which it stood at these different 
 times to some other commodity. It is not a 
 comparison of some intrinsic, independent qua- 
 lity at one period, with the same quality at 
 
AT DIFFERENT PERIODS. 73 
 
 another period ; but a comparison of ratios, or 
 a comparison of the relative quantities in which 
 commodities exchanged for each other at two 
 different epochs. If a commodity of in the 
 year 100 was worth 2 b, and in 1800 was 
 worth 4 B, we should say that a had doubled 
 its value to b. But this, which is the only kind 
 of comparison we can institute, would not give 
 us any relation between a in 100 and a in 
 1800 ; it would be simply a comparison of the 
 relation between a and b in each of those years. 
 
 It is impossible for a direct relation of value 
 to exist between a in 100 and a in 1800, just 
 as it is impossible for the relation of distance 
 to exist between the sun at the former period 
 and the sun at the latter. This perhaps will be 
 still more apparent if we make use of the defi- 
 nition of value instead of the term. It will at 
 once be seen how absurd it would be to talk 
 of the power of a in the year 100, to command 
 in exchange the same commodity in 1800. 
 
 It may, perhaps, be alleged, that I am here 
 fio^hting with a mere shadow of my own crea- 
 
74 ON COMPARING COMMODITIES 
 
 tion; for that nobody ever imagined the possi- 
 bility of comparing the value of any commo- 
 dity at one period with its value at another, 
 without reference to some other object, the bare 
 notion of such a comparison being absurd, and 
 scarcely susceptible of being stated in intelli- 
 gible language ; and further, that when the 
 value of a commodity in one year is compared 
 with its value in another, the very terms neces- 
 sarily imply a reference to other articles, and 
 are always so considered. 
 
 A slight inspection, however, of our princi- 
 pal writers will prove, that if I am fighting 
 with a shadow, which I by no means deny, it is 
 not one of my own creation. When Mr. Ricardo 
 tells us, that a commodity always produced by 
 the same labour is of invariable value, he im- 
 plicitly maintains all I have been attempting to 
 disprove. By the epithet invariable he clearly 
 means, that its value at one time will be pre- 
 cisely the same as its value at another, not in 
 relation to other commodities, for he supposes 
 all other commodities to vary, but in relation to 
 
AT DIFFERENT PERIODS. 75 
 
 itself. He distinctly states, that if equal quan- 
 tities of gold could always be obtained by 
 equal quantities of labour, the value of gold 
 " would be invariable, and it would be emi- 
 nently well calculated to measure the varying 
 value of all other things,'' whence it follows, 
 that this invariableness must be intended to be 
 affirmed of the value of gold compared with 
 itself, and not of any relation between gold 
 and some other commodity. 
 
 The same remarks apply to all attempts to 
 find out something of invariable value. Adam 
 Smith and Mr. Malthus, in considering labour 
 alone as never varying in its own value, assert 
 by implication, that labour at one period may 
 be compared in value with labour at another 
 period, without reference to any other thing 
 whatever*. I fully concede that such a notion 
 
 * For further instances see Wealth of Nations, Book i, 
 Chap. V, and Mr. Malthus's Pamphlet on the Measure of 
 Value, p. 24 and 25. When we come to treat on the mea- 
 surement of value, Ave shall find this notion at the bottom 
 of some important errors on that subject. 
 
76 ON COMPARING COMMODITIES 
 
 involves an absurdity, — that they might have 
 talked with equal propriety of the possibility 
 of comparing the distance of the sun in the 
 year 100 with its distance in 1800, without re- 
 ference to any other body in space — and that 
 language can scarcely be found to express the 
 idea in direct terms, without a palpable contra^ 
 diction : but that such a notion has extensively 
 prevailed no one will doubt, who attentively 
 turns over the pages of the first writers on the 
 subject. 
 
 The following passage from the Templars' 
 Dialogues on Political Economy, is a conspi- 
 cuous instance of the error in question. 
 
 " I wish to know," says he, " whether a day's 
 labour at the time of the English Revolution 
 bore the same value as a hundred years after, 
 at the time of the French Revolution, and if 
 not the same value, whether a higher or a lower. 
 For this purpose, if I believe that there is 
 any commodity which is immutable in value, I 
 shall naturally compare a day's labour with that 
 commodity at each period. Some for instance 
 
AT DIFFERENT PERIODS. 77 
 
 have imagined, that corn is of invariable value, 
 and supposing me to adopt so false a notion, I 
 should merely have to inquire what quantity of 
 com a day's labour would exchange for at each 
 period, and I should then have determined the 
 relations of value between labour at the t^vo 
 periods *.'' 
 
 It scarcely needs pointing out, after the ex- 
 planation I have given, that no relation of value 
 could exist between labour at these two periods : 
 the only point to be ascertained would be, whe- 
 ther the same or a different relation existed at 
 both periods, between corn and labour, and this 
 would be equally well ascertained, without sup- 
 posing the condition of corn being immutable 
 in value. This very supposition implies, either 
 that the fact which it is wished to ascertain 
 is already ascertained, or, that the value of 
 com at one period may be compared with the 
 value of corn at another period, with no re- 
 ference to any other commodity in the world, 
 
 * Dialogue v, London Mas^azine for May, p. 558. 
 
78 ON COMPARING COMMODITIES 
 
 Many errors appear to have arisen from this 
 inattention to the real nature of a comparison of 
 objects at different periods in regard to their 
 value. 
 
 Much indistinctness has also proceeded from 
 blending the comparison of contemporary com- 
 modities with that of the same commodity at 
 different times, particularly when writers have 
 been speaking of the comparative quantity, or 
 the comparative value of the labour concerned in 
 the production of commodities. It is not 
 always clear to their readers, nor does it seem 
 to have been clearer to themselves, whether they 
 intended to compare the same commodity, as 
 to the producing labour, at separate periods, or 
 different commodities at the same period. 
 There appears to me to be considerable confu- 
 sion in this respect in Mr. Ricardo's first sec- 
 tion on value ; a confusion which is probably 
 one of the latent causes of the obscurity felt by 
 many to hang over that section, and which, if I 
 mistake not, is perceptible in the very sentence 
 which forms its title. 
 
AT DIFFERENT PERIODS. 79 
 
 '^ The value of a commodity," says he, *' or 
 the quantity of any other commodity for wliich 
 it will exchange, depends on the relative quan- 
 tity of labour which is necessary for its produc- 
 tion, and not on the greater or less compensa- 
 tion which is paid for that labour." 
 
 In the first part of this sentence he appears 
 to be speaking of contemporary commodities, 
 but in the latter clause he has chanofed his 
 ground : it does not form a proper logical coun- 
 terpart to the former : there is, I think, an im- 
 plied although an unconscious reference to the 
 same commodity at different periods. For if 
 not, if he is speaking in the latter clause also 
 of contemporary commodities, the amount of 
 the proposition would be this : — 
 
 " The values of two contemporary commo- 
 dities, A and B, are to each other as the quanti- 
 ties of labour necessary to their production, 
 and they are not to each other as the values of 
 the labour employed in their production." 
 But if commodities are to each other as the 
 quantities, they must also be to each other as the 
 
yO ox COMPARING COMMODITIES 
 
 values ofthe producing labour; for the contrary 
 would necessarily imply, that the two commo- 
 dities A and B might be equal in value, 
 although the value of the labour employed in 
 one was greater or less than the value of the 
 labour employed in the other ; or that a and b 
 might be unequal in value, if the labour em- 
 ployed in each was equal in value. But this 
 difference in the value of two commodities, 
 which were produced by labour of equal value, 
 would be inconsistent with the acknowledged 
 equality of profits, which Mr. Ricardo main- 
 tains in common with other writers '^. 
 
 It is probable, therefore, that this was not 
 Mr. Ricardo's meaning, but that he uncon- 
 sciously confounded this proposition with an- 
 other, and really intended to say, that the value 
 of A at two different periods, No. 1 and 2, was 
 
 * In this chapter we are assuming, for the sake of argu- 
 ment, the truth of the doctrine, that commodities are to 
 each other in value, as the quantities of labour respectively 
 employed in their production. It will form a subject of 
 examination hereafter. 
 
AT DIFFERENT PERIODS. 81 
 
 not proportioned to the value of the labour ne- 
 cessary to its production at each period ; that 
 although, for example, the value of the labour 
 were doubled at the latter period, the value of 
 the commodity might not be affected. The 
 proposition expressed more simply is, that the 
 value of a commodity and the value of the la- 
 bour employed in its production, do not bear 
 to each other a constant ratio ; or more simply 
 still, that labour may rise and fall in value with- 
 out affecting the value of the commodity. 
 
 This is obviously a very diflferent proposition 
 from the other, and depends in fact on the fal- 
 sity of the other, or on the contrary proposition, 
 '' that the values of two contemporary commo- 
 dities a?'e to each other as the values of the 
 labour employed in producing them." For as 
 value must be value in something, let us ask, 
 in relation to what object might the value of a 
 at period No. 2 be, as here asserted, the same 
 as its value at period No. 1, although the value 
 of the producing labour were doubled? In re- 
 
 G 
 
82 ON COMPARING COMMODITIES 
 
 lation to other commodities. And why? Be- 
 cause the rise in labour would be the same in 
 all commodities ; but if the values of commo- 
 dities are to each other as the values of the la- 
 bour employed in producing them, and if the 
 labour employed in all commodities rose in 
 equal proportion, there could not possibly be 
 any disturbance of the relations existing be- 
 tween all commodities before the rise, and of 
 course a would be of the same value at period 
 No. 2 as at period No. 1. 
 
 The only alteration in this instance would 
 be, an alteration in the relation of value between 
 labour and commodities. It would be a sim- 
 ple case of a rise in labour, and (proceeding on 
 the assumption that commodities are determined 
 in value solely by the quantity of labour) the 
 whole amount of the proposition is this, that 
 the values of commodities in relation to each 
 other are not disturbed by an alteration in their 
 values in relation to labour; which is only a 
 particular application of the more general pro- 
 
AT DIFFERENT PERIODS. 83 
 
 position, that when one commodity or thing al- 
 ters its value in relation to other commodities, 
 the mutual relations of these other commodi- 
 ties, cceteris paribus, are not thereby affected *. 
 The reader will notice, that in supposing that 
 while the value of the producing labour was 
 doubled, the commodity remained the same, I 
 have used the expression, " the value of the 
 commodity might not be affected," for this rea- 
 son, that whether it was or was not affected, 
 would depend on the nature of the cause by 
 which the value of the labour was doubled. 
 In the proposition, the values of a and b are to 
 each other as the values of their producing la- 
 bour, the value of labour means aggregate 
 value. Now the aggregate value of the labour 
 necessary for the production of a commodity 
 may be increased in two ways, either by an 
 augmentation of the quantity of the labour at 
 
 * It may be necessary perhaps to state, that by the qua- 
 lification ccBteris paribus, it is meant to restrict the propo- 
 sition to cases in which the altered commodity either does 
 not enter at all into the composition of other commodities, 
 or enters into them in the same proportion. 
 
 G 2 
 
84 ON COMPARING COMMODITIES 
 
 the same rate, or by a rise in the rate, that is in 
 the value of a definite portion of it, while the 
 quantity remains the same. It is only in the 
 latter event (which is the one I have supposed 
 to take place) that the value of the commodity 
 would in general continue the same in relation 
 to other commodities, for the precise reason al- 
 ready assigned, that all commodities would be 
 affected in equal proportions. It would be a 
 positive not a comparative rise in the value of 
 the producing labour of the commodity in ques- 
 tion ; while on the other hand, should the in- 
 crease in the value have arisen from an aug- 
 mentation in the quantity of labour, such in- 
 crease would be probably, although not neces- 
 sarily comparative. 
 
 As the misconception on the part of Mr. 
 Ricardo here noticed is a fundamental one, I 
 make no apology for presenting the reader with 
 a further attempt to show it. The confu- 
 sion in the proposition will be more apparent 
 by a little alteration in the language. 
 
 " The value of a commodity a, or the quan- 
 
AT DIFFERENT PERIODS. 85 
 
 tity of any other commodity b, for which it will 
 exchange, depends on the comparative quanti- 
 ties of labour necessary for the production of 
 A and B." So far there is no obscurity, and the 
 position can be construed only in one sense. 
 When Mr. Ricardo, however, adds, " and not 
 on the greater or less compensation which is 
 paid for that labour," every one must be sensi- 
 ble of a confusion of ideas. In the former 
 clause he is telling us on what circumstance the 
 mutual value of a and b depends, or, in other 
 words, what circumstance determines the quan- 
 tities in which these two commodities are ex- 
 changed for each other ; in the latter clause it 
 was evidently his business, as it was his design, 
 to tell us on what the mutual value of a and b 
 did 7iot depend ; or, in other words, what cir- 
 cumstance did 7iot determine the quantities in 
 which these commodities are exchanged for 
 each other. Now the only circumstance as- 
 signed is obviously *' the compensation paid for 
 the labour," and the proposition really asserted 
 in this latter clause is, that the mutual value 
 
86 ON COMPARING COMMODITIES 
 
 of A and B does not depend on the compensa- 
 tion paid for the producing labour of a being 
 equal to, or greater, or less than the compensa- 
 tion paid for the producing labour of b : so that 
 this compensation might be equal in the two 
 cases, while the quantities in which a and b 
 were exchanged for each other were unequal. 
 
 As far, however, as any thing can be gathered 
 from the confusion of thought and language 
 in Mr. Ricardo's opening section, this is not 
 what he intended to assert. In the first clause 
 he was comparing a and b, and asserting the 
 cause which determined the relation between 
 them ; but dropping b by the way, in this latter 
 clause he is speaking of a alone. By quan- 
 tity of labour in the first clause, he meant 
 quantity of labour necessary to produce a, com- 
 pared with the quantity of labour necessary to 
 produce b ; but by compensation of labour in 
 the latter clause, he does not intend the com- 
 pensation of labour in a compared to the com- 
 pensation of labour in b, but the compensation 
 paid for the labour required to produce a at 
 
AT DIFFERENT PERIODS. 87 
 
 one time, compared with the compensation paid 
 for the producing labour of a at another time. 
 Hence Mr. Ricardo's sentence is a completely 
 false antithesis. 
 
 The author of the Templars' Dialogues on 
 Political Economy seems to have followed Mr. 
 Ricardo in confounding the two distinct propo- 
 sitions above pointed out. This appears the 
 more extraordinary, since he has laid down the 
 first proposition (which I have supposed Mr. 
 Ricardo did not clearly perceive to be involved 
 in the terms employed) in such bold and un- 
 measured language, as almost to preclude the 
 possibility of its being mistaken either by him- 
 self or his readers for any other. 
 
 After telling us, that ^^ Mr. Ricardo's doc- 
 trine is, that A and b are to each other in value 
 as the quantity of labour is which produces A 
 to the quantity which produces b," he says, " I 
 assert in the most peremptory manner, that he 
 who says, ' the value of a is to the value of b, 
 as the quantity of labour producing a is to 
 the quantity of labour producing b,' does of 
 
88 ON COMPARING COMMODITIES 
 
 necessity deny by implication, that the rela- 
 tions of value between a and b are governed 
 by the value of the labour which severally pro- 
 duces them." Again, " so far are the two for- 
 mul(E from presenting merely two different ex- 
 pressions of the same law, that the very best 
 way of expressing negatively Mr. Ricardo s 
 law {viz. A is to B in value as the quantities of 
 the producing labour) would be to say, a is not 
 to B in value as the values of the producing la- 
 bour =^." 
 
 Let us examine the reasoning employed to 
 support this extraordinary assertion. It is too 
 long to be introduced here, but it amounts to 
 this, that when the producing labour is in- 
 creased in quantity, the commodity produced 
 is increased in value ; but when the producing 
 labour is increased in value, the value of the 
 commodity produced remains unaltered; and 
 therefore the values of commodities are not to 
 each other as the values of the producing la- 
 
 * London Magazine for April, p. 348. 
 
AT DIFFERENT PERIODS. 89 
 
 bour. For instance, if a and b were each pro- 
 duced by six days' labour, they would be equal 
 in value ; but if a should from some cause or 
 other require 12 days' labour, then the value of 
 a would be to the value of b as 12 to 6. But 
 suppose that a in 1810 required six days' la- 
 bour at 4^., making 24,!?., and in 1811, 6 days at 
 6<y., making 36s., if the value of the commodity 
 was 40,y. at the former period, it would still be 
 40,y. at the latter. And suppose that b in 1810 
 required 3 days' labour at 4s., making I2s., and 
 in 1811, 3 days' labour at 6s., making 18,y., the 
 value of the commodity at each period would 
 be 20s. 
 
 Now this author's argument is, that because a 
 and B at these two periods do not vary in value 
 with the varying value of labour, therefore they 
 are not to each other in value as the values of 
 the. producing labour. But it is evident that 40,y., 
 the value of a in 1810, is to 20,9., the value of 
 B at the same period, as 24,9., the value of the 
 producing labour in a, is to 12,9., the value of 
 
^ ON COMPARING COMMODITIES 
 
 the labour in b; and again in 1811, 40^. is to 
 20^., the values of the commodities, as 36^. to 
 18^., the values of the labour. 
 
 The author appears to me to have vacillated 
 unconsciously between two essentially distinct 
 propositions. He has begun (not an uncom- 
 mon case) by proposing one as the object of 
 his attack, and ended by contending with the 
 other. 
 
 This will be seen at a glance when they are 
 placed together. 
 
 1 . A and B are to each other in value as the 
 values of the producing labour. 
 
 2. The value of a at one period is to the 
 value of the producing labour, as the value of 
 A at another period is to the value of the pro- 
 ducing labour ; or, to conform the expression 
 of it to the preceding instance, the value of A 
 in 1810, 40^., is to the value of the labour at 
 that period, 24^., as the value of a in 1811, 
 40^., to the value of the producing labour in 
 the same year, 36.^., which is manifestly ab- 
 
AT DIFFERENT PERIODS. 91 
 
 surd ; but I lie under a great mistake, if it is 
 not really the proposition which X Y Z ''^ has 
 been attacking, while he supposed himself to 
 be in logical combat with the first. 
 
 It is difficult to imagine how an error of this 
 kind (if I am right in supposing it to be one) 
 should have escaped a mind evidently well 
 versed in the detection of ambiguities in argu- 
 mentation. It appears to have arisen, as in the 
 case of Mr. Ricardo, from blending the compa- 
 rison of contemporary commodities with that 
 of the same commodity at different periods, 
 which led them to the erroneous inference, that 
 because the value of a at one period did not bear 
 the same relation to the value of its producing 
 labour as at another period, therefore the values 
 of two contemporary commodities did not bear 
 the same relation to each other as the values of 
 the labour respectively bestowed on their pro- 
 duction. 
 
 '^ X Y Z is the designation assumed by the Author of the 
 Dialogues. 
 
92 ' ON COMPARING COMMODITIES 
 
 In this chapter I beg not to be understood as 
 contending, either that the values of commodi- 
 ties are to each other as the quantities of labour 
 necessary for their production, or that the 
 values of commodities are to each other as the 
 values of the labour : all that I intend to insist 
 upon is, that if the former is true, the latter 
 cannot be false ; and I have endeavoured to ex- 
 plain the source of the misconception which 
 has regarded the two propositions as incompa- 
 tible and contradictory*'. The fact is, that the 
 quantity of labour and the value of labour are in 
 the same case. Any alteration in the compara- 
 tive quantities of labour required to produce a 
 and B, would alter their value in relation to 
 each other ; and an alteration in their mutual 
 value would equally follow from any change in 
 the comparative values of the producing labour, 
 
 * Of the two propositions, however, the latter is a much 
 nearer approximation to the truth, for reasons whicli will 
 be stated in a subsequent chapter on the causes of value. 
 
AT DIFFERENT PERIODS. 93 
 
 while the comparative quantities of labour re- 
 mained the same. 
 
 Again, an alteration in the positive quantities 
 of the producing labour in a and b, which left 
 the comparative quantities the same, would not 
 affect the mutual value of these two commodi- 
 ties, any more than an alteration in the positive 
 values of the producing labour, while the same 
 ratio subsisted between those values as before. 
 
CHAPTER VI. 
 
 ON MEASURES OF VALUE. 
 
 We now come to the consideration of a sub- 
 ject which has made a conspicuous figure in 
 the writings of political economists, and than 
 which, none perhaps has been a greater source 
 of error and confusion; I mean the measure- 
 ment of value. 
 
 Our first inquiry must therefore be directed to 
 the signification of the term. The analogies 
 suggested by the word measure seem to have 
 bewildered almost every author who has touched 
 on the subject. It has been taken for granted 
 that we measure value as we measure exten- 
 sion, or ascertain weight ; and it has been con- 
 sequently imagined, that to perform the opera- 
 
ON MEASURES OF VALUE. 95 
 
 tion we must possess an object of invariable 
 value. 
 
 Let us examine, therefore, how far measuring 
 value and measuring space are similar opera- 
 tions. In every case of measuring we merely 
 ascertain ratios — the ratio which one thing: 
 bears to another. In measuring the length 
 of an object we find what ratio it bears to 
 the length of some other object, or in other 
 words, how many times one is contained in the 
 other. We measure the longitudinal exten- 
 sion of a piece of timber, for example, by a foot- 
 rule; that is, we find how often the length of the 
 latter is contained in the former, and this is 
 eflfected by the actual application of the rule to 
 the timber. It is a physical operation, by which 
 we obtain the knowledge of a fact before un- 
 known, the ratio of length subsisting between 
 the object and the instrument we employ. 
 
