The Measure of Value Stated and Illustrated / With an Application of it to the Alterations in the Value of the English Currency since 1790

by T. R. Malthus

[G] Whenever it is said that the value of labour rises in the progress of cultivation, a comparison is made between the value of a given quantity of labour at two different periods; and when it is added that wages rise in proportion to the quantity of labour required to produce them, objects are measured solely by the quantity of labour employed upon them, although the rate of profits may be totally different.

[H] This proposition is essentially the same as that which is very clearly and ably expressed by Mr. Ricardo in his chapter on Profits, (p. 128. 3d ed.) in the following terms: “in all countries and at all times profits depend on the quantity of labour requisite to provide necessaries for the labourers on that land, or with that capital which yields no rent;” a proposition which though incomplete in reference to the ultimate causes of the variations of profits, contains a most important truth. From this truth the legitimate deduction appears to me to be, the constant value of labour; but Mr. Ricardo has formed his system on a deduction exactly opposite to it. He has, however, in my opinion, amply compensated for the errors into which he may have fallen, by furnishing us, at the same time, not only with the means of their refutation, but the means of improving the science of Political Economy.

[I] Mr. Ricardo, by supposing gold to be produced always by a certain quantity of labour and capital, is compelled to acknowledge that his standard “would be a perfect measure of value for all things produced under the same circumstances precisely as itself, but for no others.” p. 43. This concession appears to me quite fatal. We want to measure the value of commodities under all circumstances, and it is only gold obtained exclusively by labour, or labour itself, which can do this. See Principles of Political Economy considered with a View to their Practical Application, pp. 111 and 118.

[J] It is this rise in the money price of labour, occasioned by the fall of profits, which Mr. Ricardo considers as that necessary rise in the value of labour on which he makes so much depend in his system; but if the foregoing reasoning be well founded, it follows that this rise is not a rise in the value of labour, but a fall in the value of money.

[K] This applies to the seed, and the food of the working cattle in agriculture.

[L] The labour worked up in a commodity could not, in many cases, be ascertained without considerable difficulty; but the labour which it will command is always open and palpable.

[M] Practically, in all countries such as South America and Ireland, where there is a slack demand for labour, and the people are but half employed, the food wages of labour are high, compared with the work done.

[N] If profits rise in some departments without falling proportionally in others, the average rate of profits will have increased, although, from the difficulty of moving capital, the rate of profits in some employments may not have had time to rise before the stimulus to such rise comes to an end by a fresh increase of capital.

[O] This is the view taken of it by Colonel Torrens in his Production of Wealth, which I think the just one; because it makes the proper distinction between cost and value, on which the great stimulus to production depends. But he has most unnecessarily and incorrectly given the same interpretation to natural price, which always includes profits.

[P] In order to exclude demand and supply from the costs of production, when ordinary profits are considered as making a part of them, it would be necessary to assume that the corn wages of labour are always the same, an assumption which would be quite unwarranted, not only in reference to short periods, but to periods of fifty or sixty years, as the history of corn wages in this country alone amply testifies (see ch. iv. sect. 4, of my Princ. of Pol. Econ. &c.); and what but the state of the demand and supply of corn, compared with labour, prevents profits in the United States from being 100 per cent.? The quantity of corn divided between the labourer and capitalist would be amply sufficient to yield such profits, if the corn wages of labour were no higher than in England.