O N   T H E   C A U S E S   O F   V A L U E .

IT may seem, that an inquiry into the 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 acquainted 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 [180] one hand, whether any circumstance assigned as a cause can be correctly admitted to rank under 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 adhering to external objects, or as a relation between 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 connected 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 circumstances 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 [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 effect to a cause, when perhaps we are unable to trace the exact series of changes occurring between them, or, in other words, the less prominent links in the chain of causes and effects by which they are separated in time, but connected in efficiency. In reference to the present subject, this may be easily illustrated. The equality in the cost of production of two articles, 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 indeed 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 exchange for linen. The matter would be abundantly plain, if, besides knowing what his own [182] 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 competition 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 [183] assignable influence, whether mediately or immediately, 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 circumstances 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 respectively operating upon the objects between which the relation exists. If A is equal in [184] value to B, this must be owing, not only to causes operating On A, but also to causes operating 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 circumstances which have fixed both of them in their particular situation, while an alteration of the distance between them might originate in circumstances 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 relations? Or, in other words, what are the causes which determine the quantities in which commodities are exchanged for each other ?

[185] In order to answer this question, it will be necessary to attempt some classification of exchangeable articles. Commodities, or things possessing value, may be divided into three classes,

  1. Commodities which are monopolized, or protected from competition by natural or adventitious circumstances.
  2. Commodities, in the production of which some persons possess greater facilities than the rest of the community, and which therefore the competition of the latter cannot increase, 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.

1. Monopolies may be divided into two kinds; those in which there is only one interest con-[186]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 excellence 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 abundance or scarcity of such produce, or as it may be in a rude or polished state*.”

The second kind of monopoly differs from [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 although it might be to the advantage of the whole body if the quantity of the monopolized article 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 monopolists. While on the one hand he is fenced in by an exclusive privilege or possession from the competition of the public, lie is on the other [188] 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 require 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 what is called by political economists market value. Should the relative demand for any of these commodities increase, as it could not, according to the supposition, be immediately answered by a correspondent supply, the possessors of the commodities would enjoy a temporary monopoly ; for a while they would be protected from competition by the impossibility of producing a further quantity.

On the contrary, should the relative demand [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 adjusted 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 competition amongst themselves would force the whole of their supply into the market.

Occurrences of this kind must not be considered 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 frequency and extent of excesses and deficiencies 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] the ensuing harvest; and as it is an article which cannot be dispensed with, should the supply be less than usually required, the price may rise to an almost indefinite height. If, on the contrary, the supply should exceed the ordinary demand, which from the nature of the commodity admits of little augmentation, the holders suffer the disadvantages before described; the interest of each lies in the disposal 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, individuals 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-[191]ploy his capital in production, he must purchase 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 commodity. 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 attended with the disadvantages 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 labourers naturally possess, and which may be advantageous or disadvantageous, according to [192] 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 before they are learned, the workmen are evidently protected from immediate competition; and should there be an increase in the demand for their work, their labour would rise in value, and remain enhanced till more artizans possessed of their peculiar skill had been formed.

It scarcely needs to be mentioned, in this place, that although labourers cannot be purposely 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, compared with commodities in general, enabling the labourers to live in abundance, marriages:are encouraged, 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-[193]duced as if men could be purposely created. On the other hand, a material fall in the value of labour operates to cheek population by the penury 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 embraces 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 industry 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 article having no assignable boundary, it will be limited by the watchful competition, which is [194] 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 confine our observations to the first.

The value of that corn which is produced on lands paying rent, is not, it is acknowledged, 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 [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 distance from the bottom, would effectually prevent 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 fertility 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 [196] extraordinary profit which is obtained by the possession of an instrument of production, protected up to a certain point from competition. If the owner of this instrument, instead of using it himself, lets it out to another, he receives from him this surplus of profit under the denomination of rent. In this view of the subject, the extraordinary profit might exist, although 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 capital and labour would be expended on soils of a subordinate order. Rent, therefore, might exist, while all the land tinder 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 extraordinary profit, and not the consequence of the cultivation of inferior soils.

The extraordinary profit out of which rent [197] arises, is analogous to the extraordinary remuneration which an artizan of more than common dexterity obtains beyond the wages given to workmen of ordinary skill. In so far as competition 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 extraordinary 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] corn or other produce, rent must be an accurate representation of the additional value consequent 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 considered as representing the share of the labourer, 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 nothing to monopoly; what then are the causes which determine the quantities in which they are exchanged for each other?

