By G. M. STEELE, D.D.
I.
I. DEFINITIONS—UTILITY OF THE SUBJECT.
1. Social science comprises the statement and explanation of the natural laws which govern men in their mutual relations. Political economy is the application of that portion of those laws which pertain to the production and distribution of wealth. Now we are not to be discouraged by this term wealth, as though the subject were one which concerns only rich men, and in which a poor man could have no interest. The man who has a little property, worth only one or two hundred dollars, is just as really a possessor of wealth as one who has one or two millions; and to be able to acquire and rightly use these small fortunes is, in the aggregate, of more importance than the acquisition and management of the greater riches of the few.
2. But what is meant by wealth? For the present it is enough to say that it comprises all things which have value. A more complete definition will follow by and by. What, then, do we mean by value? This, too, has many forms of definition, but they for the most part have one element in common. The general notion concerning it is that it has reference to the amount of one commodity that may be equitably given in exchange for a designated amount of another; this is a correct notion. Thus a bushel of wheat may be exchanged for two bushels of oats, or a cord of wood for twenty yards of cloth. That is, the value of a bushel of wheat is that of two bushels of oats, and the value of twenty yards of cloth is the same as that of a cord of wood. It is thus seen to be a relative term, and not indicative of any quality of any one thing considered by itself. But in all instances of relationship there must be some ground of the relation. Let us try to determine what it is in this case. A superficial thinker might decide that it is money, from the fact that value is generally estimated in money. But money is itself in the same relation to all other commodities in this respect as they are to one another, and its value rests upon the same basis.
3. The chief element in value, and that constitutes its original standard, is the cost of production; and by cost is meant the amount of labor involved. Labor is the voluntary effort put forth by man to secure some desired object. But when we say this, a little caution is needed. We are not to infer that the present value of an article is estimated by the amount of labor required at the time of its production, especially if that was a long time ago. A hundred years since, it required the labor of a man for days to produce a yard of cotton cloth. A dozen yards of better cloth can now be produced by the same amount of labor; of course the present value of the latter is superior to the present value of the former, even if this were as good as new. It is the labor that would be required to reproduce or replace an article which determines its value.
4. But there is another element which is essential to value; this is utility. It comprises all those qualities in an object which make it available to gratify any desire. It will readily be seen that there are objects which have utility and at the same time are without value. They are such objects as cost nothing; that is, such as involve no labor in their acquisition. Thus air, and sunshine, and rain, have no value; but they are of immeasurable utility. Value is often in the inverse ratio of utility. Iron is a far more useful metal than gold, but gold is vastly more valuable than iron. Still, though utility may exist where there is no value, there can be no value where there is no utility; because no one would put forth effort for that which could not gratify any desire, and it is the ability to gratify desire that constitutes utility. Sometimes utility becomes the paramount element in determining value; but ordinarily it is subordinate to the cost of production. When the article is one for which there is a very great demand, and of which there is a great scarcity, the value may increase many times beyond the cost. In such case the utility rather than cost rules. But where the demand is readily and fully met by the supply, the cost controls.
5. But valuable things can not be produced very largely without tools, implements, and various contrivances. These constitute capital. Capital is the result of previous labor reserved and employed in further production. This implies self-denial. A man can not consume what he has secured by labor and at the same time preserve it to aid in additional production. Hence he must restrain his desires if he would save something for this purpose. This capital is sometimes called pre-existent labor. The point to be observed is that its existence is due, not to labor alone, but to abstinence as well. The two elements in the cost of production are labor and abstinence, and we may combine these in the one term, sacrifice. Sacrifice and utility, then, are the two essential conditions of value; and we may complete our definition of value by saying that value is man’s estimate of the amount of sacrifice requisite to the attainment of a desired object.
6. Hence, if wealth comprises all valuable objects, and if every desirable object which involves sacrifice has value, it would be a proper definition to say that wealth consists of all those objects and qualities useful to man, the attainment of which involves sacrifice. This includes not only material objects and qualities, but also all those human powers acquired by sacrifice, which enable man to master nature. This is not admitted by many writers. But Mr. Carey states, in a broad way, that “Wealth is the power to command the always gratuitous services of nature.” When man is at his weakest nature does nothing for him. Every infant, if dependent on nature alone, would inevitably perish. So in the infancy of society, it is only by the most strenuous exertion that a precarious existence is secured. But with every increment of power in man, nature multiplies her services. They are not bought but freely given, and given as soon as man is able to command them. In the most advanced civilization the forces of nature have become so subservient to man that in thousands of cases one can accomplish what a score, or sometimes even a hundred, could not formerly have done. It is this increase of power more than that of material commodities which constitutes the real wealth of the world.