The author, however, nothing daunted, goes on to say, that “If from any consideration, or number of considerations, men esteem one a as highly as two b, and are willing to exchange the two commodities in that ratio, it may be correctly said that a has the power of commanding two b, or that b has the power of commanding half of a.”
“The definition of Adam Smith, therefore, that the value of an object expresses the power of purchasing other goods which the possession of that object conveys, is substantially correct; and as it is plain and intelligible, it may be taken as the basis of our subsequent reasonings without any further metaphysical investigation.”[[54]]
In a Critical Dissertation on Value, which is introduced with a heavy complaint against all preceding political economists for neglecting the preliminary labour necessary to give a full perception of its meaning, it might naturally have been expected, that previous to the final adoption of the meaning in which it was intended to use the term, throughout the dissertation, the consideration, or number of considerations, which induce men to prefer one object to another, or to give two b for one a, should be carefully investigated. But nothing of this kind is done. A definition of the value of an object by Adam Smith, which, as he afterwards clearly shows, requires explanation and modification, is arbitrarily adopted, or, in the language of the author, is “taken as the basis of his subsequent reasonings, without any further metaphysical investigation.”
That this first general description of value in exchange by Adam Smith does not, without further explanation, convey to the reader the prevailing meaning which he himself attaches to the term, is obvious in many passages of his work, and particularly in his elaborate inquiry into the value of silver during the four last centuries. He there shows, in the most satisfactory manner, that, in the progress of cultivation and improvement, there is a class of commodities, such as cattle, wood, pigs, poultry, &c., which, on account of their becoming comparatively more scarce and difficult of attainment, necessarily rise in value; yet he particularly states, that this rise in their value is not connected with any degradation in the value of silver,[[55]] although it is obvious that, other things being the same, a pound of silver would have a smaller power of purchasing other goods.
Nothing, indeed, can be clearer than that this general description of value requires further explanation. There is the greatest difference imaginable between an increased power in any object of purchasing other goods, arising from its scarcity and the increased difficulty of procuring it; and the increase of its power to purchase other goods arising from the increased plenty of such goods and the increased facility of procuring them. Nor is it easy to conceive any distinction more vital to the subject of value, as the term is generally understood, or more necessary to “a full perception of its meaning.”
I cannot but think, therefore, that the author, under all the circumstances of the case, was not justified in adopting this definition of Adam Smith without further investigation.
But the adoption of this definition by the author in so unceremonious a manner, though quite inconsistent with the declarations in the preface, and most unpromising in regard to any improvement of the science which might have been expected from the dissertation, is by no means the gravest offence which he has committed in the opening of his subject.
Adam Smith’s definition, taken as it stands, however imperfect it may be, would still serve as a rough but useful standard of value in those cases where, in using the most ordinary forms of expression, some kind of standard is tacitly referred to, and no other more accurate one had been adopted.
But how is this definition of Adam Smith to be interpreted? If we understand it in the sense usually conveyed by the terms employed, it is impossible to doubt that by the power of purchasing other goods is meant the power of purchasing other goods generally. Who, then, could have conceived before-hand that the author would have inferred from this definition that he was justified in representing the power of purchasing other goods by the power of purchasing any one sort of goods which might first come to hand?—so that, considering the value of money in this country to be proportioned to its general power of purchasing, it would be correct to say that the value of an ounce of silver was proportioned to the quantity of apples which it would command; and that when it commanded more apples, the value of silver rose—when it commanded fewer apples, the value of silver fell.
It is, no doubt, quite allowable to compare any two commodities whatever together in regard to their value in exchange, and, among others, silver and apples. It is also allowable to say, though it would in general sound very strange, that the value of an ounce of silver, estimated in apples, is the quantity of apples it will command, provided that, by thus using the qualifying expression estimated in apples, immediately after the word value, we distinctly give notice to the reader that we are not going to speak of the exchangeable value of silver generally, according to the definition of Adam Smith, but merely in the very confined sense of its relation to one particular article. But if, without this distinct notice to the reader, we simply say that the value of an ounce of silver is expressed by the quantity of apples for which it will exchange, or, in the words of the author, that “the value of a is expressed by the quantity of b, for which it will exchange,” nothing can be more clear than that we use the term value in a manner totally unwarranted by the previous definition, that is, in a sense quite distinct from that in which Adam Smith uses it in the description of value adopted by the author.