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

Thus, if a commodity were produced by the aid of accumulated labour in machinery worth £2,000, the annual wear and tear of which was one-twentieth, or £100, and the labour employed on cheap materials and in the working of the machinery were worth £200, while profits were 20 per cent. then the value of the labour worked up in the commodity would be £100 added to £200, equal to £300; and the whole capital advanced being £2,300, the profits upon it would be £460, which, added to £300 would make the whole value of the produce £760. Compared with a commodity of equal value which had been produced without fixed capital, and had yet been brought to market in the same time and with the same rate of profits, it would contain less than half of the labour worked up in it; while, if profits were to fall from 20 per cent. to 10 per cent. the value of the commodity would fall in the proportion of from £760 to £530, or, if profits had been 10 per cent. and were to rise to 20 per cent. the value of the commodity would rise in the proportion of from £530 to £760, or above 42 per cent., without any change in the quantity of labour employed.[C]

It must be allowed, then, that whenever two elements are necessary to the supply, and enter into the composition of commodities, their value cannot depend exclusively upon one of them, except by accident, or when the other can be considered as a given or common quantity. But it is universally acknowledged, that the great mass of commodities in civilized and improved countries is made up at the least of two elements—labour and profits; consequently, the exchangeable value of commodities into which these two elements enter as the conditions of their supply, will not depend exclusively upon the quantity of labour employed upon them, except in the very peculiar cases when both the returns of the advances and the proportions of fixed and circulating capitals are exactly the same.

It cannot, then, be said with any thing like an approximation towards correctness, that the labour worked up in commodities is the measure of their exchangeable value.

But if to the accumulated and immediate labour worked up in commodities, we add the profits upon the whole advances for the time that they are advanced, we shall then make the proper allowance for the other element of value, and may expect to obtain a more accurate measure. If we had estimated the value of the labour advanced in money, or any other medium, we should of course estimate the profits in the same medium, and the natural price of the commodity estimated in such medium, would obviously be equal to the price of the accumulated and immediate labour expended on the commodity, together with the ordinary profits estimated upon such advances. But if, with a view to the natural conditions of supply, we consider only the quantity of labour advanced, without reference to any other medium, we must of course estimate the profits in quantity of labour also, which will give us an amount of labour in proportion to which commodities will be found to exchange with each other, just in the same way as they would exchange with each other according to the quantity of labour employed on them, if labour had been the sole ingredient which had entered into their composition.

Thus, if a hundred days labour were employed upon a commodity, at two shillings a day, and the average interval between the advance of such wages and the period when the commodity could be brought to sale were a year, and profits were 20 per cent. the price of the commodity would be £12, while the price of a commodity which had cost the same quantity of labour of the same kind, and could be brought to market immediately, would be only £10. And it is equally certain, that, if putting money or any other medium of exchange out of the question, we had estimated the profits for a year upon the advances of the hundred days labour actually employed, we should obtain a quantity of labour which, compared with the labour employed on the commodity sold immediately, would be in the proportion of 120 to 100, and expressing the relative conditions of supply, would accurately measure the rate at which the two commodities obtained under these different circumstances would exchange with each other.

It appears, then, that in the same country, and at the same time, the exchangeable value of those commodities which can be resolved into labour and profits alone, would be accurately measured by the quantity of labour which would result from adding to the accumulated and immediate labour actually worked up in them the varying amount of the profits on all the advances estimated in labour. But this must necessarily be the same as the quantity of labour which they will command, as appears from the instances above stated, and will be more fully shown farther on; and where the precious metals may be considered for short periods as of a uniform value, the conformity of this measure with the proportions of money prices at which commodities would be exchanging all around us, might daily be brought to the test of experience and be established beyond the possibility of doubt.

It will be said, perhaps, that in the same place, and at the same time, almost every commodity may be considered as an accurate measure of the relative value of others, and that what is true of labour in this respect is true of cloth, cotton, iron, or any other article. Any two commodities which, at the same time, and in the same place, will purchase or command the same quantity of cloth, cotton, or iron, of a given quality, will have the same relative value, or will exchange with each other.

This will be readily granted, if we take the same time and place exactly, and consider only relative value; but not if either any latitude be allowed as to time and place, or if we consider, as it is our object to do, not merely relative, but absolute and natural value. Cloth, cotton, iron, and similar commodities, are subject to vary most essentially in a single year, or even month, so that the manufacturer who could obtain for his goods the same quantity of cloth as he could the year before, would be very little likely to obtain the same quantity of other articles. But even supposing that these articles and the product of the capitalist were to continue of the same relative value to each other, he might still be quite unable to carry on his business. The conditions of the supply of commodities do not require that they should retain always the same relative values, but that each should retain its proper natural value, or the means of obtaining those objects which will continue to the producer the same power of production and accumulation. If the advances of capitalists consisted specifically in cloth, then these advances would always have the effect required in production; and as profits are calculated upon the advances necessary to production, whatever they may be, the quantity of cloth advanced, with the addition of the ordinary profits estimated also in quantity of cloth, would represent both the natural and relative value of the commodity. But the specific advances of capitalists do not consist of cloth, but of labour; and as no other object whatever can represent a given quantity of labour, it is obvious that labour stands quite alone in this respect, and that it is the quantity of labour which a commodity will command, and not the quantity of any other commodity, which can represent the conditions of its supply, or its natural value.[D]

It will be allowed, then,

First, that when commodities are obtained by labour alone, and sold immediately, they will, on an average, exchange with each other according to the quantity of labour employed upon them.