Value; a criticism of political economy and socialism, and a solution of their antagonism

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VJILDE:

A CRITICISM OF POLITICAL ECONOMY
AND SOCIALISM ;

AND A

SOLUTION OF THEIR ANTAGONISM.

JOHN A RMS DEN.

LONDON :
WILLIAM REEVES, 185, FLEET STREET, E.G.

CORNELL^
UNiVERSITYl

•' Economists have been more concerned with
the centralization of wealth than with the details of its partition.
It is not surprising that thip should be the c^se. Most yrriters on
political economy have been in opulent, or at least easy, circum-
stances." — Prof. Thorold Rogers.

" The good want power but to weep barren tears :
The powerful goodness want, — worse need for them :
The wise want love : and those who love want wisdom :
And all best things are thus confused to ill.
Many are strong and rich, and would be just,
But live among their suffering fellow-men
As if none felt ; they know not what thsy do.'

— Shelley.

CONTENTS,

CONTENTS.

CHAPTER I.

PAGE

The Economists on Value .... i

• CHAPTER n.
Marx and Value 21

CHAPTER HI.
Proudhon and Value 40

CHAPTER IV.

Impediments to the Law of the Proportionality

of Values 56

CHAPTER V.

The Constitution of the Law of Proportionality

of Values ' • 92

CHAPTER VI,
Malthusianism ; or the Law of Population . 121

CHAPTER VII.
The Philosophy of the Constitution of Values . 131

PREFACE.

' PREFACE,

N bringing this small volume before the public,
I do so only after several years of constant
meditation on the subject treated, and after
diligent research in nearly all the schools
of thought, economic and philosophic.
Those who have given the question of value even the
least attention will readily grant that there is room for
discussion ; and those to whom this work will for
the first time introduce its importance, may, I hope,
find in it sufficient to, at least, whet their appetite for
a further and more extensive research.

Economists, too, I venture to think, will find some-
thing worthy of their consideration ; for it will bring
under their notice a Philosophy which is only too much
neglected ; while, in the aggregate, it will give a new
aspect to many of the pressing questions of the day,
and point a way of escape from that which is, by some,

XIV. PREFACE.

looked upon as an evil, but accepted as inevitable ;
indeed, is inevitable unless its general idea is satisfied
— I mean Socialism. In evidence of this, I quote from
George Bernard Shaw, one of the leading exponents of
Socialism. In answer to Auberon Herbert, he says : —
" I prefer the justifiable physical force of Social
Democracy to the unjustifiable physical force of to-day.
I understand that you would prefer no force at all,
despotic or democratic. So would I ; and when the
alternative between Social Democracy and perfect
freedom presents itself, I shall vote for perfect freedom.
At present the choice is between Social Democracy and
the despotism of a small minority which extorts from
the vast majority half the produce of their toil by
deliberately organised coercion. Consequently I am
a Social Democrat. . . . You have not the
slightest warrant for assuming that I ' worship ' physical
force a bit more than you do. As a matter of fact, my
objection to what you call a free life is that it ofiers no
solution whatever of economic problems, which if left
unsolved, would produce, not a free life, but a free fight,
ending in the enslavement of the vanquished."

This expresses the thoughts of many Socialists ; and
the main strength of Socialism lies in the truth of its
criticisms of present societary relations, being at the
same time (as a constructive theory) very presentable

PREFACE.

to a hungry man, or one struggling against the huge
monopolies he has to encounter on every hand. Come,
it says, I will feed you, and lift you from that harrowing
anxiety and uncertainty which is your lot, and place
you in a position of security and comfort.

Everywhere men are succumbing to the temptation,
the " master delusion." This must be, since, whatever
may be said of our general advancement, the evils of
to-day are getting more and more unbearable. And
men will rid themselves of evils, though they fly to
others they know not of. On the other hand, it is diffi-
cult to portray the errors and more distant evil results
of Socialism, since they, at present, can only be seen
with the mental eye, and long dissertations on the
matter of individual rights, and Liberty, to come, some
day, perhaps, is altogether insufficient to overcome the
form which the instinct of self-preservation now presents.
Still, if it can be shown that the security and con-
tentment which Socialism claims to' offer, is to be
achieved without that dangerous exercise of force and
concentration of governmental officialism which is its
inevitable consequence; if it can be demonstrated that
monopoly and not competition is the dragon to be fought,
and that, in its absence, industry would proceed by leaps
and bounds, without necessarily scouring the earth for
fresh markets ; that in reality, as Say expresses it, the

XVI. PREFACE.

quantity of products offered and the quantity in cir-
culation would always be synonymous, and products
bought with products, then will men turn once more
with their face towards Liberty, and continue the
process of ridding themselves of yet more governmental
interference.

By criticism and afiSrmation of the various repre-
sentative economists, I shall trace the progress of the
theory of value, as the development of political economy
presents it, to its complete form, and show that society
has evolved- conditions which are on the point of giving
practical effect to this theory.

The treatment of this subject, so subtle in its nature,
must necessarily call for the utmost of the general
reader's attention ; but once understood, there is no
question of political economy that it is not the key to.

J. Armsden.
November, i8go.

CHAPTER I.
Tlie Economists on Value.^

The subject I apply myself to in this small work, is
acknowledged to be, at once, the most difficult, the
most fundamental, and, consequently the most important
that Economists have to grapple with. It is the very
hub of political economy, and a correct answer to the
question, "What is Value?," is the solvent in which
most of the errors of social science will find their solution.
The ambiguity of the word Value contributes no small
share to the confusion we see accompanying it in all its
aspects ; yet it is one of the most expressive of every-
day use, while nearly all the energy of mankind is,
consciously or unconsciously, directed towards the
establishment of its equation. The higgling of the
markets, Strikes, Riots, Revolutions, are none other
than unconscious attempts to realize value, and Utopias
of all sorts are more or less conscious attempts at the
same.

The question of value is fundamental. Says
Mill, " Almost every speculation respecting the

* By " the economists " I mean those of the school of
Ricardo, Smith, Mill, Say, etc., unless I qualify the word by
reference to any other.

I

2 VALUE.

economical interests of a society implies some theory
of value ; the smallest error on that subject infects with
corresponding error all other conclusions ; and anything
vague or misty in our conception of it, creates confusion
and uncertainty in everything else." Smith, Ricardo,
McCulloch, Say and other French writers ; Jevons,
Price, Walker, Cairnes, etc., are all equally emphatic
on the matter of its importance. Some economists
thought it necessary to bring iheir minds to a very
positive position before they could proceed with the
science. Mill, for instance, declares emphatically, and
with a degree of certainty which the advande of social
science did not at all warrant, that " happily there is
nothing in the laws of value which remains for this or
any other writer to clear up." Indeed, that there is no
measure of values ; value is value, and their comparison
is effected without a point of comparison between
them. There is no real measure of value, he says,
other than " the quantity of other things which can be
obtained in exchange for it. The value of one thing
must always be understood relatively to some other
thing, or to things in general. There is no such thing
as a general rise in values." J. B. Say, in his " Trait6
D'Economie Politique," says, " Toujours est il vrai
qu'une valeur incontestable est la quantit6 de toute
autre chose qu'on peut obtenir du moment qu'on le
desire en echange de la chose dont on veut se d6faire."
Again, " La valuer du chaque chose est arbitraire ,et
vague, tant qu'elle n'est pas reconnue. La possesseijr
de cette chose pourrait I'estimer' tres haut sans en etre
plus riche. Mais du moment que d'autre personnes
consentant a donner en echange, pour l'acqu6rir d'autre
choses pourvues de valuer de leur c6te, la quantite de

VALUE. 3

ces dernieres que Ton consent a ddnner est la measure
de la valuer de la premifere." The reader will observe
that here, Mill and Say, and with them other econo-
mists, do but utter a tautology.

As to Mill's positive position on the matter, here is
what Mr. Thornton says in the October number (1876)
of th^' Contemporary Review. — "Most members of the
Political Economy Club must be familiar with an
anecdote of Sidney Smith's, who, not many months
after joining the club, announced his intention to retire,
and on being asked the reason, replied, that his chief
motive for joining had been to discover what value was,
but that all he had discovered was that the rest of the
club knew as little about the matter as he did. That
his sarcasm, however severe, was probably not
unmerited, may be inferred from the haze with which
the object of Sidney Smith's curiosity is still surrounded,
and from the at least very partial success of the recent
attempt maide by so powerful a thinker as my lamented
friend, the late Professor Cairnes, to pierce the cloudy
envelope." ,

Professor Bonomy Price, after making the above
quotation, goes on to say : — " Fortunate would it have
been for Political Economy if Mr. Mill's happy and
confident belief that the meaning of the word value had
been discovered once and for ever, had been warranted
by fact ; that the sense of a first-rate expression had
been ascertained with the precision of a geometrical
truth. But alas, the history of economical writing,
since the days when Mr. Mill had this delightful sensa-
tion, records oilly a series of never-ending struggles to
catch the ever-fugitive meaning of this most baffling of
words, till at last Professor Jevons, one of the latest

4 VALUE.

wanderers in the trackless region, is forced to exclaim
that ' he will discontinue the use of the word altogether.'
Many may feel disposed to think thai Political Economy
has come to a pretty pass when Professor Perry flings
away the word wealth, and Professor Jevons the word
value, both unquestionably able and eminent economists,
as hopeless. What is the vaunted science to speak
about ? "

Thus the economists affirm both the importance of
the question of value, and the unfathomable depth of
the mystery.

Since the days of Smith and Ricardo, till those of
more modern lights, hereafter to be considered, the
theory of value has retrogressed. Both these econo-
mists, notwithstanding their contradictions and false
positions, were conscious of some principle which
they in vain attempted to grasp and explain, and their
failures and consequent inconsistencies and dilemmas^
appear to have blinded their successors to the exist-
ence of such a principle.

Since, then, it has baffled such eminent thinkers as
those aforementioned, and others equally eminent, not
mentioned, are we to give up the hope of ever finding
the principle ? From the time the importance of the
matter dawned upon my mind I have never let it rest,
and have sought for light in places where many are
either afraid to look, or too much wrapped up in certain
conceits and prejudices to do so. If I err in my conclu-
sions, there is at least the consolation that others greater
than I, have, in the attempt, landed themselves into an
inextricable maze of absurdities and inconsequence^ ; or,
like Marx stopped short in such an incomplete manner,
as to cause his theory exactly to ht in with an ideal with

VALUE. 5

which he was much prepossessed. However, another
economist, at present much neglected, but who is yet to
be acknowledged as a learned philosopher and profound
thinker — I refer to P. J. Proudhon* — had already
treated the theory of value, and, taking more as a thing
granted all -that Marx has developed in such detail,
proceeded successfully, by his method, unique in
econo-nics, to apply the principle.

The two authors just named attach no less im-
portance, but rather a little more, to the theory of
value, and consider it no less fundamental than do the
other economists; indeed they make it the founda-
tion stone of their economic thoughts. Value, says
Proudhon, "is the corner stone of the economic
edifice " ; and again, " the fundamental idea, the
dominant category of political economy, is value."

Political economy is a chant to the God Property ;

* The complete works of P. J. Proudhon can be had in the
French, in 51 vols., and a splendid translation, got up in
superior typographic style, of his " Qu'est-ce que la Propriety,''
and his " System des Contradictions Economiques," can be
had fi-om Mr. B. R. Tucker, Boston, Mass. Price ' i dol.
per vol.

The style of Proudhon, perhaps, is not calculated to con-
tribute to the reader's exact understanding of him. He is,
in contrast to Marx, who is somewhat dull and heavy, light
and lively, but also, I am inclined to think, too much given to
the provocation of his contemporaries by the use of ambigui-
ties.

Mazzini describes him as " powerful to dissolve," "a very
Mephistopheles of Socialism," Sparing no conventionality
the lash of his potent irony, and being anathema to socialists
and proprietors alike, it is little wonder that he is neglected
and misunderstood ; but the world cannot afford to lose truth
even though the thick hide of conventionality is pierced in
the rescue.

'6 VALUE.

the literary expression of one of the antithetical
principles between which society continually osci-
lates : Communism is its opposite factor ; and the
two are ever in deadly struggle, the latter rising,
phoenix-like from its ashes, as Property developes
the materials necessary for its activity. It is very
active to-day; yet Mill says the theory of value is
complete. It is the incompleteness of the theory of
value, and its concrete expression, which is the verj'
life of Communism of all grades, as I shall show in due
course.

But the economists have accomplishedno small task ;
they have collected the elements of the objective part of
a science which is the apex of all the sciences, the one ,
which includes all others — the science of social economy.
It is as yet a somewhat ill-assorted bundle of contradic-
tions and incongruities, but the economists hold to its
conclusions with optimistic intractibility, this being a
serious blemish upon their efforts.

Social Science is complete, for Mill has said it ; and
strikes, riots, French revolutions, and Paris com-
munes are merely inconvenient incidents of the law of
supply and demand— inconveniences, however, which
might, at any moment, land society — Heaven knows
where.

From the metaphysical -stage of the'theory of value',
under the treatment of Dr. Smith and Ricardo, it has
receded to the theological, even as sceptical society
almost invariably returns to unbounded faith. There is
no measure of value, say the economists, all is
arbitrary ; just as naturalists, in the absence of the wide^
knowledge of the connection of things, used to declare
for special creation. It is true, Adam Smith very

VALUE. 7

explicitly denies a measure of value, but he cannot rest
at that long, and tries to find it in corn, besides as-
suring us that " Labour was the first price — the
original purchase-money that was paid for all things."

He also says, " in that early and rude state of
society, which precedes both the accumulation of stocks
and the appropriation of land, the proportion be-
tween the quantities of labour necessary for ac-
quiring different objects seems to be the only cir-
cumstance which can afford any rule for ex-
changing them for one another It is natural that

what is usually the produce of two days', or two
hours' labour, should be worth double of what is
usually the produce of one day's, or one hour's labour."
That this is really the foundation of the exchangeable
value of all things, says Ricardo, "excepting those which
cannot be increased by human industry, is a doctrine
of the utmostjimportance in political economy ; for from
no source do so many errors, and so much difference of
opinion in that science proceed, as from the vague ideas
which are attached to the word value."

Important as this conception is, neither Smith nor
Ricardo could keep it well in hand, both seeing, with
more or less consciousness, its inadequacy to explain
existing phenomena. To say that the produce of one
hour's labour should be worth only half as much as the
produce of two hours, is talking of something which is
quite contrary to fact, and which neither one economist
nor the other believed could be consummated. That
one hour's labour of average intensity is worth only
half as much as two hours' oi average intensity, in the
same sphere of industry, is, perhaps, more nearly correct,
but what social science has to do, is to tell us why

8 VALUE,

one hour's labour in one sphere, is worth as mucn
as that of a year in another, or a month, or a week, as
the case may be ; how it is that the product of one day>
in one industry, is worth as much as the product of a
week, in others. That is the question for political
economy ; but which question it has not yet formulated
much less answered. Ricardo, often enough, speaks of
the quantity of labour as determining the value of things,,
but he uses the term "quantity of labour " to express both
labour time and qualitative labour, — either as conveni-
ence demands, — and so avoids the real problem, or
what is worse, builds his edifice upon this unsound
basis, and thus leaves political economy to be a butt for
all kinds of charlatans.

It is this double use of the term "quantity of labour,"
not alone by Ricardo, but by all those economists who,
accept the general idea of Smith in regard to labour and
value, which has perpetuated most of the evils, oppres-
sions, wars, and revolts of this century. This is, perhaps,
a premature and bold use of the theory of small causes,
but I believe I shall be able to thoroughly establish the
truth of the assertion. Yet such appears to be the de-
cree of fate, that before humanity can enter into the full
enjoyment of political and economic freedom (one is the
necessary counterpart of the other) it must be tried over
and over again so that no alloy shall remain, and so that
that of which man is composed shall be of firm and,,
endurable morality. Even the tyranny and oppression
of governments are not unmixed evils, for as Proudhon
says, do not the circumstances of the birth of competi-
tion presuppose the engendering of monopoly, which in
its turn calls forth the state ? The state then becomes,
with the proletaires, a new bondage that they may

VALUE. 9

extend the hand of fraternity. And is not monopoly the
result of an unbalanced market, that is, a market in
which value has not found its solution? Yes! Given
man's origin, all the industrial moments of society are
inevitable, and necessary, and now the sum, the syn-
thesized product, is, perhaps, after one more struggle,
to be realized — Liberty and wealth for all.