[199] There is, perhaps, at the bottom, little actual difference 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 immediate causes of value are the considerations which act on the minds of human beings, and that the circumstances, which form or furnish these considerations, must be the causes into which the economist has to inquire. Our present object, therefore, is to find those circumstances which act upon the mind with certainty and precision, in the interchange of commodities of the class under our notice.

A moment’s 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] to sell as large a quantity of his commodity as he can dispose of at the same price as his fellow producers.

It is not, indeed, disputed, that the main circumstance, 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 attached to this term; some contending that the quantity of labour expended on the production 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. [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 produces 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 production consists in the quantity of labour. It must be recollected, however, that we are inquiring 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 constituting the capital employed, but the amount of capital which they have parted with, in order to obtain 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] subject) into a previous quantity of labour, it would still be a correct statement of facts to say, that the 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 produced.

It is impossible, under this view of the subject, to agree with the following passage in Mr. Mill’s Elements of Political Economy.

“To say, indeed, that the value of commodities depends upon capital as the final standard, 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*.”

[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 commodities is first made something single and individual ; 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 comparative quantity of capital expended in their production, undoubtedly maintains that it is determined by the value of preceding commodities; and this is quite consistent with the value of those preceding commodities having been de-[204]termined by their comparative quantities of producing labour, or by any other cause. The latter would be a step further back in the sequence 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 commodities are determined by the capitals expended in producing them, affirms a cause, but certainly does not point out any standard of value; nor would Mr. Mill’s own doctrine furnish 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 metamorphoses, in that capacity, it will be one seldom within his reach. In reality, however, [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 labour 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 [206] he produces costs him both: if he is only a capitalist, it costs him only capital. In a civilized country instances of each kind may be found, but the mass of commodities are determined 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 which have a regular influence, cannot with any propriety be excluded. The discredit, the danger, the disagreeableness of any method of employing capital, all tend, as well 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 value, and frequently to a considerable extent. It would be an extraordinary phenomenon, indeed, if, in the interchange of commodities, the minds of men should be influenced by one exclusive consideration: if, imbued as they are with feelings of shame, and fear, and impatience, and others not necessary to enumerate, [207] these passions should leave no regular traces of their operation in the daily business of production and exchange.

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 examine its claims to be received in that character.

It is manifest that if the unqualified doctrine, as laid down by some writers, were correct, the value of any commodity would be strictly representative 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*;” [208] or, as it is stated by the author of the Templars’ Dialogues, “commodities are to each other in value as the quantities of labour employed in their production*;” or, as it is laid down by Mr. M’Culloch, “the exchangeable value, or relative worth of commodities, as compared with each other, depends exclusively on the quantities of labour necessarily required to produce them†;” 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 required the same labour to bring them to the condition in which they are exchanged‡.

[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 numerous. Every one at all acquainted with manufactures must know, that there are in the same, as well as in different occupations, various degrees of skill and rapidity of execution [210] 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 articles produced by these various classes of workmen, and under these various circumstances, bears no proportion to the mere quantity of labour expended, It is no answer to this to say, with Mr. Ricardo, that “the estimation 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 estimating equal quantities of labour, an allowance 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 difference in quantity of labour, and therefore the [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 quantities of cloth contained in them, or that their comparative value depends exclusively on the quantities 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 proposition would, in fact, be reduced to its negative, 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 rewarded. This no cause of variation in the relative value of commodities.“By this it is to be presumed he means, not what the words really imply, that the different compensation [212] 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 originally have been in them, whatever the ingenuity, skill, or time necessary for the acquirement 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 commodities.”

It is, however, a mere assumption, that “the scale, when once formed, is liable to little variation ; “nor, if this could be established, would it furnish any aid to the doctrine which we have at present under consideration. If the differences of skill in different employments are so [213] little variable as here represented, it proves only that they are circumstances which permanently affect value, and that it must be altogether 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 employed; and however inconsiderable its effects may be, they cannot be consistently either denied or overlooked. The whole of the section appears to have been dictated by a lurking impatience of any thing which seemed to break into the beautiful simplicity of the rule, 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* ”.

