"anomalous" cases of Value, is to say that there are phenomena without a Law; a doctrine which is entirely inadmissible. 40. Mr. Mill afterwards comes to the case which he alluded to in the extract given above, and it is impossible to imagine a more glaring instance of the breach of the Law of Continuity, and of the principle of the Continuity of Science. He says 'The values of commodities produced at the same place, or in places sufficiently adjacent for capital to move freely between them, let us say for simplicity, of commodities produced in the same country-depend (temporary fluctuations apart) upon their cost of production. But the value of a commodity brought from a distant place, especially from a foreign country, does not depend on its cost of production in the place from whence it comes. On what then does it depend? The value of a thing in any place, depends on the cost of its acquisition in that place; which in the case of an imported article, means the cost of production of the thing which is exported to pay for it. "Since all trade is in reality barter, money being a mere instrument for exchanging things against one another, we will, for simplicity, begin by supposing the international trade to be in form, what it always is in reality, an actual trucking of one commodity against another. As far as we have hitherto proceeded, we have found all the laws of interchange to be essentially the same, whether money is used or not; money never governing, but always obeying these general laws. "If, then, England imports wine from Spain, giving for every pipe of wine a bale of cloth, the exchange value of a pipe of wine in England will not depend upon what the production of the wine may have cost in Spain, but upon what the production of the cloth has cost in England. Though the wine may have cost in Spain the equivalent of only ten days labour, yet, if the cloth costs in England twenty days labour, the wine when brought to England, will exchange for the produce of twenty days English labour, plus the cost of carriage; including the usual profit on the importer's capital during the time it is locked up, and withheld from other employment. "The value, then, in any country, of a foreign commodity depends on the quantity of home produce which must be given 1 Bk. iii., ch. 18, of International Values. to the foreign country in exchange for it. In other words the values of foreign commodities depend on the terms of international exchange. What, then, do these depend upon? What is it, which, in the case supposed, causes a pipe of wine from Spain to be exchanged with England for exactly that quantity of cloth? We have seen that it is not their cost of production. If the cloth and the wine were both made in Spain, they would exchange at their cost of production in Spain; if they were both made in England, they would exchange at their cost of production in England: but all the cloth being made in England, and all the wine in Spain, they are in circumstances to which we have already determined that the law of cost of production is not applicable. We must accordingly, as we have done before in a similar embarrassment, fall back upon an antecedent law, that of supply and demand: and in this we shall again find the solution of our difficulty." The consideration of this example will at once shew the fallacy of the whole of Mr. Mill's system. For he says that the values of commodities produced at places near each other are governed by cost of production, but the values of those produced at distant places, and in foreign countries, are governed by the Law of Demand and Supply. Now, let us suppose that the commodities are produced in places which are at a gradually and continuously increasing distance from each other. When do the places cease to be near each other, and when do they become distant from each other? At what point does the Law of Cost of Production change into the Law of Demand and Supply? This mode of argument is an exact parallel to, and as flagrant a breach of the Law of Continuity, as the Aristotelian doctrine of the Laws of Motion quoted in page 42. Still more extraordinary is it, if possible, to suppose that the Laws of Value can change according as countries are foreign to each other, or not. England and Scotland were once foreign countries to each other; and, then, according to Mr. Mill, the values of commodities produced in them respectively and exchanged, were governed by the Law of Demand and Supply; but when England and Scotland were united into one country, the values of the same commodities were then immediately governed by the Law of Cost of Production! So that the very day and instant the Act of Union came into effect, the Laws of Value between the two countries underwent a fundamental change! Certainly this was an effect of the Union which no one ever suspected before. Formerly, Savoy was part of Sardinia, and a foreign country to France: the values of commodities exchanged between them were governed by the Law of Demand and Supply: Savoy was then united to France, and at that very instant, the Law of Value between them changed into Cost of Production! England and France are now foreign countries to each other. The values of commodities produced in them now are governed by the Law of Demand and Supply; but if France and England were once more united, then these values would be at once governed by the Law of Cost of Production! Until very recently Italy was parcelled out into a number of separate and independent States. They were foreign countries to each other: and therefore the Values of commodities exchanged between them were governed by the Law of Demand and Supply. But Italy is happily now united, and become one country. Values in it are now, therefore governed by Cost of Production! That is to say, the unification of Italy has caused a fundamental change in the Law of Value! It would be just as rational to say that the unification of Italy has caused a fundamental change in the Law of Gravity. The slightest consideration will show that such fantastic notions cannot be accepted as sound philosophy; but that the fundamental Laws of Value must be the same, whether the places of production be near to, or distant from, each other; whether situated in the same, or in foreign, countries. 