But to return: Ricardo is not "inattentive to the
•different qualities of labour, and the difficulty of com-
paring an hour's or a day's labour in one employment
■with the same duration of labour in another. The
estimation in which different qualities of labour are held,
comes soon to be adjusted with sufficient precision for
all practical purposes, and depends much on the
comparative skill of the labourer, and intensity of the
labour performed. The scale, when once formed, is
liable to little variation. If a day's labour of a working
jeweller be more valuable than a day's labour of a
common labourer, it has long ago been adjusted and
placed in its proper position in the scale of value"!!*
And Adam Smith, he also is not inattentive to the
different qualities of labour. " It is often difficult," he
says, " to ascertain the proportion between the different
quantities of labour. The time spent in two different
tinds of work will not always alone determine this
proportion. The different degrees of hardship endured,
and the ingenuity exercised, must likewise be taken
into account. There may be more labour in an hour's
hard work, than in two hours' easy business ; or in an
hour's application to a trade which it cost ten years'
labour to learn, than in a month's industry at an ordin-

■*Ricardo's "Principles of Political Economy," Ch. i, Sect. z.

10 VALUE.

ary and obvious employment. But it is not easy to find
any accurate measure either of hardship or ingenuity.
In exchanging, indeed, the different productions of
different sorts of labour for one another, some allowance
is commonly made for both. ' It is adjusted, however,
not by any accurate measure, but by the higgling and
bargaining of the market, according to that sort of
rough equality, which, though not exact, is sufficient for
carrying on the business of common life. ' Every com-
modity, besides, is more frequently exchanged for and
thereby compared with other commodities than with
labour. It is more natural, therefore, to estimate its
exchangeable value by the quantity of some other
commodity than by that of the labour which it can
purchase."* I hope the reader has given careful
attention to these two quotations, for they reveal the
whole confusion of economists on, this matter. In
speaking of the exchangeable value of commoditieSf
they mean that relation of prices which results from the
laws of production and exchange : yet, as between the
prices of commodities produced by a common labourer
and those produced by a jeweller, all they have to say,
is, that we must not suppose them inattentive to the
fact, and to the difficulty of analysing it. Indeed, in
the face of the difficulty, they say these laws are no laws;
eveijything is arbitrary and vague; some allowance
must be made for the skill and ingenuity, and hardship
displayed in different degrees, somehow, and beyond
tjliat there's the higgling of the market. As to the
" intensity of labour," it is a term which, in the foregoing
qviotations, has no economic meaning.

♦"Wealth of Nations" Book I., Ch. V.

VALUE. 1 1

In Ricardo, in the next section, a page or two
farther on, we are told that if the intensity of labour in-
creases twenty per cent., the labourer gets no more
reward, and commodities that would formerly have
exchanged for one sovereign would then only exchatjge
for sixteen shillings. It cannot be, then, in this sense
that the term, "intensity of labour," is used, for it adds
ijothing to the reward of the labourer ; and skill is only
another form of intensity which may express itself either
in the quick despatch of the work in hand, or in the
elegance of its finish, or both. It must be admitted,
however, that a good workman will often, though not
invariably, command either more regular employment
or higher wages, but how much this extra skill is due
to the time spent on his education, and how much to
his inherent capacity, it is not easy to say, nor is it
material, since individual skiU only operates, as bringing
extra reward to the labourer, where the competition is
between one common labourer and another, one shoe-
maker and another, one carpenter and another, etc., and
then the difference is but as the waves in regard to the
sea level — they leave an average ; and it is the difference
between these averages, between the reward of the
common labourer and the jeweller or chemist, bank clerk,
doctor, lawyer, business man, director, that neither in-
tensity, skill, nor hardship can account for ; the latter
element, usually, in this consideration, accompanying a
meagre reward.

It is a great question, I know, and much debated, as
to whether the occupations of a doctor, chemist, lawyer,
director, business man, do not require an inherently
superior intelligence to that possessed by the average
machanic or labourer. Looked at superficially, the

12 VALUE.

result is almost always a conviction in the affirmative ;
yet I think it is pretty readily admitted, that, should a
child from the lower classes be admitted into some
family of the well-to-do, he very often shows the won-
derful effect of altered circumstances, and commercial
success shows how easily more opulent conditions
impress themselves even on full-grown manhood. The
economic reasons will appear later, but for the present
it will be as well to say that I do not at all admit that
the difference in the mental superiority of men is
reflected by their social position or occupation. — "How
are the majority of men trampled in the mire, made
hewers of wood and drawers of water, long, very long
before there was any opportunity of ascertaining what
it was of which they were capable."* Anyhow, I shall
endeavour to show that it is not skill, but sOmethingf
else, which gives the difference in social position, and
that in a more definite manner than has hitherto been
done.

One other reason Ricardo gives for the difference in
the value of the products of the different occupations,
viz., " the time necessary for the acquirement of one
species of manual dexterity more than another." This
is quite legitimate, and quite in accordance with his
theory that labour is the principle by which the values
of things are compared one with another. But the
dexterity of labour, unlike other things, is that which
sells over and over again, a thousand times, so that the
value of one day's labour over another would not be in
accordance with the difference in time necessary for
acquiring the difference in skill, but in accordance with

♦"Thoughts on Man." — Godwin.

VALUE. 13

that time divided by the number of days "the labour is
sold. If, in the manufacture of commodities, the cost of
the wear of machinery is one thousand pounds in five
years, two hundred will enter into the value of the
annual produce, plus interest on the money : so, if a
certain quantity of labour time is used in acquiring the
knowledge of a trade, it is quite in accordance with
Ricardo's theory that it should augment the value of
labour on the market. But who will suppose that the
difference, in time, of acquiring a knowledge of the
different trades and occupations is sufficient to account
for their difference in remuneration ? To put it any
other way than labour-time is begging the question, so
Ricardo fills up the void which his theory lacks by the
very conveniently expansive and indefinite thing
♦'estimation." But to estimate, we must do so according
to some rule, and there must be some thing, or things,
in reality for the estimation to make comparisons by.
To estimate the values of commodities, then, it must be
by some factor common to them all. That is a simple-
enough fact, 'indeed ; yet, simple as it is, the economists
seem to strangely ignore it, and speak of the estimation
of the value of things as if that went to the root of the
matter, and settled it, and as if the process of estimation
was not the very thing under examination.

Adam Smith has a whole chapter on the "Wages
and profits in different employments." He commences
by saying that the whole of the advantages and dis-
advantages of the different employments of labour and
stock, must, in the same neighbourhood, be either
perfectly equal, or continually tending to equality; and
straightway enters into dissertations which, if true,
prove quite the contraryt Nevertheless, the chapter

14 VALUE.

well deserves its reputation, and if more logic and less
talk were applied to it, many of the evils of society would
be on a fair way to being removed.

Sufficient, now, I think, has been said to shdw how
inadequate is the theory of value as it is put forth by
the economists of whom Ricardo, Smith, and Say are the
type. But we will still press farther, and we shall soon
discover a still more glaringly false position.

Value, with the economists^ is' something without a
bottom. Labour, it is true, has a somewhat abstract
compliment shown it, but it octupies a position in the
theory of value, something like that of the elephant in
the theory that the world is held upon its back, — ^it
explains nothing and leaves thin air for a foundation.

It is this incompleteness, this absence of terra-firma
upon which to rest the corner stone of Political
Economy, which makes the exponents of it, alternately
-with timidity and desperation, declare the impossibility
of either a general rise or fall in values.* They base
this upon the facts, or supposed facts, that there can
be no rise in the value of labour without a fall of pro-
fits; that the value of commodities is due to the
quantity of labour required to obtain them; that any
economy of labour does but alter the relative value of
commodities, as, everythingbeing worth what it costs,**
if the same amount of labour will produce four times
the amount of commodities in any one branch of
industry, say, for instance, four pairs of stockings
instead of one, the fourfold quantity will only exchange

» Mill's "Principles of Political Economy," Book III.
Ch. IV., S. II. , ,,

** See Ricardo's Principles,' ■Ch. I., Sec. VI.; also Say's
"Ttiitd D'Economie Politique." '

VALUE. 15

for the same amount of other commodities, since they
will cost no more labour ; that should this economy
extend to all the objects of the labourer's consumptioii*,
we should find him, probably, at the end of a very few
years, in the possession of only a small, if any, addition
to his enjoyments.f

McCulloch, however, admits that the produce
assigned to the labourer may be increased as a result of
the increased productivity of industry.

It is against this complacent acquiescence in the
eternal doom of the labourer to receive none of the
increased productiveness of labour, except such as it
can snatch from the profits of capit'al, that this volume
is a protest.

That any variation in the quantity of labour required
to produce any one commodity will not cause any
alteration in the real value of things, but will effect
their value only in relation to each other. This is a
position the economists endeavour to maintain, thus : —
*' In the same country, double the quantity of labour
may be required to produce a given quantity of food
and necessaries at one time, that may be necessary at
another and a distant time ; yet the labourer's reward
may be little diminished. If the labourer's reward at
the former period were a certain quantity of food and
necessaries, he probably could not have subsisted if
that quantity had been reduced. Food and necessaries
in this case -vyould have risen 100 per cent, if estimated^
in the quantity of labour necessary to their production ;
while they will scarcely have increased in value if
measured by the quantity of labour for which they

t Ricardo's Principles, Ch. L, Sec. I.

l6 VALUE.

will exchange."} I confess this paragraph puzzled
me for some time. It is a fundamental theory
with Ricardo that the exchange of commodities is the
exchange of equal quantities of labour, and here we have
him telling us that necessaries which cost loo per
cent, more labour, will, nevertheless, exchange for no
increased quantity. Obviously Ricardo has here dressed
this idea in a very pretty garment. Let us clarify it,
reverse it, place it in the order of progress, and put it in a
style less pleasing to the labourers ; thus : — In a country,
the productivity of those industries devoted to the
production of necessaries, has increased one hundred
per cent ; but the reward of the labourer is not increased
as a consequence, and the product of one day's labour
will still only exchange for the product of a like quantity
of labour in other industries which have not increased in
productiveness. Letusputitinanotherform. Twenty
days' labour produces ten pounds' worth of necessaries;
ten pounds' worth of necessaries will exchange for other
commodities which are the result of a quantity of labour
equal to twenty days; But owing to increased produc-
tivity in those industries producing necessaries, twenty
days' labour now produces double the quantity of
products. This double quantity will, nevertheless,
only exchange for other commodities of a like amount
as before, since the industries producing the other
commodities have not intensified in productiveness;
twenty days' labour exchanges for twenty days' labour,
and therefore the labourers, not engaged in producing
necessaries, will find their rewardjdoubled, or increasisd
by one hundred per cent. This, however, the Econo-

tRicardo, "Principles of Political Economy," Sec. I., Ch. I.

VALUE. 17

mists would not admit, for it would then follow that a
like percentage of intensified production in other
industries would double the quantity exchanged for
necessaries, indeed, double the reward of the labourers
all round, and Ricardo assures us that the reward of the
labourer does not increase from such causes. It follows
then, that the labourers engaged in producing the other
commodities above referred to, either do receive a double
share of necessaries as a result of increased productivity
in those industries producing them, in which case the
reward of the labourer does increase in proportion to
increased productiveness, or, if they only receive the same
quantities of necessaries, then, in exchange for twenty
days' labour, they do but receive ten days. Kither one
or the other; and I challenge the Economists to answer.
If they say the former, I reply, it is contrary to fact ; if
the latter, then where do the rest of the commodities go
in which are embodied the remaining ten days' labour ?
The paragraph I have selected for criticism is not an
isolated slip of thought, but typical of the whole position
of orthodox political economy. Here is another quota-
tion from Ricardo's Principles. "If the shoes and
clothing of the labourer could, by improvements in
machinery, be produced by one fourth of the labour now
necessary to their production, they would probably fall
75 per cent, but so far is it from being true that the
labourer would thereby be enabled, permanently to
consume four coats, for our pairs of shoes, instead of one,
that it is probable his wages would in no long a time be
adjusted by the effects of competition, and the stimulus
to population, to the new value of the necessaries on
which they were expended. If these improvements
extend to all the objects of the labourer's consumption
2

1 8 VALUE.

we should find him, probably, at the end ©f a very few
years, in possession of only a small, if any, addition to his
enjoyments."

Political Economy, above everything else, is
an exponent of facts, you know ; but it often gets
them inextricably mixed up with hopes and un-
realities. The two extracts which I have made from
Ricardo are specimens of this. The underlying thought
of them is, that if, by improved machinery, the clothing,
etc., of the labourer could be produced with one half
the expenditure of labour, or twice the amount with
the same labour,-prices would fall proportionately, and
one sovereign, while buying no more of those
commodities in which there had been no improvement
in their production, would buy double of those in which
there had been a one hundred per cent improvement.
Prices are lowered in proportion to the increased yield ?
and the labourer finds that, eventually, competition
brings his increased daily produce down to the same
sum, in money, as his formerly limited amount fetched
him, so that in purchasing other goods whose produc-
tion has not intensified, and whose prices remain
unchanged, he obtains no more than before the improve-
ments in producing his own commodity occurred, in
short, the product of a day would still exchange for
the product of a day, in the same proportions, measured
by labour-time. This true and most important
idea, which political economy has had dangling before
it a century or more, is one which it has never yet fairl>
grasped the import of. It rather leaves us in the
dilemma I have pointed out a few pages back, where
the theory and the fact, both true, contradict one
another. The theory says, If the product of a day's

VALUE. 19

labour becomes 20 instead of 10, the increased
quantity (20) will exchange for no more of other
commodities than the former smaller yield (lo). But
as I have pointed out, in this case, the producers of
the other commodities, who do but give the same
quantity in exchange for the double quantity (20
instead of 10) find their reward doubled, and if the
improvements extend to all the industries, the reward
of all labourers is enhanced by fifty per cent. Yet the
plain every day fact is, as Ricardo says, that the
labourers' rewards do not increase with increased pro-
ductiveness, not however to any appreciable extent, and
certainly not in the same ratio.

This discrepancy between fact and theory, Ricardo
bridges over by " the effects of competition and the
stimulus to population." But all the effects of com-
petition are displayed in the process of rendering the
double quantity exchangeable for no more than the
former yield to the same labour. And what the
" stimulus to population " has to do with it, I will
attend to when there is an economist who can tell what
meaning the phrase can here have.

The fact is, the learned economists have brought us
into a dilemma, which they cannot, with all their
learning, understand and explain the nature of.

If the productivity of industry increases fourfold, the
labourer gets no more in exchange for his increased
product, as the price is lowered in proportion. This
is true enough ; but if more in quantity is given in
exchange, then some one gets the increase, notwith-
standing that political economy is oblivious of the
fact. Proudhon, in one of his ambiguities, declares,
that labour creates something out of nothing. The

20

VALUE.

Economists haVe surpassed him, for, seriously, and
with much labour, they demonstrate that something is
nothing.

We will consult Karl Marx for a further explanation
of the mechanism of production and exchange.

CHAPTER II.
Ma^x and Value.

I have said that Political Economy is the literary
expression of an antithetical law of nature ; this law
lies deep down in the nature qi things, and in the con-
stitution alike of societies and their units, — it is the
principle of Property. I am not speaking of any one
form of property which has obtained, or is likely to
obtain, at any particular time, but of the principle by
which man says, this belongs to me, of the form
property, not the content.

Alike in society as in the world of nature outside it,
its thoughts and actions are not a haphazard, promiscuous
arrangement, or non-arrangement, which has come
into being without due connection of sequences. Just as
in Natural History species are arranged and grouped
under heads of characters which are persistent and still
more persistent, and are thus classified as species,
genra, orders, etc., so the ideas of society, its customs,
morals, synthetic concepts, should be observed,
examined, their natural sequences noted, and classed
in their series. In this manner we come to see that
property is an idea under the head of which many
thoughts and actions of society may be classed, each
partaking of the general characteristic with varying

22 VALUE.

degrees of persistency. But if this is so, the com-
munistic idea is, perhaps, no less general, and includes
an equally laige sphere of action and thoughts. In this
way it comes to be a correction of any concrete
establishment of Property which is not in accordance
with what societies conceive to be justice. No less
than in the world of practice, where actions of the
class Property (Individualistic) and of the class com-
munism (Socialistic) take sides with varying degrees
of definiteness, do the philosophers and economists in
the literary world, wield the pen with prepossessions
which partake, with more or less of compromise, of
the two great generalities, Property and Communism.
Political Economy is a monument to the former, and
insists upon its sacredness at all costs : Marx comes
later and raises a monument to the latter. Is not the
subtitle of his great work well chosen, " A Critical
Analysis of Capitalistic Production " ?

The two principles must live, but their content, their
modes of existence to-day, must die, for when two such
antithetical laws assert themselves, which have not yet
become synthesised, we may be sure that a third form
must eventually appear, which must swallow up the
expressions of each, but preserve the principle of both,
the synthesised form. — Credo quia contvariwrn says
Proudhon.

Marx, then, is one of the chosen champions of that
portion of society which is pre-eminently communistic ;
but, alas ! as the fates have decreed it, he has given
that element as its realization is aspired to to-day, and
with it the present expression of property, a mortal
blow.

Have the Fabians discovered this that they now

VALUE. 23

swear by Jevons ? One of them, again Bernard Shaw,
says, that an individualist as well as a Socialist, may
quite consistently hold the Marxian theory of value,
while Jevons gives greater colour to Socialism.

