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of human desire to be intrinsic values, these may be divided into two kinds; first, those which are imparted to the substance by the immediate act of God; and secondly, those that are imparted to it through the intermediate agency of man. The former, being the gift of God, are gratuitously received, and gratuitously parted with. The latter have cost human labor, and therefore cannot be obtained without an equivalent. Hence it is the latter alone, that enter into computation, in fixing exchangeable value. Thus the exchangeable value of iron and of gold, respectively, does not depend upon the uses to which these metals may be put, but upon the labor which must be employed in preparing them to gratify desire.
But it is plain, that if a man expend labor in the creation of a value, this labor gives him a right to the exclusive possession of that value; that is, supposing the original elements belonged to no one else. Now, as almost all the qualities which gratify human desire, can exist only by the exertion of this labor, it follows, that all such objects must have already become the exclusive possession of some human being. Hence, he who wishes to possess such objects, must either himself expend the labor necessary for producing them, or else he must procure them by voluntary concession, from some one who has already expended it. But he who has expended labor upon a substance, will never voluntarily surrender it up, either for nothing, or for that which he can obtain without labor. He who makes knives, will neither give them away, nor exchange them for air, or water, or sunlight. Hence, he who wants knives must either make them himself, or else he must offer the knife-maker, in exchange for them, some value which he himself has created. Hence, every man who desires the means of happiness, must labor to obtain them. And, as every man hashis preference for some particular kind of labor; and as, moreover, every man can succeed better by confining his labor to one thing, than by devoting it to
twenty things, every man is desirous of exchanging some portion of the value created by himself, for that created by others. So soon as this is the case with any one substance, it then has acquired exchangeable value: that is, just so soon as other men are willing to give me a value which they have created, for that which I have created, then the result of my labor has exchangeable value, and not before.
The degree of the exchangeable value of any one substance, depends chiefly upon the amount of labor and of skill necessary to create that value. No one would exchange what has cost him two days' labor, for that which has cost another man of the same skill, but one day's labor; because, rather than make such an exchange, he would create this second value for himself. Thus, if a hundred pounds of fish could be procured by a day's labor, and only twenty-five pounds of venison; men would exchange, not pound for pound, but labor for labor: that is, at the rate of four pounds of fish for one pound of venison. The amount of labor expended in the creation of a value, is commonly denominated its cost. This is always the standard by which, for long periods, the degree of exchangeable value may be estimated.
When, however, we here speak of labor, we speak of it as simple labor; that is, without taking into consideration the degree of skill which may be combined with it, or the other circumstances which may conspire to create variation in its value. These are to be considered hereafter. We suppose, in the remarks above, that, in all cases, labor of the same kind is to be compared together.
I have said above, that cost forms the standard by which the degree of exchangeable value for long periods is to be estimated. Temporary circumstances may create a variation from this standard; and may, for a short time, elevate this value above, or depress it below, the cost. These, however, can continue to operate but for a short period; the tendency of exchangeable value is always to gravitate
towards cost. The causes of this variation, we will now briefly illustrate :
1. Suppose, that by the use of better tools, or from any other cause, the supply of fish became more abundant, so that a man could, by one day's labor, procure two hundred instead of one hundred pounds. The hunter would not then be willing to exchange as before, since he would now rather catch his fish for himself. He would demand eight pounds of fish for one pound of venison: that is, the exchangeable value of fish would fall; or, in other words, it could not procure as much venison in exchange, as it did before. But as, in consequence of this reduction in price, there would be an increased demand for fish; that is, more persons would want it, and they would also want a larger quantity than before, the fisherman would not be obliged to exchange at half the former rate, but would be able to exchange at a rate somewhat above it; say, perhaps, six or seven pounds for a pound of venison. Thus, both parties would be gainers. The fisherman would procure more venison; the hunter more fish, by a day's labor. Thus, a benefit to one, is a benefit to all. And thus we see, that, other things being equal, the greater the supply of any article, the less is its exchangeable value; that is, the less amount of other things, can it procure in exchange.
2. Supposing the labor necesssry for taking fish to be doubled; so that, by the labor of a day, no more than fifty pounds could be procured. The fisherman, then, would not sell, as at first, four pounds of the fish for one pound of venison; he would rather hunt his venison for himself. He would offer but two pounds for a pound of venison. But as, at this rate, the number of his customers would be greatly diminished; and as every person would use less fish than before, he would find it difficult thus to dispose of the results of his labor, and would be obliged to offer it on more favorable terms, say two and a half, or three pounds, for a pound of venison : thus, with a day's labor, he would procure less venison, and the hunter less fish. That is, the evil would be shared between them; and thus, an injury to one, is an injury to all. Thus, other things being equal, the less the supply the greater is the exchangeable value.
3. Suppose the labor necessary for procuring fish remain the same, but that, from some cause, twice as many persons desired fish as before. Suppose that every person desired five pounds, but that, there was only enough to supply half the population with this quantity. Then there would arise a competition among the buyers, and he who obtained this quantity must obtain it by overbidding his neighbor. Thus, fish would command a larger amount of venison in exchange than before; that is, the exchangeable value of fish would rise, and it would continue at this point, until the demand decreased, or, until a a sufficient number of men devoted themselves to fishing, to furnish enough to reduce it to its mean exchangeable value. Thus, the greater the demand, the greater the exchangeable value.
4. Suppose, that, while the labor of taking fish continued as before, the number of purchasers was from any cause diminished, so that, while there was fish enough caught to supply every person with five pounds, only half the population wanted any. In this case, as a large residue would at the close of every day, be left on the fisherman's hands, there would be a competition among the sellers; and each one would be desirous of disposing of his stock at a diminished price, rather than lose it altogether. Hence, he would offer to exchange it for a less amount of venison than before; that is, the exchangeable value of fish would fall. It would remain at this point, until, either the demand arose to its natural rate; or a sufficient number of persons turned their attention to some other occupation, to reduce the supply to a level with the demand. That is, the supply being the same, the less the demand, the less the exchangeable value.
It is the operation of these principles that keeps the supply of any article throughout the world always equal to the demand: and, it is surprising to observe, with what accuracy this effect is produced. In the largest cities, there is always just enough butcher's meat and vegetables, and clothing, to supply the wants of the inhabitants, and no more. The moment the price of an article falls below cost, it ceases to be produced, until the price rises. As soon as it rises above ordinary profit, capital and labor are directed to it, and it is produced in sufficient quantity to meet the unusual demand. Thus, also, we see why the high price of any article is commonly followed by a low price of the same article, and the contrary. When the price of any article is low,
, men leave off this kind of production in too great numbers, and hence follows a comparative scarcity of the product which they furnish.
When the price is high, men rush, in too great numbers, into this sort of production, and hence arises a temporary glut, and a depreciation of its exchangeable value.
Again: It will be seen that this variation in the exchangeable value of any article, is dependent greatly on its perishableness. An article which is not liable to be destroyed by keeping, will neither fall so rapidly, nor so low, by either a diminution of demand, or an increase of supply, as one which is, in its nature, rapidly perishable. Thus, iron may be kept for years, without decay; and hence, its exchangeable value cannot greatly vary, from increase of supply or decrease of demand : that is, it is an article not liable to great or sudden fluctuation. On the contrary, fish, fruits, and articles of this nature, very often, in the course of a few days, vary one or two hundred
Another source of variation in the exchangeable value of products, is the time necessary for their production. When any amount of a commodity may be produced on demand, its rise of price will not keep pace with the diminished supply; because, ev