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Smith that the money which I can obtain for my hat expresses only its nominal value, but that the labour which I can obtain for it expresses its real value,-I reply that the quantity of labour is no more any expression of the real value than the quantity of money: both are equally fallacious expressions, because equally equivocal. My hat, it is true, now buys me a quantity of labour,-and some years ago it bought only quantity of labour. But this no more proves that my hat has advanced in real value according to that proportion, than a double money price will prove it. For how will Adam Smith reply to him who urges the double money value as an argument of a double real value? He will say-No: non valet consequentia. Your proof is equivocal; for a double quantity of money will as inevitably arise from the sinking of money as from the rising of hats. And supposing money to have sunk to one-fourth of its former value, in that case a double money value-so far from proving hats to have risen in real value-will prove that hats have absolutely fallen in real value by one half; and they will be seen to have done so by comparison with all things which have remained stationary: otherwise they would obtain not double merely but four times the quantity of money price. This is what Adam Smith will reply in effect. Now the very same objection I make to labour as any test of real value. My hat now obtains a labour: formerly it obtained only one half of

x.

Be it so: but the whole real change may be in the labour: labour may now be at one half its former value: in which case my hat obtains the same real price; double the quantity of labour being now required to express the same value. Nay, if labour has fallen to onetenth of its former value,-so far from being proved to have risen 100 per cent. in real value by now purchasing double quantity of labour, my hat is proved to have fallen to one-fifth of its former value: else, instead of buying me only a labour, which is but the double of its former value (), it would buy me 5 x, or 10 times its former value.

Phil. Your objection then to the labour price as any better expression

of the real value than the money price-would be that it is an equivocal expression, leaving it doubtful on which side of the equation the disturbance had taken place, or whether on both sides. In which objection, as against others, you may be right: but you must not urge this against Adam Smith: because on his theory the expression is not equivocal: the disturbance can be only on one side of the equation, viz. in your hat. For as to the other side, the labour, that is secured from all disturbance by his doctrine that labour is always of the same value. When therefore your hat will purchase a quantity of labour instead of half x, the inference is irresistible-that your hat has doubled its value. There lies no appeal from this: it cannot be evaded by alleging that the labour may have fallen: for the labour cannot fall.

X. On the Smithian theory it cannot and therefore it is that I make a great distinction between the error of Adam Smith and of other later writers. He, though wrong, was consistent. That the value of labour is invariable-is a principle so utterly untenable, that many times Adam Smith abandoned it himself implicitly, though not explicitly. The demonstration of its variable value indeed follows naturally from the laws which govern wages; and therefore I will not here anticipate it. Meantime, having once adopted that theory of the unalterable value of labour, Adam Smith was in the right to make it the expression of real value. But this is not done with the same consistency by Mr. Malthus at the very time when he denies the possibility of any invariable value.

Phil. How so? Mr. Malthus asserts that there is one article of invariable value; what is more, this article is labour-the very same as that formerly alleged for such by Adam Smith: and he has written a book to prove it.

X. True, Philebus, he has done so; and he now holds that labour is invariable, supposing that his opinions have not altered within the last 12 months. But he was so far from holding this in 1820, at which time it was that he chiefly insisted on the distinction between nominal and real value, that he was not content with the true arguments against the pos

sibility of an invariable value but made use of one, as I shall soon show you, which involves what the metaphysicians call a non-ens-or an idea which includes contradictory and self-destroying conditions. Omitting however the inconsistency, in the idea of real value, as conceived by Mr. Malthus, there is this additional error engrafted upon the Smithian definition-that it is extended to "the necessaries and conveniences of life" in general, and no longer confined exclusively to labour. I shall therefore, as another case for illustrating and applying the result of our dispute,

ed and cleared up. That we shall not be able to determine from the mere money wages whether the laborers were "starving or living in great plenty"-is certain: and that we shall be able to determine this as soon as we know the quantity of necessaries, &c. which those wages commanded, is equally certain; for in fact the one knowledge is identical with the other, and but another way of expressing it: we must of course learn that the laborer lived in plenty, if we should learn that his wages gave him a great deal of bread, milk, venison, salt, honey, &c. And as there could never have been

any doubt whether we should learn this from what Mr. Malthus terms the real value, and that we should not learn it from what he terms the money value,-Mr. Malthus may be assured that there never can have been any dispute raised on that point. The true dispute is-whether, after having learned that the laborer lived in American plenty, we shall have at all approximated to the appreciation of his wages as to real value: this is the question: and it is plain that we shall not. What mat

2. Cite a passage from Mr. Malthus's Political Economy, p. 59. "If we are told that the wages of day-labour in a particular country are, at the present time, four-pence a-day, or that the revenue of a particular Sovereign, 700 or 800 years ago, was 400,000l. a-year; these statements of nominal value convey no sort of information respecting the condition of the lower class 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-ters it that his wages gave him a whether the labourers in the country mentioned were starving or living in great plenty; whether the king in question might be considered 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 estimated 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 denominated real value in exchange, implying the quantity of the necessaries and conveniences of life which those wages-incomes-or commodities will enable the possessor of them to command."