Having given it its place in the order of things, we
will now see what this theory is, which is known as
Marx's theory of Value, and observe the part it plays
in the development of thought on this never-exhausted
subject.

A portion of Marx's work is before the English
reading public in two volumes, but as it plays a most
important part in the complete theory of Value, I
scarcely apologize for attempting to give a summary
exposition of it, more especially as Mr. Hyndman, the
English exponent, says that the number of people who
understand him are small. However, that I may do
nothing to mislead the public upon so important a
matter, I urge all those who have an opportunity, to
apply themselves to "Capital " in corroboration of my
version. A concise and good exposition can be found
in Hyndman's " Historical Basis of Socialism,"
" England for all" and in an editorial of the " Inter-
national Review " for July, 1889, if still obtainable.*

Everything is worth what it costs, says Political
economy ; but as it has no basic element of value,
making use only of a very indefinite term, labour, it is
no wonder it is discovered in such insecure positions
as our first chapter has shown it to be in. Yet it has
done much ; it has given forth the idea that there is a
good deal of connection between the relative value of
products and the amount of labour embodied therein,
and once born, there was, and can be, no rest in the
* Reeves, Fleet St.

24 VALUE.

world of economic thought until the true nature of that
connection is known. Marx, seeing the field open,
makes a long analysis of the movement of commodities
and money, and then proceeds to show that Labour,
as spoken of, or conceived of, by the economists as the
basis of value, is valueless, for it costs nothing and can-
not therefore add to the value of anything. But the
- energy which is exerted by the human frame, that
labour-power which must be expended upon products
before they become valuable, does cost something.
Thus he argues, and we need not stop to dispute as to
whether, as words, "labour-power" can convey any
more definite meaning than "labour," but the contexts
of the two theories show a wonderful deal of difference
between the concepts they are intended to convey.

The body must be kept warm with clothing, housed,
and the muscles, etc., require nourishment ; all of which
is necessary to the expenditure of labour-power. It is
not enough to say that wages enter into the cost of
production, as do the economists ; it leads to no definite
reason why they should, why they are not more or less
than they are, and in the absence of further explana-
tion, why they do not fluctuate in a most capricious
manner. " Supply and demand " cannot explain, and
this the economists are conscious of, for if it did, there
would be no necessity for them to grope about for
something else wherewith to explain the value of com-
modities : adequately explain the circumstances which
give value to a day's expenditure of labour-power, and
the problem of value is solved. It is not so very
difficult to understand after all, and it lies so near to
the hand of the economists that it would almost appear
that they had purposely pushed it on one side. Yet

VALUE. 25

those who are accustomed to research in the abstruse
science of social economy, know what slight concep-
tions, and misconceptions, are sufficient to give an
entirely different colouring to the whole of one's
thoughts. Let Marx speak in his own way.

At Chapter VI., Vol. i, p. 149 (translation), he
says: — "The value of labour-power is determined, as
in the case of _ every other commodity, by the labour
time necessary for the production, and consequently also
the reproduction, of this special article. So far as it has
value, it represents no more than a definite quantity ot
the average labour of society incorporated in it . Labour-
power exists only as a capacity, or power of the living
individual. Its production, consequently, presupposes
his existence. Given the individual, the production of
labour-power consists in his reproduction of himself or
his maintenance. For. his maintenance he requires a
given quantity of the means of subsistence. Therefore
the labour-time requisite for the production of labour-
power, reduces itself to that necessary for the produc-
tion of those means of subsistence ; in other words, the
value of labour-power is the value of the means of
subsistence necessary for the maintenance of the
labourer. Labour-power, however, becomes a reality
only by its exercise ; it sets itself in action only by work-
ing. But thereby a definite quantity of human muscle,
nerve, brain, etc., is wasted, and these require to be
restored. This increased expenditure demands a
larger income. If the owner of labour-power works
to-day, to-morrow he must again be able to repeat the
same process in the same conditions as regards health
and strength. His means of subsistence must, there-
fore, be sufficient to maintain him in his normal state

26 VALUE.

as a labouring individual. His natural wants, such as
food, clothing, fuel, and housing, vary according to the
climatic and other physical conditions of his country.
On the other hand, the number and extent of his
so-called necessary wants, as also the modes of satis-
fying them, are themselves the product of historical
development, and depend, therefore, to a great extent,
on the degree of civilisation of a country, more parti-
cularly on the conditions under which, and consequently
on the habits and degree of comfort in which, the class
of free labourers has been formed. In contradistinction
therefore to the case of other commodities, there enters
into the determination of the value of labour-power a
historical and moral element. Nevertheless in a given
country, at a given period, the average quantity of the
means of subsistence necessary for the labourer is
practically known."

After mentioning that the necessaries must be
sufficient, not only for the maintenance of himself, but
for the support of his children up to certain ages, also
for their maintenance while a special kind of education
or training is being exercised upon them, the cost of
which training enters into value, he says, " The value
of labour-power resolves itself into the value of a
definite quantity of the means of subsistence. It there-
fore varies with the value of these means, or with the
quantity of labour requisite for their production."

The value of labour-power is a definite quantity of
the means of subsistence, and this definite quantity has
a historical evolution ; therefore if the average consump-
tion of the labour-power required in the production of
A of coined money, is B of means of subsistence, then the
value of one is equal to the value of the other, and if

VALUE. 27

B is ten pounds of tea, and A is a sovereign, then the
value of one pound of tea is two shilhngs, and the
value of the labour-power is ten pounds of tea, or one
sovereign. Thus we see that that which deternvines
the value of the product of an average day's labour, or
rather which is its basic regulator, is an average
quantity of the means of siibsistence which an average
labourer would consume. This quantity finds its
formal expression in one particular commodity, coined
gold, or money. Therefore we may henceforth, without
tautology, speak of the value of the means of subsistence
and of labour-power, and not necessarily of the quantity
of the means of subsistence.

In this research, by the help of Marx, we have made
a very special advance since our last chapter. We find
that what lies behind the value of labour-power, is a
■definite quantity of the means of subsistence, something
measurable ; also that this definite quantity has a
historical and moral development. This latter fact is
important; more important than, as far as I can
gather, Marx was aware of. But for the present we
will leave that.

Adam Smith was in search of "that principle of
value, which nevei varying in its own value, is alone
the ultimate and real standard by which the value of
all commodities can at all times and places be esti-
mated and compared." He named the commodity,
labour. But not seeing the nature of the circumstances
which gave that commodity a definite value, he did
not, and could not, hold to that idea consistently.*
Moreover there is no commodity which never varirs

* See Book I., ch. 5, " Wealth of Nations."

28 VALUE.

in its own value,* but there is a commodity with a
definite and ascertainable cost, per se ; which is not
subject to caprice ; which has a historical development ;
which becomes fixed as other customs, and only changes
by slow and almost imperceptible growth. That
commodity is, as aforesaid, Labour-Power : and its
value is determined as the foregoing quotation from
Marx explains ; which being resolved, is the labour
time necessary for the production of the means of sub-
sistence which it is the custom of the labourer to
consume, — socially-necessary labour. For the present
we will say, however, that the average value of labour-
power is 'an average quantity of the means of sub-
sistence which custom renders necessary to the labourer
for the reproduction of his labour powers.

I may here, also make emphasis respecting this
customary quantity of the means of subsistence. Of
course the reader will understand that it includes such
things as custom considers respectable and right that
the labourer should enjoy ; education for instance, and
so much of other incidentals as he looks to provide
himself with ; and when these necessaries and comforts
are once established as customary, it is difiicult for the
average wage to sink below that price for w^hich these
can be procured. Not only is this so with the absolute
necessaries of life, but with any degree of comfort
(Standard of Comfort), which the various grades of
labourers attain to. This rigidity which custom gives
to the price of labour-power, this minimum for which

* " Simple average laboHr," says Marx, " varies in different
countries and at different times although in a particular
society it is given."

VALUE. 29

the labourer will sell his services except in a temporary
manner, constitutes the "iron law of wages."

After dissertations to prove that the profits of capi-
talists do not arise from the process of exchange, Marx
proceeds as follows : — " We are therefore forced to the
conclusion that the change originates [profits arise] in
the use-value, as such, of the commodity, i.e., its con-
sumption. In order to be able to extract value from
the consumption of a commodity, our friend, Money-
bags, must be so lucky as to find within the sphere of
circulation in the market, a commodity whose use-
value possesses the peculiar property of being a source
of value, whose actual consumption, therefore, is itself
an embodiment of labour, and, consequently, a crea-
tion of value. The possessor of money does find on the
market such a special commodity." But While the
labourer sells at the cost of production, the commodity
he sells, being itself the creator of value, produces for
the capitalist more than that.. Thus : — " If the total of
the commodities required daily for the production of
labour-power = A, and those required weekly = B,
and those required quarterly — C, and so on, the daily
average of these commodities

__ 365A + 52B -H 4C -I- etc.

' 365

Suppose that in this mass of commodities requisite for
the average day, there are embodied six hours of social
labour, then there is incorporated daily in labour- power
half a day's average social labour ; in other words half a
day's labour is requisite for the daily production of
labour-power." In half a day, then, it is supposed, the
labourer produces an ^equivalent value to that which he
receives from the capitalist, and the labour-power

30 VALUE.

exerted for the remaining half-day, is in producing
commodities for the capitalists' profit, viz., in produc-
ing surplus-value. That this is to a great extent what
does happen, there is little doubt, for, as Marx explains,
the reason why the labourer is obliged to sell the
commodity, labour-power, at its cost of production,
while the capitalist is able to realize an advance on
that, is because he has no other commodity to employ
as means of production, and must therefore sell labour-
power to those who have.*

I have shown how the different commodities come
to find their expression in money form ; so that the
foregoing process of the production of value and
surplus- value appears on the surface as the purchase
by the capitalist of so much labour-power, which, being
embodied in material as a commodity, is sold at a price
over and above its labour-cost, returning in money
form, and the difference being profit to the capitalist.
This profit is continually kept, by the competition of
capitalists, to a certain ratio, the dead level being
disturbed by various circumstances. Still this disturb-
ance does not interfere with the fact that there is a
general level ; to use a familiar illustration, any more
than the disturbance of the surface by the waves,
denies the general level of the sea.

How money hides the real mechanism of industry
from the labourer, and, indeed, also from the capitalist,
will appear later on.

The condition of the labourer in regard to the means
of subsistence bears the stamp of history — has a

* " Capital," Vol. i, p. 146-7. However that this is not an
all sufficient reason will be seen later on, but we will
assume its all-suflficiency at present.

VALUE. 31

historic development. It ought to have occurred to
Marx that his condition as to the means of produc-
tion also bears the stamp of history.

Never, says Marx, has any school played more tricks
with the word science than that of Proudhon. Well,
as Hyndman has remarked, * between the schools of
Marx and Proudhon there is no love lost. But surely
to treat conditions of historic development as if they
were indissolubly connected, to start investigation
with that fixed opinion, is scarcely scientific careful-
ness.

A commodity is a "born leveller, and a cynic," says
Marx, " it is always ready to exchange not only soul,
but body, with any and every other commodity, be the
same more repulsive than Meritornes herself. Indeed F
Well, one would scarcely have thought it, since desiring
equality, he nevertheless wished to see an end, once
and for all, to that " bourgeois" t society which gave
a commodity birth, viz, capitalists' society. But it is
not true that commodities will interchange without
preference ; there is one to which they will all bow,
the crowned one. Gold. The possessor of Gold is
virtually the possessor of commodities ; the possessor
of commodities is not always the virtual possessor of
Gold.

Somewhere in " Capital " it is explained that, in
speaking of the capitalists, those are referred to who
do nothing for their income, relegating everything to
superintendents, and .whose sole occupation is to sit at

* "Historical Basis of Socialism."
fThe followers of Marx (socialists) are very fond of the word
'• bourgeois." In one publication, " Ethics of Socialism," by
E. Belfort Bax, it occurs as many as five times on one page.

32 VALUE.

home and wait for Heaven to bring them their reward
for indolence — I beg pardon, their "reward for
abstinence." The remaining portion of the public (the
large land-holder is included with the large Capitalist)
are either wholly labourers, or combine that function,
under the form of superintendence, etc., with the
function of capitalist or land-holder.

As Marx has demonstrated that surplus- value
(profits, rent, interest) arises through the purchase of
labour-power, it is quite legitimate for him to conclude
of those who combine the function of labourer and
capitalist by becoming employers, that part of their
reward is of the same nature as that of the capitalist
proper ; but, outside of this class, there are people who
sell their labour, (the ensemble of capacities) upon
■yvhich a profit must be made, and whose reward for
service is equal to that of quite large employers.
Between this class of workers and those of the common
labourer there is a difference in reward of many
hundreds per cent. Moreover, properly speaking, all
must be classed as labourers except those who derive
their income from the sole occupation of pointing to a
bank book, and who leave even the functions attached
to the process of lending money and land to agents, etc.

This wide difference in reward is accompanied by
equally wide differences in standards of comfort, so
that the difference in the value of the labour-power of
the different grades of labourers, answers in every way
to Marx's theory, viz., that it is measured or estimated
by the value of the means of subsistence which the
labourer consumes. Thus the managing director, for a
few hours' application to duty, gets his thousands a
year ; the shop-keeper for walking about and directing

VALUE. 33

his employees, and the manufacturer for attending his
office a few hours in the morning and issuing orders for
the day, get their thousands and hundreds ; the small
manufacturers and small shop-keepers who have to buy
as large a variety of articles as their bigger brethren,
and, in many respects, exercise a keener judgment
thereon in order to compete with them, besides doing
much or all of the manual labour, receive a salary
equal to about a tenth of the large manufacturers and
large shop-keepers. There is the stock-broker with
his thousands, and the skilled mechanic (whose occupa-
tion requires more application and concentration, if he
wishes to be successful, than that of the stockbroker
and the shopkeeper who act as overseers) who gets his
fifties of pounds per annum, but not many of them ;
we further have the labourer, shop-assistant, clerk,
etc., whose positions are responsible ones, requir-
ing a good deal of tact and judgment, and they are
gloriously rewarded by the tens of pounds per annum.
Truly, as Adam Smith says, the dirtiness and hardship
of employments tend to produce differences in the
value of labour, — but the reward is in inverse ratio
to the hardship .

We still have a difficulty left then, for we have not
discovered the reason of the variety of rewards for the
variety of kinds of labour. The school of Marx does
not supply the information, but settles the intricate
entanglements of reward for labour, and income from
capital, at a blow, by the use of averages. The use of
averages is very obvious, but its use may be abused
without our knowing it. In this case Marx admits
that the standard of comfort has a historic evolution ;
so also have its differences, as well as the propertyless
3

34 VALUE.

condition of the general labourer. On these two latter
points, Marx's school would set society's historic
estimate on one side, and evolve economic laws from
its own collective cranium ; insist that their legitimate
theoretical use of averages (the treatment, for sim-
plicity, of the standard of comfort as being uniform
with every individual) is the proper method of practi-
cally dealing with society's units, and by the wisdom
and power (don't forget the power) of the big,
infallible majority, settle that which their analytic
minds failed to unravel. This is the " reductio ad
absurdum" of majority-rule — even as it has been
said that Malthus is the " reductio ad absurdum " of
political economy.

The " final utility " school can settle this matter by
the rescue and patch-up of a dear old pedestal that had
long since succumbed to the waves of criticism. From
this pedestal they can proceed to talk as follows : —
The reward of the labourer is in proportion to the
scarcity of the capacity exercised by him, and subject,
like other things, to supply and demand. Supply — and
— demand is our first word, it is also our last ; and the
value of labour is estimated in commodities, or in one
which is a formal expression of their relation. The
relativity of commodities can only b& estimated by
their final utility. Final utility has a splendid mean-
ing, you know ; it answers to anything. Wind, for
instance, has utility, hut Jinal utility is the cross between
this species and the difficulty which society has in
procuring the product ; and this degree of difficulty of
obtaining two products, society estimates without any
knowledge, conscious or unconscious, of what con-
titutes the difficulty ; then how can labour-time enter

VALUE. 35

into the estimation ? So you see the m plus ultra of
economic magic is final utility.

However, one of the final utility exponents says that
" fluid labour — and — sacrifice tends so to distribute itself,
and so to shift the quantity indices, as to make the
unitary marginal utility of every com^nodity directly
proportional to the amount of work it contains." And
here final utility reaches its " marginal " fort, and, by
adopting its last defence, dies a natural death. You see
when once supply and demand equalize the profits of the
capitalists, and exercise their influence on the waves of
wages, or make value " directly proportional to the work"
the commodity contains, then supply and demand very
kindly retire, quite satisfied, and for this reason, — that
the iron law of wages, resting on the standard of comfort,
says " Thus far and no farther shalt thou go." In admit-
ting that the value of a commodity is directly propor-
tional to the amount of work it contains, if the
Jevonians mean anything definite by the term work at
all, they admit the whole of Marx's position without
the merit of having developed it, while they do not
explain that which he avoids by his averages. But
do they mean anything definite by " work " ?

