If the term had never been applied in political economy in a different sense from that in which it was first used by Adam Smith, there could be no doubt that it might be advantageously continued, and the expression real value might answer its purpose very well, and save any question respecting the substitution of some other term, such as intrinsic, positive, absolute, or natural. But as the term real has been very generally applied, by most writers, to wages, implying the real quantity of the means of subsistence and comfort which the labourer is enabled to command, in contradistinction to his nominal or money wages, the matter cannot be so easily settled, and we must come to some determination as to which of the two meanings it would be most advisable to reject.
Adhering to the rules which have been laid down, it will probably be acknowledged that the term real, when applied to the means of obtaining something in exchange, seems more naturally to imply the power of commanding the necessaries, conveniencies, and luxuries of life, than the power of commanding labour. A certain quantity of wealth is something more real, if the word real be used in its most ordinary sense, than a certain quantity of labour; and if, on this account, we continue to apply the term real to wages, we must express by positive, absolute, intrinsic, or natural, what Adam Smith has expressed by the word real, as applied to value: or it would be still better if political economists would agree in assigning a distinct meaning to the term value, as contradistinguished from price, whenever the value of a commodity is mentioned without mentioning any specific article in which it is proposed to estimate it, in the same manner as the price of a commodity is universally understood to mean price in money, whenever the term is used without referring specifically to some other article.
If, however, it should be found that the term real, in the sense in which it is first and most frequently applied by Adam Smith, has by usage got such fast hold of this meaning, that it cannot easily be displaced; and, further, if it be thought that an adjunct of this kind to the term value will sometimes be wanted in explanations, and that to express what Adam Smith means, the term real is preferable to either of the terms intrinsic, positive, absolute, or natural, there would be little objection to letting it retain its first meaning, provided we took care not to use it in application to the wages of labour, as implying the necessaries, conveniencies, and amusements of life. Instead of real wages, we must then say corn wages, commodity wages, wages in the means of subsistence, or something of the kind. But the other change is obviously more simple, and therefore in my opinion preferable.
Chapter IV.
APPLICATION OF THE TERM UTILITY BY M. SAY.
It would lead me too far and into too many repetitions, if I were to go through the principal definitions of the continental political economists, and examine the manner in which they have used their terms in reference to the obvious rules above laid down; but I cannot resist noticing one very signal deviation from them in the justly distinguished work of M. Say. It relates to the term utility.
It must be allowed by those who are acquainted with M. Say’s work, first, that he has used the term utility in a sense totally different from that in which it is used in common conversation, and in the language of those who are considered as the best authorities in political economy. Proceeding upon the principle, that nothing can be valuable which is not useful to some person or other, he has strangely identified utility and value, and made the utility of a commodity proportionate to its value, although the custom is universal of distinguishing between that which is useful and that which is merely high-priced, of that which is calculated to satisfy the acknowledged and general wants of mankind, and that which may be only calculated to satisfy the capricious tastes of a few. He has thus violated the first and most obvious rule for the use of terms.
Secondly, he has gone directly against the usage of the best writers in political economy, and particularly against the authority of Adam Smith, whom he himself considers as the main founder of the science. Adam Smith has declared his opinion in the most decided manner on this subject, by contrasting value in use, and value in exchange, and illustrating the distinction between them by adducing the marked instances of a diamond and water. M. Say, therefore, in the manner in which he has applied the term utility, has violated the second obvious rule for the use of terms, as well as the first.
Thirdly, the objections to the old terms in use, wealth and value, if there were any, do not by any means seem to have been such as to warrant the introduction of a new term. The object of M. Say seems to have been to show, that production does not mean production of new matter in the universe, but I cannot believe that even the Economists had this idea; and it is quite certain that Adam Smith’s definition of production completely excludes it. “There is one sort of labour,” he says, “which adds to the value of the subject on which it is bestowed * * * and as it produces a value may be called productive.”[[2]] There is, certainly, no question here about the creation of new matter. And as M. Say observes, that when things are in their ordinary and natural state their value is the measure of their utility, while he had before affirmed that riches were in proportion to value,[[3]] it is difficult to conceive what beneficial purpose he could have in view in introducing the term utility thus made synonymous with value or riches.
Fourthly, as the terms useful and utility are in such very common use, when applied in their accustomed sense, and cannot easily be supplied by others, it is extremely difficult to confine their application to the new sense proposed by M. Say. It is scarcely possible not to use them sometimes, as M. Say himself has done, according to their ordinary acceptation; but this necessarily introduces uncertainty and obscurity into the language of political economy.
M. Say had before made little or no distinction between riches and value, two terms which Mr. Ricardo justly considers as essentially different. He then introduces another term, utility, which, as he applies it, can hardly be distinguished from either of the others. The new term, therefore, could not have been called for; and it must be allowed that the use of it in the sense proposed, violates all the most obvious rules for the introduction of a new term into any science.