41. The fundamental objection to the whole of the RicardoMill system of Political Economy must now be apparent to any one conversant with the most ordinary principles of Natural Philosophy. Any one acquainted with the methods of investigation pursued in Physical Science since the days of Galileo, must know that there can be but ONE General Theory at the basis of every science. For if the science is broken up into many classes of phenomena, each governed by a different Theory, how is it possible to generalize in such a science? In different physical sciences there have been severe and protracted controversies as to which was the true Theory, but no one ever supposed that there could be more than one. Who ever heard of any one writing a treatise on Astronomy and maintaining that one class of Astronomical Phenomena were to be explained on the Ptolemaic Theory, another class on the Copernican Theory, and another class on Tycho Brahe's Theory? Who ever heard of any one writing a treatise on Optics, and maintaining that one class of Optical phenomena are to be explained by the Corpuscular Theory, another class of phenomena by the Wave Theory, and other classes by other theories? Would not such a method of treating Astronomy and Optics be universally scouted by every Physical Philosopher? And yet this is exactly the method followed by Ricardo and Mr. Mill in Economics! Mr. Mill says "This, then, is the Law of Value with respect to all commodities not susceptible of being multiplied at pleasure. Such commodities no doubt are exceptions (!) There is another Law (1) for that much larger class of things which admit of indefinite multiplication. But it is not the less necessary to conceive distinctly and grasp firmly the theory of this exceptional case (!!) In the first place it will be found to be of great assistance in rendering the common case more intelligible. And in the next place, the principle of the exception stretches wider, and embraces more cases than might at first be supposed." Now this Law which Mr. Mill treats as accounting for this exceptional case, by his own admission, governs the Value of Labour—the rate of discount, or the Value of Money and Credit the whole Foreign trade of the country and the value of all other commodities at any particular time." He afterwards considers some "peculiar cases " of value and says " there would be little difficulty in finding other 'anomalous cases' cases of value." Now if, according to Mr. Mill, the whole phenomena of Economics are made up of "exceptional cases," "" peculiar cases," and "anomalous cases," what remains for the general body of the science? Absolutely nothing! So Mr. Carey after maintaining as a fundamental dogma that Labour is the sole cause of value says-" Pearls may be found by those who do not seek them, and meteoric iron may be a gift to those who little anticipate its reception, while others may seek for pearls, or dig for iron, without profitable results. These are accidents which do not, in the slightest degree, militate 1 Book iii., ch. 2, § 4. Book iii., ch. 2, § 5. 5 Book iii,, ch. 3, § 1. 3 Book iii., ch. 23. • Book iii., ch. 16. against the assertion that all value is the result of labour. Nine hundred and ninety-nine out of every one thousand parts of those annually created are so, and the exceptions are too slight to be deserving of consideration. They are just sufficiently numerous to prove the rule!!" Now, leaving out of consideration that not the hundredth part of things of value have any labour associated with them at all, such methods of treating a science are simply a burlesque on science. They shew either that the writers are utterly ignorant of the commonest principles of Natural Philosophy, or that they are not in earnest in writing on Economics. Any scientific person, therefore, who had no special knowledge of Economical subjects, but who was simply informed of the method of reasoning adopted, would instantly condemn it. Ricardo and his followers break up Economic phenomena into several distinct classes of cases, and they assert that there is a distinct fundamental law of value for each. Their object is to discover where the values of things will rest. It may be said that the whole spirit of the Ricardian school of Economists is to treat it as a Statical science. But this is a most manifest fundamental error, and it was clearly seen by an eminent philosopher who never devoted himself specially to the subject. Sir John Herschel says "One great source of error and mistake in Political Economy consists in persisting to regard its problems as STATICAL rather than DYNAMICAL in their character." 1 Sir John Herschel has exactly described the fundamental defect of the whole Ricardo-Mill system of Political Economy. It is quite clear that Economics is a DYNAMICAL, and not a STATICAL, Science. The relations of Exchangeable Quantities are in a state of perpetual variation, and the great problem of the science is to discover the single General Law of these variations. That this is the true problem in the science was clearly seen by Francis Horner, who says in some letters to Sir James Mackintosh - The theory of prices and their variations is the darkest part of our system. A statist does nothing for philosophical economy unless he ascertains and describes 1 Discourses: Review of Quetelet on Probabilities, p. 435. |