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

Perhaps in the case just supposed, the result may be said to be occasioned by a fall in the value of the produce, without what could properly be called an increased demand for labour. But if we suppose that a considerable number of labourers were sent out of the country, or swept off by a plague, there could then be no doubt of a great demand for labour, yet the result would be similar. A larger quantity of produce would necessarily be awarded to the labourer, and profits would fall. A given quantity of produce obtained by the same quantity of labour as before, would fall in value on account of the fall of that part of its value which consisted of profits, while the fall of profits on the increased wages would be balanced by the increased labour necessary to obtain them.

If instead of labourers being sent out of the country, labourers were imported, the result would be just opposite. A smaller quantity of produce would be awarded to the labourer and profits would rise. A given quantity of produce, which had been obtained by the same quantity of labour as before, would rise in value on account of the rise of profits, while this rise of profits, in reference to the wages of the labourer, would be balanced by the smaller quantity of labour necessary to obtain the diminished produce awarded to the labourer.

In the former case of the demand for labour, it appeared that the greater earnings of the labourer were occasioned, not by a rise in the value of labour, but by a fall in the value of the produce for which the labour was exchanged. And in the latter case of the abundance of labour, it appeared that the small earnings of the labourer were occasioned by a rise in the value of the produce, and not by a fall in the value of the labour.

The result would be similar, if instead of supposing the same quantity of produce to be obtained by the same quantity of labour, we were to suppose the greatest variations to take place in the fertility of the soil, and, consequently, in the productive power of labour. In all cases it would still be found that, as Adam Smith says, it is the produce which varies in value, not the labour for which it will exchange; and if money were obtained in the way in which its value would unquestionably be the most constant, all these variations would appear in the money prices of commodities, whenever the demand for labour varied; while the money price of a given quantify of labour would remain the same.[I]

The following Table will further illustrate the necessary constancy in the value of labour, and some of its most important results, in a clearer manner and in a shorter compass than if each case were taken separately.

The first column represents the varying fertility of the soil, by the varying quantity of corn which can be obtained by the labour of a given number of men.

The second column represents the yearly corn wages of each labourer, determined by the state of the demand and supply of produce compared with labour.

The third column represents the variable advances of produce, in the form of corn wages, which, according to the rate at which the labourers are paid, are necessary to obtain the produce of the first column.

The fourth column represents the rate of profits determined in the common way, by the proportion which the excess of the produce in the first column above the produce paid to the labourers in the third, bears to these advances.

The fifth and sixth columns represent the quantity of labour required to produce the varying corn wages of the given number of men, with the profits estimated also in quantity of labour; and the reader will see at once that these two columns must necessarily, from the manner in which profits and wages are estimated, make up the constant quantity and value of labour which appears in the seventh column.