[214] But the most singular circumstance in this section is, that it Unsettles all our notions respecting quantity of labour itself. The grand principle of Mr. Ricardo’s work, which seemed as precise and definite as it could be, the doctrine that quantity of labour is the cause of value, which appeared to be fast anchored in the understanding, is unloosed from its moorings. 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 [215] proposed, not only as the cause but the measure of value, that which is itself unascertainable. There are only two possible methods of comparing 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 labour; 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 undetermined 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 labour respectively employed in aech) by Mr. Ricardo 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 machinery ; and suppose, that without any change [216] 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 altered 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 representative of the relative quantity of labour expended 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 [217] allow it, why persist in calling quantity of labour the sole determining principle of value ? Why attempt to give the science an air of simplicity 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, “I 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 disappear, if we recur for a moment to the mental operation implied in every creation of value. The time necessary to produce a commodity, [218] may, equally with the requisite quantity of labour, 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 procure it, without waiting during the operation; as of what would require labour, without personally bestowing the labour. If any article were offered to us, not otherwise attainable, except after the expiration of a year, we should be willing to give something to enter upon present 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 improved 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 [219] him the usual compensation rather than employ their own capitals in producing a similar result. 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 resolve the effects of time into expenditure of labour. “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 [220] muscles. As therefore no labour has been really exercised in any way relating to the wine, a tenth more of labour cannot be correctly considered as having been expended upon it, unless that can be truly regarded as having occurred which never happened.

Doctrines of this kind, which attempt to reduce all phenomena to a uniform expression, ought to be rigidly scrutinized. In the present instance, the eminent writer just quoted appears 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 accumulate we add one thing to another, and it is essential to the process, that both should remain in existence. But labour, consisting in the mere exertion of muscular power, or in the equally evanescent motions of the brain, continually perishes in detail, and therefore admits of no accumulation. It may be alleged, nevertheless, that when a series of days’ labour [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 hundred. 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 commodities by the term accumulated labour is to call the effect an accumulation of the cause.

In a rhetorical declamation, in the compressed and vigorous eloquence of a great mind disclosing its own comprehensive views by a few master strokes of expression, such an identification of cause and effect is often a positive beauty. The “Knowledge is power” of Lord Bacon, is felicitous and forcible: but in philosophical discussion, phrases of this kind as [222] 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 1 have urged to the language under consideration, will either appear frivolous or unfounded.

In this attempt to show that the value of capital 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-[223]bour, 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 exchangeable products.

It must he recollected, that although we have arranged commodities under three divisions, yet they are all, not only promiscuously exchanged for each other, but blended in production. A commodity, therefore, may owe part of its value to monopoly, and part to those causes which determine the value of unmonopolized products. An article, for instance, may be manufactured amidst the freest competition out of a raw material, which a complete monopoly enables its producer to sell at six times the actual cost; and the quantity of the raw material 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] correctly said to be determined by the quantity of capital expended upon it by the manufacturer, 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 deriving their value from other causes.

Hence for those economists, who 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 preceding capital, which was in its turn determined 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 [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 determined by the capital expended in its manufacture. 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 might find it to be owing 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 under 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 [226] 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 concerned 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, arising 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 resolvable 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 indirectly the products of equal quantities of labour, although no other circumstance existed [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 comparatively unimportant, and therefore professes to [228] 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 under 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 quantity 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 [229] value of gold itself depends, not on the labour 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 sufficient importance to that source of value which he calls scarcity ; nor did he consistently bear in wind, 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, being an 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 [230] 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 commodities, 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 increased if we increase any of its causes.

Mr. Ricardo, indeed, explicitly allows the influence of other causes, such as time, differences in the proportion of fixed and circulating capital, and inequalities in the durability of capital, by which he admits the value of commodities is liable to be affected. Notwithstanding 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 [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 he found in partial or incomplete monopolies, 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 admit. They overlook the variety of considerations operating on the mind in the interchange of commodities. These considerations are the causes of value, and the attempt to proportion the quantities in which commodities are exchanged for each other to the degree in which one of these considerations exists, must be vain and ineffectual. All in reality that can be accomplished on this subject is to ascertain the various causes of value; and when this is done, we may always infer, from [232] 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 perplex the mind of the inquirer by those perversions of language, those distortions of expression, and those circuitous expedients of logical ingenuity, which it unavoidably engenders.