In this passage, over and above the radical error about real value, there is also apparent that confusion which has misled so many writers between value and wealth; a confusion which Mr. Ricardo first detect

great deal of corn, until we know whether corn bore a high or a low value? A great deal of corn at a high value implies wages of a high value; but a great deal of corn at a low value is very consistent with wages at a low value. Money wages, it is said, leave us quite in the dark as to real value. Doubtless: nor are we at all the less in the dark for knowing the corn wages-the milk wages-the grouse wages, &c. Given the value of corn, given the value of milk, given the value of grouse, we shall know whether a great quantity of those articles implies a high value or is compatible with a low value in the wages which commanded them: but, until that is given, it has been already shown that the quantity alone is an equivocal test - being equally capable of co-existing with high wages or low wages.

Phil. Why then it passes my comprehension to understand what test remains of real value, if neither

Hume very reasonably doubts the possibility of William the Conqueror's revenue being 400,000l. a-year, as represented by an ancient historian, and adopted by subse quent writers.-Note of Mr. Malthus.

money price nor commodity price expresses it. When are wages, for example, at a high real value?

X. Wages are at a high real value when it requires much labor to produce wages; and at a low real value, when it requires little labor to produce wages: and it is perfectly consistent with the high real value that the laborer should be almost starving; and perfectly consistent with the low real value-that the laborer should be living in great ease and comfort.

Phil. Well, this may be true: but you must allow that it sounds extravagant.

X. Doubtless it sounds extravagant to him who persists in slipping under his notion of value another and heterogeneous notion, viz. that of wealth. But, let it sound as it may, all the absurdities (which are neither few nor slight) are on the other side. These will discover themselves as we advance. Meantime 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 man's idea of value.

Phil. No, certainly; because A is of high value, it does not follow that it must purchase a great quantity : that must be as various as the nature of the thing with which it is compared. But having once assumed any certain thing, as B, it does seem to follow that-however small a quantity A may purchase of this (which I admit, may be very small -though the value of A should be very great), yet it does seem to fol

low from every body's notion of value that this quantity of B however small at first must continually increase, if the value of A be supposed continually to increase. X. This may "seem" to follow: but it has been shown that it does not follow for if A continually double its value, yet let B continually triple or quadruple its value, and the quantity of B will be so far from increasing that it will finally become evanescent. In short, once for all, the formula is this: let A continually increase in value, and it shall purchase continually more and more in quantity-than what? More than it did? By no means :-but more than it would have done, but for that increase in value. A has doubled its value. Does it therefore purchase more than it did before of B? No: perhaps it purchases much less; suppose only one-fourth part as much of Bas it did before: but still the doubling of A's value has had its full effect: for B has increased in value eight-fold; and, but for the doubling of A, it would instead of one-fourth have bought only one-eighth of the former quantity. A therefore, by doubling in value, has bought not double in quantity of what it bought before, but double in quantity of what it would else have bought.

The remainder of this dialogue related to the distinction between "relative" value, as it is termed, and "absolute" value: clearing up the true use of that distinction. But this being already too long, the amount of it will be given hereafter, with a specimen of the errors which have arisen from the abuse of this distinction.

DIALOGUE THE FIFTH.

On the immediate uses of the new theory of Value. X. The great law, which governs exchangeable value, has now been stated and argued. Next, it seems, we must ask-what are its uses? This is a question which you or I should not be likely to ask: for with what colour of propriety could a doubt be raised about the use of any truth in any science? still less, about the use of a leading truth? least of

all about the use of the leading truth? Nevertheless such a doubt has been raised by Mr. Malthus,

Phæd. On what ground or pretence?

X. Under a strange misconception of Mr. Ricardo's meaning. Mr. Malthus has written a great deal, as you may have heard, against Mr. Ricardo's principle of value: his pur

pose is to prove that it is a false principle: independently of which, he contends that even if it were a true principle-it would be of little use (vid. the foot-note to p. 54 of "The Measure of Value.")

Phæd. Little use? in relation to what?

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X. Aye, there lies the inexplicable mistake: of little use as a measure of value. Now this is a mistake for which there can be no sort of apology for it supposes Mr. Ricardo to have brought forward his principle of value as a standard or measure of value; whereas Mr. Ricardo has repeatedly informed his reader that he utterly rejects the possibility of any such measure: thus at p. 10, edit. 2d, after laying down the conditio sine quâ non under which any commodity could preserve an unvarying value, he goes on to say " of such a commodity we have no knowledge, and consequently are unable to fix on any standard of value." And again at p. 343 of the same edition, after exposing at some length the circumstances which disqualify "any commodity or all commodities together" from performing the office of a standard of value, he again states the indispensable condition which must be realized in that commodity which should pretend to such an office; and again he adds immediately-" of such a commodity we have no knowledge." But what leaves this mistake still more without excuse-is, that in the third edition of his book Mr. Ricardo has added an express section (the sixth) to his chapter on value, having for its direct object to expose the impossibility of any true measure of value. Setting aside indeed these explicit declarations, a few words will suffice to show that Mr. Ricardo could not have consistently believed in any standard or measure of value. What does a standard mean?