 In measuring value, what resemblance to this 
 operation can possibly be discovered ? We may 
 place two objects by the side of each other, or 
 apply one to the other in any way we please, 
 
96 ON MEASURES 
 
 but we shall never be able by such means to 
 discover the relation of value existing- between 
 them. We shall never extort from them a sin- 
 gle fact with which we were before unac- 
 quainted. What then is it possible to do in the 
 way of measuring value? What kind of measure- 
 ment is intended, when the term is so frequently 
 employed? All that is practicable appears to 
 be simply this : if I know the value of a in rela- 
 tion to B, and the value of b in relation to c, I 
 can tell the value of a and c in relation to each 
 other, and consequently their comparative power 
 in purchasing all other commodities. This is 
 an operation obviously bearing no resemblance 
 at all to the process of measuring length. There 
 is no unknown fact discovered by a physical 
 operation : it is in truth a calculation from cer- 
 tain data, a mere question in arithmetic. It is 
 not, let it be observed, what on a first glance 
 it may appear, like ascertaining the compara- 
 tive length of two pieces of timber which can- 
 not be brought into juxta-position, by means of 
 a foot rule or other instrument which we apply 
 
OF VALUE. 97 
 
 first to one and then to the other : it is far from 
 being so much as this : it is merely like calcu- 
 lating the ratio of length between the two 
 pieces of timber, after we are informed how 
 many feet are contained in each. For of each 
 commodity a and c the value in relation to b 
 must be given, or, in other words, their value 
 must be expressed in a common denomination, 
 before their mutual relation can be ascertained ; 
 just as in the case supposed the relation of each 
 piece of timber to the foot-rule must be given, 
 before their relation to each other can be de- 
 duced. The actual application of the foot rule 
 is that part of the process which is alone en- 
 titled to the appellation of measuring, the rest 
 being mere calculation, but to this there is no- 
 thing at all analogous in any possible attempt 
 to ascertain value. The way in which the 
 commodity b would be used, in the above 
 instance, is in truth as a medium of compari- 
 son, not a measure, yet it is the only process 
 which bears any analogy to measurement. 
 It appears, therefore, that all we can under- 
 
 H 
 
98 ON MEASURES 
 
 stand by a measure of value, is some commo- 
 dity which would serve as a medium to ascer- 
 tain the relation subsisting between two other 
 commodities, that we had no means of bringing 
 into direct comparison. Thus, if I wished to 
 know the relation in exchange between corn 
 and cloth, and there happened to be no in- 
 stance of direct barter of one of these commo- 
 dities for the other, I could acquire the desired 
 information only by ascertaining their relations 
 to a third commodity. Supposing this commo- 
 dity to be money, if a yard of cloth were worth 
 lOs., and a bushel of corn 5s., I should learn 
 immediately that a yard of cloth was worth 
 two bushels of corn, and would have an equal 
 power of commanding all other things in ex- 
 change, silver in this instance being the com- 
 modity employed as a measure. This kind of 
 measure of value, which is merely a medium of 
 comparison, and obviously quite dissimilar to a 
 measure of length, is the only one which it is 
 possible to have ; and although money is the 
 measure generally employed, and by far the 
 
OF VALUE. 99 
 
 most convenient of all, yet any other commo- 
 dity might answer the purpose. 
 
 Such a measure as this, however, has not 
 contented political economists ; it is only, they 
 say, a measure of commodities at the same 
 time : they have wished for something to mea- 
 sure the value of commodities at different 
 periods. 
 
 Let us see what this amounts to: if it is 
 wished to measure or compare the value of corn 
 and cloth at one period with their value at ano- 
 ther period, money will evidently answer the 
 purpose. We have only to inquire the prices 
 of corn and cloth at each period, and we shall 
 then be able to ascertain how they have varied 
 relatively to each other. If, in the year 1600, 
 cloth was 20^. a yard, and corn lOs. a bushel, 
 and in the year 1800, cloth was 10^. and corn 
 10^., then it would manifestly appear, that in 
 1600 a yard of cloth would command in ex- 
 change or be worth two bushels of corn, and in 
 1800 only one bushel. Thus by inquiring the 
 prices of the commodities we should ascertain 
 
 H 2 
 
100 ON MEASURES 
 
 their variations in value with regard to each 
 other, and money would be the measure of 
 value or medium of comparison which we em- 
 ployed. This is evidently using money for a 
 measure of value in the same manner as in the 
 first case, the only difference being that we 
 apply it to two periods, and make a sub- 
 sequent comparison of the results obtained from 
 each. 
 
 We have therefore not yet arrived at the 
 sense in which the term is employed by econo- 
 mists, who are desirous of measuring the value 
 of commodities at different periods. They do 
 not wish to compare the mutual value of two 
 commodities, or the relation subsisting between 
 two commodities at one period, with the rela- 
 tion subsisting between them at another period, 
 for this would be effected by a simple reference 
 to their prices. They state their object to be, 
 to find some standard commodity by which they 
 might measure the value of the same object a, 
 at two or more different periods, or, in other 
 words, its fluctuations in value. 
 
OF VALUE. 101 
 
 But in relation to what object is it wished to 
 measure the value of a and its fluctuations I 
 We cannot speak of value, as I have before 
 shown, without meaning value in something, 
 and as only a and the standard commodity 
 which may be called b are here in question, 
 the value of a must mean its value in b. It is 
 wished therefore to measure the relation between 
 A and B at two different periods by b, which if 
 it has any signification must imply, that it is 
 wished to ascertain the value of a and b rela- 
 tively to each other at two different periods. 
 These are historical facts, and when we have 
 learned them as we learn other facts, we 
 shall certainly know the fluctuations which 
 the relation between a and b has undergone ; 
 but b is, in this procedure, by no means a mea- 
 sure of value, or a medium of comparison, any 
 more than a. In a word, turn the matter as 
 we please, we shall find that we can have no 
 measure of value but in the sense already ex 
 plained. 
 
 From this examination it appears, that a 
 
102 ON MEASURES 
 
 measure of value can mean nothing but a com- 
 modity employed as a medium of comparison, 
 and that so far from its being impossible to 
 have any thing perfectly capable of performing 
 this function, we are in the daily use of one 
 possessing all the perfection which it is possi- 
 ble to conceive. In regard to measuring or com- 
 paring value, there is no operation w^hich can 
 be intelligibly described or consistently ima- 
 gined, but may be performed by the media of 
 which we are in possession. 
 
 It is astonishing, indeed, to find how slight 
 are the analogies with which economists have 
 contented themselves on this subject, and which 
 have served to preclude any close investigation 
 of processes essentially different, although con- 
 founded under the same appellation. One of 
 the most striking instances of this carelessness 
 of examination is the notion of its being ne- 
 cessary, that a commodity should possess inva- 
 riable value, in order to form a perfect mea- 
 sure of value; a notion which has passed un- 
 questioned from one writer to another, and been 
 
OF VALUE. 103 
 
 adopted without any suspicion of the false ana- 
 logy and fundamental misconception on which it 
 proceeds *". It is therefore essentially requisite, 
 for a clear understanding of the present sub- 
 ject, to bring this opinion to the test of a close 
 and minute examination. 
 
 The utter absurdity, however, of supposing, 
 that a commodity to constitute a measure must 
 be of invariable value, requires no deep re- 
 search ; it lies almost on the surface, and pre- 
 sents itself in numerous different aspects. 
 
 Invariable value must signify, as we have 
 repeatedly shown, invariable in relation to 
 some one or more commodities. Suppose a to 
 be the commodity selected as a measure, and 
 that it is invariable in value to b. I have here 
 got an invariable value, but in what way am 
 I to use it in regard to other things ? When I 
 have an invariable space, or an unvarying dis- 
 tance between two points, I can apply it me- 
 diately or immediately to all other spaces or 
 distances within my reach, and ascertain their 
 
 * 8ee Note I>. 
 
104 ON MEASURES 
 
 respective ratios to it: but the invariable rela- 
 tion of value between a and b can tell me no- 
 thing of the mutual value of c and d ; or, to 
 vary the language, the power which a has to 
 command b, can tell me nothing of that which 
 c has to command d. I do not in any sense 
 measure the relation of value between two 
 commodities, by that existing between two 
 other commodities. Invariable value, there- 
 fore, can be of no service. The only meaning 
 to be attached to the phrase measuring value, 
 the only operation implied in it, is, as we have 
 seen, that comparison of the values of two ob- 
 jects which we are enabled to make by their se- 
 parate relations to a third, or, in other words, 
 by having these values expressed in a common 
 term or denomination. But the capability of 
 expressing the values of commodities has no- 
 thing to do with the constancy of their values, 
 either to each other or to the medium em- 
 ployed; neither has the capability of com- 
 paring these expressions of value any thing to 
 do with it. Whether a is worth 4 b or 6 b, 
 and whether c is worth 8 b or 12 b, are cir- 
 
OF VALUE. 105 
 
 carastances which make no difference in the 
 power of expressing the value of a and c in b, 
 and certainly no difference in the power of 
 comparing the value of a and c when ex- 
 pressed. 
 
 This supposition, of the necessity of inva- 
 riable value in any commodity employed as a 
 measure, proceeds, as I have already remarked, 
 on a false analogy. Because a measure of 
 space must be invariable in its length, a mea- 
 sure of value, it has been argued, must be in- 
 variable in its value *. To expose the fallacy 
 of this inference, let us examine in the first 
 place, what are the character and circumstances 
 of that invariableness which is requisite for a 
 measure of length. All that is required ap- 
 
 *"Asa measure of quantity," says Adam Smith, 
 " such as the natural foot, fathom, or handful, which is 
 continually varying in its own quantity, can never be an 
 accurate measure of the quantity of other things ; so a 
 commodity, which is itself continually varying in its own 
 vjilue, can never be an accurate measure of the value of 
 other commodities." Wealth of Nations, Book i, Chap. 5. 
 
106 ON MEASURES 
 
 pears to be this, that when we measure the 
 length of two objects by a third object, the 
 length of the latter, or the instrument employed, 
 must remain the same until it have been ap- 
 plied to both the objects which are to be mea- 
 sured ; or if it vary, it must vary in a known 
 degree. Suppose it is v/ished to ascertain the 
 relation of length between two trees lying 
 apart from each other on the ground. The 
 only requisite for doing this is a staff, or rod, 
 or any other instrument which shall continue 
 of the same length during the process of mea- 
 suring. The process over, although the rod 
 might be instantly altered in length, it would 
 be as good a measure as before of the length 
 of these or any other objects : for suppose the 
 measurement to be repeated after this altera- 
 tion in the instrument, the same relation of 
 length between the two trees would be ob- 
 tained. But if the rod varied in its length in 
 an unknown degree, between applying it to the 
 first tree and the second, whether this interval 
 was a minute or an age, it is obvious that it 
 
01? VALUE. 107 
 
 could not serve as a measure of their relative 
 length : there would in that case be no com- 
 mon medium of comparison. It is essential to 
 the discovery of the mutual relation of two ob- 
 jects, which cannot be directly compared, that 
 their respective relations to some third object 
 should be known: but in this case, the ratio 
 which the trees were found to bear would not 
 be to the same object, and therefore nothing- 
 could be told as to the ratio of the trees to 
 each other. It is thus indispensable, that the 
 instrument employed as a measure should re- 
 main unaltered, or be altered in a known de- 
 gree, during its successive applications to the 
 objects measured, in order to give us their re- 
 lations to one common object. By this means 
 we obtain a common term or denomination, in 
 which the lengths of the two trees are ex- 
 pressed. This is, in fact, all that is essential 
 to the end in view : the measurement, that is, 
 the actual application of the physical instru- 
 ment to the object, is the means, and the un- 
 varying length of the instrument, or its ascer- 
 
108 ON MEASURES 
 
 tainable variation during the process, is the ne- 
 cessary condition for obtaining that common 
 expression of the length of the two objects, 
 which will show their relation to each other. 
 But it is obvious that this relation of length 
 would be equally determined in whatever way 
 the common expression was obtained. 
 
 Now in the case of value, we obtain this 
 common expression without that physical ope- 
 ration here described. We learn the values of 
 two commodities in relation to the third, not 
 from the application of an instrument, first to 
 one commodity and then to the other, but from 
 intercourse with mankind, or from the inspec- 
 tion of documents in which they are regis- 
 tered. We equally obtain a common expres- 
 sion, but we obtain it by different means. But 
 the invariableness in the length of a measure of 
 space, as above described, is a circumstance be- 
 longing to the means employed to obtain a 
 common expression of length ; and as the means 
 of obtaining a common expression of value are 
 totally different, as in fact the common expres- 
 
OF VALUE. 109 
 
 sion is necessarily implied in the supposition 
 of using any commodity as a medium of com- 
 parison, there is nothing in the latter case in 
 which invariableness of any kind, or in any 
 sense, can be required. In the one case there is 
 an instrument employed in a physical opera- 
 tion, and it is for the purpose of rendering this 
 instrument capable of performing its function, 
 that invariableness is indispensably necessary : 
 in the other case there is no instrument so em- 
 ployed, and therefore there is no invariableness 
 wanted : in the former case invariableness in 
 the instrument (under the modification which it 
 is needless to repeat) is essential to the attain- 
 ment of the common term ; in the latter, the 
 common term being given, there is nothing in 
 which invariableness can have place, or of 
 which it can be predicated. If the length of 
 the rod varied in an unknown degree between 
 applying it to the two objects, we should have 
 two terms of unknown relation to each other, 
 and there could be no comparison of the ob- 
 jects to be measured ; and if the values of the 
 
110 ON MEASIHES 
 
 two commodities, which we were desirous of 
 comparing, were expressed in different media, 
 there would be the same impossibility. Hence, 
 if in the case of value We were under the neces- 
 sity of finding a counterpart to invariableness 
 of length in the instrument employed to com- 
 pare the dimensions of two objects, it would be, 
 not invariableness of value in the commodity 
 used as a medium to compare the value of two 
 other commodities, but the condition that the 
 value of these commodities should be given 
 in relation to the same medium, or, in other 
 words, expressed in a common denomination. 
 
 From all this it appears, that the analogy uni- 
 versally supposed to exist in this matter is al- 
 together imaginary, and the phrase, invariable 
 measure of value, proves to be absolutely des- 
 titute of a basis of meaning. 
 
 The doctrine which exacts invariableness in 
 a measure of value, furnishes one corollary, 
 which has been so frequently maintained and 
 so generally adopted, that although its refuta- 
 tion is contained in the preceding observations, 
 
OF VALUE. Ill 
 
 it appears to require a separate examination. It 
 is argued, that money or any other commodity 
 is a good measure of the value of commodities, 
 only at the same time, because it is liable to 
 vary; while to perform this function correctly, 
 there should be a commodity the value of which 
 did not vary from one age to another ; as to 
 measure the lengths of objects at different pe- 
 riods, there must be an object of invariable 
 length ^. Let us therefore endeavour to ascer- 
 tain what this really amounts to. With regard 
 to the measurement of space, the intervention 
 of time occasions no alteration in the requisite 
 conditions. The preceding remarks are as ap- 
 plicable to the measurement of the length of 
 objects at different times as to the same time. 
 The qualification necessary to constitute an 
 instrument a good measure of space, is in each 
 
 * " At the same time and place, money is the exact 
 measure of the real exchangeable value of all commodi- 
 ties. It is so, however, at the same time and place only." 
 Wealth of Nations, Book i, Chap. 5. 
 
112 ox MEASURES 
 
 case identical, namely, invariableness during- 
 its application to all the objects compared. 
 Whether an hour or a century elapses between 
 the successive applications of the instrument 
 makes no difference. The essential requisite 
 is the same in measuring objects in distant 
 ages, or objects existing at the same time. 
 
 But in the process called measuring value, 
 there is no application of any instrument, 
 and therefore, as I have already shovrn, there is 
 absolutely nothing to which the quality of in- 
 variableness can be attributed, or of which it 
 can be affirmed. The requisite condition in 
 the process is, that the commodities to be mea- 
 sured should be reduced to a common deno- 
 mination, which may be done at all times with 
 equal facility ; or rather it is ready done to our 
 hands, since it is the prices of commodities 
 which are recorded, or their relations in value 
 to money. If money, therefore, is a good me- 
 dium of comparison at one time, it is at all 
 times. 
 
OF VALUE. 113 
 
 It may be objected, ^' Yes, good enough for 
 commodities at each time, but not between 
 commodities at different times." 
 
 This objection, however, proceeds on a fun- 
 damental mistake already exposed in a former 
 chapter, namely, that the relation of value can 
 exist between commodities at different periods, 
 which is in the nature of the case impossible ; 
 and if no relation exists there can be no measure- 
 ment of it. It is, in truth, only the value of 
 commodities at the same time that can be mea- 
 sured; another point in which the supposed 
 analogy between the measurement of space 
 and of value completely fails. In the case 
 of length, a direct comparison may be made 
 between two objects, however separated by 
 time, and their ratio to each other found. The 
 length of an object now may be compared with 
 the length of an object in former times, by 
 means of an instrument actually handed down 
 to us ; by an uninterrupted transmission of the 
 same object, or the same space through the 
 medium of different objects, furnishing a com- 
 
 I 
 
114 ox .MEASURES 
 
 mon bond of connection between tlie measure- 
 ments of space in all ages. But this circum- 
 stance can evidently have no existence in the 
 measurement of value, w^hich is the ascertain- 
 ment of a relation between contemporary com- 
 modities, and not between objects at different 
 periods. The two cases would be analogous 
 if we supposed no physical measure of length 
 to be transmitted from one period to another, but 
 only a record of the lengths of different objects 
 expressed in a common denomination. Under 
 these circumstances, all that we could do would 
 be to compare the relative dimensions of ob- 
 jects in our ovm days, with the relative dimen- 
 sions of similar objects in past times, as re- 
 corded : but we should have no common me- 
 dium of comparison between one age and ano- 
 ther. Now what in this case would be owing 
 to the want of a transmitted measure, arises in 
 the other case from the very nature of the re- 
 lation with which we have to do. The na- 
 ture of that relation itself interposes as com- 
 plete a disconnection between different ages, as 
 
 I 
 
OF VALUE. 115 
 
 would result from the supposed want of a com- 
 mon instrument for measuring space. 
 
 It is obvious then, that if no relation of 
 value can exist between objects in different 
 ages, there can be no measurement of it, nor 
 consequently can there be any measure or me- 
 dium of comparison required. 
 
 The only thing to be done, with regard to 
 different periods, is to compare the relation of 
 value subsisting between any two commodities, 
 A and B, at one period, with the relation subsist- 
 ing between them at another; or, in other 
 words, the quantity of a which purchased b at 
 the former time, with the quantity of a which 
 purchased b at the latter. This is evidently a 
 simple comparison, in which neither a nor b 
 perform the function of a measure, or medium, 
 in any possible interpretation of the term. 
 That office has in all likelihood been already 
 discharged in ascertaining the relative quanti- 
 ties of A and B at each period ; and if, as is 
 probable, these quantities have been ascertained 
 by means of the prices of the commodities, money 
 
 I 2 
 
116 ON MEASURES 
 
 has been the medium of comparison. But 
 after these quantities have been ascertained, 
 there can be no place whatever in the subse- 
 quent comparison for any medium, no con- 
 ceivable function for it to perform. 
 
 Should it be urged, that when we compare 
 the price of corn in one year with its price in 
 another, we use money as a medium of com- 
 parison, in the same way as when we compare 
 the prices of com and cloth at the same point 
 of time, the answer is not difficult. 
 
 In the latter case it is obvious, that the facts 
 furnished to us are the relations of cloth and 
 corn to money, or, the quantities of money for 
 which definite portions of them are exchanged ; 
 and from these we infer another circumstance, 
 namely, the relation of value between corn and 
 cloth, and consequently their comparative power 
 of purchasing all other commodities. 
 
 In the former case, on the other hand, the facts 
 furnished to us are the prices of corn, or the rela- 
 tions between corn and money, at two different 
 periods : but from these we deduce no other rela- 
 
OF VALUE. 117 
 
 tion; we do not advance a step beyond the infor- 
 mation given ; there is no inference corresponding 
 to that which is drawn in the other case. We can- 
 not deduce the relation of value, between com 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 points 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. 
 
 These observations are enough to show, that 
 the only use of a measure of value, in the 
 sense of a medium of comparison, is between 
 commodities existing at the same time; and 
 consequently the proposition, that money is not 
 
118 ON MEASURES 
 
 a good measure of the value of commodities at 
 different periods, is either false or amounts to 
 nothing. If it means that money is not equally 
 a good measure of contemporary commodities 
 at any period, it is directly opposite to the 
 truth : if it means that it is not a good me- 
 dium of comparison between commodities at 
 different periods, it asserts its incapability of 
 performing a function in a case where there is 
 no function for it to perform. 
 
 In applying the principles developed in the 
 preceding disquisition to the writings of Mr. Ri- 
 cardo, we shall find that he has fallen into the 
 same errors as his predecessors and contempo- 
 raries, as well as into others peculiarly his own. 
 Misled by his radical misconception of the na- 
 ture of value, and particularly by his notions 
 on the subject of real value, he has opened his 
 section "on an invariable measure," with the 
 following passage, the errors of which will be 
 sufficiently apparent to any one who has attended 
 to the foregoing part of the present chapter. 
 
 " When commodities," says Mr. Ricardo, 
 
OF VALUE. 119^ 
 
 " varied in relative value, it would be desirable 
 to have the means of ascertaining which of 
 them fell, and which rose in real value, and 
 this could be effected only by comparing them, 
 one after another, with some invariable standard 
 measure of value, which should itself be sub- 
 ject to none of the fluctuations to which other 
 commodities are exposed. Of such a measure 
 it is impossible to be possessed, because there 
 is no commodity which is not itself exposed to 
 the same variations as the things, the value of 
 which is to be ascertained ; that is, there is 
 none which is not subject to require more or 
 less labour for its production." 
 
 It has been already shown in the first chap- 
 ter, not merely that such a commodity is phy- 
 sically impossible, as here conceded by Mr. Ri- 
 cardo, but that the supposition of such a com- 
 modity, for such a purpose, involves contradic- 
 tory conditions'^. We could not in the nature 
 
 * Should Mr. Ricardo, or rather should any of his fol- 
 lowers, shelter himself under the notion of real value, and 
 thus escape the absurdity here charged upon him, it would 
 only be taking refuge in another absurdity equally great. 
 
120 ON MEASURES 
 
 of the case have any commodity of invariable 
 value, by which to ascertain the fluctuations of 
 all other things, unless all commodities were 
 of invariable value, in which case there would 
 be no fluctuations to ascertain. 
 
 We have also seen in the present chapter, 
 that the demand for invariablenes of value in 
 any commodity to be used as a measure, is 
 founded altogether on a false analogy; that 
 fluctuations in value are not ascertained by any 
 measure, but by historical evidence ; that a 
 measure of value can signify nothing but a 
 medium of comparison for contemporary com- 
 modities ; and that we have as good a measure 
 in this sense, not only as it is possible to have, 
 but as it is possible to conceive. 
 
 Besides these errors, there is to be disco- 
 vered in Mr. Ricardo's views, as to the uses of 
 a measure of value, a singular confusion of 
 thought, which I shall here endeavour to ex- 
 plain. 
 
