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of all things which cannot be indefinitely increased, except that even for them, when produced by industry, there is a minimum value, determined by the cost of production. But in all things which admit of indefinite multiplication, demand and supply only determine the perturbations of value, during a period which cannot exceed the length of time necessary for altering the supply. While thus ruling the oscillations of value, they themselves obey a superior force, which makes value gravitate towards Cost of Production, and which would settle it and keep it there, if fresh disturbing influences were not continually arising to make it again deviate. To pursue the same strain of metaphor, demand and supply always rush to an equilibrium, but the condition of stable equilibrium is when things exchange for each other according to their cost of production, or, in the expression we have used, when things are at their Natural Value.



1. The component elements of Cost of Production have been set forth in the First Part of this inquiry.* The principal of them, and so much the principal as to be nearly the sole, we found to be Labor. What the production of a thing costs to its producer, or its series of producers, is the labor expended in producing it. If we consider as the producer the capitalist who makes the advances, the word Labor may be replaced by the word Wages; what the produce costs to him, is the wages which he has had to pay. At the first glance, indeed, this seems to be only a part of his outlay, since he has not only paid wages to laborers, but has likewise provided them with tools, materials, and perhaps buildings. These tools, materials, and buildings, however, were produced by labor and capital ; and their value, like that of the article to the production of which they are subservient, depends on cost of production, which again is resolvable into labor. The cost of production of broadcloth does not wholly consist in the wages of weavers; which alone are directly paid by the cloth manufacturer. It consists also of the wages of spinners and woolcombers, and, it may be added, of shepherds, all of which the clothier has paid for in the price of yarn. It consists, too, of the wages of builders and brickmakers, which he has reimbursed in the contract price of erecting his factory. It partly consists of the wages of machine makers, iron founders, and miners. And to these must be added the wages of the carriers who transported any of the means and appliances of the production to the place where they were to be used, and the product itself to the place where it is to be sold. labor of conveying the cotton to the country where the stockings are to be manufactured, which includes a portion of the labor bestowed in building the ship in which it is conveyed, and which is charged in the freight of the goods ; thirdly, the labor of the spinner and weaver ; fourthly, a portion of the labor of the engineer, smith, and carpenter, who erected the buildings and machinery by the help of which they are made; fifthly, the labor of the retail dealer, and of many others, whom it is unnecessary further to particularize. The aggregate sum of these various kinds of labor determines the quantity of other things for which these stockings will exchange, while the same consideration of the various quantities of labor which have been bestowed on those other things, will equally govern the portion of them which will be given for the stockings.

* Supra, pp. 37-9.

The value of commodities, therefore, depends principally (we shall presently see whether it depends solely) on the quantity of labor required for their production; including in the idea of production, that of conveyance to the market. “In estimating,” says Ricardo, * “the exchangeable value

Ricando of stockings, for example, we shall find that their value, comparatively with other things, depends on the total quantity of labor necessary to manufacture them and bring them to market. First, there is the labor necessary to cultivate total the land on which the raw cotton is grown; secondly, the

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them and * Principles of Political Economy and Taxation, ch. i. sect. 3.

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“To convince ourselves that this is the real foundation of exchangeable value, let us suppose any improvement to be made in the means of abridging labor in any one of the various processes through which the raw cotton must pass before the manufactured stockings come to the market to be exchanged for other things, and observe the effects which will follow. If fewer men were required to cultivate the raw cotton, or if fewer sailors were employed in navigating, or shipwrights in constructing, the ship in which it was conveyed to us; if fewer hands were employed in raising the buildings and machinery, or if these, when raised, were rendered more efficient; the stockings would inevitably fall in value, and command less of other things. They would fall, because a less quantity of labor was necessary to their production, and would therefore exchange for a smaller quantity of those things in which no such abridgment of labor had been made.

“Economy in the use of labor never fails to reduce the relative value of a commodity, whether the saving be in the labor necessary to the manufacture of the commodity

itself, or in that necessary to the formation of the capital, by the aid of which it is produced. In either case, the price of stockings would fall, whether there were fewer men employed as bleachers, spinners, and weavers, persons immediately necessary to their manufacture; or as sailors, carriers, engineers, and smiths, persons more indirectly concerned. In the one case, the whole saving of labor would fall on the stockings, because that portion of labor was wholly confined to the stockings; in the other, a portion only would fall on the stockings, the remainder being applied to all those other commodities, to the production of which the buildings, machinery, and carriage were subservient."

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§ 2. It will have been observed that Ricardo expresses himself as if the quantity of labor which it costs to produce ulitin me on a commodity and bring it to market, were the only thing license on which its value depended. But since the cost of production to the capitalist is not labor but wages, and since"

na may premte wages may be either greater or less, the quantity of labor being the same; it would seem that the value of the int in wiper product cannot be determined solely by the quantity of too. labor, but by the quantity together with the remuneration; and that values must partly depend on wages.

In order to decide this point, it must be considered that value is a relative term; that the value of a commodity is uului miniones not a name for an inherent and substantive quality of imaticheant's the thing itself, but means the quantity of other things

A tantie perant which can be obtained in exchange for it. The value of all one thing must always be understood relatively to some other thing, or to things in general. Now the relation of one thing to another cannot be altered by any cause which affects them both alike. A rise or fall of general wages is a fact which affects all commodities in the same manner, and therefore affords no reason why they should exchange

for each other in one rather than in another proportion. To suppose that high wages make high values, is to suppose that there can be such a thing as general high values. But this is a contradiction in terms; the high value of some things is synonymous with the low value of others. The mistake arises from not attending to values, but only to prices. Though there is no such thing as a general rise of values, there is such a thing as a general rise of prices. As soon as we form distinctly the idea of values, we see that high or low wages can have nothing to do with them ; but that high wages make high prices, is a popular and widelyspread opinion. The whole amount of error involved in this proposition can only be seen thoroughly when we come to the theory of money; at present we need only say that if it be true, there can be no such thing as a real rise of wages; for if wages could not rise without a proportional rise of the price of every thing, they could not, for any substantial purpose, rise at all. This surely is a sufficient reductio ad absurdum, and shows the amazing folly of the propositions, which may and do become, and long remain, accredited doctrines of popular political economy. It must be remembered too, that general high prices, even supposing them to exist, can be of no use to a producer or dealer, considered as such; for if they increase his money returns, they increase in the same degree all his expenses. There is no mode in which capitalists can compensate themselves for a high cost of labor, through any action on values or prices. It cannot be prevented from taking its effect in low profits. If the laborers really get more, that is, get the produce of more labor, a smaller percentage must remain for profit. From this Law of Distribution, resting as it does on a law of arithmetic, there is no escape. The mechanism of Exchange and Price may hide it from us, but is quite powerless to alter it.

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