PRINCIPLES

OF

POLITICAL ECONOMY.

PART II.

VALUE AND PRICE.

THE various methods by which labour may be rendered most productive, and the relation and dependence of the different kinds of industry being previously traced and exhibited, we now proceed to the second division of our subject, or to an investigation of the laws which regulate the value and price of the products of industry.

In treating of the production of wealth, it was not necessary to inquire whether the labour required to appropriate and produce commodities, was the sole source and measure of their value; or whether it was not partly derived from other causes, and partly only from labour. But an acquaintance with the circumstances which determine the value of commodities, in the different stages of society, is necessary to enable us to ascertain, with due precision, the principles which regulate their distribution.

CHAPTER I.

Exchangeable Value-How it is determined—Conditions required to render a Commodity invariable in its Exchangeable Value-Cost or Real Value-How it is determined—Conditions required to render a Commodity invariable in its Cost-Quantity of Labour required to produce a Commodity different from the Quantity for which it will exchange-Corn not invariable in its Value-Changes in the Value of Money.

We endeavoured to show, at the commencement of this work, that the value and the utility of commodities are totally distinct qualities, and cannot be confounded, or regarded in the same point of view, without leading to the most erroneous conclusions. An article is useful, or possessed of utility, when it has the power or capacity of exciting, satisfying, or gratifying one or more of the various wants and desires of man. But an article is not valuable, or possessed of value, unless it may be exchanged for some quantity of voluntary labour, or of some other article. or product, obtainable only through the exertion of such labour.

Without utility of some sort or other, no article will ever be desired. But the most useful article, if it be a spontaneous production of nature, and may be freely enjoyed by every individual, is wholly destitute of value; for none will either labour, or give the produce of labour, for that which Providence gratuitously supplies. That an article may have value, it is indispensable that some expenditure of labour, or, which is the same thing, some sacrifice of toil and trouble, should be required for its acquisition. The maximum of utility, if it be obtained independently of this sacrifice, can give no value to any thing. What can

be more useful than atmospheric air and the rays of the sun? and what can be more completely destitute of value?

An article or product possessed of utility and value must derive the latter from one of two sources, or from both. Labour must have been required for the production or appropriation of a valuable article, or it must exist in a limited quantity, or under such circumstances that the supply is inferior to the demand. All those articles and products of which the supply may be indefinitely increased, and which are not subject to any artificial restraints, derive their value either wholly from the labour expended upon them, or partly from that cause, and partly from the accidental circumstance of their supply being inferior to the demand; but the value of such articles and products as exist only in limited quantities, and the supply of which, not admitting of an indefinite extension, is really subjected to a natural or an artificial monopoly, is altogether independent of the labour required to produce them; and is derived partly, as in the case of waterfalls, from the labour they are fitted to save, and partly, as in the case of antique gems, statues, &c., from the mere competition of those who wish to obtain. them.

We must, therefore, carefully distinguish between the exchangeable value of an article, or the quantity of produce or labour for which it will exchange, and its cost, or, as it is sometimes termed, its real value; meaning, by cost or real value, the quantity of labour originally required to produce or acquire an article.

I. EXCHANGEABLE OR MARKETABLE VALUE.-The capacity of exchanging for or buying other things is inherent in all commodities, which are not spontaneous productions, when they happen to be in demand; but it can neither be manifested nor appreciated except when they are compared with each other, or with labour. It is, indeed, quite impossible to speak of the value of a commodity without referring to some other commodity, or to labour, as a standard.

No article or product can have exchangeable value, except in relation to something else that is or may be exchanged for it. We might as well talk about absolute height or absolute depth, as about absolute value. A is said to possess value, because it exchanges for some quantity of B or C; and it is evident, that the quantity of B or C for which A exchanges, forms the only attainable measure of, or expression for, the value of A; just as the quantity of A forms the only attainable measure of, or expression for, the value of B or C.

Exchangeable value being the power which a commodity has of exchanging for other commodities, or for labour, it follows that the exchangeable value of no single commodity can vary without occasioning a simultaneous variation in the exchangeable value of those with which it is compared. Suppose a bushel of wheat exchanged, in 1750, for an ounce of silver, and that it now exchanges for two ounces on this hypothesis, it is evident that wheat has doubled in value as compared with silver; or, which is the same thing, that silver has lost half its value as compared with wheat. This case is, mutatis mutandis, the case of all commodities or products exchanged for each other. If A rise, it must be in relation to something else, as B; and if B fall, it must be in relation to something else, as A; so that it is obviously impossible to change the relation of A to B, without, at the same time, changing that of B to A.

It appears, therefore, that no commodity can be constant or invariable in its exchangeable value, unless it will at all times exchange for, or purchase, the same quantity of all other commodities and of labour. Suppose A exchanges for 1 B, 2 C, 3 D, &c., its exchangeable value will be constant, provided it always preserves its present relation to them, but not otherwise. And it is obvious, that to communicate this constancy of value to A, it is indispensable that those circumstances, whatever they may be, that now determine its relation to, or power of exchanging for or purchasing B, C, D, &c., should, in all time to come, continue