 The specific error of Mr. Ricardo on the sub- 
 ject of invariable value consists, as before 
 explained, in supposing, that if the causes of 
 
OF VALUE. 121 
 
 value affecting one commodity remained the 
 same, the value of that commodity could not 
 vary, overlooking the circumstance, that value 
 denotes a relation between two objects, which 
 must necessarily alter with an alteration in the 
 causes affecting either of them. He incessantly 
 identifies constancy in the quantity of pro- 
 ducing labour with constancy of value. 
 Hence he maintains, that if we could find any 
 commodity invariable in the circumstances of 
 its production, it would be in the first place 
 invariable in value ; and, secondly, it would 
 indicate, or would enable us to ascertain, the 
 variations in value of other commodities. 
 
 It is curious enough that he should never 
 have clearly discerned v^^hat such a commodity 
 would really serve to indicate: it would not, as 
 he asserts, serve to indicate the variations 
 in the value of commodities, but the variations 
 in the circumstances of their production. It 
 would enable us to ascertain, not any fluctua- 
 tions in value, but in which commodity those 
 lluctuations had originated. He has in truth 
 
122 ON MEASURES 
 
 confounded two perfectly distinct ideas, name- 
 ly, measuring the value of commodities, and 
 ascertaining in which commodity, and in what 
 degree, the causes of value have varied. 
 
 For suppose we had such a commodity as he 
 requires for a standard : suppose, for instance, 
 all commodities to be produced by labour 
 alone, and silver to be produced by an invari- 
 able 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 in- 
 variable 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 circumstance of the producing labour 
 of silver being a constant quantity. 
 
 But it is the fluctuations of commodities 
 which this invariable standard is to ascertain or 
 
OF VALUE. 123 
 
 measure. Let us trv to discover liow far it 
 would assist us here. 
 
 Suppose cloth in the year 1600 was worth 
 12^. a yard, and in 1800 only 6s. Here we 
 have a fluctuation in the value of cloth, in re- 
 lation to the standard commodity; in 1800 it 
 was worth only half as much silver as it was in 
 1600. This, however, is not, let it be ob- 
 served, a fluctuation ascertained by the cir- 
 cumstance of silver being produced by an in- 
 variable quantity of labour. Had silver varied 
 in the circumstances of its production, our in- 
 formation as to the relation between cloth and 
 silver would have been equally attainable, and 
 equally complete. What then could be ascer- 
 tained, in this case, from the metal being in- 
 variable in the quantity of its producing la- 
 bour? What inference would this circum- 
 stance enable us to draw ? No inference, ob- 
 viously, as to the value of cloth and silver ; 
 for, on this point, the prices of the former tell 
 us all that it is possible to know. The in- 
 ference we should draw would be, that the 
 
124 ON MEASURES 
 
 cause of the change in the relation between 
 cloth and silver had been in the former, and as 
 labour is, by the supposition, the sole cause of 
 value, we might more particularly infer, that 
 the producing labour of cloth had been abridged 
 to half its former quantity. 
 
 A commodity, therefore, under these con- 
 ditions, produced by an invariable quantity of 
 labour, would enable us to ascertain, not the 
 fluctuations in value between two or more com- 
 modities (for these are facts to be gathered 
 from appropriate evidence), but the fluctuations 
 in the quantity of labour w^hich produced them : 
 and in truth, if we examine what is the par- 
 ticular advantage which Mr. Ricardo himself 
 supposes we should be able to derive from the 
 possession of such a commodity, we shall find 
 it to be in reality that which is here described, 
 the power of ascertaining, not the variations in 
 value, but the variations in the producing la- 
 bour of commodities. Speaking of the inter- 
 change of game and fish, in the earlier stages^ 
 of society, he says, — 
 
OF VALUE. 125 
 
 " If with the same quantity of labour, a less 
 quantity of fish, or a greater quantity of game 
 were obtained, the value of fish would rise in 
 comparison with that of game. If, on the con- 
 trary, with the same quantity of labour a less 
 quantity of game, or a greater quantity of fish 
 was obtained, game would rise in comparison 
 with fish. 
 
 *^ If there were any other commodity, which 
 was invariable in its value, we should be able 
 to ascertain, by comparing the value of fish 
 and game with this commodity, how much of 
 the variation was to be attributed to a cause 
 which affected the value of fish, and how much 
 to a cause which affected the value of game. 
 
 " Suppose money to be that commodity. If 
 a salmon were worth £1, and a deer £2, one 
 deer would be worth two salmon. But a deer 
 might become of the value of three salmon, for 
 more labour might be required to obtain the deer, 
 or less to get the salmon ; or both these causes 
 might operate at the same time. If we had 
 this invariable standard, we might easily as- 
 
126 ox MEASURES 
 
 certain in what degree either of these causes 
 operated. If salmon continued to sell for £1, 
 whilst deer rose to £3, we might conclude that 
 more labour was required to obtain the deer. If 
 deer continued at the same price of £2, and 
 salmon sold for 13^. Ad, we might then be sure 
 that less labour was required to obtai?! the salmon ; 
 and if deer rose to £2. 10^. and salmon fell to 
 16^. ^d. we should be Qonvmcediihzi both causes 
 had operated in producing the alteration of the 
 relative value of these commodities." 
 
 Here we have a very accurate description, 
 by Mr. Ricardo, of what a commodity pro- 
 duced by an invariable quantity of labour 
 (not a commodity of invariable value, as he 
 erroneously terms it) would enable us to ascer- 
 tain, under the supposition that all things were 
 determined in value by quantity of labour. 
 He does not tell us that such a commodity 
 would enable us to ascertain the value of fish 
 or game, or their variation in value, but this 
 variation being given, that it would enable us 
 to infer how much of it was to be attributed to a 
 
OF VALUE. 127 
 
 change in the labour required to obtain the 
 salmon, and how much to a change in that re- 
 quired to obtain the deer. 
 
 In this and other passages it will be found, 
 that although Mr. Ricardo is professedly speak- 
 ing of a commodity produced by invariable la- 
 bour, in the character of a measure of value, he 
 is in reality, without being conscious of the dif- 
 ference, altogether occupied with the considera- 
 tion of that commodity as capable of indicating 
 variations in the producing labour of other com- 
 modities*. Instead of a measure of value, 
 
 * The same remark will apply to economists in general. 
 Their real object in seeking for a measure of value (how- 
 ever little they may be aware of it) is to determine m which 
 commodities any changes of value have originated, and not 
 to ascertain the extent of these changes, which, as I have 
 repeatedly stated, are matters of record and evidence, and 
 a knowledge of which is in reality pre-supposed in any ap- 
 plication of what they call a measure. It is not, there- 
 fore, a measure of value which they are in pursuit of, but 
 a commodity which would indicate the sources of variation. 
 Whether there is any one object which would do this better 
 than another, would at all events be a rational, and might 
 prove a useful inquiry. 
 
128 ON MEASURES 
 
 such a commodity as he describes would be a 
 measure of labour, or a medium of ascertain- 
 ing the varying quantities of labour which 
 commodities required to produce them. Be- 
 fore it could be employed in regard to any ob- 
 ject, the value of that object, or its relation to 
 the standard commodity, must be given, and 
 then all that could be deduced from the datum 
 would be the quantity of labour bestowed on 
 its production. 
 
 But perhaps the most remarkable circum- 
 stance of all is, that for this latter purpose, that 
 invariableness in the quantity of labour, which 
 he has insisted upon as so essentially requisite, 
 would be of no peculiar service. On the sup- 
 position that labour was the sole determining 
 principle of value, a commodity produced by 
 an invariable quantity of labour would afford 
 us no assistance even as a measure of labour, 
 which could not be equally derived from a 
 commodity the producing labour of which 
 was variable, provided we were furnished with 
 the same data. 
 
OF VALUE. 129 
 
 For in the above comparison of cloth in 1600 
 and cloth in 1800, mark all that is specifically 
 ascertained. 
 
 If silver had been liable to variation in the 
 quantity of its producing labour, we should 
 still have been informed, from the same source 
 that supplied the information in the other case, 
 what was its relation to cloth, for this is equiva- 
 lent to saying, that we should still have been in- 
 formed of the prices of cloth at the two different 
 periods specified. These are historical facts, and 
 not deductions from the invariableness of the 
 labour employed in the production of silver. 
 Were this labour then a variable quantity, we 
 should still learn, that a yard of cloth in 1600 
 was 12^. and in 1800 6s. ; but we should, it is 
 alleged, be at a loss to discover, whether the 
 change in the relation between silver and cloth 
 had been owing to the former or the latter. This 
 then is the sole circumstance by which the two 
 cases are supposed to be distinguished, and in 
 fact it amounts to this ; we could tell that, in 
 the former case, cloth in 1800 required only 
 
 K 
 
130 ON MEASURES 
 
 half the labour necessary for its production in 
 1600, while in the latter case we could not tell 
 whether the quantity of producing labour in 
 the cloth had been reduced one half, or whether 
 that required for the production of money had 
 been doubled. In answer to this I say, that the 
 ratio between the quantities of labour necessary 
 for the production of cloth in 1800, and in 
 1600, might be equally ascertained, although 
 the quantity of labour employed in the produc- 
 tion of silver had varied, provided that the data 
 in the two cases were equal. 
 
 The data in the first case are the prices of 
 cloth at each period, and the ratio subsisting 
 between the I quantity of labour employed at 
 each period in the production of silver. The 
 circumstance of this ratio being that of equality 
 makes no difference. 
 
 Now suppose, in the second case, that we 
 are furnished with the prices of cloth at both 
 periods, and with the ratio subsisting between 
 the quantities of the labour necessary for the 
 production of silver, which ratio, by the sup- 
 
OF VALUE. 131 
 
 position, not being that of equality, suppose 
 to be as 2 in 1600 to 1 in 1800, or, in other 
 words, suppose that silver in 1800 is produced 
 by half the labour required in 1600. 
 
 With these data it is obvious, that we could 
 deduce the ratio of labour employed in the 
 production of cloth at these periods, with as 
 much accuracy as we could under the condi- 
 tions of the first case. If in 1600 the cloth 
 was 12^. per yard, and in 1800 only 6s,, the 
 producing labour of silver at the latter period 
 being only half of what it was at the former 
 period, then the producing labour of cloth 
 would have been reduced to a quarter of its 
 former quantity. For in 1600 a yard of cloth 
 being 12^. in value, the yard of cloth and the 
 12^. took equal quantities of labour to produce 
 them : but in 1800 the producing labour of 12.y. 
 is by the supposition reduced one half, and 
 consequently the quantity of labour in 6s, must 
 be a quarter of the quantity which had been 
 necessary to produce 12.9. in 1600. Now as 6.?. 
 in 1 800 exchange for a yard of cloth, the pro- 
 lyl 2 
 
132 ON MEASURES 
 
 ducing labour of the yard of cloth must be 
 equal to the producing labour of the 6s. ; that is, 
 a quarter of the quantity of labour employed to 
 produce a yard of cloth in 1 600. 
 
 It may probably be alleged, however, as an 
 advantage peculiar to the first case, that the 
 quantity of producing labour being invariable, 
 we are saved from all that research into its com- 
 parative quantity at different periods which 
 would be necessary on the contrary supposition. 
 But it is to be recollected, that the circumstance 
 of a commodity having been always produced 
 by the same quantity of labour, is an historical 
 fact quite as difficult to ascertain as the vari- 
 ations of another commodity. We might, it is 
 true, be saved from all investigation of this 
 nature, if there existed a commodity, which, 
 from some obvious and insuperable necessity, 
 was always the product of the same labour; yet 
 even this advantage is not dependent on the in- 
 variableness of the labour; for if, what is 
 equally easy to suppose, and quite as likely to 
 happen, we had a commodity which necessarily 
 
OF VALUE. 133 
 
 varied every year in a given proportion, we 
 should be equally spared the pains of historical 
 research. To have a commodity, whether pro- 
 duced by a variable or by an invariable quan- 
 tity of labour, which saved us the trouble of 
 inquiry, would doubtless be an advantage, but 
 we might as well suppose fifty other arbitrary 
 aids *. 
 
 In concluding this discussion, it may not be 
 useless to advert more particularly to one of the 
 objects, which economists have proposed to 
 themselves in the attempt to discover an inva- 
 riable measure or standard of value. It appears 
 to have been to determine the efficiency of re- 
 venues, salaries, and wages of different classes 
 of people at different periods, in what condi- 
 tion such revenues enabled them to live, or 
 what power it enabled them to wield. This, it 
 is supposed, would be accomplished, did we 
 possess some object of immutable value. 
 
 " If we are told," says Mr. Malthus, " that 
 the wages of day-labour in a particular coun- 
 
 * See Note E. 
 
134 ON MEASURES 
 
 try are, at the present time, four pence a day ; 
 or, that the revenue of a particular sovereign, 
 700 or 800 years ago, was 400,000/. a year, 
 these statements of nominal value convey 
 no sort of information respecting the con- 
 dition of the lower classes of people in the 
 one case, or the resources of the sovereign 
 in the other. Without further knowledge on 
 the subject, we should be quite at a loss to say, 
 whether the labourers in the countrv mentioned 
 were starving, or living in greater plenty ; 
 whether the king in question might be consi- 
 dered as having a very inadequate revenue, or 
 whether the sum mentioned was so great as to 
 be incredible. 
 
 " It is quite obvious, that in cases of this 
 kind, and they are of constant recurrence, the 
 value of wages, incomes, or commodities, esti- 
 mated in the precious metals, will be of little 
 use to us alone. What we want further is 
 some estimate of a kind which may be deno- 
 minated real value in exchange, implying the 
 quantity of the necessaries and conveniences of 
 life, which those wages, incomes, or commodi- 
 
OF VALUE. 135 
 
 dities will enable the possessor of them to com- 
 mand *." 
 
 Now to suppose that we can have any one 
 object by which this information can be ob- 
 tained, would imply a gross misconception of 
 the nature of value. I have already 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. From 
 this fact, which must be ascertained like other 
 facts, no inference whatever can be drawn as to 
 the value of any thing beyond the two commo- 
 dities in question. From the relation of corn 
 and money nothing can be inferred as to the 
 relation of corn and labour, or of money and 
 labour. If, proceeding a step farther, we learn 
 from the proper records the relation also of la- 
 bour and money, then we can deduce the rela- 
 tion of labour and corn ; but we should not be 
 able to make any inference to any other object. 
 The only practicable inference on the subject 
 
 * Principles of Pol. Econ., p. 59. 
 
136 ON MEASURES 
 
 of value, is the mutual relation of two commo- 
 dities from their separate relations to a third. 
 
 It follows, that if we wish to ascertain the 
 state of comfort or luxury in which any class 
 of people lived at any assigned period, there is 
 no possible method of effecting the object, but 
 ascertaining from the proper documents the 
 amount of their incomes, and then, particular 
 by particular, the relation which these incomes 
 bore to commodities. If the incomes are 
 stated in corn, or silver, nothing can be inferred 
 from the statement, as to their power over 
 other things. Supposing the income to be a 
 certain amount of money, then the inquirer 
 must find records of the prices of those arti- 
 cles to which his curiosity is directed, and a 
 simple calculation will teach him the power of 
 the income to command them. 
 
 If he wishes, for example, to ascertain the 
 condition of the labouring class at any given 
 period, he must first find the rate of wages, or, 
 in other words, the mutual relation of labour 
 and money. This is one step in the investiga- 
 
OF VALUE. 137 
 
 tion, but it will not of itself throw any light on 
 the food, clothing, and comfort, which the la- 
 bourers are able to procure ; and he must there- 
 fore search in the proper registers for the 
 prices of such commodities as constitute these 
 necessaries and conveniences. He can ascer- 
 tain nothing but what is shown by the histori- 
 cal documents which he consults. When he 
 has found the price of labour, the price of 
 corn, of cloth, of hats, of stockings, of fuel, of 
 house-room, he will be able to tell how much 
 of each of these commodities a week's or a 
 years labour could command : in other words, 
 the condition of the labouring class of society 
 in these respects will become manifest. 
 
 But these are all separate particulars, to be 
 separately ascertained: one will not disclose 
 another ; each must be individually established 
 by independent evidence. There can be no 
 commodity, by a reference to which the power 
 of a given income over any or all other com- 
 modities may be shown. 
 
138 MEASURES OF VALUE. 
 
 Conclusions such as these are so obvious, 
 that they would scarcely require to be for- 
 mally stated had they not been frequently over- 
 looked. Even the author of the Templars' 
 Dialogues, who observes, " that Mr. Malthus, 
 in common with many others, attaches a most 
 unreasonable importance to the discovery of a 
 measure of value," seems to sanction the pre- 
 vailing errors, when he goes on to remark, that 
 such a measure " would at best end in answer- 
 ing a few questions of unprofitable curiosity^." 
 Sufficient, it is hoped, has been said to show, 
 that we are in possession of the only kind of 
 measure which can be had or conceived, and 
 that we must look for the gratification of our 
 curiosity, not to any measure of value whatever, 
 but to the records of former times, and a few 
 simple calculations from the data which they 
 furnish. 
 
 * London Magazine for May 1824, p. 560. 
 
CHAPTER VII, 
 
 \ 
 
 ON THE MEASURE OF VALUE PROPOSED 
 BY MR. MALTHUS. 
 
 After the conclusions established in the pre- 
 ceding chapter, it would be a superfluous task 
 to examine the various measures of value which 
 may have been imagined or proposed by dif- 
 ferent economists. As that, nevertheless, which 
 has been recently advocated by Mr. Malthus, 
 and which was originally brought forward by 
 Adam Smith, has attracted some attention^ it 
 may deserve a cursory notice. 
 
 This measure is labour, considered as an 
 exchangeable commodity, or, in other words, 
 the labour which commodities command : 
 and proceeding on the false principle, that a 
 measure of value must be itself immutable in 
 
140 ON THE MEASURE OF VALUE 
 
 value, Mr. Malthus maintains that the value of 
 labour is invariable. 
 
 The discussions in which we have already 
 been engaged, furnish a variety of methods in 
 which the errors of this doctrine may be ex- 
 posed. 
 
 It has been shown, for example, 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 in truth 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 measur- 
 ing the variations of other commodities, in- 
 volves a direct contradiction. 
 
 It has also been shown, that to term any 
 thing immutable in value, amidst the fluctua- 
 tions of other things, implies that its value at 
 one time may be compared with its value at 
 
PROPOSED BY MR. MALTHUS. 141 
 
 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, if attain- 
 able, be of any peculiar service in the capacity 
 of a measure. 
 
 These considerations are quite sufficient to 
 overturn the claims of the proposed measure, 
 as maintained by its advocate, but it may be 
 inquired, how far would it be useful in the sense 
 of a medium of comparison. In order to sa- 
 tisfy this inquiry, let us suppose a simple case. 
 I wish to know, for instance, the mutual value 
 of corn and cloth in the year 1600 ; and in the 
 ordinary way I find, that corn was 6s, a bushel 
 and cloth 12^. a yard, and I thence perceive, 
 that a bushel of corn was worth half a yard of 
 cloth. This appears to be the only informa- 
 tion wanted ; but this is using money as the 
 medium of comparison ; and to apply Mr. Mal- 
 thus's measure, we must find the value of corn 
 and cloth in relation to labour. Of this, how- 
 ever, I probably shall find no record, and there- 
 
142 ON THE MEASURE OF VALUE 
 
 fore the measure proposed cannot be used. I 
 may find, it is true, the prices of labour, corn, 
 and cloth : I then may proceed to calculate the 
 value of a yard of cloth and a bushel of corn 
 in labour ; and their separate relations to labour 
 will show their relation to each other : but 
 this I have already learned from their prices or 
 separate relations to money. Their value in 
 labour, therefore, is perfectly superfluous towards 
 ascertaining their mutual relation, consequently 
 labour in this case is perfectly useless as a mea- 
 sure of value. 
 
 The way in which Mr. Malthus attempts to 
 establish the invariable value of labour is re- 
 markable enough, and his table, drawn up with 
 that view, is certainly one of the most curious 
 productions in the whole range of political 
 economy*. 
 
 In the first column he supposes certain 
 quantities of corn to be produced by ten men, 
 
 * As the subsequent remarks could scarcely be under- 
 stood without a reference to tliis table, a copy of it is pre- 
 sented to the reader at the end of the present chapter. 
 
PROPOSED BY MR. MALTHUS. 143 
 
 according to the varying fertility of the soil. 
 In the second column he states the yearly corn 
 wages of each labourer, determined by the de- 
 mand and supply. The first case supposes the 
 yearly wages of a labourer to be 12 quarters, 
 the last only 8 quarters ; in other words, the 
 value of labour in relation to corn is in the first 
 case 12 quarters, and in the last 8. Hence it 
 is obvious, that to prove the invariable value of 
 labour, he begins by supposing it to be variable ; 
 singular premises, certainly, from which to de- 
 duce such a conclusion. And the process of 
 deduction is no less sino;ular. Takino: the first 
 case, he proceeds thus: If 1 man obtain 12 
 quarters per annum for wages, 10 men will ob- 
 tain 120 quarters, and as the whole product of 
 these 10 men is 150 quarters, profits will be 25 
 per cent. Now as 150 quarters are the product 
 of 10 men, 120 quarters must be produced by 8 
 men, and the profits being equal to the labour of 
 2 men, the value of the whole 120 quarters is 
 10, But 10 what? Evidently 10 men's labour: 
 that is, in other words, the quantity of corn 
 
144 ON THE MEASURE OF VALUE 
 
 given to 1 men for their labour, is equal in 
 value to the labour often men, which is just equi- 
 valent to saying, that the number of shillings 
 which any one gives for a yard of cloth, is equal 
 in value to the yard of cloth for which the 
 shillings are exchanged ! In a word, Mr. Mal- 
 thus sets out from the premises, that 120 quar- 
 ters of corn are given as wages to 10 men, and, 
 after journeying through two columns of figures, 
 he arrives at the conclusion, that the said 1 20 
 quarters are worth the labour for which they 
 are given. In the same manner he goes through 
 all the other cases, and as whatever quantity of 
 corn is given to 10 men as their wages must be 
 equal in value to that for which it is exchanged, 
 that is, to the labour of 10 men, he constantly 
 succeeds in alighting at the point from which 
 he set out. Having accomplished thus much, 
 he appears to proceed as follows : " If I give 
 a commodity, which is as valuable at one time 
 as at another, for another commodity at eacli of 
 these periods, that other commodity must be 
 equally constant in value. Now the wages of 
 
PROPOSED BY MR. MALTHUS. 145 
 
 10 men having been proved to be as valuable 
 at one time as at another, the value of the la- 
 bour for which they are exchanged must be also 
 constant." By wages he means the aggregate 
 quantity of corn ; and how has he shown these 
 wages to be of invariable value ? He has shown 
 them to be invariable, estimated in labour : his 
 argument consequently is, that because the 
 wages of ten men are always of the same value, 
 estimated in labour, therefore the labour for 
 which they are exchanged must be of invaria- 
 ble value. 
 