If I might be pardoned for one irregularity, I would
like to say that I never knew anything which appeared
to me so superlatively and pedantically stupid as the
final utility theory of value.

We have now examined the theory of value as it is
put forth by the champions of the two elements of
society, — those who advocate property, and those who
aspire to Socialism — both of which are straining every
nerve, the one to keep hold of, the other to get hold of,
the power of government, in order to make everyone

36 VALUE.

conform to the logic of their erroneous or incomplete
theories. It must be admitted that the Socialistic
element is rapidly gaining ground ; and property is
getting quite frightened, not to say desperate, at the
appearance of the red spectre.

Just a word or two as to the position of Marx on the
matter of exchange. According to his definition of
exchange, a definition which for purposes of discussion
may be quite in order, he is right when he says that
surplus-value cannot thereby arise. But such a func-
tion as he defines lies in some metaphysical and quite
unreal process which the commercial world knows
nothing of. There is no such thing as the function
of exchange which is not production ; and the func-
tions of circulation are the functions of exchange. How-
ever small a quantity it may be, labour is necessary to
all commercial exchange. Even the exchange of stocks,
or the advance of money, requires labour, and therefore
the reward that accrues to the individual stock-broker,
or the individual money-lender, is reward for labour,
or at least our theory of value does not, as yet, warrant
us in denying it. So with the individual merchant
who buys up a cargo of tea, or other merchandise :
his reward is partly for present services in taking
risk, and in distributing the commodities in the various
quantities and quaUties required by the retailer — or
being unfinished products, for the operators — and partly
for the labour of ascertaining and noting the require-
ments and whereabouts of his customers. Moreover,
if we suppose the merchant becomes an employer of
labour, it does not require much commercial know-
ledge to see that his income increases very much in
proportion as he does so, while his actual personal

VALUE. 37

labour becomes less. So of the shop-keeper,- &c. The
circulation of commodities, then, involves labour, and
accordingly adds to their value, and, as the merchant
performs a part of that necessary labour, his income or
profits or wages is the remuneration which society
allows him for the reproduction of himself, namely, for
supplying what historic evolution has come to say is
his necessary means of subsistence. Marx, therefore,
I do not consider is warranted in saying, " If the
transformation of merchant's money into capital is to
be explained otherwise than by the producers being
cheated, a long series of intermediate steps would be
necessary, which, at present, when the simple circula-
tion of commodities forms our only assumption, are
entirely wanting." I repeat, there is no such thing as
a sirnple circulation of commodities, in a commercial
sense, which is not part of the process of production.
Immediately a commodity finishes its circulation, the
process of the production of that commodity (that is, of
increasing its value by additional labour-power) ceases —
not before. It is, perhaps, difficult to draw the line,
but there is, nevertheless, a time when the mere specu-
lator and trust deviser, as distinct from the legitimate
merchant, comes out in full relief. But of this charac-
ter Marx is not speaking, and I therefore leave it out
of consideration here.

" Let us now accompany the owner of some com-
modity," hesays, ' ' — say our old friend the weaver of linen
— to the scene of action, the market. His twenty yards
of linen has a definite price, ;^2. He exchanges it for the
£i, and then, like a man of the good old stamp that he is,
he parts with the £i for a family Bible of the same price.
The linen, which in his eyes is a mere commodity, a

38 VALUE.

depository of value, he alienates in exchange for gold,
which is the linen's value-form, and this form he again
parts with for another commodity, the Bible, which
is destined to enter his house as an object of u tility and
of edification to its inmates. The exchange becomes an
accomplished fact by two metamorphoses of opposite yet
supplementary character, — the conversion of the com-
modity into money, and the reconversion of money into
a commodity. The two phases of this metamorphosis
are both of them distinct transactions of the weaver —
selling, or the exchange of the commodity for money ;
buying, or the exchange of the money for commodity ;
and the unity of the two acts, selling in order to buy.

" The result of the whole transaction, as regards the
weaver, is this, that instead of being in possession of
the linen, he now- has the Bible ; instead of his original
commodity, he now has another of the same value, but
of different utility. In like manner he procures his
other means of subsistence and means of production.
From his point of view, the whole process effectuates
nothing more than the exchange of the product of his
labour for the product of some one else's, nothing more
than an exchange of products."

It is easily seen, here, that the £-2, value of the
weaver's linen includes the cost of bringing it to
market, and of every function necessary for the final
transfer ; for if it does not include that, so much labour
of the weaver is lost to him. So that the point (quite
in accordance with mathematical definition) of cir-
culation, as distinct from production, is quite an
imaginary one, and, as I have said before, has no real
existence in commercial life. It is quite legitimate for
Marx to shut off exchange, and show that surplus-

VALUE. 39

value arises in the use-value of labour-power, as such,
but when this point of distinction, necessary for theoris-
ing, is utilised for showing that merchants' money is
only transformed into capital by cheating, it is done by
giving the term, exchange, a practical coroUory which
it did not possess in the theory. Commodities could not
gather value purely by circulation dissociated from
production, but it is in virtue of the inevitable productive
element associated with it that value arises, consequently
surplus-value and capital. If I were to imitate the atti-
tude of Marx to Proudhon, I should say that this con-
venient use of the double meaning of terms is "play-
ing such tricks with the word science " as is worthy of
his school. — The great boast of the modern socialists is
that they are not as were the socialists of old, whose
socialism was the outcome of a commendable senti-
ment " with no scientific basis whatever," but that it
now "rests upon an impregnable scientific and economic
foundation which renders all attacks upon it utterly
futile." Nevertheless I do not wish to underrate the
importance of the theory which "Capital" developes,
or to ignore the hard-headed thinking it displays.

But who is this Proudhon who " plays such tricks
with the word science ? "

CHAPTER III.
Proudlion and Value.

The point of progress we have made in our last
chapter, by the aid of Capital, is that the cost of labour-
power is a definite quantity of the means of subsistence,
the requirement of such definite quantity having historic
development ; that it becomes fixed, as other customs,
and only changes by a gradual process ; that labour-
power sells in the market at its cost of production ; that
the capitalist purchases this labour-power, and by virtue
of the command he has over the means of production,
causes it to be expended for a longer time than is
necessary to reproduce the inevitable quantity of the
means of subsistence, the difference between the amount
required by the labourer, and that produced by him,
going to the capitalist as his surplus- value. Competition
keeps the profit of the capitalist to a certain general
level (risks, etc., being allowed for), and we find that
the basic principle underlying the value of commodities,
and determining their relations in exchange, is the
quantity of the means of subsistence required by the
labourer to reproduce his labour-power.

The Capitalist's command over gold, credit, and
machinery, enables him to stand between the labourer
and his produce, and, after doling out the necessary
sop to Cerberus, he demands the remainder as his toll for

VALUE. 41

finding employment. That — speaking of the mass — the
labourer's means of subsistence is of this nature, there
is little doubt, for should a commercial crisis occur, or it
it is repeated too often, and the capitalist is unable to
continue his usual contributions to the wages fund, well,
as Byron says : —

' ' The mob
At last falls sick of imitating Job.

At first it grumbles, then it swears, and then.
Like David, flings smooth pebbles 'gainst a giant;

At last it takes to weapons, such as men
Snatch when despair makes human hearts less pliant
Then comes the ' tug of war.' "

So far we have learned that value rests upon a
tangible and firm basis of a definite and ascertainable
cost, and this is the contribution to social economy
which " Capital" places before the English reader.

The error of Marx lies in his cutting the Gordon
Knot of the differences in Standard of Comfort, and by
reducing them to the same general level and average,
bringing his theory in line with his Utopian preposses-
sions.

He will have no tricks with the word science ; but
surely to take inference for certain truth, without
subjecting that inference to experimentation, is not in
accordance with methods scientific — Socialism cannot
be subjected to the test of experiment without departing
from those recognised rules of procedure. Isolated
experiments cannot give the required verification, for
they would lack that element, the presence of which is
necessary for the establishment of the truth of the infer-
ence, to wit, the element of that national and inter-
national governmental force which Socialism sees is its

42 VALUE.

necessary counterpart — we must wait for the moments
of society to verify our hypotheses ; and in that case
what becomes of the principle of forcing those
hypotheses upon society by government ? Such pro-
cedure is the assumption of the truth of what is only an
inference, and which at best is but partially verified.
Socialism, then, has dogmatism written on its threshold.
It cannot verify its hypothesis without proceeding in
a manner, the justification of which, at least, pre-
supposes that hypothesis verified, and even were its
truth unmistakably established, there remains the
question of how far we ought to force our neighbours
to do even that which is undoubtedly right . In this
respect Communist- Anarchism stands on a surer footing;
but like all forms of common ownership, it must, as I
believe, fall to pieces ; besides, I shall show them to be
unnecessary.

Social science is different from all other sciences, and
is distinguished from them by the nature of its material.
Man is at once the operator and the subject of enquiry.
Society and its units cannot be modelled and remodelled,
decomposed and placed in affinity again, experimented
upon and its effects destroyed, like the sculptor's clay,
the crystal of a chemist's laboratory, or the germinat-
ing seeds of a botanist. Experiments may be con-
ducted, it is true, such as M. Godin's FamilistSre de
Guise, etc., but then they lack the element of univer-
sality, and this would alter the whole of the circum-
stances. The materials for such experiments, too, are
drawn from the very Slite of the workers and overseers ; it
is also voluntary, and the fact that its members may with-
draw ensures a bond which no government could equal.
But whether Socialism be State Socialism, or Free

VALUE. 43

CommunisTi, or Commuaist-Anarchism, or Anarchist-
Communism, universality is the element demanded,
and, this is a case, where what is true of its units is not
true of the whole. If we have the choice of either
entering organisations (whether they be co-operative
societies or trades-unions), or remaining outside as
individualities, there is some prospect, where the field
is open to competition, of ensuring conditions of equity ;
but where the position of neutrality is abolished and
we have only the choice of either one organization or
another, then officialism and corruption become
engendered, and their unbearability sets up the move-
ment of decomposition.

Proudhon was too much of a philosopher not to heed
these elementary principles of scientific research and
obvious facts. He loved freedom, and he was enthusiastic
for the emancipation of the workmen. The interpretation
of economic phenomena he declared to be Liberty and
Wealth for all, and this by the operation of laws which
are independent of governmental action,* and deep down
in the spontaneous relations of society and the natur e
of things. + It must be admitted, however, that while

• " La valeur des produits et services doit se fixer, non par
I'opinion ou I'estime du 16gislateur, mais par I'equilibre
general de la production, lequel ne depend point du bon
plaisir du gouvernement." " Solution du Probleme Social,"
p. 176, by P. J. Proudhon.

+ Before we go any farther, I may as well say that
Proudhon commences his " What is Property ? " by declaring
' ' property is robbery. " Lest the reader should be misled,
by this phrase being carelessly quoted, into supposing he
required the nationalisation or communal ownership of
land or other goods, I will assure him that such was not the
case, and that the phrase applies to the concrete form of
property, the conditions under which it has been, and is at

44 VALUE.

Proudhon saw what Marx did not see, nevertheless the
latter's theory of value, developed in detail as it is, is a
most important and necessary addition to the complete
theory.

Proudhon, assuming the position of Marx without
demonstrating it,* proceeds to lay tare the enigmas of
Political Economy and expose its crudities.

With the economists, he knew, and indeed every
student of political economy knows, that the increased
productiveness of labour lowers the value of the
unitaryproduct^ But he also knew, what the economists
failed to note with any approximation to precision, that
if its monetary value, or exchange value, is lowered, the

present held. He also says, "property is an institution of
justice." This is in accordance with his proposition of the
opposition between fact and right (Economical Contradic-
tions, Chap.. I.). Applied to property it runs thus : — " La
propriete, en fait at en droit, est essentiellement con-
tradictoire, at c'est par cette raison meme qu'elle est quelque
chose. En effet,

" La Propriete est le droit d'occupation : et en meme
temps le droit d'exclusion.

" La Propriete est le prix du travail ; et la negation du
travail.

" La Propri6te est le produit spontane da la socifitfe ; et la
dissolution de la soci6t^.

" La Propriete est une institution de justice ; et la propriety
C'EST LE VOL." "Contradictions Economiques " tome ii.,
chap. xi.

*" When I say that every product is worth what it costs,
I mean that every product is a collective unit, which, in a
new form, groups a certain number of other products con-
sumed in various quantities "— " Economical Contradictions "
Chap. II. This, as will be seen more fully later on, is a very
diiferent thing from the " fraise de production" of the
economists.

VALUE. 45

quantity of products is increased ; — while, as capitalists and
associates of political economists, indeed as sellers, the
price falls (the sole idea with which political economy is
occupied), the use-value increases. Now what becomes of
these increased use-values.

They do not go to the labourers, for aspolitical economy
complacently puts it, so far is it from being true that
the labourers would thereby be enabled to consume
more, that it is probable his wages (money is here
the element of confusion) would in no long time be
adjusted to the new value. That is, the labourers'
wages would sink to such a price as would command
only the same quantity as before. True ! And Marx
has invested this (to the Economists) vague and
meaningless expression, with tangibility. We know
why the labourers' wages become adjusted to the new
value. It is because their standard of comfort is a
definite quantity of the means of subsistence, and if such
means of subsistence fall in money price, then competi-
tion forces money wages down proportionately. But I
ask again, what of the increased quantity which the
labourer produces but does not consume, since the
adjustment of his wages to the new value allows him
to purchase no more. Political Economy has no answer ;
indeed, as has been pointed out, is not aware of the
existence of a problem here — truly gold is the dust which
blinds the economist.* Metaphysics invests a non-entity
with the character of an entity ; political economy
reverses the process and invests an entity with the
character of a non-entity. It declares something to be
nothing ; and British guns and bayonets are set to work
if a body of producers should attempt to resist the
* Jevons

46 VALUE.

forcing of this absurdity upon them. It is with such
conclusions as these that political economy defends the
title to property, and with no better economic princi-
ples tha n these for support, so able a philosopher as Mr,
Herbert Spencer would make an exception to his general
denial of the right to make use of governmental force.

In our last chapter we found that the capitalist, by
virtue of his command over the means of production,
could appropriate the product of the labourers, less a
definite quantity necessary to satisfy the demands of
their standard of comfort. By the same process, and in
virtue of the same position, he, with the landlord, appro-
priates any of the result of intensified production, with
the exception of what little the labourer can manage
to cause to stick on to that standard of comfort.*
The process of appropriation, however, goes on quite
independently of any theoretical knowledge of it by the
capitalist. But it would seem that, as the rate of
profit (that is the proportion between the amount of profit
and the amount of capital employed) is fairly constant,
the same competition which prevents it rising much
above or below the general average, would also force the
capitalist to deliver up the whole of the results of
improved machinery to the landlord in as full a manner
as Henry George supposes to be the case. But such is
not the fact. The capitalist requires not only the
return of the principal of his money, but sufficient to
provide for his standard of comfort, which includes an
accumulation of capital ; that accumulation he must

* It will be observed that the term, labourer, is here used
i Q a di iferent inclusiveness from that which meant all workers,
in which e mployers who combine the function of capitalist
and labourers are included.

VALUE. 47

have, and does have. For instance we find him with
;^i 0,000; being a manufacturer, he finds that surplus-
value has enabled him, within a certain period, and
after payment of expenses, including those of his house-
hold, to accumulate ;^2,ooo, and he reasons thus : If with
a capital of ;^io,ooo, I get a net profit of £"2,000, now that
I have an employed capital of ;^i 2,000, I ought to get
;^2,4oo, and he gets it, less any reduction which may be
the result of the lowering of the general rate of profit, a
reduction which is of slow process. As a matter of fact,
the increase of Capital is out of all proportion to the
growth of population ; How, then, in the name of all that's
economic, does the capitalist get his ever-increasing
amount of profit, and how can he pay an advanced rent,
butforthe continual march of improvement in productive
power ? For no lowering of the rate of profit is likely
to be permanent which is not the result of an increased
amount. — It is an axiom of political economy that any
increase or decrease in the rate of profit will cause
capital to flow to or from those industries in which it
respectively occurs, thus maintaining the general rate.
Although it may be the means of abstracting a share
of the effects of intensified production from Capital, yet
it cannot be true that rent is merely the result of the
lowering of the margin- of cultivation, as Ricardo
teaches, for in that case (and if the only effect of
increased productiveness is an alteration of the money
expression of commodities)* it would come from labour,
as a result of its diminished reward, and this Ricardo
could not admit ; for " In the same country double the
quantity of labour may be required to produce a given
quantity of necessaries at one time, than maybe neces-
* See Mill's Principles. Book III., Ch. I.

48 VALUE.

sary at another and more distant time ; yet the labourers'
reward may be very little diminished."

