Now, note the second qualification. I say that the value of things produced for sale under normal conditions is determined by the amount of labor socially necessary, on an average, for their production. Some of the clever, learnedly-ignorant writers on Socialism think that they have completely destroyed this theory of value when they have only misrepresented it and crushed the image of their own creating.
It does not mean that if a quick, efficient workman, with good tools, takes a day to make a coat, while another workman, who is slow, clumsy and inefficient, and has only poor tools, takes six days to make a table that the table will be worth six coats upon the market. That would be a foolish proposition, Jonathan. It would mean that if one workman made a coat in one day, while another workman took two days to make exactly the same kind of coat, that the one made by the slow, inefficient workman would bring twice as much as the other, even though they were so much alike that they could not be distinguished one from the other.
Only an ignoramus could believe that. No Socialist writer ever made such a foolish claim, yet all the attacks upon the economic principles of Socialism are based upon that idea!
Now that I have told you what it does not mean, let me try to make plain just what it does mean. I shall use a very simple illustration which you can readily apply to the whole of industry for yourself. If it ordinarily takes a day to make a coat, if that is the average time taken, and it also takes on an average a day to make a table, then, also on an average, one coat will be worth just as much as one table. But I must explain that it is not possible to bring the production of coats and tables down to the simple measurement. When the tailor takes the piece of cloth to cut out the coat, he has in that material something that already embodies human labor. Somebody had to weave that cloth upon a loom. Before that somebody had to make the loom. And before that loom could make cloth somebody had to raise sheep and shear them to get the wool. And before the carpenter could make the table, somebody had to go into the forest and fell a tree, after which somebody had to bring that tree, cut up into planks or logs, to the carpenter. And before he could use the lumber somebody had to make the tools with which he worked.
I think you will understand now why I placed emphasis on the words "socially necessary." It is not possible for the individual buyer to ascertain just how much social labor is contained in a coat or a table, but their values are fixed by the competition and higgling which is the law of capitalism. "It jest works out so," as an old negro preacher said to me once.
I have said that competition is the law of capitalism. All political economists recognize that as true. But we have, as I have explained in a former letter, come to a point where capitalism has broken away from competition in many industries. We have a state of affairs under which the economic laws of competitive society do not apply. Monopoly prices have always been regarded as exceptions to economic law.
If this technical economic discussion seems a little bit difficult, I beg you nevertheless to try and master it, Jonathan. It will do you good to think out these questions. Perhaps I can explain more clearly what is meant by monopoly conditions being exceptional. All through the Middle Ages it was the custom for governments to grant monopolies to favored subjects, or to sell them in order to raise ready money. Queen Elizabeth, for instance, granted and sold many such monopolies.
A man who had a monopoly of something which nearly everybody had to use could fix his own price, the only limit being the people's patience or their ability to pay. The same thing is true of patented articles and of monopolies granted to public service corporations. Generally, it is true, in the franchises of these corporations, nowadays, there is a price limit fixed beyond which they must not go, but it is still true that the normal competitive economic law has been set aside by the creation of monopoly.
When a trust is formed, or when there is a price agreement, or what is politely called "an understanding among gentlemen" to that effect, a similar thing happens. We have monopoly prices.
This is an important thing for the working class, though it is sometimes forgotten. How much your wages will secure in the way of necessities is just as important to you as the amount of wages you get. In other words, the amount you can get in comforts and commodities for use is just as important as the amount you can get in dollars and cents. Sometimes money wages increase while real wages decrease. I could fill a book with statistics to show this, but I will only quote one example. Professor Rauschenbusch cites it in his excellent book, Christianity and the Social Crisis, a book I should like you to read, Jonathan. He quotes Dun's Review, a standard financial authority, to the effect that what $724 would buy in 1897 it took $1013 to buy in 1901.