 In the same way any article might be proved 
 to be of invariable value; for instance, 10 yards 
 of cloth. For whether we gave £5 or £10 for 
 the 10 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 griven for 
 a thing of invariable value, must itself be in- 
 variable, whence the 10 yards of cloth must be 
 of invariable value. 
 
 It is scarcely necessary to expose the futility 
 
146 ON THE MEASURE OF VALUE 
 
 of reasoning like this. Instead of proving la- 
 bour to be of immutable value, it proves the re- 
 verse. An alteration in the mutual value of 
 two articles means, that the quantities in which 
 they are exchanged for each other are altered : 
 a definite quantity of one is exchanged for a 
 greater or smaller portion of the other than be- 
 fore. Now the only commodities in question, 
 in Mr. Malthus's table, are corn and labour ; 
 and if, as he supposes, the labour of 10 men is 
 at one time rewarded with 120 quarters of corn, 
 and at another time with only 80 quarters, the 
 only condition required for an alteration of 
 value is fulfilled, and labour, instead of being 
 invariable, has fallen one-third. 
 
 The fallacy lies in virtually considering or 
 speaking of wages, as if they were a commo- 
 dity ; while, as the term is used by Mr. Mal- 
 thus, it really implies an aggregate quantity of 
 corn, in the same way as the term sum implies 
 an aggregate quantity of money; and it is just 
 the same kind of futility to call wages invariable 
 in value, because though variable in quantity 
 
PROPOSED BY MR. MALTHUS. 147 
 
 they command the same portion of labour, as 
 to call the sum given for a hat, of invariable 
 value, because, although sometimes more and 
 sometimes less, it always purchases the hat. 
 In speaking of the rise and fall in value of 
 commodities, we have nothing to do with ag- 
 gregate quantities which really vary in amount, 
 and have no identity but in name ; our business 
 is with definite portions : and the precise rea- 
 son why the labour in one case, and the hat in 
 the other, are not of invariable value, is, that 
 the quantities of corn and of money given for 
 them have varied, although these quantities un- 
 der every variation continue to be designated 
 by the terms '' wages," and " sum." 
 
 It is true enough, that if a commodity ex- 
 changes at one time for 10 men's labour, and at 
 another time for the same, it has not altered in 
 value to labour : both the commodity and the 
 labour have been constant in value to each 
 other ; but as wages are not a commodity, as 
 in Mr, Malthus's nomenclature they signify an 
 aggregate quantity of corn, if this aggregate 
 
 l2 
 
148 ON THE MEASURE OF VALUE 
 
 t^uantity, given for a definite portion of labour, 
 is sometimes larger and sometimes smaller, tlie 
 corn of which the aggregate is composed 
 varies accordingly in value in relation to the 
 labour for which it is given, and the labour 
 varies in value in relation to the corn. 
 
 From these remarks the reader will perceive, 
 that Mr. Malthus's " Table illustrating the in- 
 variable value of labour," absolutely proves 
 nothing. It exhibits merely the results of a few 
 simple operations in arithmetic, as a slight in- 
 spection of the annexed copy will show. Co- 
 lumn 1 contains the quantities of corn produced, 
 according to the varying fertility of the soil, by 
 the yearly labour of 10 men, which quantities 
 are assumed, and not deduced from other data. 
 The second column exhibits the quantities of 
 corn given yearly to each labourer, and these 
 quantities are also assumed, not deduced. 
 Column 3 contains the quantities of corn given 
 yearly to 10 men, obtained by multiplying the 
 quantities in column 2 by the number 10. 
 Column 4 shows the rate of profit, or how much 
 
PROPOSED BY MR. MALTHUS. 149 
 
 per cent, the quantities of corn in column 1 ex- 
 ceed the corresponding quantities in cohimn 3 ; 
 or, in other words, how much per cent, the 
 quantities of corn produced by 10 men exceed 
 the quantities given to 10 men for their labour. 
 Column 5 exhibits the quantities of labour, or 
 number of men required to produce the quan- 
 tities of corn in the third column, obtained by a 
 simple operation in the rule of three : if 10 
 men produce 150 quarters, how many will be 
 required to produce 120? 
 
 Column 6 shows the profits estimated in la- 
 bour, after the rate in the fourth column ; or, 
 what is the same thing, it shows the quantities of 
 labour which the quantities of corn in column 3 
 will command, over and above what produced 
 them. Column 7 contains the quantities of 
 labour commanded by the corn in column 3, 
 ajid is nothing but a repetition of what was be- 
 fore told us in the third column : for we are 
 there informed, that the quantities of corn enu- 
 merated, severally commanded the yearly labour 
 of 10 men, and in this seventh column there 
 
150 ON THE MEASURE OF VALUE. 
 
 are fourteen distinct reiterations of the same 
 piece of information. Column 8 is merely 
 another enumeration of results obtained by 
 simple operations in the rule of three. It shows 
 the quantities of labour which 100 quarters of 
 corn would command, at the different rates ac- 
 cording to which labour is rewarded in the 
 third column. 
 
 Column 9 is a similar enumeration of results, 
 obtained in the same manner, and exhibits the 
 quantity of labour which the products of the 
 labour of 10 men in column 1 would respectively 
 command, or the value of those aggregate quan- 
 tities estimated in labour. 
 
 This cursory review evinces, that the for- 
 midable array of figures in the table yields not 
 a single new or important truth ; and that the 
 seventh column, which was intended to afford 
 the grand result of this tabular argument, ex- 
 hibits merely a constant repetition of one of the 
 assumptions on which the whole is built"^. 
 
 ' * See Note F. 
 
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CHAPTER Vlll. 
 
 ON METHODS OF ESTIMATING VALUE. 
 
 The discussion respecting the measurement of 
 value naturally leads to the consideration of the 
 methods of estimating value. To measure and 
 to estimate value are often considered as im- 
 plying the same operation, and are used indis- 
 criminately. The explanation, however, of the 
 former, which I have given in a preceding 
 chapter, establishes a useful distinction bet\^ een 
 them. By measuring value I mean finding the 
 mutual relation of two commodities by their 
 separate relations to a third. Estimating value 
 is the same thing as expressing it *, except that 
 
 * See Note G. 
 
ESTIMATION OF VALUE. 153 
 
 the latter is more appositely used in regard to a 
 single definite portion of a commodity, or at least 
 in the simpler cases of valuation; while the 
 former may be appropriated to cases of greater 
 complexity, where we compute the value of a 
 mass or number of commodities. When I 
 say a yard of cloth is worth twenty shillings, 
 or a pound, I express the value of the cloth in 
 relation to silver. When I say that 1000 yards 
 of cloth, 500 quarters of corn, and 20 tons of 
 iron, are worth 3000 guineas, I estimate the 
 value of these articles in gold. If it is ne- 
 cessary to establish a distinction between ex- 
 pressing and estimating value, it may therefore 
 be stated to be, that the latter involves the idea 
 of computation, which is not necessarily implied 
 ill the former. The distinction, however, is 
 not essential, and the indiscriminate use of the 
 terms can scarcely lead to error. 
 
 Mr. Ricardo frequently insists, that if by im- 
 provements in the methods of production the 
 whole produce of a country were doubled, 
 while the labour employed remained the same, 
 this doubled produce would be only of the same 
 
154 ON METHODS OF 
 
 aggregate value as the former produce, while 
 each individual commodity would have fallen 
 fifty per cent, in value. It is obvious, however, 
 that the truth of this and similar positions en- 
 tirely depends on the medium in which we es- 
 timate value. Suppose, for the sake of simpli- 
 fication, that the country had no foreign com- 
 merce, and produced its own money : then if 
 all commodities (money of course included) were 
 produced in double quantity, the effect would 
 be, that while the value of the aggregate would 
 be doubled, the value of each individual com- 
 modity would remain as before. For by the 
 value of an individual commodity we mean its 
 power of commanding other things in exchange. 
 If a pair of stockings were formerly worth a 
 shilling, it would still be worth a shilling. 
 Every commodity would in the same way con- 
 tinue to be exchanged in the same quantity 
 against every other commodity. So far as to 
 the value of individual commodities. With 
 regard to the aggregate, value being in strict 
 propriety a relation existing amongst the several 
 parts, it cannot be predicated of the whole, ex- 
 
ESTIMATING VALUE. 155 
 
 cept in reference to some of its parts. If the 
 value of the whole means any thing, it can be 
 only its value estimated or computed in some 
 individual commodity ; and in this sense, as 
 the quantity of every thing would be doubled, 
 the aggregate value would be doubled. If a 
 pairof stockings continued to be worth a shilling, 
 2000 pair, which would now be produced for 
 every thousand pair previously, would be worth 
 2000 shillings ; and thus, with regard to every 
 other commodity, we should have a double 
 value in shilling's, and the sum of all these 
 values would be double. 
 
 Labour is the only thing in relation to which 
 any commodity would not necessarily appear to 
 be of the same value*, but here we are of course 
 leaving labour out of consideration. On the sup- 
 
 * Commodities might appear of the same value even in 
 relation to labour ; that is to say, there would be no incon- 
 sistency or repugnance amongst the terms and ideas in- 
 volved in the supposition, although the circumstance would 
 be one not likely to happen : a point, indeed, in which it 
 only resembles the other parts of this hypothetical case. 
 
156 ox METHODS OF 
 
 position that all commodities were doubled in 
 quantity, this is the result, in whichever of the 
 commodities or parts we choose to estimate the 
 whole. But if any one commodity is supposed 
 to be produced in the same quantity by the 
 same labour as before, and the whole of the 
 other commodities are estimated in this one, it 
 will be true enough, that the whole produce 
 continues of the same value, while the parts 
 have fallen one half*. From this it is evident, 
 that in all such cases the result depends on the 
 commodity chosen as the medium of estima- 
 tion. As by value we always imply value in 
 something, a commodity may be said by one 
 person to rise, and by another to fall, and with 
 equal truth, if they speak wit^ tacit reference 
 to different commodities ; but a general affirma- 
 tion of this nature is worse than useless. The 
 assertion of a rise or fall in any thing should 
 be accompanied by a mention of the commo- 
 
 * Assuming that commodities are to each other in value 
 as the quantities of labour concerned in their production. 
 
ESTIMATING VALUE. 157 
 
 dity in relation to which it has thus varied, or, 
 at all events, the commodity should be clearly 
 indicated by the tenour of the language em- 
 ployed. Otherwise, two disputants in Political 
 Economy may share the fate of the two 
 knights, who fell sacrifices to their obstinacy in 
 maintaining, the one that a shield was of gold, 
 the other that it was of silver, both being 
 equally correct in their assertions, and their 
 difference arising, as a thousand differences 
 arise, from the simple circumstance of having 
 looked at opposite sides of the same object. 
 
 The present subject may be further elucidated 
 by citing a passage from Mr. Ricardo. '' The 
 labour of a million of men in manufactures,' 
 says he, " will always produce the same value, 
 but will not always produce the same riches. 
 By the invention of machinery, by improve- 
 ments in skill, by a better division of labour, 
 or by the discovery of new markets, where 
 more advantageous exchanges may be made, a 
 million of men may produce double or treble 
 the amount of riches, of necessaries, conve- 
 
158 ON METHODS OF 
 
 niences, and amusements, in one state of so- 
 ciety, that they could produce in another, but 
 they will not on that account add any thing to 
 value; for every thing rises or falls in value in 
 proportion to the facility or difficulty of pro- 
 ducing it, or, in other words, in proportion to 
 the quantity of labour employed on its pro- 
 duction*." 
 
 All this may be safely pronounced unmeaning 
 and nugatory f. It conveys no information, nor 
 can we judge of its correctness or inaccuracy, 
 till we know what is the commodity, in relation 
 to which it is meant to assert, that the product 
 of the labour of this million of men will always 
 prove of the same value, or in other words, 
 until we are told what is the commodity em- 
 ployed as a medium of estimation. If these 
 men produce treble the quantity of all articles 
 of exchange whatever, then the aggregate valxie 
 of the product of their labour will be treble, 
 
 * Principles of Pol. Econ., p. 320, 3d edit. 
 t See Note H. 
 
ESTIMATING VALUE. 150 
 
 estimated in any article we please. It any ar- 
 ticles still require the same labour, and we esti- 
 mate the rest in these, then the aggregate value 
 will remain the same. 
 
 In the sequel of the passage above cited, 
 Mr. Ricardo maintains, that when the labour of 
 a certain number of men, formerly capable of 
 producing 1000 pair of stockings, becomes by 
 inventions in machinery productive of 2000 pair, 
 the value of the o^eneral mass of commodi- 
 ties will be diminished, because the stockings 
 manufactured before the improvement must 
 fall to the level of the new goods. This again 
 depends on the mode of estimation. Estimated 
 in stockings, the aggregate value of the ge- 
 neral mass of commodities would rise ; esti- 
 mated in any thing else it would fall : and al- 
 though it may seem ludicrous to talk of esti- 
 mating the value of all commodities in stockings, 
 the principle is still the same as if gold or 
 any other commodity happened to be the me- 
 dium of valuation. 
 
 Hence it appears, that these propositions, 
 
 / 
 
160 ON METHODS OF 
 
 which carry, so profound and paradoxical an 
 air, really amount to nothing but this, that a 
 commodity may rise or fall in relation to one 
 commodity and not to another, and therefore 
 that the estimation of commodities in dift'erent 
 media will necessarily yield different results. 
 
 It may be here remarked, that Mr. Ricardo 
 employs the term estimate in a manner alto- 
 gether incorrect. 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. 
 Now if to estimate has the same meaning as to 
 express value, with the accessory idea of com- 
 putation annexed, it follows that we can esti- 
 mate value only in the same manner. Should 
 we therefore at any time employ labour as the 
 medium of estimation, it must be the labour 
 for which a commodity will exchange. But 
 Mr. Ricardo speaks of estimating commodities 
 by the labour which is required to produce 
 them. Nor is this to be regarded merely as a 
 verbal inaccuracy, for it appears to have led 
 
ESTIMATING VALUE. 161 
 
 him into that erroneous method of estimating 
 the value of labour, which has been already 
 pointed out. It may be said, at least, that a 
 clear apprehension of the precise meaning of the 
 term would have been incompatible with his 
 doctrine on the real value of wages, if not with 
 the fundamental error which runs through his 
 speculations, and of which his doctrine on the 
 subject of the real value of wages is but a 
 ramification. 
 
 M 
 
CHAPTER IX. 
 
 ON THE DISTINCTION BETWEEN VALUE AND 
 
 RICHES. 
 
 In the last chapter the subject of the present 
 one has been in some degree anticipated. It 
 has been there shown what is the real amount 
 of the assertion, that the riches of a so- 
 ciety may be doubled or trebled without any 
 thing being added to their value. The sub- 
 ject, however, is of so much importance, that 
 it will be necessary to enter into a closer ex- 
 amination of it. 
 
 The distinction between riches and value is 
 sufficiently obvious, riches signifying the com- 
 modities themselves (with one or more accessory 
 ideas annexed), and value denoting the relation 
 in exchange between any of these commodities. 
 
ox VALUE AND RICHES. 163 
 
 Mr. Ricardo, nevertheless, has been singularly 
 unfortunate in his attempt to discriminate them. 
 His elaborate chapter, which contains it, ap- 
 pears to me to be a remarkable tissue of 
 errors and unmeaning conclusions, arising from 
 his fundamental misconception of the nature of 
 value. Throughout the whole of this chapter, 
 he speaks of value as the positive result of la- 
 bour : whence it follows, that the same quantity 
 of labour must always produce the same value, 
 however much its productive powers may have 
 increased. Riches, therefore, may be inde- 
 finitely multiplied, while no more labour is em 
 ployed ; but the value of the riches, under this 
 condition, remains invariably the same. 
 
 Such is the sum and substance of his argu- 
 ment. The error of stating^ the value to re- 
 main constant has been sufficiently considered. 
 There is still, however, an ambiguity or ob- 
 scurity in the meaning of the term riches, which 
 requires to be cleared up, Mr. Ricardo has 
 regarded it as synonymous, sometimes, with 
 commodities, and at other times with ahundance 
 
 M 2 
 
164 ON THE DISTINCTION 
 
 of conmiodities. It is evidently used in a col- 
 lective sense ; it is a term expressive of aggre- 
 gation, if not of plenty. The adjective rich 
 is never applied but to denote the possession of 
 abundance, or the means of commanding it, 
 and it may be doubted whether the sub- 
 stantive riches is ever used without an im- 
 plication of the same idea. If it were merely 
 a general expression for commodities, without 
 any accessory idea, it might be discarded from 
 our speculations, and the latter word substituted 
 in its stead. But such an experiment would 
 not answer. We could not with any propriety 
 change the title of Adam Smith's great work 
 into " An Inquiry into the Nature and Causes 
 of the Commodities of Nations." We should 
 approximate more nearly to the meaning of the 
 original, were we to translate it, " An Inquiry 
 into the Nature and Causes of the greater or 
 smaller abundance of Commodities possessed 
 by Nations." 
 
 Whether the idea of abundance, however, 
 is involved in the meaning of riches or not, 
 
BETWEEN VALUE AND RICHES. 165 
 
 the idea of aggregation or collection cannot be 
 excluded. A single grain of wheat is not 
 wealth, although it may be said to be an article 
 of wealth. The idea of possession also seems 
 essential to it. Riches are not simply commo- 
 dities as things existing, but as things pos- 
 sessed. The most useful articles in an unin- 
 habited country could not be termed wealth, 
 because they would have no proprietor. The 
 country, it is true, might be denominated rich 
 in such articles, but only inasmuch as it would 
 be the container or possessor of them. There 
 would still be the same idea of possession in- 
 volved in our lang^uao^e. 
 
 Whatever difficulty may be found in furnish- 
 ing a good and complete definition of riches, 
 there can be none in establishing the difference 
 between the terms riches and value, as used in 
 the science of Political Economy. Riches are 
 the attribute of men, value is the attribute of 
 commodities. A man or a community is rich ; 
 a pearl or a diamond is valuable. He pos- 
 
166 ON THE DISTINCTION 
 
 sesses riches who is the owner of commodities 
 which themselves possess value*; and, fur- 
 ther, he is rich in proportion to the value of 
 the objects possessed. Mr. Ricardo, indeed, 
 denies that value is the measure of riches ; but 
 a slight consideration will show, that it is the 
 only criterion by which we can determine whe- 
 ther one man or one community is richer than 
 another. If the wealth of two men consisted 
 in one single commodity, then, without entering 
 into the question of exchange or value, we 
 might determine that one was richer than the 
 other, from mere excess of quantity. Even, 
 however, in the simplest imaginable case of 
 
 * Colonel Torrcns is of opinion, that value is not essen- 
 tial to the idea of riches : it may be questioned, however, 
 whether it is not always implied, and whether the latter 
 term would have been invented in a state of society in 
 which there was no interchange of commodities. It is a 
 point, at all events, of little importance ; as, in those cases 
 which come under the notice of the political economist, 
 value in exchange is a constant adjunct of wealth. Vide 
 Essay on the Production of Wealth, chap. i. 
 
BETWEEN VALUE AND RICHES. 167 
 
 this kind, there would necessarily be a supe- 
 riority of value, if such an idea came at all 
 into question, as well as of wealth. If the 
 sole commodity in possession of the two indi- 
 viduals were corn, of which one possessed 500 
 quarters and the other 1000, the latter would 
 not only be richer, but the proprietor of pro- 
 duce, the aggregate value of which was 
 greater. 
 
 In all but this very simplest case, it would 
 be impossible to decide with accuracy on the 
 superiority of two individuals in point of riches, 
 except by estimating their value in some 
 common medium. Suppose the individual 
 who possessed the 500 quarters of corn, was 
 worth also 500 yards of cloth, while the other, 
 who had 1000 quarters of corn, possessed only 
 100 yards of cloth ; in what imaginable method 
 could their riches be compared, and the supe- 
 riority of one over the other be ascertained, 
 except by means of their value, computed in 
 some common medium of estimation, or re- 
 duced into one denomination ? 
 
168 ON THE DISTINCTION 
 
 With regard to heterogeneous commodities, 
 there are in fact only two conceivable criteria 
 of riches : one, the utility of any possessions ; 
 the other, their value. The first is in the 
 highest degree unsteady and indeterminate, and 
 altogether inapplicable. Iron, as Mr. Ricardo 
 remarks, may be more useful than gold, but 
 the possession of a pound of the former metal 
 would not constitute a man as rich as that of 
 an equal weight of the latter. Value, there- 
 fore, is the only criterion of riches which is left 
 to us. 
 
 In determining, then, the question whether 
 riches could be increased, without an increase 
 of value, we must recur to the principles laid 
 down in the last chapter. The answer in each 
 particular case will depend on the medium of 
 estimation. There is one additional remark, 
 however, which may be here introduced. In 
 the chapter referred to, a case was supposed, 
 in which all commodities were produced in 
 double quantity by the same labour, with the 
 exception of one solitary article, and it was 
 
BETWEEN VALUE AND RICHES. 169 
 
 admitted, that if the whole were estimated in 
 this one commodity, the aggregate value would 
 be unaltered. In this hypothetical case, ne- 
 vertheless, it still remains to be determined 
 how we are to estimate the value of the com- 
 modity chosen as the medium. In estimating 
 the whole produce in this medium, we neces- 
 sarily include the latter, and compute it as 
 being worth itself. But value is a relation 
 between two objects, and had we in any case 
 to express the value of the medium, we must 
 have recourse to one of the other commodities, 
 when its value would appear to be doubled. 
 Hence, although according to the supposed 
 estimate, the aggregate value of the other 
 commodities would be the same, the value 
 of the medium would be twice as orreat as 
 before ; and thus it might be truly said, that 
 let us adopt what medium of estimation we 
 please, no increase of riches can take place 
 without an increase of value. 
 
CHAPTER X. 
 
 ON THE DIFFERENCE BETWEEN A MEASURE 
 AND A CAUSE OF VALUE. 
 
 Any one who takes the trouble of minutely ex- 
 amining the writings of the most celebrated 
 political economists will be astonished, not only 
 at the looseness of expression, but at the vague- 
 ness of design by which they are too frequently 
 distinguished. It is often far from being ma- 
 nifest, what is the precise doctrine or propo- 
 sition they are intending to support, or to over- 
 throw ; or rather, it is evident that they them- 
 selves have not succeeded in defining it clearly 
 to their own understandings. 
 