Rent and Interest, then, swallow up, the result
of the ever increasing productiveness of labour.
The means by which this is conveyed is a market in
which the labourer sells his labour-power to the
capitalist at its cost of production (the price which will
secure him so much of the means of subsistence as
custom allows) while the product of its expenditure
realizes more, the money price of wages falling as the
money price of commodities, securing the increase.

Thus the more the capitalist receives, the more he is
able to command : with;^io,ooohe demands an accumu-
lation of ;^2,ooo ; with this addition to his principal he
demands ;^2,4oo, and from this he delivers up to the
landlord only a sum of such quantity as results from a
diminished rate of profit. The Capitalist's standard of
comfort, then, is unlike that of the labourer proper.
Everything in laws economic tends to keep the latter's
standard of comfort stationary, and it is only by
Herculean efforts that he is able to raise it. On the
other hand, the Capitalists' increase is at a compound
rate, and unavoidably so, from the inherent nature of
interest and the accumulation of Capital. " What
means, then, this eternal babble of the economists about
the improvidence of labourers, their idleness, their
want of dignity, their ignorance, their debauchery,
their early marriages, etc. ? All these vices and excesses
are only the cloak of pauperism ; but the cause, the
the original cause which holds four-fifths of the human
race in disgrace — what is it? "

Let us assume conditions which mqsl of my readers
will declare to be impossible of realisation. For the

VALUE. ,,49

present I will grant the impossibility, but I will remind
the reader that they are none other than those assumed
by Ricardo and other economists, viz., the exchange
of products against products, without the intervention
of money, as money, and with Rent and Interest
eliminated. Previous figures will suffice : labour being
the measure of value, twenty labourers produce com-
modities which may be represented by the number, 100 ;
another batch of twenty labourers produce 100 pairs of
stockings in the same time : 100 pairs of stockings are
worth 100 commodities. Suppose the whole produce
of a country is represented by 100 pairs of stockings
and 900 unspecified commodities. In time, by the use
of improved machinery, 150 pairs of stockings can be
produced by the same amount of labour as formerly
produced only 100 pairs ; as I have shown, the econo-
mists go no farther than to say that these 150 pairs,
having no more labour-power expended upon them, will
still only exchange for 100 commodities, and they leave
us quite in the dark as to what the owners of the 100
commodities do with the extra 50 pairs which come
to them by the exchange. We have seen that, in
reality, it passes from the labourers to capitalists and
landlords, and to so many of the workers as are also
partly capitalists, and in proportion as they are such
and partake of their general character. But we now
assume the elimination of these commercial functionaries.
Nevertheless it is true that the product of a day's
labour will only exchange for the product of a
day's labour, as heretofore, although improved
machinery may have doubled the quantity in one
industry ; so that the 150 pairs of stockings, the result
of fifty per cent, increased productiveness, under our
4

50 VALUE.

assumed conditions, will still only exchange for loo
commodities. But these loo commodities, although
the product of labour equal to twenty labourers, come
from various sources, indeed from all producers, and the
stockings given in exchange, enter into the labourers'
consumption, according to our illustration, in the pro-
portion of one-tenth of the whole, because we repre-
sented the stocking industry by the number loo, and other
industries by 900 ; so that, as a result of the distribution
of stockings among all the producers in every industry,
every labourer, including the stocking-producers who
hold back sufficient for. use, can now consume fifty per
cent, more stockings, or what is the same thing, get one-
tenth of his means of subsistence fifty per cent, cheaper.
The labourers' reward is inevitably under such condi-
tions, increased by one-twentieth, and if we suppose
the same amount of increased productiveness to have
occurred in other industries, by the same process, the
labourers' standard of comfort will be increased by
fifty per cent. Nor can the question of supply and
demand alter the conclusion, indeed it is part of the
process sketched, and pre-supposed.

We may now put it in a formula, That any increase in
the productiveness of labour distributes its results amongst the
whole of the labourers in exact proportion as the commodity, in
the production of which the improvement occurs, enters into
the labourers' consumption.

An increased supply comes as the result of an antici-
pated extra demand ; therefore (if, as the consequence
of improved machinery, labourers are not withdrawn
from the stocking industry), we may conclude that the
consumers can do with more stockings per head or
that population has increased ; in the latter case, the

VALUE. 51

cheapness of stockings will enable the labourer to add
some other article to his consumption, or increase his
security for old age, etc. ; in any case it would be
impossible for him not to increase his comfort in the
proportion mentioned.

The operation of the "iron law of wages," too,
would defeat itself, for suppose the labourers still
accept the same amount of commodities as wages,
then all the forces of competition would conspire to
make that applied increase of productive power still
further cheapen the commodities into which they
enter.

This process could not stop, for in the law of the
production of values, no less than in other economic
laws, there is an antinomy. As Proudhon says, "the
economists have very clearly shown the double
character of values, but what they have not made
equally plain is its contradictory nature."

" Utility is the necessary condition of exchange ; but
take away exchange and utility vanishes ; * these two
things are indissolubly connected. Where, then, is the
contradiction ?

" Since all of us live only by labour and exchange,
and grow richer as production and exchange increase,
each of us produces as much useful value as possible,
in order to increase by that amount his exchanges, and
consequently his enjoyments. Well, the first effect, the
inevitable effect, of the multiplication of values is to

^Tbat is to say, every one produces a special commodity and
more of it than he can individually use ; he must, therefore,
exchange it for other commodities ; and if by any accident
he is unable to make these exchanges, then he is virtually in
possession of nothing.

52 VALUE.

LOWER them,"* Thus the producer, while impelled to
the multiplication of values, is obliged to yield up the
result of his extra exertion, under actual conditions, to
Interest and Rent receivers. Under the conditions our
illustration supposes, it would distribute itself among
the whole of the labourers.

Use- value and exchange- value' are inversely pro-
portional to each other. "Value is capricious, like
liberty : it considers neither utility nor labour ; on
the contrary, it seems that, in the ordinary course of
affairs and exceptional derangements aside, the most use-
ful objects are those which are sold at the lowest price ;
in other words, that it is just that the men who perform
the most attractive labour should be the best rewarded,
while those whose tasks demand the most exertion are
paid the least." This results from the antinomical
nature of value, and from society's evolutionary struggle
to find the synthesis, or, to produce what Proudhon
calls its constituted form.

Let Proudhon analyze the existing expression of
value.

" Where there is liberty, production is necessarily
undetermined, either in quantity or in quality ; so that
from the point of view of economic progress, as from
that of the relation of consumers, valuation always is
an arbitrary matter, and the price of merchandise will
ever fluctuate. Suppose for a moment that all pro-
ducers should sell at a fixed price; there would be some

* "System of Economical Contradictions " Ch. IX., P.
78, Proudhon (translation).^ — Professor Jevons strikes out
the word value from iiis terminology, because it is contra
dictory ; Proudhon adopts it for the same reason.

VALUE. 53

who, producing at less cost and in better quality, would
get much, while others would get nothing- In evern
way equilibrium would be destroyed. Do you wish, iY
order to prevent business stagnation, to limit produc-
tion strictly to the necessary amount ? That would be
a violation of liberty : for, in depriving me of the power
of choice, you condenin me to pay the highest price ; you
destroy competition, the sole guarantee of cheapness,
and encourage smuggling. In this way, to avoid com-
mercial absolutism, you would rush into administrative
absolutism ; to create equality, you would destroy
liberty, which is to deny equality itself. Would you
group producers in a single workshop (supposing you
to possess the secret) ? That again does not suffice : it
would be necessary also to group consumers in a
common household, whereby you would abandon the
point. We are not to abolish the idea of value, which
is as impossible as to abolish labour, but to determine
it ; we are not to kill individual liberty, but to socialize
it. Now it is proved that it is the free will of man that
gives rise to the opposition between value in use and
value in exchange : how reconcile this opposition while
free will exists ? And how sacrifice the latter without
sacrificing man ?

'• Then, from the very fact that I, as a free purchaser,
am judge of my own wants, judge of the fitness of the
object, judge of the price I wish to pay, and that you
on the other hand, as a free producer, control the means
of production, and consequently have power to reduce
your expenses, absolutism forces itself forward as an
element of value, and causes it to oscillate between
utility and opinion.

" But this oscillation, clearly pointed out by the

54 VALUE.

economists, is but the effect of a contradiction which,
repeating itself on a vast scale, engenders the most
unexpected phenomena. Three years of fertility in
certain provinces of Russia are a public calamity, just
as, in our vineyards, three years of abundance are a
calamity to the wine grower. I know well that the
economists attribute this distress to the lack of markets ;
wherefore this question of markets is an important one
with them. Unfortunately the theory of markets, like
that of emigration with which they attempted to meet
Malthus, is a begging of the question. The states
having the largest markets are as subject to over-
production as the most isolated countries : where are
high and low prices better known than in the stock
exchanges of Paris and London ?

" From the oscillation of value and the irregular effects
resulting therefrom, the socialists and the economists,
each in their own way, have reasoned to opposite, but
equally false, conclusions : the former have made it a
text for the slander of political economy and its exclu-
sion from social science ; the latter, for the denial of
all possibility of reconciliation, and the affirmation of
the incommensurability of values, and consequently
the inequality of fortunes, as an absolute law of
commerce.

" I say that both parties are equally in error.

" The contradictory idea of value, so clearly exhibited
by the inevitable distinction between useful value and
value in exchange, does not arise from a false mental
perception, or from a vicious terminology, or from any
practical error; it lies deep in the nature of things,
and forces itself upon the mind as a general form of
thought— that is, as a category. Now, as the idea of

VALUE. 5^

value is the point of departure of political economy, it
follows that all the elements of the science — I use the
word science in anticipation — are contradictory in them-
selves and opposed to each other : so truly is this the
case that on every question the economist finds himself
continually placed between an afBrmationanda negation
alike irrefutable.* Antinomy, in fine, to use a word
sanctioned by modern philosophy, is the essential cha-
racteristic of political economy ; that is to say, it is at
once its death-sentence and its justification.

"Antinomy, literally conter-law, means opposition
in principle or antagonism in relation." +

I must impress upon the reader the necessity of a
thorough grasp of the thoughts expressed by this quota-
tion, and the method employed ; the antinomical
method of analysis, once understood, will save him
from many a one-sided position. In the first chapter
of this work, I have treated the subject of Property
and Communism by antinomy, that is, by giving them
an historic position of thesis and anti-thesis, of oppo-
site facts.

The economists, after simply noting that there is a
value in use, have banished it from their thoughts, and
declared exchange-value to be the only form which
political economy has any right to acknowledge ; thus
they have missed one of the essential elements of the
creation and development of values. The socialists,
seeing the importance of use- value and the denial of its
consumption by the labourers through the principle of
exchange, would forbid us longer to buy and sell ; and

* Let the reader particularly aote this,
t Ibid, 81-83.

56 - VALUE.

it is with these two crudities that the two great divi-
sions of societyto-day are respectively occupied, each
one endeavouring, by all and any means, to suppress
the other. It is a vain attempt; we must find a
method of " rendiering all useful values and exchange"-
able values one and the same thing, that is, all useful
values equally exchangeable and all exchange values
equally useful."

" Supply and demand, held up as the sole regulators of
value, are nothing more than two ceremonial forms serv-
ing to bring useful value and exchangeable value face to
face, and to provoke their reconciliation. They are the
two electric poles whose connection must produce the
economical phenomenon of affinity called Exchangb." *

Supply and demand, then, are the two forces which
do but serve to bring values in connection and deter-
mine the quantities in which the various products
should be produced ; but that which determines their
proportional value, Proudhon declares to be Labour
differing in quantity and quality with the producer.
" It is labour, labour alone that produces all the ele-
ments of wealth, and that combines them to their last
molecules according to a law of certain but variable
proportionality . ' '

"Say," he says, "and the economists who have
succeeded him have observed that, labour being itself
an object of valuation, a species of merchandise indeed
like any other, to take it as the principal and efficient
cause of value is to reason in a vicious circle. There-
fore, they conclude, it is necessary to fall back on
scarcity and opinion^

* Ibid, 89.

VALUE. 57

" These economists, if they will allow me to say it,
herein have shown themselves wonderfully careless.
Labour is said to have value, not as merchandise
itself,, but in view of the values supposed to be con-
tained in it potentially. The value of labour is a
figurative expression, an anticipation of effect from
cause."

Observe : society, whatever the economists may say
to the contrary, comes to look upon labour as having
value, in view of values supposed to be contained in it
potentially. How, then, does it come to fix its estimate
of these potential vahies of labour at a certain minimum
or point? By a law which Proudhon was the first to
seize the importance of — the law of the proportionality
of values ; the law by which labour combines all the
elements of wealth, to their last molecules, according
to a certain, but variable proportionality ; the law by
which the cheapness of commodities is in accordance
with society's estimate of their necessity, their use-
value, and by which, the process, tending to bring them
all into general consumption, also tends to equalize the
standard of comfort. This, acting and reacting through
the operation of the antithetical principle of value, and
including them all in the necessities of life (standard of
comfort), reduces them to a value, as compared with
other commodities, in exact proportion to the amount
of \a.houT-time devoted to their production. This law
not only confirms the theory of value as developed by
Marx, and as set forth in our last chapter, but shows
how economic tendencies contain the functional ele-
ments necessary for the consummation of all that Marx
could desire in the shape of equality, and without
resortin to that administrative absolutism and sup-

58 VALUE.

pression of liberty which he would fly to for the over-
throw of economic absolutism.

It should be noted that Proudhon does not speak of
labour as a value-creator, in the same equivocal manner
as the economists, who, as I have pointed out, mean
now labour-time, and now qualitative labour, but that
definiteness which is shown in the equal value of the
product of ten hours' work in one industry, to that of
the same time in another. Exceptional circumstances
aside, of course, but as a general law, it will be seen
that the value of commodities are in proportion to the
labour-time they cost society. That the full operation
of this law is impeded and diverted in many ways and
by many customs, and its consequences destroyed,
and in place of beneficial results, dire results ensue,
is not a denial of its existence.

Let Proudhon speak of it.

I will first remind the reader, again, however, of the
contradiction of value in use and value in exchange, and
the diminution of the latter with the increase of the
former; and of the position of the economists, who
failed to recognise its importance as an instrument for
preventing individuals from appropriating so much of
society's productive genius and other gifts, or in other
words, of spreading the result of increased productive-
ness among all the units. Indeed, seeing it is a fact that
the rapid improvement in machinery did not, and does
not, increase the reward of the labourer to any appre-
ciable extent, and insisting upon the incommensurability
of values, they exclaimed, " Oh ! si les damn6s pou-
vaient brfiler I'enfer ! "

The socialists, demanding that the labourer shall not
be damned, are marshalling their forces for the institu-

VALUE. 59

tion of that concentration of force and officialism which
is called State Socialism — only another way of securing
that damnation they wish to prevent.

But how does Proudhon treat the matter ?

Speaking collectively, and not overlooking causes
which produce in society, " classes which thrive and
classes which perish ; labourers paid twice, thrice, a
hundred times over, and labourers continually out of
pocket," he says : —

" Prometheus [that is society] devotes, on an average,
ten hours a day to labour, seven to rest, and seven to
pleasure. In order to gather from his toil the most
useful fruit, Prometheus notes the time and trouble
that each object of his consumption costs him. Only
experience can teach him this, and this experience lasts
throughout his life. While labouring and producing,
then, Prometheus is subject to an infinitude of disappoint-
ments. But, as a final result, the more he labours, the
greater is his well-being and the more idealized is his
luxury ; the further he extends his conquest over Nature,
the more strongly he fortifies within him the principle
of life and intelligence in the exercise of which he alone
finds happiness ; till finally, the early education of the
labourer completed and order introduced into his
occupations, to labour, with him, is no longer to suffer,
— it is to live, to enjoy. ...

" Prometheus knows that such a product costs an
hour's labour, such another a day's, a week's, a year's ;
he knows at the same time that all these products,
arranged according to their cost, form the progres-
sion of his wealth. First, then, he will assure his
existence by providing himself with the least costly,
and consequently most necessary, things ; then, as fast

60 VALUE.

as his position becomes secure, he will look forward to
articles of luxury, proceeding always, if he is wise,
according to the natural position of each article in the
scale of prices. . . .

" Imagine ourselves living in the day after the birth
of man at the beginning of civilization : is it not true
that the industries originally the simplest, those which
require the least preparation and expense, were the
following : gathering, pasturage, hunting, and fishing, which
were followed long afterwards by agriculture ? . . .

" Thus the very nature of things, as well as his own
wants, indicate to the labourer ths order in which he
should effect the production of th'i (values that make
up his well-being. Our law of^ proportionality, then,
is at once physical and logical, objective andsubjective ;
it has the highest degree of certainty. Let us pursue
the application.

