I have already stated that I decidedly differ from Mr. Ricardo, and it follows of course that I differ equally from the Templar, in thinking that the value of a commodity may be correctly expressed by referring to the producing labour alone; but compared with the expression of value proposed to be substituted by the author of the Critical Dissertation, it has a prodigious superiority. Let us try both, for instance, by the touch of the talisman recommended by the author himself. Let the question be the value of silver before the discovery of the American mines; and let us ask, as directed, value in relation to what? The Templar would answer, value in relation to the producing labour; and though in this answer a material ingredient of elementary value is omitted, yet I should collect from it some tolerable notion of the esteem in which silver was held at that time; and if I found, on comparison, that the producing labour was now three or four times less, I should be able, with tolerable certainty, to infer, that silver had grown more plentiful; and that four centuries ago a given quantity of silver was held in much greater esteem, that is, people would make a much greater sacrifice in order to obtain it, than at present.
On the other hand, if the author of the Critical Dissertation should speak of the value of silver before the discovery of the American mines, and we should ask, value in relation to what? the answer would be, “I have repeatedly stated that to know the value of an article at any period is merely to know its relation in exchange to some other commodity;” consequently, we should know the value of silver in the fifteenth century, or the esteem in which it was held, by comparing it with calicoes, although we might know nothing at all about the difficulty or facility of obtaining calicoes at that time. And if we were to proceed, as in the former case, and, with a view to ascertain the esteem in which silver was held in the fifteenth century, as compared with the esteem in which it is held in the nineteenth, were to mark the relation of silver to calicoes in the two periods, it would appear, that as, owing to the improvements in the cotton machinery, a given quantity of silver would command more calicoes now than formerly, silver should be considered as being held in higher estimation now than four centuries ago. Yet no person, I believe, not even the author himself, would agree to this conclusion. He would probably say that the comparison was merely between silver and calicoes, and had nothing to do with anything else. If this be all he means, why does he confuse his readers by stating that value means the esteem in which a commodity is held? and why does he say that to know the value of an article at any period is merely to know its relation in exchange to some other commodity? If all he means by the value of a commodity is its relation to some other, why did he not at once say, without ever talking about esteem, that the value of one commodity in relation to any other was expressed by the quantity of that other for which the first would exchange; and that, when the first rose in relation to the other, the other would always fall proportionably in relation to the first? If he had so expressed himself, his proposition would have obtained universal consent; it would have been a truism which had never been denied. But as long as he continues to talk of the esteem in which commodities are held, his readers must consider him as peculiarly inconsistent, if, on the supposition of there being only two commodities in existence, he prefers measuring the esteem in which one of them is held by its relation to the other, rather than by its relation to the producing labour. And they must further think, that while he continues to state that “to know the value of an article at any period is merely to know its relation in exchange to some other commodity,” he is stating a proposition which, according to the usual sense in which the word value is understood when so placed, is totally unfounded. No man, I believe, but the author would venture to say that he should know the value of silver four hundred years ago by knowing the quantity of calicoes which an ounce of silver would then command.
The sixth chapter of the author is entitled “On Measures of Value;” and the discussion of this subject leads him to such strange conclusions, that one cannot but feel the greatest surprise at his not seeing that he must have been proceeding in a wrong course. He ridicules the notion of its being necessary that a commodity should possess invariable value, in order to form a perfect measure of value. Such a notion, which he says in a note has been entertained by all the most distinguished writers in political economy, he civilly calls an utter absurdity. According to the doctrines and language of the author, no relation exists between the value of a commodity at one time and the value of the same sort of commodity at another; and “the only use of a measure of value, in the sense of a medium of comparison, is between commodities existing at the same time.”[[68]]
“If this be so, it is, no doubt, quite absurd in political economists to look for anything approaching towards an invariable measure of value, or even to talk of one commodity or object being more steady or constant in its value than another. At the same moment, bags of hops are as good a measure of the relative value of commodities as labour or money. With regard to money, indeed, the author particularly observes, that from the relations between corn and money, at two different periods, no other relation can be deduced; we do not advance a step beyond the information given. * * We cannot deduce the relation of value between corn at the first, and corn at the second period, because no such relation exists, nor, consequently, can we ascertain their comparative power over other commodities. If we made the attempt, it would be, in fact, endeavouring to infer the quantities of corn which exchanged for each other at two different periods of time, a thing obviously absurd. And further, money would not be here discharging a particular function any more than the other commodity. We should have the value of corn in money and the value of money in corn, but one would be no more a measure or medium of comparison than the other.”[[69]]
From all this it follows necessarily that we must on no account say, that butter has been rising during the last month; if we do, we shall be convicted of the absurdity of proposing to exchange the butter which was consumed three weeks ago with the butter now on our table, in order to ascertain that a pound of the former will command less than a pound of the latter. For the same reason, we must not on any account say, that the value of wheat fell very greatly from 1818 to 1822, and rose considerably from 1822 to 1826. We must not venture to compare the value of the advances of a master manufacturer with the value of his returns; or, in estimating the rate of his profits, presume to prefer money, which generally changes slowly and inconsiderably in its power of setting labour to work, to hops, which change so rapidly and greatly, &c. &c. In short, the whole of the language and inferences of the business of buying and selling, and making money, must be altered and adapted to the new definitions and doctrines.