 No department of political economy has suf- 
 fered more from this indefiniteness of purpose, 
 and ambiguity of language, than that which is^ 
 
A MEASURE AND A CAUSE OF VALUE. 171 
 
 occupied with investigating the measures and 
 causes of value. It would seem, on a first 
 view, that the ideas of measuring and causing 
 value were sufficiently distinct to escape all 
 danger of being confounded ; yet it is remark- 
 able, that both the ideas themselves, and the 
 terms by which they are expressed, have been 
 mixed and interchanged and substituted, with 
 an apparently total unconsciousness of any dif- 
 ference existinor- between them. 
 
 The author of the Templars' Dialogues on 
 Political Economy is the only writer who ap- 
 pears to me to have been fully aware of this 
 confusion of two separate and distinct ideas ^. 
 He traces it partly to an ambiguity in the word 
 determine. ^' The word determine," says he, 
 " may be taken subjectively for what determines 
 X in relation to our knowledge, or objectively, 
 for what determines x in relation to itself. 
 
 * This was written before 1 had seen the second edition 
 of Mr. Mill's Elements, in which the distinction is for the 
 first time introduced. His language on this point, never- 
 theless, is not uniformly consistent, as will be shown in the 
 next chapter. 
 
172 DIFFERENCE BETWEEN 
 
 Thus if I were to ask, ^ What determined the 
 length of the race course?' and the answer 
 were, ^ The convenience of the spectators, who 
 could not have seen the horses at a greater 
 distance ;' or, ' The choice of the subscribers ; ' 
 then it is plain, that by the word ' determined,' 
 I was understood to mean ' determined objec- 
 tively,' in relation to the existence of the object; 
 in other words, what caused the race-course to 
 be this length rather than another length: but 
 if the answer were, ' An actual admeasurement,' 
 it would then be plain, that by the word * de- 
 termined,' I had been understood to mean * de- 
 termined subjectively," i. e. in relation to our 
 knowledge; what ascertained it^?" 
 
 The writer just quoted is wrong, however, 
 in supposing Mr. Ricardo to be free from am- 
 biguity in this point. A very cursory inspec- 
 tion of the Principles of Political Economy and 
 Taxation will show, that he has fallen into 
 the same confusion as other economists ; and it 
 is astonishino' to find the author of the Dia- 
 
 o 
 
 * London Magazine, Dec. 1823, p. 588: article en- 
 titled *' Measure of Value." 
 
A MEASURE AND A CAUSE OF VALUE. 173 
 
 iogues asserting, that Mr. Ricardo did not 
 propose his principle of value (namely, the 
 quantity of labour) as the measure of value. 
 The fact is, that he sometimes speaks of it as 
 the cause, and sometimes as the measure, in 
 such a way as proves that he had not attained 
 to any distinct conception of the difference be- 
 tween the two ideas. 
 
 Thus in the first section of his book he ac- 
 cuses Adam Smith of erecting the labour, which 
 a commodity will command, into a standard 
 measure, instead of the labour bestowed on its 
 production, the latter of which he asserts to 
 be, " under many circumstances, an invariable 
 standard, indicating correctly the variations 
 of other things*." Farther on he speaks of es- 
 timating food and necessaries " by the quantity 
 of labour necssary for their production ; " con- 
 trasting it with measuring them " by the quan- 
 tity of labour for which they will e.vchange'\ T 
 
 In the second section, after speaking of la- 
 
 * Principles of Political Economy and Taxation, p. 5, 
 3d edition. 
 
 t Ibid, p. 7- f'he Italics are Mr. Ricardo"s 
 
174 DIFFEllEXCE BETWEEN 
 
 hour as being the foundation of all value, he 
 adopts in a note the language of Adam Smith, 
 which designates labour as the real measure of 
 the exchangeable value of all commodities*". 
 
 In another chapter of his work he is still 
 more explicit. 
 
 " A franc," says he, " is not a measure of 
 value for any thing, but for a quantity of the 
 same metal of which francs are made, unless 
 francs and the thing to be measured can be 
 referred to some other measure, which is com- 
 mon to both. This I think they can be, for 
 they are both the result of labour ; and, there- 
 fore, labour is a common measure, by which 
 their real as well as their relative value may be 
 estimated f." 
 
 And to support this doctrine he cites a pas- 
 sage from M. Destutt de Tracy, the scope of 
 which is to show that labour is the cause of 
 value. Surely nothing can more decisively 
 prove a confusion of ideas on this point than 
 adducing a passage, which asserts labour to be 
 
 * Ibid., p. 13. t Ibid., p. 333. 
 
A MEASURE AND A CAUSE OF VALUE. 175 
 
 the cause of value, in confirmation of a propo- 
 sition that it is the measure of value. 
 
 Mr. Malthus, who has himself fallen into 
 the same confusion of ideas and terms, is suf- 
 ficiently justified by these passages in attri- 
 buting to Mr. Ricardo the act of bringing 
 forward his principle as a measure. That 
 Mr. Ricardo has more frequently spoken of it 
 as a cause of value, only proves that he has 
 deviated into inconsistencies. How the author 
 of the Dialogues could be led to maintain, in the 
 face of these passages, that " Mr. Ricardo 
 never dreamed of offering it as a standard or 
 measure of value," it is difficult to imagine. 
 
 It will possibly be urged by the admirers of 
 Mr. Ricardo, in order to defend him from the 
 charge of inconsistency or ambiguity of lan- 
 guage, that if quantity of labour is truly the 
 sole cause of value, then it must also be a cor- 
 rect measure or criterion of value ; and as one 
 of these circumstances necessarily follows the 
 other, it is indifferent in which capacity we 
 speak of it. 
 
176 DIFFERENCE BETWEEN 
 
 It is certainly true, that, provided quantity of 
 labour were the sole cause of value, we should 
 always be able to deduce the value of two com- 
 modities from a knowledge of the quantities of 
 labour which they respectively required to pro- 
 duce them; and in this sense, quantity of la- 
 bour would be at once the cause and the mea- 
 sure of value. But even under these circum- 
 stances, an author would not be justified in an 
 indiscriminate use of the terms ; nor could he 
 fall into such an error, had he a distinct ap- 
 prehension of the difference between the two 
 ideas. 
 
 It would by no means follow, however, from 
 quantity of labour being the cause of value, 
 that it would be of any service as a measure. 
 On this point we may adopt the language of 
 the author of the Dialogues : " If it had been 
 proposed as a measure of value, we might 
 justly demand that it should be ready and easy 
 of application ; but it is manifestly not so ; for 
 the quantity of labour employed in producing 
 A, ' could not in many cases' (as Mr. Malthus 
 
A MEASURE AND A CAUSE OF VALUE, 177 
 
 truly objects) ' be ascertained without con- 
 siderable difficulty :' in most cases, indeed, it 
 could not be ascertained at all. A measure of 
 value, however, which cannot be practically 
 applied, is worthless*." 
 
 It was probably some obscure and undefined 
 impression of this truth, which, when Mr. Ri- 
 cardo deliberately set himself to treat on the 
 subject of a measure of value, influenced him 
 to speak, not of labour itself in that capacity, 
 but of a commodity produced by an invariable 
 quantity of labour. If the quantity of pro- 
 ducing labour really determines the value of 
 commodities, it seems on a first view useless to 
 require for a measure an object of which the 
 producing labour is invariable, when we may 
 have recourse to the labour itself. But Mr. Ri- 
 cardo probably perceived, that a knowledge of 
 the quantity of producing labour in objects 
 would be in most cases difficult of attainment, 
 and therefore betook himself to the considera- 
 
 * London Magazine for May, 1824, page 559. 
 
 N 
 
]78 A MEASURE AND A CAUSE OF VALUE. 
 
 tion of a commodity in which a definite por- 
 tion of it was embodied*. 
 
 All that is really meant by a measure of 
 value we have already seen, and what is im- 
 plied by a cause of value will be examined in^ 
 the following chapter. The object of the pre- 
 ceding brief discussion is not to consider the 
 nature of either, but merely to show the es- 
 sential distinction between the ideas which they 
 involve. 
 
 * There was a further reason, namely, that the real object 
 which he contemplated in a measure of value was to ascer- 
 tain by it the changes whicli commodities might undergo 
 in regard to the quantity of labour required to produce 
 them. Now to use labour itself as a measure implies this 
 object to be already accomplished. See Note 1. 
 
CHAPTER XI. 
 
 ON THE CAUSES OF VALUE. 
 
 It may seem, that an inquiry into tlie causes of 
 value should have had an earlier place in the 
 present treatise ; but it is in reality the natural 
 method of proceeding to make ourselves ac- 
 quainted with the nature of an effect, before we 
 attempt to investigate its causes. Although, in 
 point of time, a cause must precede its effect, 
 yet in the order of our knowledge the case is 
 commonly reversed, and we ascend from the 
 phenomena before us to the active principles 
 concerned in their production. 
 
 Our first object in this investigation must be 
 to ascertain what is really meant by a cause of 
 value, or what is its true nature, that we may 
 have some criterion which will show us, on the 
 
 n2 
 
180 ox THE CAUSES 
 
 one hand, whether any circumstance assigned 
 as a cause can be correctly admitted to rank un- 
 der this denomination, and, on the other hand, 
 whether any circumstance alleged to have no 
 influence can be justly excluded. 
 
 It was explained in the first chapter, that 
 value, although spoken of as a quality ad- 
 hering to external objects, or as a relation be- 
 tween them, implies a feeling or state of mind, 
 which manifests itself in the determination of 
 the will. This feeling or state of mind may be 
 the result of a variety of considerations con- 
 nected with exchangeable commodities, and an 
 inquiry into the causes of value is, in reality, an 
 inquiry into those external circumstances, which 
 operate so steadily upon the minds of men, in 
 the interchange of the necessaries, comforts, 
 and conveniences of life, as to be subjects of 
 inference and calculation. These circum- 
 stances may either act directly on the mind, as 
 considerations immediately influencing its views, 
 or they may operate indirectly, by only causing 
 certain uniform considerations to be presented 
 
OF VALUE. 181 
 
 to it. In either case, if they are steady in their 
 operation, they may be equally regarded as 
 causes of value. We may often assign an ef- 
 fect to a cause, when perhaps we are unable to 
 trace the exact series of changes occurring be- 
 tween them, or, in other words, the less pro- 
 minent links in the chain of causes and effects 
 by which they are separated in time, but con- 
 nected in efficiency. In reference to the present 
 subject, this may be easily illustrated. The 
 equality in the cost of production of two ar- 
 ticles, for example, is a cause of their exchanging 
 for each other. This we know is the general 
 effect of such circumstances ; but it would be 
 difficult to trace with precision the mode in 
 which the effect was produced, and which in- 
 deed might vary on different occasions without 
 disturbing the result. Suppose two persons, a 
 and B, of whom the former has linen, which he 
 wishes to exchange for woollen cloth, and the 
 latter has woollen cloth, which he wishes to ex- 
 chano^e for linen. The matter would be abun- 
 dantly plain, if, besides knowing what his own 
 
182 
 
 ON THE CAUSES 
 
 article cost him, each had a knowledge of the 
 producing cost of the article to be received in 
 exchange. But it is likely enough that they do 
 not possess this latter knowledge, and in this 
 case the defect will be supplied by the compe- 
 tition of the producers, which is itself governed 
 by the cost of production ; and thus, although 
 the two parties to the bargain may not be 
 guided by a knowledge of what each article 
 has cost to produce it, they are determined by 
 considerations, of which the cost of production 
 is the real origin. This is still more strikingly 
 the case in other instances, A clergyman, who 
 received his tithes in kind, and exchanged 
 raw produce for cloth, might be ignorant of the 
 cost of either, yet the terms of his bargain 
 would be determined by the general cost of 
 both. The cost would regulate the point at 
 which the competition of the producers would 
 fix each article, or their ordinary prices; and a 
 knowledge of these prices would operate on his 
 mind in the exchanges which he made. 
 
 Whatever circumstances, therefore, act with 
 
OF VALUE. 183 
 
 assignable influence, whether mediately or im- 
 mediately, on the mind in the interchange of 
 commodities, may be considered as causes of 
 value. 
 
 Although, in the subsequent remarks, I may 
 sometimes have to bring into view the mental 
 operations implied in all cases of interchange, 
 yet, to avoid prolixity, instead of speaking of cir- 
 cumstances operating on the mind in regard to 
 any commodity, I shall frequently speak of those 
 circumstances as operating on the commodity 
 itself. While this will save circumlocution, it 
 will not, it is hoped, give rise to ambiguity, as 
 such language will be employed with a tacit 
 reference to the real nature of the occurrence 
 which it is intended to designate. 
 
 I have already had occasion to remark, that 
 since value is a relation between two objects, it 
 requires no proof that it cannot arise from 
 causes affecting only one of the objects, but 
 from two causes, or two sets of causes respec- 
 tively operating upon the objects between 
 whicli the relation exists. If a is equal in 
 
184 ON THE CAUSES 
 
 value to B, this must be owing, not only to 
 causes operating on a, but also to causes ope- 
 rating on B. In investigating the sources of 
 value, however, it will be necessary to treat of 
 these causes separately ; and it may not be 
 useless to recollect, that although value must 
 in every instance arise from the combination of 
 two sets of causes, any alteration, any rise or 
 fall of value, may proceed from only one. The 
 value of A and b is the effect of causes acting 
 on both, but a change in their mutual value may 
 arise from causes acting on either : as the distance 
 of two objects is to be referred to the circum- 
 stances which have fixed both of them in their 
 particular situation, while an alteration of the 
 distance between them might originate in cir- 
 cumstances acting on one alone. 
 
 What then are the causes which determine 
 the value of commodities, and an alteration in 
 which is followed by a change in their rela- 
 tions? Or, in other words, what are the causes 
 which determine the quantities in which commo- 
 dities are exchanged for each other ? 
 
OF VAlA't. 185 
 
 In order to answer this question, it will be 
 necessary to attempt some classification of ex- 
 changeable articles. 
 
 Commodities, or things possessing value, 
 maybe divided into three classes. 
 
 1. Commodities which are monopolized, or 
 protected from competition by natural or ad- 
 ventitious circumstances. 
 
 2. Commodities, in the production of which 
 some persons possess greater facilities than 
 the rest of the community, and which there- 
 fore the competition of the latter cannot in- 
 crease, except at a greater cost. 
 
 3. Commodities, in the production of which 
 competition operates without restraint. 
 
 A cursory attention to these classes will at 
 once show, that their respective causes of value 
 cannot be the same. Let us therefore take them 
 in detail, and examine the causes operating on 
 each class. 
 ] . Monopolies may be divided into two kinds ; 
 
 those in which there is only one interest con- 
 
18(3 ON THE CAUSES 
 
 cerned, and those in which there are separate 
 
 interests. 
 
 In the first case, "the competition," (as 
 Mr. Ricardo justly remarks) " is wholly on one 
 side — amongst the buyers. The monopoly 
 price," he continues, " of one period, may be 
 much lower or higher than the monopoly price 
 of another, because the competition amongst the 
 purchasers must depend on their wealth, and 
 their tastes and caprices. Those peculiar wines 
 which are produced in very limited quantity, 
 and those works of art, which from their ex- 
 cellence or rarity have acquired a fanciful value, 
 will be exchanged for a very different quantity 
 of the produce of ordinary labour, according as 
 the society is rich or poor, as it possesses abun- 
 dance or scarcity of sucll produce, or as it may 
 be in a rude or polished state '^'." 
 
 The second kind of monopoly differs from 
 
 * Principles of Political Economy and Taxation, p. 290, 
 thiril edition 
 
OF VALUE. 187 
 
 the first in the obvious circumstance, that there 
 may be a competition amongst the sellers as well 
 as amongst the buyers. Where there is only 
 one interest concerned in the monopoly, it may 
 be to the advantage of the party to withhold his 
 article from the market in times of dull demand, 
 or even to destroy a part of it to enhance the 
 value of the remainder ; a policy which is said 
 to have been pursued by the Dutch in the spice 
 trade. But when a monopoly is in the hands 
 of different individuals, with separate interests, 
 such a line of policy is impracticable : for al- 
 though it might be to the advantage of the whole 
 body if the quantity of the monopolized ar- 
 ticle were proportionately reduced to each 
 holder, yet as, by the supposition, there is no 
 combination of interest, every individual finds 
 it beneficial to dispose of all that he possesses. 
 To destroy any part of it, would be to injure 
 himself for the benefit of his brother monopo- 
 lists. While on the one hand he is fenced in 
 by an exclusive privilege or possession from the 
 competition of the public, he is on the other 
 
188 ON THE CAUSES 
 
 hand compelled by his own interest to bring to 
 market the whole of his supply, and he is 
 obliged by the same principle to produce the 
 greatest supply in his power, so long as the 
 average price pays him a higher profit than the 
 ordinary employment of capital. It deserves 
 to be remarked, that all commodities, which re- 
 quire any considerable period of time for their 
 production, are liable to be occasionally forced 
 into the class of articles owing their value to 
 this second kind of monopoly, by a sudden 
 alteration in the relative state of the demand 
 and supply. Hence arises w^hat is called by 
 political economists market value. Should the 
 relative demand for any of these commodities 
 increase, as it could not, according to the sup- 
 position, be immediately answered by a cor- 
 respondent supply, the possessors of the com- 
 modities would enjoy a temporary monopoly ; 
 for a while they would be protected from com- 
 petition by the impossibility of producing a fur- 
 ther quantity. 
 
 On the contrary, should the relative demand 
 
OF VALUE. 189 
 
 decrease, the possessors of the commodities 
 would be exposed to the necessity of bringing 
 them to market at a reduced rate, especially if 
 they were commodities of which the supply 
 could be neither immediately stopped, nor ad- 
 justed to the new state of the demand. The 
 holders, in this case, would be exposed to all 
 the disadvantages incident to a monopoly in 
 which there were separate interests. The com- 
 petition amongst themselves would force the 
 whole of their supply into the market. 
 
 Occurrences of this kind must not be con- 
 sidered as rare or unimportant. Mr. Tooke, in 
 his recent valuable work " on the High and 
 Low Prices of the Thirty Years, from 1793 
 to 1822," has most strikingly shown the fre- 
 quency and extent of excesses and defi- 
 ciences in the supply of corn, as well as the 
 momentous effects which they occasion. These 
 effects are all referable to the principle of a 
 temporary monopoly. Foreign supplies being 
 put out of the question, the holders of corn 
 have obviously a monopoly of the article till 
 
190 ON THE CAUSES 
 
 the ensuing harvest ; and as it is an article wliich 
 cannot be dispensed with, should the supply be 
 less than usually required, the price may rise 
 to an almost indefinite height. If, on the con- 
 trary, the supply should exceed the ordinary 
 demand, which from the nature of the com- 
 modity admits of little augmentation, the 
 holders suffer the disadvantages before de- 
 scribed ; the interest of each lies in the dis- 
 posal of as large a quantity as possible, and 
 the competition thus engendered infallibly 
 brings down the value. The larger quantity 
 may in this way become of less aggregate value 
 than the smaller quantity at the previous high 
 prices. Were the commodity in the hands of 
 an individual, or, what is the same thing, in- 
 dividuals combined by one interest, this is a 
 circumstance which could never occur. 
 
 Labour must be considered as falling under 
 this class of exchangeable commodities, and as 
 being determined in value by the same causes 
 which operate on articles monopolized in the 
 second method here described. If a man em- 
 
OF VALUE. 191 
 
 ploy his capital in production, lie must pur- 
 chase labour, and the demand for labourers 
 will therefore be in proportion to the capital 
 destined for this purpose. But there are only 
 a certain number of labourers in existence ; 
 these cannot for the time be either purposely 
 increased or diminished, and they consequently 
 possess a monopoly of their peculiar commo- 
 dity. The greater the demand, therefore, for 
 their labour, the higher it will rise, exactly as 
 other monopolized commodities in the same 
 circumstances. This monopoly, too, is at- 
 tended with the disadvantao^es common to all 
 monopolies in the hands of conflicting interests. 
 Under all circumstances the labourers must live, 
 and must therefore sell their labour ; and 
 should the demand for it decrease, as they 
 cannot purposely diminish or keep back their 
 numbers, competition will soon reduce the 
 value of their labour. 
 
 Besides the general monopoly which the la- 
 bourers naturally possess, and which may be 
 advantageous or disadvantageous, according to 
 
192 ox THE CAUSES 
 
 circumstances, there are divers subordinate 
 monopolies, occasioning labour to be paid 
 after different rates. In trades, which require 
 application for a greater or smaller period be- 
 fore they are learned, the workmen are evi- 
 dently protected from immediate competition ; 
 and should there be an increase in the de- 
 mand for their work, their labour would rise 
 in value, and remain enhanced till more ar- 
 tizans possessed of their peculiar skill had been 
 formed. 
 
 It scarcely needs to be mentioned, in this 
 place, that although labourers cannot be pur- 
 posely augmented or reduced in number by the 
 application of capital, or its diversion into 
 different channels, like material commodities, 
 yet they may be augmented or reduced in 
 another way. The high value of labour, com- 
 pared with commodities in general, enabling the 
 labourers to live in abundance, marriages are en- 
 couraged, or at least more children are reared, 
 and population is increased ; so that, after the 
 lapse of a certain interval, the same effect is pro- 
 
OF VALUE. 193 
 
 duced as if men could be purposely created. On 
 the other hand, a material fall in the value of 
 labour operates to check population by the pe- 
 nury and hardship which it spreads among the 
 labouring classes; and the supply of labour 
 becomes eventually adjusted to the demand by 
 disease and death. 
 
 2. The second class of commodities em- 
 braces articles of more importance (with the 
 exception of labour) than that which we have 
 just considered. When a commodity is of a 
 kind which admits of being increased by in- 
 dustry and competition, but only at a greater 
 cost, the possessor of the cheaper means of 
 producing it has evidently a monopoly to a 
 certain extent, and the value of the commodity 
 will depend on the principles already explained, 
 until it reach such a height as will afford the 
 ordinary profit to those who produce it at a 
 greater expense. The same causes will be in 
 operation, but instead of the value of the ar- 
 ticle having no assignable boundary, it will be 
 limited by the watchful competition, which is 
 
194 ON THE CAUSES 
 
 ever ready to act upon it the moment it has 
 exceeded a particular point. 
 
 Under this head we may class the important 
 articles of corn, raw produce in general, metals, 
 coals, and several others. As one commodity, 
 however, will elucidate the rest, we may con- 
 fine our observations to the first. 
 