"Of all the products of labour, none perhaps has
cost longer and more patient efforts than the calendar.
Nevertheless, there is none the enjoyment of which
can now be procured more cheaply, and which, con-
sequently, by our own definition, has become more
necessary. How, then, shall we explain this change ?
Why has the calendar, so useless to the early hordes,
who only needed the alternation of night and day, as
of winter and summer, become at last so indispensable,
so inexpensive, so perfect? For, by a marvellous
harmony in social economy, all these adjectives are inter-
convertible. How account, in short, by our law of
proportion, for the variability of the value of the
calendar ?

" In order that the labour necessary to the production
cf the calendar might be performed, might be possible,

VALUE. 61

man had to find means of gaining time from his early
occupations and from those which immediately followed
them. In other words, these industries had to become
more productive, or less costly than they were at the
beginning. . . .

" Suppose, then, that suddenly, by a fortunate com-
bination of efforts, by the division of labour, by the use
of some machine, by better management of natural
resources — in short, by his industry — Prometheus finds
a way of producing in one day as much of a certain
object as he formerly produced in ten : what will follow ?
The product will change its position in the table of the
elements of wealth ; its power of affinity for other
products, so to speak, being increased, its relative
value will be proportionally diminished, and instead of
being quoted at one hundred, it will thereafter be quoted
only at ten. But this value will still and always be
none the less accurately determined, and it will still be
labour alone which will fix the degree of its importance.
Thus value varies, and the law of value is unchangeable :
further, if value is susceptible of variation, it is because

is governed by a law whose principle is essentially
inconstant — namely, labour measured in time."*

Constituted values, then, are those which society has
come to look upon as necessary to its existence, con-
sequently which it has found the means of supplying
in ample proportion to its general wealth and require-
ments, and which, derangements of a transitory nature
aside, are produced and compared with other values of
a like nature (constituted) in exact proportion to the
labour-time expended upon them, and produced by

* Ibid 98-100.

62 VALUE.

labourers within the sphere of the general standard of
comfort ; that is to say, this class of labourers it is
whose labour-power contributes the greater part of the
value. Public opinion no longer exaggerates their
value in virtue of their scarcity; theyare articles of
general consumption and within the reach of- the
average worker — truly did Marx say, " a commodity is
a born leveller," for all commodities tend to this con-
stituted form.

Our theory of value is complete : from the time when
Adam Smith impressed the world with the economic
importance of labour, there could be no rest in this
sphere of thought until the theory was brought to satisfy
every phase of practical life. Moreover, the necessity
for its completion has once niore asserted itself by the
degree of the development of civilization. The political
sanction of the right to labour, to use, and to exchange
has beep granted in sufficient fullness to allow the
positing of all the economic moments. Liberty, political
and economic, must perfect itself, or develop into a
license which may threaten the very existence of
society.

We have yet to discover the path which shall lead
us out from all impediments to the operation and full
effects of the law of the proportionality of values ; and
that path must be free from all compromise with
immorality or injustice; it must not appeal to, or
impose, self-sacrifice of individuality in any form; it
must satisfy alike the egoisn^of the capitalist and of the
labourer, for that is the principle which, in the end,
always proves itself the strongest, at any rate it is
much the safest to calculate upon.

By methods wholly different, both Marx and

VALUE. 63

Proudhon show that society comes to estimate the
value of commodities by the amount of labour-time
expended upon them — the former by showing the
definite character of the labourer's means of subsistence
(standard of comfort), and how this definite quantity,
into which an element, historic and moral, enters,
comes to express itself in an iron law of wages, the
foundation upon which competition works. Labour-
power is the collective form in which these definite
quantities are purchased by the capitalist, and it is
sold by the labourers at a price which will repurchase
those quantities, and no more. By its expenditure
however it can produce more than the quantity con-
sumed for its support, and this .extra quantity is
the capitalist's reward or profit.

Proudhon goes further than Marx, and demonstrates
that society uses those goods for general consumption
which cost the least time to procure, and that they are
gradually brought within, or towards, the sphere and
reach of the average labourer as machinery and other
improvements are used in their production ; that the
proportion of consumption of each to the whole is in
accordance with the time necessary to their production.
This movement, which every economic phase intensifies,
and which the present cosmopolitan commerciality and
universal use of machinery should demonstrate with
startling eiFect, is destined, as Proudhon's great work
"System of Economical Contradictions " points out
in a most masterly manner, to bring all values to their
constituted form, and inaugurate a reign of order and
equality which shall outshine all Utopias, and produce
a well-being. Liberty, and exact Justice, which man,
at present, cannot contemplate.

64 VALUE.

This tendency., notwithstanding all obstructions,
economic and of more artificial character, is evidenced
by the movement among labourers to a nearer
approach to uniformity of wage.

The law of the proportionality of values is the law
which — once given free scope, instead of being cramped
and limited as it now is, and only forcing itself forward
in spite of difficulties — must, with these removed by a
simple process which the next two chapters will bring
under the reader's notice, equalize the standard of com-
fort with marvellous rapidity. It is the law of equality
itself and it lies deep in the conditions of present day
industry. It results from the contradiction of value-in use
and value in exchange; from the march of machinery and
invention and education, etc. No wonder the economist
left us in mid stream, and failed to apply the principle
of diminishing price with increased productiveness.

Equality, then is no longeran a /inon argument, but an
aposteviori one; no longer a vague Utopian aspiration, but
an inevitable consequence of demonstrated and acknow-
ledged economic laws.

" The proposition, labour is the principle of th» propor-
tionality of values, not only is true, resulting as it does
from an irrefutable analysis, but it is the object of pro-
gress, the condition and form of social well-being, the
beginning and end of political economy. From this
proposition and its corollaries, every product is worth what
it costs, and products are bought with products, follows the
dogma of the equality of conditions.

•' The idea of value socially constituted, or of pro-
portionality of values, serves to explain further ; {a) how
a mechanical invention, nstwithstanding the privilege
which it temporarily creates and the disturbances which

VALUE. 65

it occasions, always produces in the end a general amelio-
ration ; (&) how the value of an economical process to its
discoverer can never equal the profit which it realizes
for society ; (c) how, by a series of oscillations between
supply and demand, the value of every product con-
stantly seeks a level with cost and with the needs of
consumption, and consequently tends to establish itself
in a fixed and positive manner ; (d) how, collective pro-
duction continually increasing the amount of consum-
able things, and the day's work constantly obtaining
higher and higher pay, labour must leave an excess for
each producer ; (e) how the amount of work to be done,
instead of being diminished by industrial progress, ever
increases in both quantity and quality, — that is in
intensity and difficulty, — in all branches of industry ;
(J) how social value continually eliminates fictitious
values — in other words, how industry effects the social-
ization of capital and property ; {g) finally, how the
distribution of products, growing in regularity with the
strength of the mutual guarantee resulting from the
constitution of value, pushes society onward to equality
of conditions and fortunes.

" Finally, the theory of the successive constitution of
all commercial values, implying the infinite progress of
labour, wealth, and well-being, the object of society,
from the economic point of view, is revealed to us :
to produce incessantly, with the least possible amount
of labour for each product, the greatest possible quantity
and variety of values, in such a way as to realize, for each
individual, the greatest amount of physical, moral, and
intellectual well-being, and, for the race, the highest
perfection and infinite glory."*

* Ibid, p. 137.

CHAPTER. IV.

Impediments to the Law of the Proportionality of
Values.

We have seen that the law of proportionaUty is the
general tendency of all commodities to be included in
general consumption ; by which the standard of comfort
must eventually be equalized ; and consequently by
which labour-time in every industry will be equally
rewarded ; for as Marx has demonstrated, the value of
labour-power depends upon the standard of comfort.
Increased productiveness, that is, a continually increas-
ing yield of products to the same amount of labour, is a
necessity of its operation ; society adding to its general
consumption, products, as they cost less and less
labour.

But if this is true of society as a whole, it is less true
of the average producer, for let wealth increase as
quickly as it will, and if the produce of a country
increase fourfold, the labourer will be able to add no
more coats or shoes to his consumption, and no more
or better food. Such is the interpretation of facts by
Ricardo, and because it is true of to-day, economists
tacitly agree that it must go on for ever, although
they are afraid to conclude quite frankly according to
their principles. But it cannot go on for ever, and not

66

VALUE. 67

for long ; for the labourers are crying out against the
injustice of it, and their cry must be understood. I
say understood : one great excuse which is put forth
for the present inequality of conditions, is that it gives
leisure to many for the cultivation of the sciences, of
knowledge, of the arts. Never fear for your sciences,
and arts ; when the law of proportionality is afforded
an opportunity of fully expressing itself, we shall find
the sciences less enshrouded with pedantic mediocrity :
increased productivity must precede a rise in the
standard of comfort, and labour must leave an excess
for every individual ; then those will be called to the
sciences and arts who are capacitated for them, and not
as now in virtue of their social position. Moreover,
what is the science into which all others converge ;
which includes all others, and whose final and aggre-
gate truth is their great meaning ? It is the Social
Science. Yet wljen the labourer^ long suffering as
he is, asks for a light, asks the leisured scientist
philosophers, leaders, for a solution of the economic
difficulties, they can give no answer, and do but exhort
to patience under suffering, and with all kinds of
prejudices and compromises, which leisure and culture
should have dispelled from their mentalities, implore
their respect for the sacred rights of property and
the laws which they have framed for its protection.
I confess, I think such patience is well nigh exhausted,
although I do not see what the labourers are to gain by
" slinging smooth pebbles 'gainst a giant," except,
perhaps the negative advantage of sweeping away the
prejudice and insolence of a crowd of wealthy fools,
who sneer and pooh-pooh at the tragic throes of
historic crises.

68 VALUE.

" Eclecticism, the golden mean, compromise with
heaven or with morality ; is it always to be the same
philosophy then ? True science is repugnant to such
arrangements. All invested capital must return to the
producer in the form of interest ; all labour must leave
a surplus, all wages be equal to product. Under the
protection of these laws, society continually realizes,
by the greatest variety of production, the highest
possible degree of welfare. These laws are absolute ;
to violate them is to wound, to mutilate society.
Capital, accordingly, which after all is nothing but
accumulated labour, is inviolable. But, on the other
hand, the tendency to equality is no less imperative ; it
is manifested at each economic phase with increasing
energy and an invincible authority. Therefore you
must satisfy labour and justice at once ; you must give
to the former guarantees more and more real, and
secure the latter without concession or ambiguity.

"Instead of that, you know nothing but the continual
substitution of the good pleasure of the prince for your
theories, the arrest of the course of economic law by
arbitrary power, and under the pretext of equity, the
deception of the wage worker and the monopolist alike !
Your liberty is but a half liberty, your justice but a half
justice, and all your wisdom consists in those middle
terms whose iniquity is always twofold, since they justify
the pretensions of neither one party nor the other ! No,
such cannot be the science which you have promised
us, and which, by unveiling for us the secrets of the
production and consumption of wealth, must unequivo-
cally solve the social antinomies. Your semi-liberal
doctrine is the code of despotism, and shows that you
are powerless to advance as well as ashamed to retreat.

VALUE. 69

" If society, pledged by its economic antecedents,
can never retrace its steps, if, until the arrival of the
universal equation, monopoly must be maintained in its
possession, — no change is possible in the laying of
taxes : only there is a contradiction here, which, like
every other must be pushed till exhausted. Have, then
the courage of your opinions — respect for wealth and no
pity for the poor, whom the God of monopoly has con-
demned. The less the hireling has wherewith to live,
the more he must pay : qui minus kabet, etiam quod
habet auferetur ab eo. This is necessary, this is
inevitable ; in it lies the safety of society."

Thus Proudhoij addresses the economists of his time
in regard to the compromise of their economic conclu-
sions by such proposals as progressive taxation, etc.
Subsequent revolutionary events proved that not only
were such proposals repugnant to social science, but,
by their ineffectiveness, fatal to social order also.

All revolutions, even though apparently political in
character, have their raison d'etre in the material con-
dition of the masses. In the case of the Wat Tyler
insurrection and the rising of the " Men of Kent," it
was the resistance of comparatively free men to the
attempt to reduce them to serfs by depriving them o
the means of free men, in conjunction with the impover-
ished state of the lower grades of labourers ; in the case
of the French Revolution it was the rising of men
driven to despair and desperation, poverty and, mad-
ness, by the insolence of a corrupt court and an
unscrupulous administration, not forgetting the economic
period which made that possible.

Now the conditions which are producing the world-
wide labour-ferment to-day, with all its prospects of

70 VALUE.

restrictive legislation, are conditions which result from
the frequently occurring periods of panics and crises,
and consequently the discharge of workmen and a
continual residuum of labour.

Let us further examine these conditions.

In order to do so, I shall go back to Political economy
and be guided by a criticism of it which Mr. Hawley
in a work, " Capital and Population " has the merit of
being the author of.

Mill has defined Capital as that part of wealth
which is destined for productive consumption, and also
that which is at present employed. This division of
capital is a most important conception, but like many
other distinctions of the economists, they appear to
have left it for someone else to apply and follow up
the consequences of. Mr. Hawley, it is true, is very
careful to assure his readers that he is quite an orthodox
economist, and he appears to me to be quite timid at
the consequences of his criticism, for it is the reversion
of the principle which Mr. Mill stakes his economic
conclusions upon.

At page 10, then, Hawley states, and afterwards clearly
proves, that the division of capital into two such portions,
although distinctly recognised by all economists, as far
as he knows, none have realised its importance, or con-
sistently observed it in their arguments. He shows that
in using the word Capital in their arguments, they
mean at one time that which is employed, and at another,
that which is employed and that which is destined to
become employed.

The former, that which is employed, he calls " active
stock ; " the latter, that which is destined for employ-
ment, he calls " dead stock."

VALUE. 71

I don't think the division of stock into " dead" and
" active " can be So clearly defined, or that it covers the
changes so completely, as Mr. Hawley supposes, and
without a term which expresses an equivocal stage, it
is, like Mr. Mill's general definition of capital, rather
vague. Yet it points to distinctions which do actually
occur, as can be seen by the following quotation from
the work mentioned. " Nearly all products are at
first ' dead ' stock." " The rate of profit itself depends
upon the amount of dead stock, and any increase of dead
stock, other things remaining the same, lowers its money
value without affecting wages. . . . Propor-
tional 'wages rise at the expense of profit. But if an
increase of dead stock lowers profits, and a decrease of
profit discourages the conversion of dead stock into
active stock, [that is, discourages the employment of
capital] it follows that the wages fund will be the
smallest when dead stock is relatively most abundant,"
and when the rate of proportional wages is the highest

. . . The amount of dead stock that will become
active, depends upon the amount of dead stock itself,
and varies inversely with it."

The finished product of one industry is the raw
material of another, and what is meant in the above
quotation by dead stock, is the finished product of each
industry as it is on the market, together with that
portion of wealth which is more properly covered by
Mills, "destined to become employed." But in the
case of the unfinished product on the market, it is in a
stage that may be termed equivocal; and is, with the
merchant, more or less active and in the course of having

* Tills is a point for Malthusians to ponder over.

72 VALUE.

value added to it by the labour required for its trans-
portation from one place to another ; nevertheless, it is
this merchant's stock which governs prices considerably.
If it is comparatively large, the merchants who must
liquidate their debts, meet their liabilities with cash,
must sell, and prices are lowered in proportion to the
inability to realize ; if it is small, then prices advance.
In the former case, merchants unable to find a market
at normal prices, will stay their orders to manufac-
turers ; they, the latter, lower prices in order to keep up
the sale, but all to no purpose ; the more they supply
the more lasting and intense is the depression of prices,
and the inevitable results ; prices are lowered to the
minimum, that is, wages bearing a larger proportionality than
the general ratio to profit, capital ceases to invest, the
wages fund is diminished, hands are discharged, the
crash has come ; we are in the midst of a commercial
crisis. And this because we have abstained too much ;
the quantity of goods is beyond effectual demand ;
labour has left a disproportionate excess, production
proceeding out of ratio with consumption.

The cause of scarcity of provisions among the
labourers is their general superabundance ; food
and clothing to spare are in existence but cannot be
distributed. How does this curious phenomenon of
modern civilization come upon us ? Political economy,
being largely, and, as I think, important as it is,
quite unduly influenced by the " Essay on Population,"
discovered no flaw in it or their theories, although the
first step of Malthus is a begging of the question ; so
they commenced to blame capitalists for engaging in
"unproductive consumption," and the labourers for
being improvident. Produce more and consume less.

VALUE. 73

they say, while, given present conditions, the only way
out of a depression is to consume more and produce less.
Indeed, this is exactly how we do evolve prosperity, or
brisk trade, from bad times.

Idle capital in the hands of the capitalists. Mill says,
is the same thing to the labourers as if it did not exist.
Herein Mill shows himself woefully negligent of the
most elementary principles of commercial speculation.
Capitalists know better. They know that idle capital
means depressed prices ; and depressed prices means a
low rate of profit (that the money value of commodities
has deteriorated more than the money value of wages) ;
and that this means the slow movement of money. The
increased value of the wages of those still in employ-
ment, therefore, and the consumption of those out of
employment, (the means of which must be found some-
where and somehow,) with other means of " unproduc-
tive consumption " induced by low prices, gradually
clears the superabundance or disproportionality of
products away.

