Now though, in the more advanced stages of society, the producer is not always at the same time the demander and consumer; yet the effectual demand for commodities must, on an average, be proportioned to the productive services set in motion to obtain them;[[89]] and when the different kinds of producers are reduced to a common denominator, such as common agricultural day-labour, and profits are deducted as the remuneration of the capitalist, and rent as the remuneration of the landowner, the proportion which the remaining produce bears to the number of such producers must represent, exactly in the same manner as in the early periods of society, the degree of scarcity in which the commodity exists compared with the producers; and therefore the value of the commodity is measured by the quantity of it which will command a day’s common labour. In fact, if it be once allowed that when labour is exclusively concerned, the number of days’ labour necessary to produce a commodity at any place and time represents the natural value of the commodity at that place and time[[90]], then, as it is quite certain that the value in exchange of any other commodity compared with the first, will be accurately in proportion to the respective quantities of the same kind of labour which they will command, it follows necessarily, that the value of the second commodity must always be in proportion to the quantity of labour it will command, however its value may have been affected by profits, rents, taxes, monopolies, or the accidental state of its supply compared with the demand.
Seventhly: It has been stated that the values of commodities must be proportioned to the causes of value operating upon them. The author of the Critical Dissertation has a chapter on the causes of value, and, at the conclusion of it, adverting to the variety of considerations operating upon the human mind, which he thinks have been overlooked by political economists, he observes, “these considerations are the causes of value; and the attempt to proportion the quantities in which commodities are exchanged for each other to the degree in which one of these considerations exists, must be vain and ineffectual. All, in reality, that can be accomplished on this subject, is to ascertain the various causes of value; and, when this is done, we may always infer, from an increase or diminution of any of them, an increase or diminution of the effect.”[[91]]
These remarks, it must be allowed, are justly applicable to those who propose to measure the values of commodities by the quantity of labour actually bestowed upon them; but in no degree to those who propose to measure them by the quantity of labour which they will command. We have already shown that the labour which commodities will command measures that paramount cause of value which includes every other; namely, the state of the supply as compared with the demand. Whatever may be the number and variety of considerations operating on the mind in the interchange of commodities, whether merely the common elementary costs of production, or whether these costs have been variously modified by taxes, by portions of rent, by monopolies strict or partial, and by temporary scarcity or abundance, the result of the whole must appear in the state of the supply compared with the demand; and in the case of an individual article, the supply of which may be considered as given, the demand, must be proportioned to the sacrifice which the purchasers are able and, under all the circumstances, willing to make in order to attain it.
But it has already been shown that it is the command of labour which the purchasers are able and willing to transfer to the sellers, and not any particular commodity, except in proportion as it will command labour, that can alone represent the sacrifice of the purchasers. The labour, therefore, which a commodity will command, or which the purchasers are willing to give for it, measures the result of all the causes of value acting upon it,—of all the various considerations operating upon the mind in the interchange of commodities.
Whether then we consider the value of a commodity at any place and time as expressed by the estimation in which it is held; whether we consider it as founded entirely on the state of the supply as compared with the demand; whether we consider it as determined by the sacrifice which people are willing to make in order to obtain it; or by the natural and necessary conditions of its supply; or by the elementary costs of its production; or by the number of its producers; or by the result of all the causes of value operating upon it, it is plain that the labour which it will ordinarily command in any place will measure its natural and ordinary value; and the labour which it will actually command will measure its market value.
It must always be recollected, however, that in any sense in which we can use the term value of a commodity, there must be a reference, either expressed or implied, to some place and time, in the same manner as when we use the term price of a commodity. We all well know that the price of the same kind of commodity of the same quality, weight, and dimensions, is very different in different places and at different times; and this must be equally true in regard to the value of a commodity. It follows that, from the very nature of the thing, the value of a commodity cannot be expressed or measured independently of place and time. It is this quality which so essentially distinguishes the value of a commodity from its length or weight; but it does not necessarily destroy its capability of being measured.
It is true, however, that a very general opinion has prevailed among political economists, even since the publication of Adam Smith’s work, that from the very nature of value, so essentially different from length or weight, it cannot admit of a regular and definite measure.[[92]] This opinion seems to me to have arisen principally from two causes.
First—a proper distinction has seldom been made between the definitions of wealth and value. Though the meanings of these two terms have by no means always been considered as the same, yet the characteristics of one of them have been continually allowed to mix themselves with the characteristics of the other. This appears even in Adam Smith himself. When he says, that a man is rich or poor according to the quantity of the necessaries, conveniencies, and luxuries of life which he can command, he gives a most correct definition of wealth; but when he afterwards says, that he is rich or poor according to the quantity of labour which he can command, he evidently confounds wealth with value. The former is a definition of wealth; and of this, or of the general power of purchasing, which too much resembles it, there is no measure. The latter is his own definition or expression of real value; and of this the very terms which he uses show that there is a measure. The measure is distinctly expressed in the terms.
The second principal cause which has prevented labour from being received, according to the language of Adam Smith, as “alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared,”[[93]] is, that in different periods, and in different countries, it is not really true, as stated by him, that the labourer in working “lays down the same portion of his ease, his liberty, and his happiness.”[[94]] There is the best reason to believe that the labourer in India, and in many other countries, neither exerts himself so much while he is working, nor works for so many hours a day as an English labourer. A day’s labour, therefore, is not invariable either in regard to intensity or time. But still it appears to me that, for the reasons before stated, that is, because the labour of each place and time measures at that place and time the estimation in which a commodity is held, the state of its supply compared with the demand, the elementary costs of its production, the natural and necessary conditions of the supply, the proportion of the produce to the producers, &c. it must be considered as measuring, with a fair approach towards accuracy, the values of commodities at these places and times, so as to answer the question,—what was the value of broad-cloth of a certain description in the time of Edward III. in England? or, what is the value of money at present in China? The nature of the measure, and the reason why the varying intensity of the labour and the different number of hours employed in the day, do not disqualify it from performing its functions, may perhaps be illustrated by the following comparison:—
Let us suppose that the heights of men in different countries were extremely different, varying from six feet to six inches, and that the trees, shrubs, houses, utensils, and every other product or article were all in proportion, and that the foot-rule in each country bore the same relation to the race of human beings which inhabited it as the English foot-rule does to Englishmen: then, though it is obvious that the length of ten feet in one nation might extend over a much larger portion of space than ten feet in another nation; yet the foot of each nation would measure with accuracy the relative estimation in which men and things were held in regard to height, length, breadth, &c. It would determine whether a man was tall or short in the estimation of his fellow-citizens; whether his shoulders were broad or narrow; whether his circumference was great or small; and not only whether Mr. Pike’s nose was longer than Mr. Chub’s, but whether it was not, in the accustomed language of the country, absolutely a long nose, although perhaps it might not extend to a quarter of an English inch. On the other hand, if, instead of referring to the measure of each country, we were to refer always to an English foot, though we should be able to ascertain the relative portions of space which all the men to whom we applied our measure occupied, we should make sad havoc with the estimates which they and their countrymen had formed of their own heights, and many certainly would be considered as very short who had before always been considered as very tall. Now it must be allowed that the value of a commodity, as it changes with place and time, and depends upon the wants and caprices of man and the means of satisfying them, resembles more the estimate of tall or short, broad or narrow, than a portion of space capable of being ascertained by a measure unchangeable by time and place.