 The value of that corn which is produced 
 on lands paying rent, is not, it is acknow- 
 ledged, in proportion either to the capital or to 
 the labour actually expended in its production. 
 It must be owing, therefore, to some other 
 cause ; and the only other cause is the state of 
 the supply and demand, or the competition of 
 the purchasers. This competition might raise 
 the price to an indefinite height, if it were not 
 for the existence of other lands, which although 
 they could produce corn only at a greater cost, 
 would be brought into cultivation as soon as 
 the price had risen sufficiently high to pay 
 the ordinary profits on the capital required. 
 It is, therefore, the possibility of producing 
 corn, or the actual production of it, at a greater 
 
OF VALUE. 195 
 
 cost, which forms the limit to its value. But 
 although this is the limit beyond which its value 
 cannot rise, it cannot be said to be the cause of 
 its value. It is the cause of its being no 
 higher, not the cause of its being so high. A 
 perforation in the side of a vessel, at any dis- 
 tance from the bottom, would effectually pre- 
 vent its being filled to a greater height with 
 water, but it would be no cause of the water 
 attaining that height. At the utmost it could be 
 considered as only a joint cause of the result. 
 
 We accordingly find that the expression used 
 by Mr. Ricardo on this subject is, not that the 
 value of corn is caused, but that it is regulated 
 by the cost of production on the least fertile 
 lands. The owners of land of superior fer- 
 tility enjoy a monopoly, which, however, does 
 not enable them to raise their commodity in 
 definitely, according to the varying wants and 
 caprices of mankind, but which is bounded 
 by the existence of inferior soils. 
 
 It is simply out of this monopoly-value that 
 rent arises. Rent proceeds, in fact, from the 
 
 o 2 
 
196 ON THE CAUSES 
 
 extraordinary profit which is obtained by the 
 possession of an instrument of production, pro- 
 tected up to a certain point from competition. 
 If the owner of this instrument, instead of 
 using it himself, lets it out to another, he re- 
 ceives from him this surplus of profit under the 
 denomination of rent. In this view of the 
 subject, the extraordinary profit might exist, al- 
 though the land in cultivation were all of the 
 same quality ; nay, must exist before inferior 
 land was cultivated ; for it could be only in 
 consequence of extraordinary gains obtained 
 by the monopolizers of the best land, that ca- 
 pital and labour would be expended on soils of 
 a subordinate order. Rent, therefore, might ex- 
 ist, while all the land under cultivation was of 
 equal fertility. Perhaps it might not exist 
 under these circumstances during any long 
 period, but its existence at all would prove 
 that it was the effect of monopoly, an extra- 
 ordinary profit, and not the consequence of the 
 cultivation of inferior soils. 
 
 The extraordinary profit out of which rent 
 
OF VALUE. 197 
 
 arises, is analogous to the extraordinary remu- 
 neration which an artizan of more than common 
 dexterity obtains beyond the wages given to 
 workmen of ordinary skill. In so far as com- 
 petition cannot reach them, the owner of the 
 rich soil and the possessor of the extraordinary 
 skill obtain a monopoly price. In the one case 
 this monopoly is bounded by the existence of 
 inferior soils, in the other of inferior degrees of 
 dexterity. 
 
 It has been made a question, whether rent 
 forms a component part of the price or value of 
 produce. *' Rent," says Mr. Ricardo, ** does 
 not and cannot enter in the least degree as a 
 component part of its price." The expression 
 is in reality figurative, and the only meaning 
 of the assertion, that rent is a component part 
 of price, must be, that it is one of the causes 
 of the value of produce. But we have just 
 seen that rent is a consequence of the extraor- 
 dinary value of a monopolized commodity, and 
 it cannot therefore be one of the causes of its 
 value. Although not the cause of the value of 
 
198 ON THE CAUSES 
 
 corn or other produce, rent must be an accurate 
 representation of the additional value conse- 
 quent on the monopoly of the land on which 
 the corn is grown : therefore, if one part of the 
 price of corn, from any particular land, is con- 
 sidered as representing' the share of the la- 
 bourer, another the share of the capitalist, the 
 remainder, if any, will be representative of the 
 rent ; and it is probably this consideration 
 which has led economists to speak of it as a 
 component part of price. In whatever way the 
 expression is used, it is at the best vague and 
 indefinite, and ought to be banished from a 
 science, which owes half its difficulties to the 
 laxity and ambiguity of language, 
 
 3. The third class of commodities, those 
 which can be increased by industry, and on 
 which competition acts without restraint, are 
 the next to claim our consideration. 
 
 The value of these commodities owes no- 
 thing to monopoly ; what then are the causes 
 which determine the quantities in which they 
 are exchanged for each other ? 
 
OF VALUE. 199 
 
 There is, perhaps, at the bottom, little actual 
 diflference amongst economists as to these 
 causes, but they do not agree either in their 
 methods of explanation, or in the language 
 they employ. It has been shown, that the im- 
 mediate causes of value are the considerations 
 which act on the minds of human beinsrs, and 
 that the circumstances, which form or furnish 
 these considerations, must be the causes into 
 which the economist has to inquire. Our pre- 
 sent object, therefore, is to find those circum- 
 stances which act upon the mind with certainty 
 and precision, in the interchange of commodities 
 of the class under our notice. 
 
 A moments reflection on the subject will 
 suffice to discover, that the principal of these 
 circumstances must be the cost of production. 
 No man, who bestows his time and attention on 
 the production of a commodity, will continue 
 to produce it for the purpose of exchanging it 
 against another commodity, which he knows 
 costs less to the producer than his own : and, on 
 the other hand, every producer will be willing 
 
200 ON THE CAUSES 
 
 to sell as large a quantity of his commodity as 
 he can dispose of at the same price as his fel- 
 low producers. 
 
 It is not, indeed, disputed, that the main cir- 
 cumstance, which determines the quantities in 
 which articles of this class are exchanged, is 
 the cost of production ; but our best economists 
 do not exactly agree on the meaning to be at- 
 tached to this term ; some contending that the 
 quantity of labour expended on the produc- 
 tion of an article constitutes its cost; others, 
 that the capital employed upon it is entitled to 
 that appellation. Let us look at the state of 
 the facts. If a man exchanges an article which 
 he has produced by a day's labour, for another 
 article, also the produce of a day's labour, it is 
 plain that the cost of production is the labour 
 bestowed. If another man expends £100 in 
 producing a quantity of cloth, that is, in the 
 purchase of materials as well as in the wages 
 of labour, and exchanges it for a quantity of 
 linen which has cost his neighbour £100, the 
 cost of production is the capital employed. 
 
OF VALUE. ' 201 
 
 Cost of production may be, therefore, either a 
 quantity of labour or a quantity of capital. 
 What the labourer produces without capital, 
 costs him his labour ; what the capitalist pro- 
 duces costs him his capital. 
 
 Such appears to be the simplest view of the 
 subject ; but it is contended, that as the value 
 of the capital itself has been caused by labour, 
 it is more accurate to say, that cost of produc- 
 tion consists in the quantity of labour. It must 
 be recollected, however, that we are inquirino- 
 into the circumstances which determine men 
 to give a certain quantity of one commodity for 
 a certain quantity of another ; and what really 
 acts upon the minds of two capitalists in 
 exchanging their respective goods, is not the 
 labour which in a thousand different ways has 
 been expended upon the articles constitutino- 
 the capital employed, but the amount of capital 
 which they have parted with, in order to ob- 
 tain the commodity produced. So that granting 
 for the present that the value of capital may be 
 resolved (to use the common language on this 
 
202 ON THE CAUSES 
 
 subject) into a previous quantity of labour, it 
 would still be a correct statement of facts to 
 say, that tlie cost of production consists in the 
 quantity of capital expended : or to lay aside 
 the term cost of production altogether, that the 
 amount of capital expended is the cause which 
 determines the value of the commodity pro- 
 duced. 
 
 It is impossible, under this view of the sub- 
 ject, to agree with the following passage in 
 Mr. Mill's Elements of Political Economy. 
 
 ** To say, indeed, that the value of commo- 
 dities depends upon capital as the final stan- 
 dard, implies one of the most obvious of all 
 absurdities. Capital is commodities. If the 
 value of commodities, then, depends upon the 
 value of capital, it depends upon the value of 
 commodities ; the value of commodities depends 
 upon itself. This is not to point out a standard 
 of value. It is to make an attempt for that 
 purpose clearly and completely abortive'^." 
 
 * Elements of Political Economy, p. 94, 2(1 edition. 
 
OF VALUE. 203 
 
 This passage, which seems to have a tacit 
 reference to the speculations of Col. Torrens, 
 appears to me to show the power of words 
 over the clearest and strongest minds. By the 
 potent magic of a term, the value of commo- 
 dities is first made something single and indi- 
 vidual ; and then it follows of course, that an 
 individual thing cannot depend upon itself as a 
 cause. But this is not asserted by those who 
 contend that capital causes or determines value. 
 The value of commodities may not be capable 
 of depending on itself, but the value of one 
 commodity, which is one thing, may very easily 
 depend on that of another, which is a different 
 thing ; and if it did not in point of fact, there 
 would be no logical absurdity in asserting it. 
 He who maintains that the mutual value of two 
 commodities is chiefly determined by the com- 
 parative quantity of capital expended in their 
 production, undoubtedly maintains that it is de- 
 termined by the value of preceding commodities; 
 and this is quite consistent with the value of 
 those preceding commodities having been de- 
 
204 ON THE CAUSES 
 
 termined by their comparative quantities of pro- 
 ducing labour, or by any other cause. The 
 latter would be a step further back in the se- 
 quence of causes and effects. There can be 
 nothing absurd in assigning one thing as the 
 proximate cause of an effect, merely because it 
 is possible that another may be assigned as its 
 remote cause. 
 
 Mr. Mill's language, too, is unusually lax. 
 He confounds the standard with the cause of 
 value. The proposition, that the values of com- 
 modities are determined by the capitals ex- 
 pended in producing them, affirms a cause, but 
 certainly does not point out any standard of 
 value ; nor would Mr. Mill's own doctrine fur- 
 nish such an auxiliary. A standard, whatever 
 meaning it may have in this connection, must 
 at all events be something clearly defined and 
 easily accessible; and if Mr. Mill purposes to 
 set up the quantity of labour in a commodity 
 from first to last, through all its various meta- 
 morphoses, in that capacity, it will be one 
 seldom within his reach. In reality, however, 
 
OF VALUE. 205 
 
 the preceding part of his section is occupied in 
 proving labour to be the cause of value ; and it 
 is only at the conclusion that he deviates into 
 this laxity of expression*. 
 
 It appears, therefore, that if we do not aim at 
 undue generalization, but are content with a 
 simple statement of facts, the value of objects, 
 in the production of which competition operates 
 without restraint, may be correctly stated to 
 arise principally from the cost of production ; 
 and that cost of production may be either la- 
 bour or capital, or both. Whatever the mere 
 labourer produces costs him his labour: if a 
 man is a capitalist as well as a labourer, what 
 
 * In the second edition of his Elements, Mr. Mill himself, 
 in the section succeeding that containing the passage here 
 animadverted upon, has distinctly pointed out the diflFerence 
 between what he calls " the regulator," and the measure of 
 value, and has mentioned two circumstances which, he 
 says, render it impossible that the former should be era- 
 ployed in the latter capacity. It is therefore surprising 
 that he should have retained a passage, which confounds 
 what he has subsequently taken express pains to distin- 
 guish. 
 
206 ON THE CAUSES 
 
 he produces costs him both : if he is only a 
 capitalist, it costs him only capital. In a civi- 
 lized country instances of each kind may be 
 found, but the mass of commodities are de- 
 termined in value by the capital expended upon 
 them. 
 
 The amount of capital is thus the chief, but 
 by no means the sole cause of value. Other 
 circumstances vs^hich have a regular influence, 
 cannot v^ith any propriety be excluded. The 
 discredit, the danger, the disagreeableness of 
 any method of employing capital, all tend, as 
 vs^ell as pecuniary expenditure, to enhance the 
 value of the product. The time, too, which 
 a commodity requires before it can be brought 
 to market, is another circumstance affecting va- 
 lue, and frequently to a considerable extent. 
 It would be an extraordinary phenomenon, in- 
 deed, if, in the interchange of commodities, the 
 minds of men should be influenced by one ex- 
 clusive consideration: if, imbued as thev are 
 with feelings of shame, and fear, and impa- 
 tience, and others not necessary to enumerate, 
 
OF VALUE. 207 
 
 these passions should leave no regular traces of 
 their operation in the daily business of produc- 
 tion and exchanofe. 
 
 I have hitherto been contending, that even if 
 capital could be resolved into previous labour, 
 it would still be a correct statement of facts to 
 say, that the value of commodities is chiefly 
 determined by the capital expended upon them. 
 It is an interesting inquiry, however, how far 
 this doctrine, which we have taken for granted, 
 is true, and I shall therefore proceed to ex- 
 amine its claims to be received in that cha- 
 racter. 
 
 It is manifest that if the unqualified doctrine, 
 as laid down by some writers, were correct, the 
 value of any commodity would be strictly re- 
 presentative of the quantity of labour expended 
 on its production from first to last. " If," as 
 Mr. Mill expresses it, " quantity of labour in 
 the last resort, determines the proportion in 
 which commodities exchange for one another * ; " 
 
 * Elements of Political Economy, p. 94, 2d edition. 
 
208 ON THE CAUSES 
 
 or, as it is stated by the author of the Tem- 
 plars' Dialogues, " commodities are to each 
 other in value as the quantities of labour em- 
 ployed in their production*;" or, as it is laid 
 down by Mr. M^Culloch, '^ the exchangeable 
 value, or relative vy^orth of commodities, as 
 compared with each other, depends exclusively 
 on the quantities of labour necessarily required 
 to produce themf;" then it follows, that any 
 two commodities, which at any time exchange 
 for each other (putting aside all fluctuations 
 of market value), must have been produced by 
 exactly the same quantity of labour. If a 
 quarter of wheat is exchanged for a piece of 
 linen, these two commodities must have re- 
 quired the same labour to bring them to the 
 condition in which they are exchanged:}:. 
 
 * Dialogue 1, passim. 
 
 t A Discourse on the Science of Political Economy, 
 p. 66. 
 
 X This is stated in the strongest conceivable terms by the 
 second-mentioned writer. " No cause can possibly aflfect 
 the value of any thing, i. e. its exchangeable relation to 
 
OF VALUE. 209 
 
 Now this cannot be true if we can find any 
 instances of the following nature : 
 
 1. Cases in which two commodities have been 
 produced by an equal quantity of labour, 
 and yet sell for different quantities of money. 
 
 2. Cases in which two commodities, once equal 
 in value, have become unequal in value, 
 without any change in the quantity of labour 
 respectively employed in each"*^. 
 
 Cases of the first kind are exceedingly nu- 
 merous. Every one at all acquainted with ma- 
 nufactures must know, that there are in the 
 same, as well as in different occupations, va- 
 rious degrees of skill and rapidity of execution 
 
 other thing's, but an increase or diminution of the quantity 
 of labour required for its production : and the prices of all 
 things whatsoever represent the quantity of labour by which 
 they are severally produced ; and the value of a is to the 
 value of B universally as the quantity of labour which pro- 
 duces A to the quantity of labour which produces b." — 
 London Magazine, April 1824, p. 352. 
 
 * This last case is resolvable into the first, but the sub- 
 ject will be better illustrated by keeping them distinct. 
 
 P 
 
210 ON THE CAU.SES 
 
 amongst artizans, various kinds and gradations 
 of talent and acquirement, which enable some 
 of them to earn double the money obtained by 
 their less fortunate compeers in the same time. 
 There are also circumstances of insalubrity, or 
 disagreeableness, or danger, which affect the 
 pecuniary recompense. The value of the ar- 
 ticles produced by these various classes of 
 workmen, and under these various circum- 
 stances, bears no proportion to the mere quan- 
 tity of labour expended. It is no answer to 
 this to say, with Mr. Ricardo, that " the esti- 
 mation in which different qualities of labour 
 are held, comes soon to be adjusted in the 
 market with sufficient precision for all practical 
 purposes;" or with Mr. Mill, that " in esti- 
 mating .equal quantities of labour, an allow- 
 ance would, of course, be included for different 
 degrees of hardness and skill." Instances of 
 this kind entirely destroy the integrity of the 
 rule. Difference of skill is a circumstance 
 which practically affects value, as well as dif- 
 ference in quantity of labour, and therefore the 
 
OF VALUE, 211 
 
 latter cannot, with any propriety, be said to be 
 the sole cause of value. 
 
 What should we think of an assertion, that 
 coats are to each other in value as the quanti- 
 ties of cloth contained in them, or that their com- 
 parative value depends exclusively on the quan- 
 tities of cloth required to make them ? And if 
 it were added, that due allowances must be 
 made for the different qualities of the cloth, 
 where would be the truth or the utility of the 
 first mathematically strict position ? The pro- 
 position would, in fact, be reduced to its nega- 
 tive, that coats are not to each other in value 
 as the quantities of cloth contained in them. 
 
 In Mr. Ricardo's language on the subject of 
 the different qualities of labour, there is some 
 inconsistency and much indistinctness. The 
 second section of his first chapter is headed, 
 " Labour of different qualities differently re- 
 warded. This no cause of variation in the re- 
 lative value of commodities." By this it is to 
 be presumed he means, not what the words 
 really imply, that the different compensation 
 
 p 2 
 
212 ON THE CAUSES 
 
 given to labour of different qualities does not 
 originally affect the value of commodities, but 
 that when the influence of this cause is once 
 adjusted, it subsequently occasions no variation 
 in value. In the body of the section, however, 
 he softens this expression into " inconsiderable 
 variation." '' We may fairly conclude," says 
 he, *' that whatever inequality there might ori- 
 ginally have been in them, whatever the in- 
 genuity, skill, or time necessary for the ac- 
 quirement of one species of manual dexterity 
 more than another, it continues nearly the same 
 from one generation to another ; or at least that 
 the variation is very inconsiderable from year 
 to year, and therefore can have little effect for 
 short periods, on the relative value of commo- 
 dities." 
 
 It is, ?iowever, a mere assumption, that " the 
 scale, when once formed, is liable to little va- 
 riation ; " nor, if this could be established, would 
 it furnish any aid to the doctrine which we 
 have at present under consideration. If the dif- 
 ferences of skill in different employments are so 
 
OF VALUE. 213 
 
 little variable as here represented, it proves 
 only that they are circumstances which perma- 
 nently affect value, and that it must be alto- 
 gether incorrect to designate quantity of labour 
 the sole cause, when quality of labour is so 
 steady in its effects. This cause of value is, in 
 fact, on precisely the same footing as any 
 other. A variation in it, small or great, would 
 occasion a corresponding variation in the value 
 of the article on which the labour was em- 
 ployed ; and however inconsiderable its effects 
 may be, they cannot be consistently either 
 denied or overlooked. The whole of the sec- 
 tion appears to have been dictated by a lurking 
 impatience of any thing which seemed to break 
 into the beautiful simplicity of the iiile, that 
 value is determined by quantity of labour. Else 
 why not freely allow the exceptions wherever 
 they occur, and qualify the expression of the 
 general rule accordingly*?" 
 
 * The only place in Mr. Ricardo's work, where I have 
 been able to find the expression of the general rule pro- 
 
214 ON THE CAUSES 
 
 But the most singular circumstance in this 
 section is, that it unsettles all our notions re- 
 specting quantity of labour itself. The grand 
 principle of Mr. Ricardo's work, which seemed 
 as precise and definite as it could be, the doc- 
 trine that quantity of labour is the cause of 
 value, which appeared to be fast anchored in 
 the understanding, is unloosed from its moor- 
 ings. We are here told of " the difficulty of 
 comparing an hour's or a day's labour in one 
 employment with the same duration of labour 
 in another." The language of Adam Smith is 
 quoted, to show ^' that it is often difficult to 
 ascertain the proportion between two different 
 quantities of labour. The time spent in two 
 different sorts of work will not always determine 
 this proportion." 
 
 If this be true, then quantity of labour has no 
 determinate criterion, and Mr. Ricardo has 
 
 perly qualified, is the Index He there says, '* the quan- 
 tity of labour requisite to obtain commodities the principal 
 source of their exchangeable value." 
 
OF VALUE. 215 
 
 proposed, not only as the cause but the measure 
 of value, that which is itself ,unascertainable. 
 There are only two possible methods of com- 
 paring one quantity of labour with another ; 
 one is to compare them by the time expended, 
 the other by the result produced. The former 
 is applicable to all kinds of {abour; the latter 
 can be used only in comparing labour bestowed 
 on similar articles. If therefore, in estimating 
 two different sorts of work, the time spent will 
 not determine the proportion between the 
 quantities of labour, it must remain undeter- 
 mined and undeterminable. 
 
 2. We are furnished with cases of the second 
 kind (namely, those in which two commodities, 
 once equal in value, have become unequal in 
 value without any change in the quantity of la- 
 bour respectively employed in aech) by Mr. Ri- 
 cardo himself. 
 
 Take any two commodities of equal value, 
 A and B, one produced by fixed capital and the 
 other by labour, without the intervention of ma- 
 chinery ; and suppose, that without any chano-e 
 
216 ox THE CAUSES 
 
 whatever in the fixed capital or the quantity 
 of labour, there should happen to be a rise in 
 the value of labour; according to Mr. Ricardo's 
 own showing, a and B would be instantly al- 
 tered in their relation to each other ; that is, 
 they would become unequal in value. At the 
 former period being equal in value, they must, 
 according to the doctrine under consideration, 
 have been the products directly or indirectly of 
 equal quantities of labour ; but if at the latter 
 period their values were taken as repre- 
 sentative of the relative quantity of labour ex- 
 pended on each, the result obtained would be, 
 that they were the products of unequal quantities 
 of labour. The doctrine, therefore, that the 
 values of commodities are representative of the 
 respective quantities of labour required for 
 their production, which is a direct corollary 
 from the proposition that commodities are to 
 each other in value as is their producing labour 
 in quantity, cannot possibly be true. 
 
 This again, it may be said, is allowed by 
 Mr. Ricardo and his followers-, but if they 
 
OF VALUE. 217 
 
 allow it, why persist in calling quantity of la- 
 bour the sole determining principle of value ? 
 Why attempt to give the science an air of sim- 
 plicity which it does not possess ? 
 
 To these cases we may add the effect of 
 time on value. If a commodity take more time 
 than another for its production, although no 
 more capital and labour, its value will be greater. 
 The influence of this cause is admitted by 
 Mr. Ricardo, but Mr. Mill contends, that time 
 can do nothing; " how then," he asks, *' can 
 it add to value?'' "Time," he continues, ^-'is a 
 mere abstract term. It is a word, a sound. 
 And it is the very same logical absurdity to 
 talk of an abstract unit measuring value, and of 
 time creating it*." 
 
