Phil.
"So they among themselves in pleasant vein
Stood scoffing."
I suppose I may add—
"Heightened in their thoughts beyond
All doubts of victory."
Meantime, what is it you allude to?
X. You are acquainted, I doubt not, Philebus, with the common distinction between real and nominal value; and in your judgment upon that distinction I presume that you adopt the doctrine of Mr. Malthus.
Phil. I do; but I know not why you should call it the doctrine of Mr. Malthus; for, though he has reurged it against Mr. Ricardo, yet originally it belongs to Adam Smith.
X. Not so, Philebus; a distinction between real and nominal value was made by Adam Smith, but not altogether the distinction of Mr. Malthus. It is true that Mr. Malthus tells us ("Polit. Econ.," p. 63) that the distinction is "exactly the same." But in this he is inaccurate; for neither is it exactly the same; nor, if it had been, could Mr. Malthus have urged it in his "Political Economy" with the same consistency as its original author. This you will see hereafter. But no matter; how do you understand the distinction?
Phil. "I continue to think," with Mr. Malthus, and in his words, "that the most proper definition of real value in exchange, in contradistinction to nominal value in exchange, is the power of commanding the necessaries and conveniences of life, including labor, as distinguished from the power of commanding the precious metals."
X. You think, for instance, that if the wages of a laborer should in England be at the rate of five shillings a day, and in France of no more than one shilling a day, it could not, therefore, be inferred that wages were at a high real value in England, or a low real value in France. Until we know how much food, &c., could be had for the five shillings in England, and how much in France for the one shilling, all that we could fairly assert would be, that wages were at a high nominal value in England and at a low nominal value in France; but the moment it should be ascertained that the English wages would procure twice as much comfort as the French, or the French twice as much as the English, we might then peremptorily affirm that wages were at a high real value in England on the first supposition, or in France on the second:—this is what you think?
Phil. It is, and very fairly stated, I think this, in common with Mr. Malthus; and can hold out but little hope that I shall ever cease to think it.