Phæd. A standard is that which stands still whilst other things move, and by this means serves to indicate or measure the degree in which they have advanced or receded.

X. Doubtless and a standard of value must itself stand still or be stationary in value. But nothing could possibly be stationary in value upon Mr. Ricardo's theory unless it were always produced by the same

quantity of labour: since any alteration in the quantity of the producing labour must immediately affect the value of the product. Now what is there which can always be obtained by the same quantity of labour? Raw materials, for reasons which will appear when we consider Rent, are constantly tending to grow dearer by requiring more labour for their production: manufactures, from the changes in machinery which are always progressive and never retrograde, are constantly tending to grow cheaper by requiring less: consequently there is nothing which upon Mr. Ricardo's theory can long continue stationary in value. If therefore he had proposed any measure of value, he must have forgotten his own principle of value.

Phil. But allow me to ask, if that principle is not proposed as a measure of value, in what character is it proposed?

X. Surely, Philebus, as the ground of value; whereas a measure of value is no more than a criterion or test of value. The last is simply a principium cognoscendi, whereas the other is a principium essendi.

Phil. But wherein lies the difference?

X. Is it possible that you can ask such a question? a thermometer measures the temperature of the air: that is, it furnishes a criterion for ascertaining its varying degrees of heat; but you cannot even imagine that a thermometer furnishes any ground of this heat. I wish to know 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 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 corn a day's labour would exchange for at each period, and I should then have determined the relations of value between labour at the two periods. In this case I should have used corn as the measure

of the value of labor: but I could not rationally mean to say that corn was the ground of the value of labor: and, if I said that I made use of corn to determine the value of labor, I should employ the word "determine" in the same sense as when I say that the thermometer determines the heat-viz. that it ascertains it, or determines it to my knowledge (as a principium cognoscendi). But, when Mr. Ricardo says that the quantity of labor, employed on A, determines the value of A,-he must

of course be understood to mean that it causes A to be of this value, that it is the ground of its value, the principium essendi of its value: just as when, being asked what determines a stone to fall downwards rather than upwards, I answer that it is the earth's attraction-or the principle of gravitation, meaning that this principle causes it to fall downwards, and if in this case I say that gravitation "determines" its course downwards, I no longer use that word in the sense of ascertain: I do not mean that gravitation ascertains it to have descended: but that gravitation has causatively impressed that direction on its course: in other words, I make gravitation the principium essendi of its descent.

Phad. I understand your distinction and in which sense do you say that Mr. Malthus has used the term Measure of Value; in the sense of a ground, or of a criterion?

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X. In both senses: he talks of it

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accounting for" the value of A, in which case it means a ground of value; and as "estimating' the value of A, in which case it means a criterion of value. I mention these expressions as instances: but the truth is that throughout his essay entitled "The Measure of Value Stated and Illustrated”—and throughout his Political Economy (but especially in the second chapter entitled "The Nature and Measures of Value"),

he uniformly confounds the two ideas of a ground and a criterion of value under a much greater variety of expressions than I have time to enumerate.

Phil. But, admitting that Mr. Malthus has proceeded on the misconception you state, what is the specific injury which has thence resulted to Mr. Ricardo?

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X. I am speaking at present of the uses to be derived from Mr. Ricardo's principle of value. Now, if it had been proposed as a measure of value, we might justly demand that it should be "ready and easy of application" to adopt the words of Mr. Malthus (Measure of Value, p. 54): but it is manifestly not so: for the quantity of labor employed in producing A "could not in many cases," (as Mr. Malthus truly objects) "be ascertained without considerable difficulty:" in most cases, indeed, it could not be ascertained at all. A measure of value however, which cannot be practically applied, is worthless as a measure of value, therefore, Mr. Ricardo's law of value is worthless and if it had been offered as such by its author, the blame would have settled on Mr. Ricardo: as it is, it settles on Mr. Malthus, who has grounded an imaginary triumph on his own gross misconception. For Mr. Ricardo never dreamed of offering it as a standard or measure of value, or of tolerating any pretended measure of that sort

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by whomsoever offered.

Thus much I have said for the sake of showing what is not the use of Mr. Ricardo's principle in the design of its author; in order that he may be no longer exposed to the false criticism of those who are looking for what is not to be found nor ought to be found* in his work. On quitting this part of the subject I shall just observe that Mr. Malthus, in common with many others, attaches a most unreasonable importance to the

At p. 36 of The Measure of Value" (in the foot-note) this misconception of Mr. Ricardo appears in a still grosser shape; for not only does Mr. Malthus speak of a "concession 99 (as he calls it) of Mr. Ricardo as being "quite fatal" to the notion of a standard of value-as though it were an object with Mr. Ricardo to establish such a standard; but this standard moreover is now represented as being gold. And what objection does Mr. Malthus make to gold as a standard? The identical objection which Mr. Ricardo had himself insisted on in that very page of the third edition to which Mr. Malthus refers.

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