 The alleged absurdity, however, will disap- 
 pear, if we recur for a moment to the mental 
 operation implied in every creation of value. 
 The time necessary to produce a commodity, 
 
 * Elements of Pol. Econ. p. 99, 2d edition. The cre- 
 dit of this argument, however, is due to Mr. M'Culloch, 
 whose authority is cited by Mr. Mill. 
 
218 ON THE CAUSES 
 
 may, equally with the requisite quantity of la- 
 bour, be a consideration which influences the 
 mind in the interchange of useful or agreeable 
 articles. We generally prefer a present pleasure 
 or enjoyment to a distant one, not superior to it 
 in other respects. We are willing, even at 
 some sacrifice of property, to possess ourselves 
 of what would otherwise require time to pro- 
 cure it, without waiting during the operation ; 
 as of what would require labour, without 
 personally bestowing the labour. If any arti- 
 cle were offered to us, not otherwise attainable, 
 except after the expiration of a year, we should 
 be willing to give something to enter upon pre- 
 sent enjoyment. On the part of the capitalist, 
 who produces and prepares these articles, the 
 time required for the purpose is evidently a 
 consideration which acts upon his mind. If the 
 article is wine, he knows that the quality is im- 
 proved by keeping; he is aware that the same 
 excellence cannot be imparted to any wine, 
 without the employment of capital for an equal 
 period ; and that people will be found to give 
 
OF VALUE. 219 
 
 him the usual compensation rather than employ 
 their own capitals in producing a similar re- 
 sult. Thus time is really a consideration which 
 may influence both buyers and sellers; nor is it 
 necessary here to enter into any metaphysical 
 inquiry into its nature in order to prove its 
 effects. 
 
 The author of the Elements of Political 
 Economy has made a curious attempt to re- 
 solve the effects of time into expenditure of la- 
 bour. " If," says he, '' the wine which is put 
 in the cellar is increased in value one tenth by 
 being kept a year, one tenth more of labour may 
 be correctly considered as having been expended 
 
 upon it*." 
 
 Now if any one proposition can be affirmed 
 without dispute, it is this, that a fact can be 
 correctly considered as having taken place only 
 when it really has taken place. In the instance 
 adduced, no human being, by the terms of the 
 supposition, has approached the wine, or spent 
 upon it a moment or a single motion of his 
 * Elements, p. 97, 2d edition. 
 
220 ON THE CAUSES 
 
 muscles. As therefore no labour has been 
 really exercised in any way relating to the wine, 
 a tenth more of labour cannot be correctly con- 
 sidered as having been expended upon it, un- 
 less that can be truly regarded as having oc- 
 curred which never happened. 
 
 Doctrines of this kind, which attempt to re- 
 duce all phenomena to a uniform expression, 
 ought to be rigidly scrutinized. In the present 
 instance, the eminent writer just quoted ap- 
 pears to have been seduced by a preceding false 
 generalization, that, namely, which designates 
 capital as accumulated or hoarded labour. This 
 is at best an aukward mode of expression, which 
 can answer no good purpose. When we accu- 
 mulate we add one thing to another, and it is 
 essential to the process, that both should re- 
 main in existence. But labour, consisting in 
 the mere exertion of muscular power, or in the 
 equally evanescent motions of the brain, con- 
 tinually perishes in detail, and therefore admits 
 of no accumulation. It may be alleged, ne- 
 vertheless, that when a series of days' labour 
 
OF VALUE. 221 
 
 has been bestowed on any article, we may 
 fairly say that there has been an accumulation 
 of labour ; one day's labour has been added to 
 another day's labour till they have amounted to 
 a given number, suppose, for example, a hun- 
 dred. The only accumulation here, however, 
 is not an actual but an arithmetical one, and 
 admitting the accuracy of the expression in this 
 sense, it amounts to this, that a hundred days' 
 labour is an accumulation of labour, not that 
 the article produced is accumulated labour. 
 The article produced is the result of labour, not 
 labour itself. To designate capital or commo- 
 dities by the term accumulated labour is to call 
 the effect an accumulation of the cause. 
 
 In a rhetorical declamation, in the com- 
 pressed and vigorous eloquence of a great mind 
 disclosing its own comprehensive views by a 
 few master strokes of expression, such an iden- 
 tification of cause and effect is often a positive 
 beauty. The " Knowledge is power" of Lord 
 Bacon, is felicitous and forcible: but in philo- 
 sophical discussion, phrases of this kind as 
 
222 ON THE CAUSES 
 
 grounds of reasoning, or as' correct expressions 
 of fact, mislead the mind intent on the pursuit 
 of truth ; and I have no fear, that to those who 
 are adequately aware of the importance of 
 words in all moral and political researches, the 
 objection, which I have urged to the language 
 under consideration, will either appear frivolous 
 or unfounded. 
 
 In this attempt to show that the value of ca- 
 pital cannot be traced entirely to the quantity of 
 producing labour, I have taken into view those 
 commodities only, the production of which is 
 perfectly free to competition : and so far as we 
 have proceeded, the strictures, which I have 
 ventured to offer, apply rather to the manner in 
 which the doctrine is asserted than to any thing 
 actually maintained by its supporters. But the 
 great defect of this theory is, its overlooking the 
 important fact, that capital consists, not only 
 of commodities of this class, but also of the 
 commodities belonging to the other two classes 
 of our enumeration. To assert, that the value 
 of capital may be resolved into quantity of la- 
 
OF VALUE. 223 
 
 hour, is to lose sight both of the modifications 
 generally admitted, and, what is of far greater 
 moment, of causes which extend themselves in 
 every direction through the mass of exchange- 
 able products. 
 
 It must be recollected, that although we have 
 arranged commodities under three divisions, 
 yet they are all, not only promiscuously ex- 
 changed for each other, but blended in pro- 
 duction. A commodity, therefore, may owe 
 part of its value to monopoly, and part to those 
 causes which determine the value of unmono- 
 polized products. An article, for instance, may 
 be manufactured amidst the freest competition 
 out of a raw material, which a complete mono- 
 poly enables its producer to sell at six times the 
 actual cost ; and the quantity of the raw mate- 
 rial necessary might be so proportioned to the 
 quantity of labour required to work it up, that 
 they would equally contribute to the value of 
 the finished fabric. In this case it is obvious, 
 that although the value of the article might be 
 
224 ON Tin: CAUSES 
 
 correctly said to. be determined by the quantity 
 of capital expended upon it by the manufac- 
 turer, yet no analysis could possibly resolve 
 the value of the capital into quantity of labour. 
 Nor must it be supposed that is this a case of 
 rare occurrence. In scarcely any instance could 
 the value of capital be traced to the quantity of 
 labour as its only source, liable as every process 
 of production is to the intrusion of articles de- 
 riving their value from other causes. 
 
 Hence for those economists, v^ho object to the 
 doctrine of the value of commodities being chiefly 
 determined by the quantity of capital expended 
 in their production, that it does not satisfy the 
 whole of the inquiry, since they want to know 
 what has determined the value of the capital, 
 the answer is easy. The value of the capital 
 was probably determined by the value of pre- 
 ceding capital, which was in its turn deter- 
 mined by preceding capital in the same manner. 
 Does any one ask, what determined the value of 
 the first of these capitals, trace them as far 
 
OF VALUE. 225 
 
 back as we will ? I answer, perhaps monopoly, 
 perhaps the quantity of labour, or perhaps the 
 value of labour ; or possibly some combination 
 of these. 
 
 Let us take, for example, a piece of linen. 
 The value of this has been proximately deter- 
 mined by the capital expended in its manufac- 
 ture. The capital expended consisted, we will 
 suppose, of food for the workmen and flax as 
 the material. We have then to inquire what 
 has caused the value of the food and the flax ; 
 and we mio^ht find it to be owins; to the labour 
 expended in raising it, or more probably to a 
 monopoly possessed by the owners of land. In 
 the former case it may be urged, the value of 
 the capital is ultimately resolvable into the 
 quantity of producing labour; and not the less 
 so in the latter, since the value of the produce 
 grown on superior soils is determined by the 
 value of that grown on lands not coming mider 
 any description of monopoly, or in other words 
 paying no rent. But it does not follow in the 
 first case, that the value of the produce should 
 
 Q 
 
226 ON THE CAUSES 
 
 have been determined by the mere quantity of 
 labour : it may have been affected by the value 
 of that labour, since the skill of those con- 
 cerned in raising it may have been better paid 
 than in other employments, or have done the 
 work with half the usual number of hands, or 
 there may be some peculiarity of hardship, aris- 
 ing from the nature of the employment itself. 
 In the second case, if the value of produce 
 from a superior soil is regulated by the quantity 
 of labour necessary to raise the same kind on 
 inferior soils, it is not determined by the labour 
 actually employed in raising such produce, and 
 therefore the value of the produce is not resolv- 
 able into quantity of labour. 
 
 Hence it appears, that the value of capital 
 may possibly be traced to quantity of labour 
 as its origin, but it is not necessarily traceable 
 to it; and we therefore could not pronounce, 
 that because a and b are equal in value, these 
 two articles have been either directly or indi- 
 rectly the products of equal quantities of la- 
 bour, although no other circumstance existed 
 
OF VALUE. 227 
 
 to render such a conclusion erroneous. If two 
 samples of corn of equal quality, but from 
 different soils, were submitted to us, and we 
 were told that their prices were equal, we could 
 not pronounce with any certainty that they 
 were the results of equal labour. One might 
 have been produced by a fourth part of the 
 labour required for the other, and yet they are 
 of the same value. If gold and corn, or cloth 
 and corn, were compared in the same way, 
 there would be a similar impossibility of telling 
 that portions of these commodities of equal 
 value had been produced by equal quantities of 
 labour. 
 
 We shall now be prepared to take a general 
 survey of Mr. Ricardo's doctrine on the subject 
 of the causes of value, and estimate it at its 
 real worth. He commences by stating, that 
 '* commodities derive their exchangeable value 
 from two sources : from their scarcity, and from 
 the quantity of labour required to obtain them.' 
 Articles of the first kind he regards as compa- 
 ratively unimportant, and therefore professes to 
 
 q2 
 
228 ON THE CAUSES 
 
 restrict his inquiries to " such commodities only 
 as can be increased in quantity by the exertion 
 of human industry, and on the production of 
 which competition operates without restraint." 
 Instead, however, of confining himself to these 
 commodities, he enters into the consideration 
 of the value of labour, of corn, of gold, and 
 of other articles, in the production of which 
 competition certainly does not operate without 
 restraint ; but which he is obliged to bring un- 
 der that head, from the imperfect classification 
 with which he sets out. According to his own 
 division, the value of these things should be 
 determined by the quantity of labour necessary 
 to produce them: but of none of them can 
 this be asserted ; for the value of labour can in 
 no sense be said to be determined by the quan- 
 tity of labour necessary to produce it : the 
 value of corn in general is determined, on 
 his own principles, by the quantity of labour 
 required to raise corn on the worst soils in 
 cultivation, and not by the quantity of its own 
 producing labour; and in the same way the 
 
OF VALUE. 229 
 
 value of gold itself depends, not on the la- 
 bour necessary to produce every individual 
 portion of it, but on the labour necessary to 
 extract it from the least fertile mines that are 
 worked. 
 
 Mr. Ricardo did not, evidently, allow suf- 
 ficient importance to that source of value which 
 he calls scarcity; nor did he consistently bear 
 in mind, that it was the very same principle 
 which enabled the owner of land, or of mines, 
 of more than common fertility, to raise the 
 value of their articles beyond what would afford 
 the customary profit. Instead of scarcity, or, 
 in other words, monopoly, or protection from 
 competition, bemg ah unimportant source of 
 value, and the commodities which owe their 
 value to it forming a very small part of the 
 mass of commodities daily exchanged in the 
 market, we have seen that it is a most extensive 
 source of value, and that the value of many of 
 the most important articles of interchange must 
 be referred to this as its origin. 
 
 With regard to the causes of the value of 
 
230 ON THE CAUSES 
 
 these commodities, which are left in every way 
 perfectly free to competition, the practical truth 
 inculcated by Mr. Ricardo is this, that if the 
 quantity of labour necessary for the production 
 of a commodity is increased or decreased, it 
 rises or falls in value in relation to other com- 
 modities, of which the quantity of producing 
 labour is not altered. This, however, is a truth 
 not dependent on the quantity of labour being 
 the sole cause of value, but on its being one of 
 the causes. The same is true of every other 
 cause of value. Any effect is necessarily in- 
 creased if we increase any of its causes. 
 
 Mr. Ricardo, indeed, explicitly allows the 
 influence of other causes; such as time, differ- 
 ences in the proportion of fixed and circulating 
 capital, and inequalities in the durability of 
 capital, by which he admits the value of com- 
 modities is liable to be affected. Notwithstand- 
 ing these modifications, however, his followers 
 continue to lay down the position of quantity 
 of labour being the sole cause of value in the 
 most precise and positive terms ; not that they 
 
OF VALUE. 231 
 
 deny the exceptions, but they appear to lose 
 sight of their existence, and frequently fall into 
 language incompatible with their admission ; 
 while they altogether overlook the source of 
 value to be found in partial or incomplete mo- 
 nopolies, and the intermixture in production of 
 commodities which are indebted for their value 
 to different causes. 
 
 On a review of the subject it appears, that 
 economists attempt too much. They wish to 
 resolve all the causes of value into one, and 
 thus reduce the science to a simplicity of which 
 it will not adn:iit. They overlook the variety of 
 considerations operating on the mind in the 
 interchange of commodities. These considera- 
 tions are the causes of value, and the attempt 
 to proportion the quantities in which commo- 
 dities 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 
 
232 ON THE CAUSES OF VALUE. 
 
 an increase or diminution of any of them, an 
 increase or diminution of the effect. If 
 Mr. Ricardo, as his admirers allege, has really 
 enriched the science of political economy with 
 any new and important truths (a point which 
 this is not the place to decide), we may safely 
 pronounce that they are not inferences from the 
 doctrine, that the quantity of labour employed 
 in the production of commodities is the sole 
 determining principle of their value. It may be 
 affirmed, without any hazard of error, that 
 there is not one of them, whatever they may be, 
 which would not equally flow from the more 
 accurate proposition, that it is the principal 
 cause. A false simplification in matters of fact 
 can be of no service, and can only tend to per- 
 plex the mind of the inquirer by those perver- 
 sions of language, those distortions of expres- 
 sion, and those circuitous expedients of logical 
 ingenuity, which it unavoidably engenders. 
 
NOTES AND ILLUSTRATIONS. 
 
 NOTE A {page 38). 
 
 Mr. Ricardo introduces his notion of real value in a 
 somewhat obscure and indirect manner. 
 
 He gives us no formal preliminary definition or explana- 
 tion of the terra, and had not perhaps, at the outset, de- 
 fined it clearly in his own mind, although the idea seems to 
 have mingled itself with all his speculations. In the 
 opening of his book, the only kinds of value which he 
 points out are value in use and value in exchange, as dis- 
 tinguished by Adam Smith ; the latter of which is defined to 
 be the power of purchasing. At the third page, neverthe- 
 less, we find another kind of value introduced, without 
 comment or explanation, in an extract from the Wealth of 
 Nations. " The real price of every thing, what every 
 thing really costs to the man who wants to acquire it, is 
 the toil and trouble of acquiring it. What every thing is 
 reallj/ worth to the man who has acquired it, and who wants 
 to dispose of it, or exchange it for something else, is the 
 toil and trouble which it can save to himself, and which it 
 can impose upon other people." 
 
234 NOTES AND ILLUSTRATIONS. 
 
 In adopting this passage, however, Mr. Ricardo makes 
 no use of the new kind of value introduced to his readers, 
 and we hear nothing more of real value, till he applies 
 the epithet to the value of wages, in the sense men- 
 tioned in the text. See pages 11 and 12 of the Principles 
 of Pol. Econ. and Taxation, third edition. At page 15 
 he introduces another kind of value, which he terms " ab- 
 solute," in a sense which I have not been able to seize, 
 but this is only incidentally, and no consequences are de- 
 duced from it. At page 41 he says, " when commodities 
 varied in relative value, it would be desirable to have the 
 means of ascertaining which of them fell and which rose 
 in real value J*^ This appears to be the first passage in which 
 relative value and real value are fairly placed in contrast; 
 and we gather from it, that the value, which he calls real, 
 is not of a relative nature. We subsequently come to the 
 passage quoted in the text, wherein he uses the phrase real 
 value as synonymous with the quantity of labour and capi- 
 tal employed in producing a commodity : whence it follows, 
 that the real value of an object has no relation to the quan- 
 tity of any other object which it will command, but solely 
 to the cost of production, or rather it is the cost of pro- 
 duction itself. If the cost of production is always the 
 same, the real value is always the same. 
 
 It may perhaps be contended, that Mr. Ricardo had a 
 right to use the term real value in any sense he chose, and 
 that all which could be required of him was consistency in 
 
NOTES AND ILLUSTRATIONS. 235 
 
 its employment. Conceding this for the sake of argument, 
 we may yet remark, that it is an apologfy inapplicable in the 
 present case, because he had already given us his defini- 
 tion of value, and was therefore bound to adhere to it, by the 
 very principle here supposed to be offered in extenuation. 
 
 If he had a right to use the term in any sense he pleased, 
 he had no right to destroy the essence of his own defini- 
 tion by an epithet annexed to the term defined. His defi- 
 nition of the term, as the power of purchasing, makes it 
 essentially relative to something to be purchased, and it is 
 annihilating his own meaning to transmute value, by the 
 force of an epithet, into something in which no relation of 
 this kind is implied. 
 
 It may still possibly be urged, that Mr. Ricardo is not 
 liable to the charge of having deviated from his definition of 
 value, that he has strictly adhered to one meaning, and that 
 the term real has not the neutralizing effect here assigned 
 to it. If this were true, we might of course substitute the 
 definition for the term, which w^oiild yield some curious re- 
 sults. The real value of an object in this case must be 
 its real power of purchasing or commanding other objects 
 in exchange ; and we have already seen, that a power of 
 commanding in exchange can be expressed only by a quan- 
 tity of the commodity commanded. What then is the com- 
 modity in which real value can be expressed ? Mr. Ricardo 
 tells us, that the value of a thing in money, hats, coats, or 
 corn, is only nominal value. In what commodity then shall 
 
236 NOTES AND ILLUSTRATIONS. 
 
 we express real value ? His answer must be, in none. This 
 illustration is itself suflScient to show, that Mr. Ricardo's 
 notion of real value is totally irreconcilable and incompa- 
 tible with his previous definition of the only kind of value 
 of which he professes to treat. The argument is short 
 and conclusive : value, as the power of purchasing, can be 
 expressed only by a quantity of the commodity to be pur- 
 chased — real value cannot be so expressed — therefore 
 value and real value are used in senses incompatible and 
 contradictory. 
 
 In a foot-note to the text we have stated, that real value, 
 as used by jVfr. Ricardo, has no relation to any commodity 
 unless it be to an imaginary one ; namely, a commodity 
 produced by an invariable quantity of labour. But it must 
 be observed, that if we had such a commodity, it would 
 still not enable Mr. Ricardo or any body else to furnish an 
 expression of real value ; it would only enable him to ex- 
 press a variation in real value. For suppose gold to be 
 such a commodity, and take any point of time, for exam- 
 ple A. D. 1600 : suppose further, an object a to be worth 
 at that period so much gold, so much corn, so much cloth : 
 in this case, the value of a in gold would have no more 
 claim to the title of real value (even on Mr. Ricardo's or 
 any other person's theory) than its value in corn or cloth. 
 But we next compare the value of a in gold, corn, and 
 cloth, in the year 1800, and we find that it is worth only half 
 as much gold, although worth as much corn as before, 
 
NOTES AND ILLUSTRATIONS. 237 
 
 and worth more cloth. Here then, according to Mr. Ri- 
 cardo's doctrine, a has fallen to half its former real value, 
 because worth only half as much gold, which by the suppo- 
 sition is invariable in real value. But although we can 
 tell how much a has fallen in real value, we are no nearer 
 obtaining an expression of real value than we were before. 
 Still the value of a in gold would be no more its real value, 
 than the value of a in corn or cloth. Hence it is plain, 
 that real value, in Mr.Ricardo's sense, is not value in rela- 
 tion to any commodity whatever : conseciuently it does not 
 mean power of purchasing, and Mr. Ricardo has used the 
 word value, when coupled with the epithet real, in an ac- 
 ceptation which excludes the whole of his own defi- 
 nition. 
 
 The same remarks will apply to Mr. IMalthus's notion of 
 absolute value. " If we could suppose," says he, *' any ob- 
 ject always to remain of the same value, the comparison of 
 other commodities with this one would clearly show which 
 had risen, which had fallen, and which had remained the 
 same. The value of any commodity, estimated in any mea- 
 sure of this kind, might with propriety be called its absolute 
 or natural value," &c. &c. — The Measure of lvalue stated 
 and illustrated, page 2. 
 
 To pass over the inconsistency already exposed, of sup- 
 posing a commodity to remain of the same value, and to 
 take it as implying constancy in the circumstances of its 
 production, it is evident, that, at an assigned period, the 
 
238 NOTES AND ILLUSTRATIONS. 
 
 value of any commodity a, in this invariable commodity 
 which we may term x, would have no more right to the ap- 
 pellation of real value than the value of a in any other com- 
 modity. Assume another period, and the same remark 
 would be applicable : if commodities had varied in the cir- 
 cumstances of their production, the change in their value 
 to X would show such variation, which Mr. Malthus calls a 
 variation in their absolute value, but still their value in x 
 would not be absolute value, in Mr. Malthus's sense, any 
 more than their value in B, C, or D. 
 
 It is to be remarked, that Mr. Ricardo is any thing but 
 consistent in the use of the term under consideration, or 
 of the doctrine which it implies. 
 
 In fact, the more I examine his writings, the more I am 
 convinced that he had not formed any clear notions on the 
 subject, that there was a radical confusion in his views 
 regarding it. 
 
 It is only occasionally that he intimates to his readers 
 that he is speaking of real value : in general he professes to 
 be speaking of " exchangeable value," sometimes of 
 " relative value," as contradistinguished from that which 
 is " absolute" and " real." 
 