Trade depressions are characterized by the slow movement of
money. Instead of a certain quantity of money effecting
its normal number of exchanges, it effects less. Pro-
sperity means a quick money movement, and a quick
turnover of capital; then capitalists everywhere, from
the least to the greatest, increase their operations, for a
sharp turnover is equal to a large addition of capital.
But under such conditions, the wages of those who had
remained in employment during the depression, are
now, in proportion to prices, less than before prosperity
set in, else how is the enhanced profit of the capitalist
made, the very thing which induces him to produce so
energetically ? Consequently a greater proportion of

74 VALUE.

accumulation to production goes on where they are
employed, even if over-time or piece-work does not
obtain. Then, the large army of unemployed, instead
of consuming without producing, are producing more
than they consume ; everywhere the commodity capital
is being increased. But, although at the commence-
ment of this prosperity, money was relatively abundant,
owing to its quick return by consumers and the number
of exchanges it would effect, consequent upon the sharp
demand for commodities, still, the great increase of the
commodity capital and of commercial operations must
gradually, but except to some, say bankers, etc., imper-
ceptibly, swallow it up. This movement is at a rate
which is inevitably faster than the expenditure of money
forstandard-of-comfort consumption. As a consequence,
merchants and shopkeepers all at once begin to find
themselves excessively supplied ; they cease their mutual
operations ; one of the ordinary and most important
channels of money's circulation is impeded, and the effect
shows itself in most unexpected quarters. All the in-
dustrial princes are startled. The public requires the
same amount of goods, but no more, or at least their in-
comes will admit of no more consumption ; besides, there
is already a perception of that income being lessened.
Money now performs less and less of its usual functions,
and this is called a scarcity of money, the effect being
taken for the cause. The fact is, shortly, that the
quantity of products is being continually augmented,
and a gradual process of increasing disproportionality
of them to the standard-of-comfort consumption, soon
finds its expression in the slow movement of mer-
chants' transactions ; this reacting and vibrating along
the whole of the exceedingly sensitive industria

VALUE. 75

organism, until everything is paralyzed. A panic, through
a scarcity of gold at the Bank, is, of course, one of the
links in this chain of circumstances, but I can only
look upon such scarcity of gold there, and its con-
sequences, as one of the effects of such causes as I have
endeavoured to point out, and not as a primary cause
itself. Without the explanation I have given, no one
has as yet been able to say how it is that, by the
present means of economy by cheques, bills of exchange
etc., a market is not able to obtain and hold a quantity*
of money sufficient to carry on its exchanges when the
increasing volume of trade in times of prosperity
demands it. Those who say it is due to scarcity of
money, and wish to increase the quantity, fly in the
face of their own theory of the possibility of a market
holding as much as required. It is not the want of
present money, for the markets can hold no more of it '
on an average. It would also be impossible to increase
that average to provide for emergencies ; and even if we
could, it would but push the time of collapse a little
farther ahead. What we want is an increased propro,
tion of consumption to production, but not an increase
of expense in production — two different things as I
shall show.

Under our present form of production, no amount of
reserve of precious metal can prevent the result our
analysis has disclosed.

To the readers of this volume who have paid special
attention to the last two chapters, (perhaps for our
present demonstration, Chapter II. is the more impor-
tant,) the accumulation of merchants' stock out of pro-
portion to money that flows thereto, will not be difficult to
understand, but will force itself upon themind inevitably.

^6 VALUE.

From the time of the primitive hordes till now,
society has daily increased the yield to labour. There
have been times of devolution, it is true, but speaking
generally, each day's labour — by improvements in
production — has yielded an increasing quantity of
products, is greater than that of the previous day;
but the standard of comfort does not increase at any
such like rate ; that is, the standard of comfort of
the labourers changes but by very gradual and almost
Imperceptible growth ; in comparison to the increased
yield it remains the same. It follows, then, that society,
as a whole, is continually and quite unconsciously
creating its capital. Not only this, however, but the
increased consumption that would take place is pre-
vented by a mechanism which puts into the hands of
the capitalists and landlords, all but the smallest pro-
portion of the ever- augmenting yield and not allowed
to return in the manner our assumed economic condi-
tions would admit of.

We know the process : the labourer receives wages
which will purchase sufficient of the product of the
market to satisfy the needs which he thinks are impera- .
tive to his existence. With this quantity he remains,
or is obliged, by force of circumstances, to remain
satisfied, while he always produces commodities
sufficient to supply the capitalist and landlord, over
and above this amount. Also the march of invention
and other productive economies, do but augment the
rewards of his masters, who claim interest, not only
upon the principal originally invested, but upon the
capital which his ownership of the means of production,
etc., makes it possible for him to obtain from the product
more than that which supplies him with that interest

VALUE. 77

upon original capital, that is, he claims interest upon his
accumulation — an amount of capital the acquirement
of which is not at all expressed by " abstinence."

This retention of products by capitalists works
smoothly enough by their interchanges, so long as it is
in proportion to the increased demands of their house-
holds, or of new machinery, etc., to meet the require-
ments of the growth of population, but immediately it
goes beyond that, the rapidity of their circulation is
slackened, and with it the circulation of money. The
re-adjustment comes, and can only come, from a
decrease of productive consumption greater than the
decrease of unproductive.

As 1 write the brief circle of commercial prosperity
which we have had this last two years or a little more ,
has nearly run its course ; big events are happening in
the commercial world and what is next to come, no one
knows. Shade of Malthus ! And this is because pro-
duction (accumulation) has out-run population.

The great phenomenal impediment to the progress of
the law of the proportionality of value, that is, its efficient
distributive effects, is the combination of conditions
which admit of the taking of interest by the capitalists,
conditions in which the means of production and distri-
bution are owned by the few, and in which the manual
labourer has nothing to offer the market but his labour-
power, a commodity, as Marx says, that won't keep, for
it must, under present conditions, find a buyer quickly,
or perish.

I do not wish the reader, here, to pronounce upon the
justice or not of the fact, or whether the principle, or
function, of Interest is immortal or transitional, I merely
wish to say that the conclusion results from ou

78 VALUE.

examination of the conditions of present industry — and
we have proved it from the combined aut hority of the
schools of orthodox political economy, Marx, and
Proudhon — that the necessary conditions of Interest are
those very same which deprive the labourer of the
benefits of intensified production, and which, thereby
obstruct the full operation of the law of proportionality
in exact fullness as the capitalists so appropriates such
collective benefits.

Society still chooses its articles of consumption by
the proportion of labour contained therein, but the whole
effect, or nearly the whole effect, as regards the
labourers, is nullified by the reduction of money wages
as the prices of commodities fall, and in such proportions,
too, as caused Ricardo to declare that increased pro-
ductiveness does not add more coats to the backs of the
labourers. It is only this reduction of wages with prices
that can maintain the present inequality of fortunes,
and pour such wealth into the laps of individual
capitalists and landlords for so comparatively little ser-
vices. This does not deny the truth of what a few pages
back I endeavoured to maintain, viz., that the reduction
of prices increases proportional or real wages, for here I
refer to the proportion of the general rate of real wages
to prices, and there I am discussing the fluctuations of
that proportion and the disturbances of industry.

Such disturbances and fluctuations, also, are the result
of, and are altogether bound up with, the conditions
under which Interest arises,' and not at all indissolubly
connected with individual production and exchange.

But what is the political result of the ever-recurring
panics, crises, depressions ? To say nothing of the (in
itself) direct moral and physical suffering and degradation

VALUE, 79

of a large portion of the world's population (Socialism
portrays these evils vividly and graphically), what is
the reflex effect of this economic enslavement of the
workers ?

For some few centuries before the French Revolution
men, that is, men of the new civilizations that were then
growing, began to question the right divine of Kings and
Popes in a rather pronounced manner ; they began to
throw off their baby attire and ask to be treated as men.
Commercial Freedom, Religious Freedom, Political
Rights, the right to think and to do, such were the
demands. It was a desperate struggle. The personality
was trying to assert itself and to throw off the shell of
sjiperstitious circumstances which confined it ; it
fought and bled and died, but it gained the victory ; and
we of this century are free to think, speak, and write,
with a very considerable latitude. Political equality, a
share in the framing of such laws as were looked upon
as necessary, freedom to think, speak, and write — these
were the general ideas of the movement of events which
culminated in the French Revolution, the American war
of Independence, and the framing of the constitutions of
those two countries which flashed their light over
nearly the whole of Europe.

But already new evils had arisen, — the evils accom-
panying the introduction of machinery and the creation
of the fortunes of the middle class. It was vain to say
that the new light of Freedom would eventually eman-
cipate the labourers; for a continually increasing number
were declaring that new chains were being wrought for
them by the very liberty from which they expected their
emancipation. Laws were soon demanded for the pro-
tection of the labourers against the power which wealth

80 VALUE.

was exercising over them. Henceforth there were three
distinct parties, the old aristocratic party, who would
return to their ancient privileges, if possible ; the party
of the middle class, who insisted upon the right to
produce, exchange, and use wealth in its own way, and
the party of the proletariat, the embryo-labour part)'
with demands, as mentioned above, for laws for the
protection of the labourer.

The addition of the latter element excited a more
stirring and vigorous research into the laws which
govern production and exchange ; history had produced
in real life its ever recurring dilemma, the opposition
between ngkt and fact ; but this time it had become
such as to embrace the whole field of social economy.
Political economy declared for the individual use of
machinery and for as much freedom from state control as
possible (defining, of course, that amount) ; the existing
facts of life, laws as posited by political economy, were
demonstrated by the labour party, to be in their nature
opposed to that individual freedom which economists
aspired to, and to be continually producing moral
enslavement and license : such were the circumstances
and parties of the literary and historic combat of the
beginning of the nineteenth century.

Every panic, every crisis, every depression, marks
the advance of the Socialistic cause, and the demands
for labour legislation. It is getting daily more and
more respectable and more and more a matter of
course ; that abstract something called the State is
the instrument of reform which is becoming more and
more relied upon ; every one with a crotchet seeks to force
his special panacea for special ills upon everybody else ;
parliament and its members, finding it a growing diffi-

VALUE. • 8l

culty to satisfy the increasing variety of wants of their
voting followers, are, for this very reason, more at the
mercy of any new section that may arise ; the questions
of the day, with them, become less and less a matter of
principle and more and more a question of how to act
in order to secure the largest number of votes ; officials,
as a consequence, are getting greater in number, and
insolent and high-handed in proportion ; which ever
way we look, or move, the hand of those dressed in a
little brief authority, stays us ; it is going up and up, it
will gradually, (if it stops for so slow a process) for a
time, entirely subvert the mechanism of modern
industry — delightful, this majority rule, isn't it ?

Thus commercial depression, which political economy
passes by as a simple accident, a mere transitory incon-
venience of its laws, is the very circumstance which is
giving life to that force which is swallowing it up, both
in a literary and historic sense, and neither political
economy, nor mere subjective individualism, can stem
the flowing tide. The Socialists reply to the former with
a more exact analysis of the laws of production ; and in
regard to the latter, it is of little use to preach liberty
without wealth to those who are toiling endlessly with no
better prospects for old age than charity in some form ;
they want something more immediately and glaringly
beneficial, and Socialism has the appearance of supplying
that ; they will only recoil from its evils when they fall
upon them. Prospective evils have no terrors for
them in the face of those they are suffering from to-day.

The conditions, then, under which Interest and

Rent find their economic expression, are the conditions

which give rise to monopolies, taxes, legal restric tion ;

attempts to create trade guilds and unions for the

6

82 ' • VALUE.

maintenance of privileged industry and for the exclusion
of conipetition, etc., and these are by nature impedi-
ments to the emancipation of labour, obstacles to the
full effect of the law of the proportionality of values —
they are hindrances to the progress of wealth and well-
being for all.

Perhaps there is nothing whose monopoly is so
iniquitous as the monopoly of the precious metals by
the various governments, at all times and all places, or
nearly so. Yet people everywhere have allowed their
Kings, Princes, and Governors to be masters of this very
delicate and important piece of industrial mechanism.
No matter the " thirty million mostly fools," for a uni-
versal effect, there is, it may be granted, a corresponding
cause. From very early times, copper, silver, and gold,
have been looked upon as something whose value may
be taken to be constant ; which, at all times, is exchange-
able with other commodities, and the possession of
which is preferable to them even if its present value is
no more. And this is no fiction, no mere creation of the
brain ; it lies in the nature of the metals themselves,
combined with the necessary course of the development
of societies — that is, the development of the production
of values. Gradually they come to be looked upon
more and more as the unit in which is reflected the
movement and image of all other commodities, as the
commodity par excellence ; and this- movement having
once set in, there was no return ; it must work out its
economic destiny.

Economically, the possessor of money ishe who has
accomplished his societary task, and who holds in his
hand the command for others to do likewise. The first
moment of production is the possession of commodities,

VALUE. 83

but as we have before remarked, should exchange from
any cause be forbidden to the producer, he is as if he
possessed nothing. A necessary step, then, is the
transformation of commodities into money, and as
every one is concerned in obtaining this metamorphosis,
he who has accompHshed this task has no difficulty in
attracting such other commodities as he desires for his
consumption ; thus the economic pons asinovum is the
transformation of commodities into money. No wonder
Kings, Emperors, Princes, and presidents, stamp their
image upon it ; when civilizations become what they '
are to-day, the sine qua non of the existence of these
magnates is the royalty of money ; one is the symbol
of political inequality, the other the symbol of economic
inequality ; they, are counterparts, and must die
together ; the instrument of their death is of their own
generation.

Let us see.

The control of the money medium by Kings and
Governments, and the stamping of their image and
symbols upon it, is the creation of a yet more unique
pre-eminence for every money unit over every other
commodity unit ; it is the crowning of the economic
King, and an alliance made between the economic and
political privileges for mutual support. Hereafter any
body of men who, " in the interest of the public," and for
the security of industry, undertake the establishment of
institutions for the " facility of commercial transactions,"
find nothing easier than to persuade themselves that
they are mankind's benefactors, and therefore entitled
to the patronage of Kings and Governments. Indeed^
do not the security of industry and the interest of the
general public demand that only persons of the highest

84 VALUE.

rank and most unquestionable integrity and financial
soundness shall interfere with this precious thing, the
currency ?

So it was reasoned, and so it came about, that kings,
and merchants only of highest social estimation, were
allowed to share the spoils of a controlled currency,

I do not mean to say that this combination was
brought about by any purely selfish desire for gain, but
men so hopelessly mix up their individual interests with
their opinions, that they catch at any plausible theory
which accords with the former. In no other way can
the history of our development be explained.

" I contend," says Professor Thorold Rogers, " that
from 1563 to 1824, a conspiracy, concocted by the law
and carried out by parties interested in its success, was
entered into to cheat the English workman of his
wages, to tie him to the soil, to deprive him of hope,
and to degrade him into irremediable poverty. . . .
For more than two centuries and a half, the English
law, and those engaged in administering the law, were
engaged in grinding the English workman down to the
lowest pittance, in stamping out every expression or act
which indicated any organized discontent, and in
multiplying penalties upon him when he thought of his
natural rights."* Still we speak of natural inequalities,
just as if everything haed been conducted with the most
even justice, and as if there had been a fair field and
no favour.

The increasing market for English wool led to the
most cruel and wanton dispossession of whole villages
of the poor people, the grabbing of common lands, and

* " Six Centuries of Work and Wages," p. 398.

VALUE. 85

a scramble that will remain an everlasting disgrace to
our rulers.

In conjunction with this, the successive debasements
of the currency, coming with such abominable laws as
the Statute of Labourers, is all-sufficient to account for
the inequalities and other beauties of this best of all
possible worlds. But the cup of iniquity was not yet
full.

Besides the suffering and discontent which was the
outcome, largely, of our Old Nobility and its noble
tactics as regards the common lands, etc., a scheme
was started for the raising of revenues for the govern-
ment. A corporation was formed which was called
the Bank of England, and it was embodied in an Act
of Parliament, " for granting to their Majesties several
duties upon tonnage of ships and vessels, and upon
beer, ale, and other liquors ; for securing certain recom-
penses and advantages, in the same act mentioned,
to such persons as shall voluntarily advance the sum
of fifteen hundred thousand pounds towards carrying
on the war with France." The Corporation thus
formed and subscribed to, was to lend the whole of the
capital to the government, and to receive interest at the
rate of eight per cent., and for management of the
Corporation, ;^4O00. — Government made easy ! And as
to'the " certain recompenses and advantages " we shall
soon see that they were not forgotten.