It is quite astonishing that these consequences should not have startled the author, and made him turn back. If he had but adhered to his first description of value, namely, the esteem in which an object is held; or even if he had interpreted his second definition of value, namely, “the power of purchasing other goods,” according to the ordinary and natural meaning of the expression, he could never have been led into the strange mistake of supposing, that when people have talked of the value of a commodity at one period, compared with the value of the same kind of commodity at another, they could only refer to the rate at which they would actually exchange with each other, which, as no exchange could in such a case take place, would be absurd. What then did they mean? They obviously meant either to compare the esteem in which a commodity was held at one period with the esteem in which it was held at another, founded on the state of its supply compared with the demand, and ordinarily on its costs of production; or to compare the general power of purchasing which a commodity possessed at one period with its general power of purchasing at another period. And will the author venture to assert, that there are not some objects better calculated than others to measure this esteem, or measure this general power of purchasing at different periods? Will the author maintain, that if, in reference to two periods in the same country, a commodity of a given kind will in the second period command double the quantity of labour that it did in the first, we could not with much more certainty infer that the esteem for it had greatly increased, than if we had taken calicoes or currants as the medium of comparison? Or would the author, upon a little reflection, repeat again what he says in the passage last quoted, that from the relations between corn and money in two successive seasons, we can deduce no other relation, * * “money would not be here discharging a particular function any more than the other commodity. We should have the value of corn in money and the value of money in corn, but one would be no more a measure or medium of comparison than the other.”[[70]]
To me, at least, these statements appear utterly unfounded. If the money-price of corn has risen this year to double what it was in the last, I can infer, with almost absolute certainty, that corn is held in much higher estimation than it was. I can be quite sure that the relation of corn to other articles, besides money, has most essentially changed, and that a quarter of corn will now command a much greater quantity of labour, a much greater quantity of cloth, a much greater quantity of hardware, a much greater quantity of hats and shoes, than it did the year before: in short, that it will command nearly double the quantity of all other commodities which are in their natural and ordinary state, and have not been essentially affected by the causes which have operated upon the price of corn.
Where then is the truth of saying, that from the altered relation between corn and money we deduce no other relation? It is perfectly obvious that we can deduce and do deduce a great number of other most important relations; and, in fact, do ascertain, though not with perfect accuracy, yet with a most desirable and useful approach to it, the degree of increase in the power of corn to command in exchange the mass of other commodities.
On the other hand, from the diminished power of money in relation to corn, we cannot infer that money has fallen nearly in the same proportion in relation to other commodities. If an ounce of silver will now command only half a bushel of wheat, instead of a whole bushel, we can by no means infer that an ounce of silver will therefore command only about half the quantity of labour, half the quantity of cloth, half the quantity of hardware, half the quantity of hats and shoes, and of all those commodities which are in their natural and ordinary state. To all these objects money will probably bear nearly the same relation as before.
Where, then, is the truth of saying, that money would not be here discharging a particular function more than the other commodity? Broad, glaring, and incontrovertible facts show, that for short periods money does perform the function of measuring the variations in the general power of purchasing possessed by the corn; but that the corn does not measure the variations in the general power of purchasing possessed by the money. This is one of the instances of that extraordinary inattention to facts which, most unfortunately for the science of political economy, the professors of it have lately indulged themselves in.