Definitions in Political Economy, / Preceded by an Inquiry Into the Rules which Ought to Guide Political Economists in the Definition and Use of Their Terms; with Remarks on the Deviation from These Rules in Their Writings

by T. R. Malthus

Supposing, then, that the exchangeable value of a commodity were defined to be its general power of purchasing, this must refer to the power of purchasing the mass of commodities; but this mass is quite unmanageable, and the power of purchasing it can never be ascertained. With a view, therefore, to its practical application, it would unquestionably be our endeavour to fix upon some object, or set of objects, which would best represent an average of the general mass. Now, of any one object, it cannot for a moment be denied that labour best represents an average of the general mass of productions. There is no commodity considered by society as wealth, for which labour is not, in the first instance, exchanged; there are very few for which it is not exchanged in great quantities: and this can be said of no other object, except labour, and the circulating medium which represents it. It is, at once, the first, the universal, and the most important object given in exchange for all commodities; and if to this we add, that while there is one large class of commodities, such as raw products, which in the progress of society tends to rise as compared with labour, there is another large class of commodities, such as manufactured articles, which at the same time tends to fall; it may not be far from the truth to say, that the portion of the average mass of commodities which a given quantity of labour will command in the same country, during the course of some centuries, may not very essentially vary.

Allowing, however, that it would vary, and that labour is an imperfect measure of the general power of purchasing; yet, if some sort of standard more applicable than the mass of commodities be required, and labour appears to be beyond comparison the best representative of this mass, there will be a very powerful reason for adopting labour as the practical measure of value, even among those who may persevere in thinking that the best definition of value in exchange is the general power of purchasing.

To those, however, who hold the opinion that the variations in the exchangeable value of a commodity and the variations in its power of purchasing are not identical, and that a commodity increases in exchangeable value only when it will command a greater value in exchange, while its power of purchasing may increase merely because it will command a greater quantity of commodities which have confessedly fallen in value, the reasons for adopting labour as the measure of value will be found to increase tenfold in force.

There are various ways of describing value in the sense here understood; and the slightest examination of them will show that the labour which a commodity will command can alone be the measure of such value.

First; The author of the Critical Dissertation on Value has commenced his work by a description of it, in which I entirely agree with him. He says, as I have before stated, that “value, in its ultimate sense, appears to mean the esteem in which any object is held. But it is obvious that the degree of this esteem cannot be measured by comparing it with another commodity about which we know as little as of the first. The comparison with money would leave us as much in the dark as ever, if we did not previously know the estimation in which money was held.”[^[85]] Even the mere relative values of two commodities cannot be inferred by putting them side by side, and looking at them for any length of time. Before we can attain even this partial conclusion, we must refer each of them to the desires of man, and the means of production; that is, we must make a previous comparison, in order to ascertain the value of each before we can venture to say what relation one bears to the other. It is this primary comparison which, independently of any secondary comparison, determines the estimation in which the commodity is held. And as this primary comparison can only be represented by the exchange with labour, it is certain that, if we define the value of a commodity to be the estimation in which it is held, the quantity of labour which it will command can alone measure this estimation.

Secondly: Locke, most justly looking to the foundation of all value, considers the value of commodities as determined by the proportion of their quantity to their vent, or of the supply to the demand; but the varying vent or demand for one commodity cannot possibly be represented by the varying quantity of another commodity for which it is exchanged, unless the second commodity remain steady in regard to labour. If at one time I give two pounds of hops for a yard of cloth, and at another time only one, it does not at all follow that the demand for cloth has diminished; on the contrary, it may be increased, and in giving the value of one pound of hops, I may have enabled the cloth manufacturer to set more men to work, and to obtain higher profits than when I gave the value of two pounds. But the demand for a commodity, though not proportioned to the quantity of any other commodity which the purchaser is willing and able to give for it, is really proportioned to the quantity of labour which he will give for it; and for this reason: the quantity of labour which a commodity will ordinarily command, represents exactly the effectual demand for it; because it represents exactly that of labour and profits united necessary to effect its supply;[^[86]] while the actual quantity of labour which a commodity will command when it differs from the ordinary quantity, represents the excess or defect of demand arising from temporary causes. If then looking to the foundation of all value, namely; the limitation of the supply as compared with the wants of mankind, we consider the value of commodities at any time or place as proportioned to the state of their supply compared with the demand at that time and place, it is evident that the quantity of labour of the same time and place which any commodity, or parcels of commodities, will command, can alone represent and measure the state of the supply of them as compared with the demand,[^[87]] and their values as founded on this relation.