 It is, in truth, curious to note the diflferent kinds of value 
 of which he speaks in the course of his speculations. The 
 following enumeration will show how far he is entitled to 
 credit for the precision of his language and ideas on this 
 subject. 
 
NOTES AND ILLUSTRATIONS. 239 
 
 Page 
 Value in use 1 
 
 Value in exchange, or exchangeable 
 
 value 1, 4. 
 
 Real Ditto 11, 41, 50. 
 
 Absolute Ditto 15. 
 
 Relative Ditto 15,41. 
 
 Nominal Ditto 50. 
 
 Natural Ditto 80, 85. 
 
 If the view of the subject unfolded in these pages is at all 
 correct, all these epithets (except perhaps the last) may 
 be at once swept away. Even the adjunct exchangeable is 
 tautological, the term value implying in itself a relation in 
 exchange, or the power of commanding in exchange, and 
 consequently any epithet which merely expresses the same 
 idea being perfectly superfluous. The word, too, is ill 
 adapted to convey the meaning imposed upon it. It is 
 easy to understand what an exchangeable commodity is ; a 
 commodity, namely, which is capable of being exchanged : 
 and this is the proper meaning of the epithet ; but what is 
 meant by an exchangeable value is not so clear. The words 
 import a value capable of being exchanged ; and although 
 it is possible to speak of exchanging the value of a for the 
 value of B without absolute absurdity, yet this is evi- 
 dently not the sense in which tlie epithet is employed. All 
 that is meant by it is value in exchange, and not value ca- 
 pable of being exchanged. The same epithet is sometimes 
 
240 NOTES AND ILLUSTRATIONS. 
 
 coupled with the term relation, in which case the impro- 
 priety is still more g-laring. It would be difl&cult for the 
 greatest ingenuity to find out any way in which the rela- 
 tion between two commodities can be capable of being ex- 
 changed. If it were permitted to introduce a new term, 
 perhaps the epithet exchan^ive might be useful to mark the 
 particular kind of relation which we are now obliged to 
 designate by the phrase " relation in exchange." The ex- 
 chanu^ive relation of a commodity would be less objection- 
 able than the exchangeable relation ; and if this term were 
 adopted, it would supply a deficiency which most writers 
 on political economy must have occasionally felt. 
 
 In the text, I have noticed the improper use of the 
 terms real and nominal value, in our English economists 
 only. The celebrated French writer, M. Say, commits 
 precisely the same error. 
 
 " If different commodities," says he, "have fallen in 
 different ratios, some more, others less, it is plain they 
 must have varied in relative value to each other. That 
 which has fallen, stockings for instance, has changed its 
 value relatively to that which has not fallen, as butcher's 
 meat; and such as have fallen in equal proportion, like 
 stockings and sugar in our hypothesis, have varied in real, 
 though not in relative value. — There is this difference be- 
 tween a real and a relative variation of price ; that the for- 
 mer is a change of value, arising from an alteration of the 
 charges of production ; the latter, a change arising from 
 
NOTES AND ILLUSTRATIONS. 241 
 
 an alteration of the ratio of value of one particular com- 
 modity to other commodities." — Treatise on Pol. Econ. 
 translated by C. R. Prinsep, book ii, chap. 3. 
 
 NOTE B (page 61). 
 
 The source of such barren and paradoxical proposi- 
 tions as are noticed in the text, is to be found in the 
 notion of real value ; and that notion being conceded as 
 a preliminary, these propositions logically follow from it. 
 We must look for the original fallacy therefore in the notion 
 itself, the intrinsic inconsistency of which has been already 
 sufficiently exposed. 
 
 NOTE C (page 70). 
 
 To avoid misconception it may be necessary to state, 
 that in this and the preceding chapter ic has been intended 
 simply to explain the nature of a rise in the value of labour 
 and a rise in profits, not the causes on which they depend, 
 or the way in which they actually take place. In main- 
 taining that there is no inconsistency in supposing a simul* 
 taneous rise of labour and of profits, I profess not to en- 
 ter into the question whether such a rise does ever or can 
 ever take place, but contend solely, that in cases of im- 
 proved productive power, the product might be so divided, 
 that the rate of profits should be increased, while the 
 value of labour was enhanced ; and that this would be ne- 
 
242 NOTES AND ILLUSTRATIONS. 
 
 cessarily the result, were the product divided in the way 
 described in tlie hypothetical case adduced by Mr. Ricardo. 
 
 NOTE D (page 103). 
 
 The universality of the supposition, that a commodity 
 must itself be invariable in order to serve as a measure of 
 value, will appear from the following extracts. 
 
 *' As a measure of quantity, such as the natural foot, 
 fathom, or handful, which is continually varying- in its own 
 quantity, can never be an accurate measure of the quantity 
 of other things ; so a commodity, which is itself continually 
 varying in its own value, can never be an accurate measure 
 of the value of other commodities. Equal quantities of 
 labour at all times and places, may be said to be of equal 
 value to the labourer. In his ordinary state of health, 
 strength, and spirits, in the ordinary degree of his skill 
 and dexterity, he must always lay down the same portion 
 of his ease, his liberty, and his happiness. The price 
 which he pays must always be the same, whatever may be 
 the quantity of goods which he receives in return for it. 
 
 Of these, indeed, it may sometimes purchase a greater 
 and sometimes a smaller quantity ; but it is their value 
 which varies, not that of the labour which purchases them. 
 
 At all times and places, that is dear which it is difficult 
 to come at, or which it costs much labour to acquire ; and 
 that cheap which is to be had easily, or with very little la- 
 bour. Labour alone, therefore, never varying in its own 
 
\ 
 
 NOTES AND ILLUSTRATIONS. 243 
 
 value, is alone the ultimate and real standard by which the 
 value of all commodities can at all times and places be es- 
 timated and compared." — Wealth of Nations, by Adam 
 S?nith, book i, chap. 5. 
 
 *' That money, therefore, which constantly preserves an 
 equal value, which poises itself, as it were, in a just equi- 
 librium between the fluctuating proportion of the value of 
 things, is the only permanent and equal scale by which value 
 can be measured." — An Inquiry into the Principles of 
 Pol. Econ., by Sir James Stuart, book iii, chap. 1. 
 
 " Incapacities of the Metals to perform the Office of 
 an invariable Measure of Value." — Ibid. Title to chap, iii, 
 book 3. 
 
 " As nothing can be a real measure of magnitude and 
 quantity, which is subject to variations in its own dimen- 
 sions, so nothing can be a real measure of the value of 
 other commodities, which is constantly varying in its own 
 value." — A71 Inquiry into the Nature and Origin of Pub- 
 lic Wealth, by the Earl of Lauderdale, page 25, second edit. 
 
 " Le principal caractere d'un mesure est d'etre inva- 
 riable. C'est en appliquant successivement une mesure 
 invariable a des quantit^s variable, qu'on peut se former 
 une id^e de leur rapports ; mais quand on applique une 
 mesure variable a des quantites qui le sont aussi, on n'ap- 
 prend rien. Une poignee, une coudee, ne sont pas des me- 
 sures propre a comparer les dimensions, puisqu'elles va- 
 rient dans chaque individu ; il en serait de m6me d'un nu- 
 
 r2 
 
244 NOTES AND ILLUSTRATIONS. 
 
 m^raire dont la valeur varierait, soit dans le mfime temps 
 dans diff^rens endroits, soit dans le m^me endroit dans dif- 
 f^rens temps ; il ne pourrait guere servir a mesurer d'au- 
 tres valeurs." — Coiirs D'Economie Politique, par Henri 
 Storch, Premifere Partie, liv. v, chap. 2. 
 
 " Silver is more valuable, when it will purchase a large 
 quantity of commodities, than when it will purchase a 
 smaller quantity. It cannot, therefore, serve as a mea- 
 sure, the first requisite of which is invariability." — A 
 Treatise on Pol. Econ., by J. B. Say, translated from the 
 French, by C, R. Prinsep, book i, chap. 21, 
 
 " When commodities varied in relative value, it would be 
 desirable to have the means of ascertaining which of them 
 fell and which rose in real value, and this could be eflfected 
 only by comparing them, one after another, with some in- 
 variable standard measure of value, which should itself be 
 subject to none of the fluctuations to which other commo- 
 dities are exposed." — Principles of Pol. Econ. and Taxa- 
 tion, by D. Ricardo, Esq., page 42, third edition. 
 
 " Labour, like all other commodities, varies, from its 
 plenty or scarcity compared with the demand for it, and 
 at different times, and in different countries, commands very 
 different quantities of the first necessary of life ; and fur- 
 ther, from the different degrees of skill, and of assistance 
 from machinery with which labour is applied, the products 
 of labour are not in proportion to the quantity exerted. 
 Consequently, labour, in any sense in which the term can 
 
NOTES AND ILLUSTRATIONS. 245 
 
 be applied, cannot be considered as an accurate and stan- 
 dard measure of real value in exchange." — Principles of 
 Pol. Econ., by Rcd. T. R. Malthus, page 125. 
 
 It is to be remarked, that in the preceding passage, Mr. 
 Malthus rejects labour as an accurate measure of value, 
 because it is not invariable. In his pamphlet on this sub- 
 ject he has altered his views, and maintains labour to be 
 an accurate measure, because it is invariable. In both 
 cases he proceeds equally on the doctrine, that invariable- 
 ness of value is necessary in a measure of value. 
 
 " A standard, by a reference to which we may ascer- 
 tain the fluctuations in the exchangeable power of other 
 things, must itself possess an exchangeable value fixed and 
 unalterable. 
 
 " Nothing can be an accurate measure of value, except 
 that which itself possesses an invariable value." — An Es- 
 say on the Production of Wealth, by R. Torrens, Esq., pages 
 56 and 59. 
 
 " There is no point so difficult to ascertain as a varia- 
 tion of value, because we have no fixed standard measure 
 of value ; neither nature nor art furnish us with a commo- 
 dity, whose value is incapable of change ; and such alone 
 would afford us an accurate standard of value." — Conver- 
 sations on Pol. Econ., by Mrs. Mnrcet, page 330. 
 
 " Money, that is, the precious metals in coin, serves prac- 
 tically as a measure of value, as is evident from what has 
 immediately been said. A certain quantity of the previous 
 
 L 
 
246 NOTES AND ILLUSTRATIONS. 
 
 metal is taken as a known value, and the value of other 
 things is measured by that value ; one commodity is twice, 
 another thrice the value of such a portion of the metal, and 
 so on. 
 
 " It is evident, however, that this can remain an accu- 
 rate measure of value only if it remains of the same 
 value itself. If a commodity, which was twice the value 
 of an ounce of silver, becomes three times its value ; we 
 can only know what change has taken place in the value of 
 this commodity, if we know that our measure is un- 
 changed." — Elements of Pol. Econ., by James Mill, Esq. 
 second edit., page 108. 
 
 " A standard is that which stands still, while other 
 things move, and by this means serves to indicate or mea- 
 sure the degree in which they have advanced or receded."^** 
 And a standard of value must itself stand still, or be sta- 
 tionary in value." — The Templars' Dialogues on Pol. 
 Econ., London Magazine, May 1824, page 558. 
 
 " That great desideratum in political economy, an uni- 
 form measure of value." — Observations on the Effects pro- 
 duced by the Expenditure of Govern?ne7it, by Wm. Blake ^ 
 Esq. 
 
 It will not be thought uninteresting to examine what no- 
 tions on the subject of a measure of value were enter- 
 tained by so clear a thinker as Locke. He considered, that 
 the value of commodities is determined by "the proportion 
 of their quantity to the vent ;" that the vent of money being 
 
NOTES AND ILLUSTRATIONS. 247 
 
 always " sufficient and more than enough,"— *' its quantity 
 alone is enough to regulate and determine its value, with- 
 out considering any proportion between its quantity and 
 vent, as in other commodities." Hence he argues, that so 
 long as the quantity of money in a country remains the 
 same, its value is invariable, and it will serve to measure the 
 varying value of other things. In his own words -— 
 
 '' IMoney, whilst the same quantity of it is passing up 
 and down the kingdom in trade, is really a standing mea- 
 sure of the falling and rising value of other things, in re- 
 ference to one another : and the alteration of price is truly 
 m them only. But if you increase or lessen the quantity 
 of money current in traffic, in any place, then the altera- 
 tion of value is in the money : and if, at the same time, 
 wheat keep its proportion of vent to quantity, money, to 
 speak truly, alters its worth, and wheat does not, though it 
 sell for a greater or less price than it did before. For 
 money, being looked upon as the standing measure of 
 other commodities, men consider and speak of it still as 
 if it were a standing measure, though, when it has varied 
 its quantity, it is plain it is not." 
 
 In this passage may be remarked the same error, that I 
 have pointed out in other economists, of supposing an al- 
 teration in value can take place in one commodity, while 
 the commodity compared with it remains the same; 
 " money alters its worth and wheat does not." Yet in the 
 subsequent paragraph, the sound sense of this profound 
 
248 NOTES AND ILLUSTRATIONS. 
 
 reasoner carried him to the truth, although into some ap- 
 parent inconsistency 5 for he adds, "But the value or 
 price of all commodities, amongst which money passing in 
 trade is truly one, consisting in proportion, you alter this, 
 as you do all other proportions, whether you increase one, 
 or lessen the other." — Considerations on the lowering of 
 Interest and raising the Value of Money. 
 
 It may he further remarked on the former of these pas- 
 sages, that, taking him on his own theory, the measure which 
 he describes, like the measures of other economists, would 
 not enable us to ascertain any variations of value, for these 
 are necessarily exhibited in the prices of commodities, but 
 would indicate in which commodities the changes origin- 
 ated. While money remained unaltered as to the causes 
 of value operating upon it, which it would do on his princi- 
 ples as long as it remained the same in quantity, all varia- 
 tions in the prices of commodities must necessarily pro- 
 ceed from alterations in the proportion between the quan- 
 tities of such commodities and their vent, and this is all 
 that, under the circumstances supposed, Mr. Locke's stand- 
 ing measure would show. 
 
 On reviewing this subject from first to last, it appears 
 to me, that nearly the whole of the vagueness, confusion, 
 and perplexity in which it has been involved, may be traced 
 to an unconscious vacillation between two distinct ideas. 
 There are evidently two senses in which the term measur- 
 ing value is employed, and it is the unconscious passing 
 
NOTES AND ILLUSTRATIONS. 249 
 
 and repassing from one to the other, which has been the 
 source of the mischief : one of these senses, and the only pro- 
 per sense, is, ascertaining the mutual value of two commo- 
 dities by their separate relations to a third ; the other is, as- 
 certaining, when two commodities have varied in value, in 
 which of them the variation has originated. The transition 
 from one of these ideas to the other is, I think, perceptible 
 in the doctrine examined in the text, that money is a good 
 measure of value for commodities at the same time, but not 
 for commodities at different times. In the first part of this 
 proposition, the term measure is used in the former sense, 
 and it is meant to assert, that the value of commodities to each 
 other is shown by their prices, or values in money. In 
 the latter part of the proposition, a transition is made to 
 the second meaning, and it is intended to say, that the 
 value of a commodity in money at different periods does 
 not show whether there has been any alteration in the cir- 
 cumstances of its production ; whether any variation in its 
 price has originated with it, or with the money in which 
 its value is expressed. If we do not suppose this transi- 
 tion to be made, but that one sense is rigidly adhered to, 
 the proposition is liable to all the objections brought 
 against it in the text. 
 
 It is probably the latter construction of the term measure, 
 under which invariableness has been so generally supposed 
 requisite. But this, as is shown in the course of the pre- 
 sent chapter, would not be invariableness of value, but in- 
 
250 NOTES AND ILLUSTRATIONS. 
 
 variableness of cost, or invariableness in the circumstances 
 of production ; and what would be measured by it would 
 be that cost, or those circumstances, and not value. 
 
 NOTE E (page 133). 
 
 The reasoning in the text shows, that on the supposition 
 that coramoditities were to each other in value as the quan- 
 tities of labour required to produce them, any commodity 
 produced by labour alone, however variable the quantity of 
 that labour, would enable us to ascertain all that Mr. Ri- 
 cardo regards as to be derived exclusively from a commo- 
 dity produced by an invariable quantity of labour ; pro- 
 vided a register were kept of the varying quantities of the 
 producing labour required. In both cases, the prices of 
 the standard (if we may so call it) at different periods, 
 would be equally necessary. In the one case, the circum- 
 stance of invariableness in the labour expended would 
 save the trouble of keeping such a register, and simplify 
 our calculations ; but in the other case, the result would be 
 attained, if not with equal ease, at least with equal cer- 
 tainty. 
 
 NOTE F {page 150). 
 
 The author of the Templars' Dialogues has also exa- 
 mined this table, but it appears to me that he has fallen 
 
NOTES AND ILLUSTRATIONS. 251 
 
 into some singular misconceptions of Mr. Malthus's mean- 
 ing. At least he has construed it differently from what it 
 is represented in the text, and consequently either he or 
 myself must be in error — possibly the latter. I can only 
 say, that I have been at pains to understand and scrupulous 
 not to misrepresent the scope of Mr. Malthus's argument. 
 At the same time I must confess, that with all the patient 
 attention which I have given to the speculations of the 
 latter, there are many parts of " The Measure of Value 
 stated and illustrated" which I am unable to comprehend. 
 
 NOTE G {page 15). 
 
 It is to be observed, that many writers consider mea- 
 suring and expressing value as the same thing. This is 
 directly maintained by M.Say, in the following passage. 
 
 " Quant a la mesure de la valeur de deux objets qui 
 sont en presence, leur deux valeurs se mesurent I'une par 
 I'autre. Si Ton a dix livres de ble pour une livre de cafe, 
 le cafe vaut dix fois autant que le ble ; et chacune de ces 
 choses est la mesure de I'autre. La monnaie n'a a cet 
 egard aucun privilege. Trente sous sont la valeur d'une 
 Jivre de cafe, et une livre de cafe marque la v.aleur des trentes 
 sous aussi bien que les diverses choses que Ton peut 
 acquerir avec cette monnaie." — Note in M. Say's Edition 
 (page 124, vol. i) of <' Cours d'Economie Politique, par 
 Henri Storch/' 
 
 It is not correct, however, to regard these two opera- 
 
252 NOTES AND ILLUSTRATIONS. 
 
 tions as identicaL To measure implies, either directly or 
 indirectly, the ascertainment of a ratio between two objects 
 by the intervention of a third. We say, it is true, that we 
 have measured the length of a building, when we have 
 found its ratio to a yard or a foot, but this is because the 
 length of other objects in feet is known to us, and there- 
 fore, when we have the length of the building in feet, we 
 have it in a common denomination : the ratio of the 
 building to the foot, determines its place in the common 
 scale ; or, in other words, determines its ratio to a variety 
 of other objects. We should scarcely consider the length 
 of a building to be measured, if its ratio was determined 
 only to a staff or rod, the length of which in relation to 
 any other object could not itself be ascertained. 
 
 In the same way, when we say the value of a commodity 
 A is measured when expressed in money, it is because we 
 know already the relations in value between money and a 
 variety of other commodities, and therefore the value of a 
 in money instantly determines its relation to all these ob- 
 jects. The idea of intermediation is still implied. But 
 although to express the value of a commodity in money 
 may thus be considered as equivalent to measuring it, we 
 could not with propriety apply the latter term to the ex- 
 pression of the value of a commodity in another commo- 
 dity of no known or ascertainable relation to any thing 
 else. 
 
 The following passage from one of Locke's able tracts on 
 
NOTES AND ILLUSTRATIONS. 253 
 
 raising- the value of money, so accurately describes the 
 only process which can be termed with propriety measur- 
 ing- value, that I cannot resist the temptation of inserting 
 it here in confirmation of my own views. 
 
 " By this measure of commerce, viz. the quantity of 
 silver, men measure the value of all other things. Thus to 
 measure what the value of lead is to wheat, and of either 
 of them to a certain sort of linen cloth, the quantity of 
 silver that each is valued at, or sells for, needs only be 
 known ; for if a yard of cloth be sold for half an ounce of 
 silver, a bushel of wheat for one ounce, and a hundred 
 weight of lead for two ounces ; any one presently sees and 
 says, that a bushel of wheat is double the value of a yard 
 of that cloth, and but half the value of an hundred weight 
 of lead." — Further Considerations concerning raising the 
 Value of Bloney. 
 
 NOTE H (page 158). 
 
 Many of the strictures which have been made on 
 Mr. Ricardo's writings, in this and other chapters, would 
 be in some degree obviated if two things were conceded, 
 namely, if we assumed that he was constantly speaking of 
 real value, and if we were to grant him the absurdity 
 which we have shown this expression to imply ; or, in other 
 words, if we were to consider it as importing cost of 
 production, without relation to the power of commanding 
 in exchange. But then, although some inconsistencies 
 
254 NOTES AND ILLUSTRATIONS. 
 
 "would by this means be obviated or explained away, we 
 should obtain in their place a number of others equally 
 irreconcilable, and also a series of unmeaning and identi- 
 cal propositions. For instance, the proposition that a 
 million of men always produced the same value, but not 
 the same riches, would be reduced to this, that what a mil- 
 lion of men produced always cost the labour of a million 
 of men : a = a. The truth appears to be, that the idea 
 of real value was seldom distinctly present to his mind, 
 although there was almost constantly an obscure reference 
 to it. 
 
 NOTE I {vage I78). 
 
 In speaking sometimes of a commodity produced by an 
 invariable quantity of labour as a measure, and sometimes 
 of the labour itself in that character, Mr. Ricardo has in 
 fact used the term in the two senses mentioned in note D, 
 and passed from one to the other without being conscious 
 of it. When he says, that a commodity produced by an 
 invariable quantity of labour would serve to measure the 
 variations of other things, his meaning, as we have before 
 shown, amounts to this, that such a commodity would serve 
 to indicate the variations in the cost of production, or pro- 
 ducing labour of other commodities. But to employ the 
 quantity of producing labour itself as a measure in this 
 sense would be endeavouring to ascertain what is already 
 
NOTES AND ILLUSTRATIONS. 255 
 
 presupposed. When, therefore, he affirms labour itself to 
 be a common measure of value, he makes a transition to 
 the other sense of the phrase, and means, that when the 
 quantities of labour respectively required to produce com- 
 modities are known, their values in relation to each other 
 are thereby determined. 
 
 This distinction, constantly borne in mind, would, I am 
 persuaded, throw great light upon the obscurity which 
 clouds many discussions in political economy, and clearly 
 show the source whence it has proceeded. 
 
 THE END. 
 
 LONDON : 
 
 PRINTED BY CHARLES WOOD. 
 Poppiii's Court, Fleet Street, 
 
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