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

Consequently, as no other supposition will suit the actual phenomena, and as it has already appeared that the value of commodities in the same country is determined by the quantity of labour which they will command, we may safely conclude that the value of the precious metals in different countries is determined by the same measure, or by the different quantities of common agricultural labour, taking the average of summer and winter wages, which a given portion of them will command.

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When we come to consider the varying value of commodities at distant periods in the same country, or the rise or fall of produce in the progress of cultivation and improvement, we are necessarily deprived of the test of an actual exchange. We know, however, that at different periods in the same country both the value of the precious metals, and the rate of profits and corn wages, may alter most essentially.

The effect of the varying value of the precious metals, when we have once obtained a measure of value, will be easily estimated. The most important point at present is, to consider the effects which must be produced upon the value of commodities in the progress of society, by the changes which necessarily take place in the profits of stock and the corn wages of labour.

On the supposition of high profits at an early period of society, and a considerable fall of them subsequently, how are we to measure and compare the value of commodities at these different periods? With regard to those which had continued to cost the same quantity of accumulated and immediate labour, we could not say that they were of the same value, unless we were prepared to assert that the value of commodities is determined solely by the labour employed upon them, not only when the rate of profits is the same but when it is totally different;[G] a proposition which no one can venture to assert in the case of foreign commodities, and which there is as little reason to assert in comparing the commodities of distant periods.

If profits were 50 per cent. five hundred years ago, and are 10 per cent. now, the question is, whether a piece of cloth which had cost the same quantity of labour at these different periods would be of the same value. By the supposition it was composed of a greater quantity of profits in the earlier period, and having cost the same quantity of labour, we should naturally conclude that it would be of a higher value.

It is said, however, that, although it cost the same quantity of labour, yet that the labour in the former period was of much less value, which would counterbalance the greater quantity of profits, and leave the value obtained by the same quantity of labour the same. But when we are thus referred to the lower value of labour, the principle of compensation which had before been applied is quite forgotten. The corn which pays the labourer is indeed obtained by a smaller quantity of labour, on account of the superior fertility of the soil from which it is raised, but it is sold as the cloth is sold, at a profit of 50 per cent.; and if it be said that, in the case of the cloth, the low value of wages which is supposed to be the result of superior fertility counteracts the high profits and keeps the value of cloth the same, surely it may be said, in the case of the corn which pays the wages, that the smaller quantity of labour necessary to produce it is made up by the greater rate of profits at which it is sold, and the value of wages is thus kept the same.

If 100 quarters of corn be obtained in the different periods of society by the labour of a different number of men, such as 7, 8 and 9, each paid at the rate of 10 quarters a year, the value of the 100 quarters of corn, or the value of the wages of any one of the men employed, estimated in the labour advanced, with the addition of the profits upon such advances, must obviously always be the same.

At an early period of society, when the soil was very fertile and the labour of 7 men only was necessary to produce 100 quarters of corn on land which paid little or no rent, the advances in labour being 7 men, or in corn 70 quarters, and the return 100 quarters, the rate of profits would be 42-6/7 per cent., and the advances of the labour of 7 men increased by a profit of 42-6/7 would equal the labour of 10 men, or the quantity of labour which the whole return would command. At a more advanced period, when the last land taken into cultivation was less fertile, and the labour of 8 men was necessary to obtain the return of 100 quarters, the advances in labour being 8 men, or in corn 80 quarters, the rate of profits would be 25 per cent., and the labour of 8 men increased by 25 per cent. would exactly equal the labour of 10 men. On the same principle, if at a still later period 9 men were necessary to produce the 100 quarters, the rate of profits would be 11-1/9 per cent., and the quantity of labour employed increased by the profits would still be equal to the labour of 10 men.

It appears then that when the labourer continues to be paid the same corn wages, the value of the whole corn produce, or the value of each man’s wages estimated in the usual way in labour and profits, must obviously remain constant, and that it must be most erroneous to infer that labour rises in value because it requires more labour in the progress of cultivation to produce the wages of 10 men or one man, if at the same time it requires such a diminished value of profits as exactly to balance it.