I repeat once more that the same trade precisely would go on between India and Europe, as far as regards commodities, if no such thing as money made of gold and silver existed in the world. All commodities would in that case as well as now command a much larger quantity of labour in India than in England; and, if we wanted to know how much more, either of those commodities, as well as money, would enable us to ascertain. The same thing which makes money of a low value in England makes many other commodities of a low value there; and the political economist in accounting for the low value of one accounts at the same time for the low value of the others. I do not object to accounting for the low value of gold in particular countries; but I say it is not material to an enquiry into a general measure of value, particularly if it be itself objected to as forming any element in that measure.
Suppose a farmer to have a certain quantity of cattle and implements and a hundred quarters of wheat,—that he expends this wheat in supporting a certain quantity of labour, and that the result is 110 quarters of wheat and an increase of one-tenth also in his cattle and implements; would not his profits be 10 per cent. whatever might be the price of labour the following year? If the 110 quarters could command no more labour than the 100 quarters could command before, he would, according to you, have made no profits; and you are right if we admit that yours is a correct measure of value; he would have a profit in kind but no profit in value. If wheat was the measure of value, he would have a profit in kind, and the same profit in value. If money was the correct measure of value and he commenced with £100, he would have 10 per cent. profit if the value of his produce was £110. All these results leave the question of a measure of value undecided, and prove nothing but the convenience, in your estimation, of adopting one in preference to another. The labourer, however, who lived by his labour would find it difficult to be persuaded that his labour was of the same value at two periods, in one of which he had abundance of food and clothing, and in another he was absolutely starving for want. What he might think would certainly not affect the philosophy of the question; but it would be at least as good a reason against the measure you propose as that of the farmer in favour of it, when he found that he had no profits because he had no greater command of labour, although he might have more corn or more money. You call every increase of value nominal which is not an increase in the measure you propose. I do not object to your doing so; but those who do not agree with you in the propriety of adopting this measure may argue very consistently in saying they are possessed of more value when they have £110 than when they had £100, although the larger sum may not when it is realized command so much labour as the smaller sum did before, because they not only admit but contend that labour may rise and fall in value, and therefore in respect to labour he may be poorer, although he possesses a greater value.
I have said that the value of most commodities is made up of labour and profits. If this be so, you observe, 'it is as clear as the sun that the variable wages which command the same quantity of labour must be of the same value, because they will always cost in their production the same quantity of labour with the addition of the profits upon that labour.' I confess that I cannot see the connection of this conclusion with the premises. Whether you divide a commodity in eight, seven, or six divisions, it will always be divided into two portions, variable portions, but always two. If the division be in eight, the portions may be six and two, five and three, four and four, seven and one. If seven, they may be six and one, five and two, four and three, and so on. Now this is my admission. What we want to know is what the number of those divisions are, or what the value of the commodity is, whether eight, seven, or six? And have I come a bit nearer to this knowledge by admitting that whatever the value may be it will be divided between two persons? Whatever you give to the labourer is made up of labour and profits, and therefore the value of labour is constant! This is your proposition. To me it wants every quality of clearness. I find that at one time I give a man ten bushels of wheat for the same quantity of his labour for which at another time I give him eight bushels. Wheat, according to you, falls in the proportion of ten to eight. I ask why? And your answer is, because 'as the positive value of the labour worked up in the wages increases, the positive value of the profits (the other component part of their whole value) diminishes exactly in the same degree.' Now does this positive value refer to the same quantity of wheat? Certainly not, but to two different quantities, to ten bushels at one time, to eight at another. You add: 'If these two propositions['] (namely the one I have just mentioned and the invariability of labour as a measure of value) 'can properly be considered as having no connection with each other, I must have quite lost myself on these subjects, and can hardly hope to show the connection by anything which I can say further[']. I hope you do not suspect me of shutting my eyes against conviction; but, if this proposition is so very clear as it is to you, I cannot account for my want of power to understand it. I still think that the invariability of your measure is the definition with which you set out, and not the conclusion to which you arrive by any legitimate argument. My complaint against you is that you claim to have given us an accurate measure of value, and I object to your claim, not that I have succeeded and you have failed, but that we have both failed, that there is not and cannot be an accurate measure of value, and that the [most th]at any man can do is to find out a measure of value applicable in a great many cases, and not very far deviating from accuracy in many others. This is all I have pretended to do, or now pretend to have done; and, if you advanced no higher claims, I would be more humble; but I cannot allow that you have succeeded in the great object you aimed at. In answering you I am really using those weapons by which alone you say you can be defeated, and which are I confess equally applicable to your measure and to mine, I mean the argument of the non-existence of any measure of absolute value. There is no such thing; your measure as well as mine will measure variations arising from more or less labour being required to produce commodities, but the difficulty is respecting the varying proportions which go to labour and profits. The alteration in these proportions alters the relative value of things in the degree that more or less of labour or profit enters into them; and for these variations there has never been, and I think never will be, any perfect measure of value.
I have lost no time in answering your letter, for I am just now warm in the subject, and cannot do better than disburthen myself on paper.
Ever, my dear Malthus,
Truly yours,
David Ricardo.
LXXXVIII[276].
Gatcomb Park, 31 Aug., 1823.
My dear Malthus,
I have only a few words more to say on the subject of value, and I have done. You cannot avail yourself of the argument that a foot may measure the variable height of a man, although the variable height of a man cannot truly measure the foot, because you have agreed that under certain circumstances the man's height is not variable, and it is to those circumstances that I always refer. You say of my measure, and say truly, that if all commodities were produced under the same circumstances of time, etc., as itself, it would be a perfect measure, and you say further that it is now a perfect measure for all commodities produced under such circumstances. If then under certain circumstances mine is a perfect measure, and yours is always a perfect one, under those circumstances certain commodities ought to vary in these two measures just in the same degree. Do they so? Certainly not, then one of the measures must be imperfect. If they are both perfect mine ought to measure yours as well as yours mine.