Thirdly: It has often been stated that the value of a commodity is determined by the sacrifice which people are willing to make in order to obtain it; and this seems to be perfectly true. But the question recurs, how are we to measure this sacrifice? It is obvious that we cannot measure it by the quantity of another commodity which we are willing to give in exchange for it. When I give more calicoes, or more potatoes, than I did before, for a certain quantity of hardware, it does not at all follow that I make a greater sacrifice in order to obtain what I want. On the contrary, if calicoes and potatoes had both fallen in price, the one from improved machinery and the other from the abundance of the season, my sacrifice might even have been less rather than greater. Even the quantity of money which is given for a commodity is no measure of the sacrifice made to obtain it. Though it is an excellent measure of the variations in the sacrifice made, at the same time and place; yet without further information, it will tell us nothing either about the amount, or the variations at different places and times. The giving of an ounce of silver was a very different sacrifice in the time of Edward I. from what it is at present. It is obvious, therefore, that the sacrifice which we are willing to make, in order to obtain a particular commodity, is not proportioned to the quantity of any other commodity for which it will exchange, but to the difficulty with which such quantity, whether more or less, is attained. Now labour can measure this difficulty, but nothing else can. If, then, the value of a commodity be determined by the sacrifice which people are willing to make in order to obtain it, it is the labour given for a commodity, and labour alone, which can measure this sacrifice.

Fourthly: In the Measure of Value Stated and Illustrated, I considered the value of commodities as, on an average, determined by the natural and necessary conditions of their supply. These conditions I stated to be the accumulated and immediate labour worked up in commodities with the ordinary profits upon the whole advances for the time that they were advanced. And it appeared, both in the early part of the discussion, and in the Table, that the quantity of labour which a commodity would ordinarily command must represent and measure the quantity of labour worked up in it with the addition of profits. It was certainly a very remarkable fact, that when Mr. Ricardo chose the labour worked up in commodities “as, under many circumstances, an invariable standard,” and rejected the labour which they would ordinarily purchase as subject to as many fluctuations as the commodities compared with it,[^[88]] he should not have seen that the labour which a commodity will ordinarily command, necessarily involves his own proposition, with that addition to it merely which can alone make it correct; and that it is precisely because the labour which a commodity will ordinarily command measures the labour actually worked up in it with the addition of profits, that it is justifiable to consider it as a measure of value. If then the ordinary value of a commodity be considered as determined by the natural and necessary conditions of its supply, it is certain that the labour which it will ordinarily command is alone the measure of these conditions.

Fifthly: The values of commodities are often said to be determined by the costs of production. When the costs of production do not refer to money, but to those simple elements of production, without an adequate quantity of which, whatever may be their price in money, the commodity cannot be produced, they are precisely the same as the natural and necessary conditions of the supply. The elementary costs of production, excluding rents and taxes, are the labour and profits required to produce a commodity. Of these it has been already shown, that the labour which the commodity will ordinarily command is alone the measure; and allowing that we could obtain with tolerable exactness the average price of common agricultural labour at different times and in different countries, and that when the prices of all other sorts of labour were once established, they would (as assumed by Adam Smith and Mr. Ricardo) continue to bear nearly the same relation to each other in the further progress of cultivation and improvement, it is certain that the quantity of common agricultural labour which a commodity would ordinarily command at any place and time would measure, with a near approach to accuracy, the elementary costs of production at that place and time; so that commodities, which at two different periods in the same country would ordinarily command the same quantity of agricultural labour, might fairly be said to be equal to each other in their elementary costs of production, and, of course, in their values, if their values be determined by their elementary costs of production.

Sixthly: It may be said that the value of a commodity must be proportioned to its supply compared with the number of its producers. This appears, indeed, to be strikingly the case in the early periods of society when many commodities are obtained, almost exclusively, by labour. If fruits are to be procured, or game killed or caught, by labour alone, or assisted only by capital of very little value, the quantity obtained, on an average, by a day’s labour must represent, with a great approach to accuracy, the degree of scarcity in which commodities exist compared with the producers of them working for a certain time. But the degree in which the supply of a commodity is limited, as compared with the numbers, powers, and wants of those who wish to obtain it, is the foundation of all value. Here the producers are both the effectual demanders and the consumers; and the produce obtained on an average by a single producer must represent the supply compared with the numbers, powers, and wants of the demanders. If a large quantity of produce be obtained by a producer, the commodity will be in abundance, and will be considered as of comparatively little value; if a small quantity be obtained by a producer, the commodity will be scarce, and will be considered as of comparatively great value. If it be the custom of the country for the producers to work only four hours a-day instead of ten or twelve, the commodities produced will bear a comparatively small proportion to the numbers of the producers and effectual demanders, and will consequently be of much higher value, than in those countries where it is the custom to work for the greater number of hours; and, on the other hand, if the producers, besides working ten or twelve hours a-day, are aided by ingenious instruments and great skill in the use of them, the commodities produced will be in unusual plenty compared with the producers, and will be considered as proportionally of low value. In all these cases the value of the commodity is evidently determined by the relation between its quantity and the number of its producers.