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our other conclusions; and anything vague or misty in our conception of it, creates confusion and uncertainty in everything else. Happily, there is nothing in the laws of Value which remains for the present or any future writer to clear up; the theory of the subject is complete; the only difficulty to be overcome is that of so stating it as to solve by anticipation the chief perplexities which occur in applying it; and to do this, some minuteness of exposition, and considerable demands on the patience of the reader, are unavoidable. He will be amply repaid, however, (if a stranger to these inquiries,) by the ease and rapidity with which a thorough understanding of this subject will enable him to fathom most of the remaining questions of political economy.

S 2. We must begin by settling our phraseology. Adam Smith, in a passage often quoted, has touched upon the most obvious ambiguity of the word value ; which in one in the of its senses, signifies usefulness, in another, power of - lusso on me on purchasing ; in his own language, value in use and value in ipotesi exchange. But, (as Mr. De Quincey has remarked,) in illustrating this double meaning, Adam Smith has himself to fallen into another ambiguity. Things (he says) which have the greatest value in use have often little or no value in exchange; which is true, since that which can be obtained without labor or sacrifice will command no price, however useful or needful it may be. But he proceeds to add, that things which have the greatest value in exchange, as a diamond for example, may have little or no value in use. This is employing the word use, not in the sense in which political economy is concerned with it, but in that other sense in which use is opposed to pleasure. Political economy has nothing to do with the comparative estimation of different uses in the judgment of a philosopher or of a moralist. The use of a thing, in political economy, means



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its capacity to satisfy a desire, or serve a purpose. Diarelease monds have this capacity in a high degree, and unless they

had it, would not bear any price. Value in use, or as Mr. De Quincey calls it, teleologic value, is the extreme limit of value in exchange. The exchange value of a thing may fall short, to any amount, of its value in use; but that it can never exceed the value in use, implies a contradiction; it supposes that persons will give, to possess a thing, more than the utmost. value which they themselves put upon it, as a means of gratifying their inclinations.

The word Value, when used without adjunct, always means, in political economy, value in exchange; or as it has been called by Adam Smith and his successors, eschangeable value, a phrase which no amount of authority that can be quoted for it can make other than bad English. Mr. De Quincey substitutes the term Exchange Value, which is unexceptionable.

Exchange value requires to be distinguished from Price. The words Value and Price were used as synonymous by the early political economists, and are not always discriminated even by Ricardo. But the most accurate modern writers, to avoid the wasteful expenditure of two good scientific terms on a single idea, have employed Price to express the value of a thing in relation to money ; the quantity of money for which it will exchange. By the price of a thing, therefore, we shall henceforth understand its value in money; by the value, or exchange value of a thing, its general power of purchasing; the command which its possession gives over purchasable commodities in general.

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$ 3. But here a fresh demand for explanation presents itself. What is meant by command over commodities in general ? The same thing exchanges for a great quantity of some commodities, and for a very small quantity of

others. A suit of clothes exchanges for a great quantity of bread, and for a very small quantity of precious stones. The value of a thing in exchange for some commodities may be rising, for others falling. A coat may exchange for less bread this year than last, if the harvest has been bad, but for more glass or iron, if a tax has been taken off those commodities, or an improvement made in their manufacture. Has the value of the coat, in these circumstances, fallen or risen? It is impossible to say; all that can be said is, that it has fallen in relation to one thing, and risen in respect to another. But there is another case, in which no one would have any hesitation in saying what sort of change had taken place in the value of the coat; namely, if the cause in which the disturbance of exchange values originated, was something directly affecting the coat itself, and not the bread, or the glass. Suppose, for example, that an invention had been made in machinery, by which broadcloth could be woven at half the former cost. The effect of this would be to lower the value of a coat, and if lowered by this cause, it would be lowered not in relation to bread only or to glass only, but to all purchasable things, except such as happened to be affected at the very time by a similar depressing cause. We should, therefore, say, that there had been a fall in the exchange value or general purchasing power of a coat. The idea of general exchange value originates in the fact, that there really are causes which tend to alter the value of a thing in exchange for things generally, that is, for all things which are not themselves acted upon by causes of similar tendency.

In considering exchange value scientifically, it is expedient to abstract from all causes except those which originate in the very commodity under consideration.

Those which originate in the commodities with which we compare it, affect its value in relation to these commodities; but those which originate in itself, affect its value in relation to all commodities. In order the more completely to confine our attention to these last, it is convenient to assume that all commodities but the one in question remain invariable in their relative value. When we are considering the causes which raise or lower the value of corn, we suppose that woollens, silks, cutlery, sugar, timber, &c., while varying in their power of purchasing corn, remain constant in the proportions in which they exchange for one another. On this assumption, any one of them may be taken as a representative of all the rest ; since in whatever manner corn varies in value with respect to any one commodity, it varies in the same manner and degree with respect to every other; and the upward or downward movement of its value estimated in some one thing, is all that needs be considered. Its money value, therefore, or price, will represent as well as anything else its general exchange value, or purchasing power; and from an obvious convenience, will often be employed by us in that representative character; with the proviso that money itself do not vary in its general purchasing power, but that the prices of all things, other than that which we happen to be considering, remain unaltered.



s 4. The distinction between Value and Price, as we have now defined them, is so obvious, as scarcely to seem in need of any illustration. But in political economy the greatest errors arise from overlooking the most obvious truths. Simple as this distinction is, it has consequences with which a reader unacquainted with the subject would do well to begin early by making himself thoroughly familiar. The following is one of the principal. There is. such a thing as a general rise of prices. All commodities may rise in their money price. But there cannot be a general rise of values. It is a contradiction in terms. A can only rise in value by exchanging for a greater quantity

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of B and C; in which case these must exchange for a rise
smaller quantity of A. All things cannot rise relatively to implica
one another. If one half of the commodities in the market
rise in exchange value, the very terms imply a fall of the
other half; and reciprocally, the fall implies a rise. Things ::sten
which are exchanged for one another can no more all fall,
or all rise, than a dozen runners can each outrun all the
rest, or a hundred trees all overtop one another. Simple
as this truth is, we shall presently see that it is lost sight of,
in some of the most accredited doctrines both of theorists
and of what are called practical men. And as a first speci-
men, we may instance the great importance attached in the
imagination of most people to a rise or fall of general !
prices. Because when the price of any one commodity
rises, the circumstance usually indicates a rise of its value, ivice
people have an indistinct feeling when all prices rise, as if
all things simultaneously had risen in value, and all the
possessors had become enriched. That the money prices
of all things should rise or fall, provided they all rise or
fall equally, is in itself, and apart from existing contracts,
of no consequence. It affects nobody's wages, profits, or
rent. Every one gets more money in the one case, and
less in the other ; but, of all that is to be bought with
money, they get neither more nor less than before. It
makes no other difference than that of using more or fewer
counters to reckon by. The only thing which in this case
is really altered in value, is money; and the only persons
who either gain or lose are the holders of money, or those
who have to receive or to pay fixed sums of it. There is
a difference to annuitants and to creditors the one way,
and to those who are burdened with annuities, or with
debts, the contrary way. There is a disturbance, in short,
of fixed money contracts; and this is an evil, whether it
takes place in the debtor's favor or in the creditor's. But
as to future transactions there is no difference to any one.

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