Such was, in part, the mutuality established, in its
initiation, between the Bank of England and the
Parliament. Successive governments did not forget
these facilities for raising revenues, and the Corporation
of the Bank of England have much to be thankful for,
in the kindly protection of the dear old, good natured

86 VALUE.

and impecunious institution, the State. It was enabled
under such protection to deal quite recklessly with the
money of the public, in order to make large profits, and
to escape the penalty of such reckless dealing which
people unfavoured by such privileges would have in-
curred. For " certain recompenses and advantages " it
was ever ready to yield to the pressure of the exchequer,
till at last, in 1797, it was compelled to stop payment.
Was this its ruination ? Not a bit. Where commer-
cial ability failed, government came in and "for certain
recompenses and advantages " passed another Act of
Parliament, allowing the Corporation of the Bank of
England, composed of " gentlemen of the highest
commercial integrity," to continue that stoppage of
payment till the end of the war ! This kind of
mutual mischief-breeding has a long history, and at
each stage of meddling some other arrangement became
necessary in order to cover up the mischief of the
preceding one. So the state " meddles and muddles."
In consequence of the stoppage of payment, bank notes
became much depreciated. " If the possessor of the notes
of the Bank of England, promissory to pay £"46 14s. 6d.,
or a pound weight of gold, offered such note for payment
on demand, according to their tenor, he was presented
at the Bank with an Act of Parliament, excusing and
prohibiting such payment till the end of the war, — that is
to say, for an indefinite time. If he wanted the pound
of gold, he was therefore under the necessity of taking to
market the promise of the Bank to pay him that weight
on demand, but with payment deferred till the end of the
war, where he found that all that could there be got, for
the promise to pay a pound of gold some day or other,
was three-quarters or two-thirds of a pound ready weight ;

VALUE. Sy

more or less according to the estimation of the value,
i.e. according to the depreciation of the notes in the
market. ... In the year 1813, the price of gold
had advanced from the mint price of £2 17s. lo^d, to the
market price in Bank notes of ;^5 6s. i^d. . . . Statutes
were indeed passed by the legislature by which it was
made a misdemeanour to give or receive less of the royal
coin for the riotes of the Bank, than the quantity of
such coin promissory by them, to be paid at the end of
the war.

"It is needless to observe that such statutes were futile,
not to say absurd and ridiculous, as all statutes which
affect to over-rule and control the law and order of
nature ever were and ever must be. But, in as far as
they affected to fix the value of the gold coin, they soon
had reference only to a nonentity ; for all gold coin
necessarily disappeared from the circulating medium of
Great Britain,- whence, by melting it, every pound and
every greater and less quantity in proportion, was raised
in value from £^6 14s. 6d. to £6^ 13s. 6d., in payment
of existing debts."

What could the effect of this be upon the commercial
world and upon the real wages of labour ! No wonder the
general condition of the poorer classes, at this time, was
unparalelled in the history of this country for centuries.
The degradation of the workers, and the horrible slavery
to which men, women, and children were subjected,
hovelled, and fed, like beasts, were largely the results of
the money-making of these banking princes.

Again, the difference of the values of ;^ioo of the ii^
millions of the 3 per cent, stocks belonging to the cor-
poration of the Bank and the ;^ioo of the 488! millions
of 3 per cent, stocks belonging to other individuals

88 VALUE.

of the public, shows to a certain extent the value of the
monopolies and exclusive privileges sold to the
corporation.

" The 488J millions of 3 per cent, stocks (taking the
<vhole at 500 milhons) belonging to other individuals fell
in value during the late war, so as to be worth, in the
market, only 47 per cent, and never rose during that
period, on the average of any year, to 72J per cent ; the
1 1 J millions of such stock belonging to the individuals
composing the corporation of the Bank, never fell lower
than I i5J^ per cent., and rose (in the year 1809) to no less
than 288 per cent.

" With respect to the enormous profits, amounting to
more than fourteen millions, made by the Bank of England
during its stoppage of payment from 1797 to 1822, over and
above the accustomed half-yearly dividends of 7 per cent, per
annum, it may be asked, was not that a profit unduly
derived from the public itself — made by the use of a
state-paper money issued by the Bank, to the amount
of nearly thirty millions, for which the partners of the
bank were not responsible beyond each his or her share
of the joint stock amounting to only eleven millions
and a half?"

I do not wish to deny that industrial crises would
have happened even if we could have kept our currency
free from the mischievous interference of Kings, and
our banking interests free from government regulations
and intrigues ; but long, long before now, and with half
the suffering and destitution, the solution of the money
problem would have been found, but for this abomin-
able meddling and mischievous restriction.

Indeed, as the reader will have perceived, such crises
are the natural result of our transitional stage in the

VALUE. 89

development of the constitution of value, but the
mischief inflicted upon the world by the yielding of our
governors and kings to the temptation of truckling with
the currency and thereby enriching themselves, is so
incalculable, so intense, so lasting, that it is altogether
an open question as to wjiether our civilizations will
survive it. As a remedy, however, freedom might have
a little more attention than is generally accorded it.

Quite after its usual wont. Government placed its
stereotyping influence on a custom which came to
liquidate debts through the medium of the precious
metals, by insisting that payments should be made
through that medium. It has thus thrown a spell over
the banking and commercial interests which prevents
all thought of any other method of liquidation. The
state (all states) guarantee to enforce payment in gold
or other precious metals: why, then, should the great
money kings trouble themselves about getting them
settled in any other way ? They have only to insist
upon money payment, and the state sees to it that they
get it: this prevents any growth of a system of ex-
change based upon a more mutual consideration of the
convenience of all parties.

It is the same with all governmental action, and the
amount of iniquity of each is unmeasurable. With the
lightest heart, and with no compunction, legislators lay
hold of a principle or custom : whether it is of recent
arrival or old as society, transitory or eternal, an
antinomy or a synthesis, or both, they know not nor
care : it is here, that is sufiicient ; they stamp it
permanent, everlatsing, and insist upon its enforcement
at all times, till such enforcement becomes so intoler-
able that it is obliged to be relinquished owing to the

go VALUE.

forces it calls up in opposition to it, and the evils it
engenders. Such forces are not always of commendable
"methods, but they are unavoidable. Philosophers
point the goal, the impiressioni filter down, and the
more unconscious movements of society's units do the
rest.

Societies are growths, and notwithstanding minor
differences which distinguish their individualities, they
proceed, always upon certain well-known lines, and
with fundamental likenesses. All the horrors which
governments were capable of committing (and they are
ugly and numerous enough) have been conjured up to
prevent this inevitable growth, but all to no other
purpose than to inflict most distressing misery upon
the different races and impede their progress or ensure
their decadence.

It is true, governments come to be the force to sustain
the hereditary principle of society, and in societies, as
in the world of nature, the principle of heredity is no
less needed than the principle of the tendency to vary.
But from the nature of the elements of its composition,
and the circumstances of the growth of each and every
form of Government, it does its work in a very bungling
manner, and, blindly and inevitably as the forces of
the physical world, battles with, and if possible, sub-
verts any and all forms of variation whether good or
evil, — strength determines right, order is evolved from
opposition.

It is this character of governments which, at certain
periods of societies' growths, induces complications of a
most inextricable nature, and an embroglio of such
fierceness of ferment as to hurl civilizations back to the
throes of barbarism.

VALUE. 91

This ferment we have reached dangerously close to
to-day, and it is clear that the landless, capitalless
condition of the labourers, with all their misfortunes
and inequalities— ^in fact, society — owes its impeded
growth and abortive present day expression, largely to
this character of government, expressing itself in a
vicious system of legal land theft and oppression ; in
unscrupulous tamperings with the currency by Kings ;
in such statutes as those of the Statute of Labourers ;
latterly in the maintenance and intensification of those
conditions by such reckless speculation with the public
weal as the government and corporation of the Bank of
England conjointly indulged in ; and still in the present
systems of inadequate, but State-propped medium of
exchange and Banking ; systems which periodically
produce by their inelasticity and inadaptability to
modern requirements, the phenomena of crises, panics,
depressions, and the continuation of those conditions
which admit of the appropriation of the increased pro-
ductiveness of labour and the consequent nullification of
the distributive effect of the law of the proportionality
of values.

CHAPTER V.

The Constitution of the Law of Proportionality
of Values.

In this chapter, I propose laying before the reader a
principle which, if acted upon, will subvert, at one
stroke, the conditions under which labour is robbed of the
benefits of its collective productiveness ; consequently,
dispel for ever the phenomenon of depression ; establish
a free and open market, in the full sense of the phrdse ;
cut the ground from under the feet of the State monopoly
of currency, and leave its edicts of cash payments to be
remembered only as the Pope's bulls, while Rent and
Interest will have no place or necessity. All these
things are connected and consequential, grafted upon
the same stem, and will succumb, in a body, to the
same conditions.

" The happiest state which the human race could
conceive, is such a mobility of labour, and such an
extension of cultivable land and the productive indus-
tries which man gives to cultivable land, as to produce
that plenty in which rent finds no place. To mourn over
the decline of rent is to regret that one has extinguished
friction and loss in the machinery of human industry
and social life. To rail at rent is silly, to declare that
one would confiscate it is dishonest ; to seek out such a

92

VALUE. 93

machinery of industry as would reduce it to a minimum
is the best service one can render to mankind, is the
best answer to the insolence of unmerited wealth and
to the bitter discontent of starved and ill-paid labour."*

It is refreshing that one rich economist can so lift
himself from his surroundings as to conceive so much
of the nature of rent and the possibility of its extinction.
But as I have shown, rent is the result of the increased
productiveness of labour; it is abstracted from the share
of the capitalist, and is possible, therefore, only under
conditions in which the latter is able to claim such
increase. Also, rent is none other than interest at the
present day, although, in purchasing, the value of land
is estimated by the rent it will yield, at least, it is so to
a very great extent — the reduction of rent then is the
reduction of the value of land.

The reason why men pay rent is because they cannot
afford to purchase the land they wish to use, or, that
they find it more profitable to invest their capital in
other directions. The same with interest : men pay
interest on money because they cannot command the
required use values (commodities) without it, or that
their own money is invested in such a manner as to
make it' more profitable to borrow than to withdraw it.
Then why do you quarrel with rent and interest, the
reader will ask ; if men find it more convenient to
borrow money or land, and to pay a certain price for the
loan, than to use their own capital, by what edict will
you command them to cease their mutual conveniences?
Well, not by force, governmental or otherwise, for if

* "Six Ceiituries of Work and Wages," f5p. 456-7 — Professor
Thorold Rogers.

94 VALUE.

interest and rent are irrepressible except by force they
are irrepressible with it.

Let us quote and examine M. Bastiat's illustrsCtion of
the plane. It is cited everywhere as unanswerable, and
as proof positive of the eternal necessity of interest.

" A very long time ago there lived, in a poor village,
a joiner, who was a philosopher, as all my heroes are,
in their way. James worked from morning till night
with his two strong arms, but his brain was not idle,
for all that. He was fond of reviewing his actions,
their causes, and their effects. He sometimes said to
himself, ' With my hatchet, my saw, and my hammer, I
can make only coarse furniture, and can only get the
pay for such. If I had a plane, I should please my cus-
tomers more, and they would pay me more. It is quite
just ; I can only expect services proportioned to those
which I render myself. Yes ! I am resolved, I will
make myself a plane.'

" However, just as he was setting to work, James
reflected further : — ' I work for my customers 300 days
in the year. If I give ten to making my plane, supposing
it lasts me a year, only 290 days will remain for me to
make my furniture. Now, in order that I be not the
loser in this matter, I must gain henceforth, with the
help of the plane, as much in 290 days as I do now in
300.* I must even gain more ; for unless I do so, it
would not be worth my while to venture upon any
innovations.' James began to calculate. He satisfied
himself that he should sell his finished furniture at a
price which would amply compensate for the 10 days
devoted to the plane ; and when no doubt remained on
this point, he set to work. I beg the reader to remark,
that the power which exists in the tool to increase the

VALUE. g5

productiveness of labour, is the basis of the solution
■which follows."

I, also, beg .the reader to remark the point.

"At the end of ten days, James had in his possession
an admirable plane, which he valued all the more for
having made it hifnself. He danced for joy,— for, like
the girl with her basket of eggs, he reckoned all the
profits which he expected to derive from the ingenious
instrument ; but, more fortunate than she, he was not
reduced to the necessity of saying good-bye to calf,
cow, pig, and eggs, together. He was building his fine
castles in the air, when he was interrupted by his
acquaintance William, a joiner in the neighbouring
-village. William, having admired the plane, was struck
with the advantages that might be gained from it.
He said tc James : —

" W. You must do me a service.

" J. What service ?

" W. Lend me the plane for a year.

" As might be expected, James at this proposal did
not fail to cry out, ' How can you think of such a thing,
William ? Well, if I do you this service, what will you
do for me in return ? '

" W. Nothing. Don't you know that a loan ought
to be gratuitous ? * Don't you know that capital is
naturally unproductive ? Don't you know fraternity

* M. Bastiat here refers to what Proudhon once said to
him, that the foundation stone of his system is the gratuitous-
ness of credit. But the ilhistration does not cover, for M.
Bastiat did not grasp the meaning of the term credit. M.
Proudhon's use of the term Socialism, also, meant general
well-being, and not what it does to-day as the reader will
have gathered.

96 VALUE.

has been proclaimed ? If you only do me a service for
the sake of receiving one from me in return, what merit
would you have ?

"J. William, my friend, fraternity does not mean
that all the sacrifices are to be on one side ; if so, I do
not see why they should not be on yours. Whether a
loan should be gratuitous I don't know ; but I do know
that if I were to lend you my plane for a year, it would
be giving it to you. To tell you the truth, that is not
what I made it for.

" W. Well, we will say nothing about the modern
maxims discovered by the Socialist gentlemen. I ask
you to do me a service ; what service do you ask of me
in return ?

"J. First then, in a year the plane will be done for,
it will be good for nothing. It is only just that you
should let me have another like it ; or that you should
give me money enough to get it repaired ; or that you
should supply me the ten days which I must devote to
replacing it.

'.' W. This is perfectly just. I submit to these condi-
tions. I engage to return it, or to let you have one like
it, or the value of the same. I think you must be
satisfied with this, and require nothing further.

" J. I think otherwise. I made the plane for myself
and not for you. I expected to gain some advantage
from it, by my work being better finished and better
paid, by an improvement in my condition. What
reason, is there that I should make the plane, and you
should gain the profit ? I might as well ask you to
give me your saw and hatchet ! What a confusion ! Is
it not natural that each should keep what he has niade^
with his own hands, as well as his hands themselves?^

VALUE. 97

To use without recompense the hands of another, I call
slavery; to use without recompense the plane of another,
can this be called fraternity ?

" W. But, then, I have agreed to return it to you
at the end of a year, as well polished and as sharp as
it is now.

, "J. We have nothing to do with next year; we are
speaking of this year. I have made the plane for the
sake of improving my work and condition ; if you merely
return it to me in a year, it is you who will gain the
profit of it during the whole of that time. I am not
bound to da you such service without receiving any-
thing from you in return : therefore, if you wish for my
plane, independently of the entire restoration already
bargained for, you must do me a service which we will
now discuss ; you must grant me remuneration.

" And this was done thus : — William granted a
remuneration calculated in such a way that, at the end
of the year, James received his plane quite new, and in
addition, a compensation, consisting of a new plank, foir
the advantages of which he had deprived himself, and
which he had yielded to his friend.

" It was impossible for any one acquainted with the
transaction to discover the slightest trace in it of
oppression or injustice.

" The singular part of it is, that at the end of the
year, the plane came into James's possession, and he
lent it again ; recovered it, and len,t it a third and fourth
time. It has passed into the hands of his son, who
still lends it."

This is indeed a very pretty little piece of fiction;
but economists are concerned, or should be, and pirofess
to be, with facts, and to say nothing of some minor
7

gS VALUE.

points, it ill accords with such. The functions of
James as a labourer, and the same as a capitalist, are
most beautifully mixed to an exceedingly nice and con-
venient conclusion. As the fallacy underlying it has
never, to my knowledge, been seen through, it is worth
examination.

As a labourer, whatever M. Bastiat's conception of
justice or injustice may have been, " the power which
exists in the tool to increase the productiveness of
labour," can have no effect upon the remuneration of
James, — none whatever which does not also affect
William's in like degree ; for as political economy has
truly shown, if no more labour is expended upon the
product, although the quantity is increased, or its
quality improved, the production of exchange-value is
no greater; so that in this respect, James's expectations
of large profits would have been, truly, castles in the
air, to be dashed to pieces, very quickly, by the cruel
hand of iron law, even the iron law of wages. M.
Bastiat here takes the transactions of individual friends
as analagous to that of the entire commercial com-
munity. Such a proceeding is often fallacious, and
this is an instance.

If instead of one James, who appears to have an
advantage over one William of knowing how to con-
struct, and become possessed of a plane, there had
been many Jameses and many Williams, then the value
of the plane, as I have remarked, would not be in
accordance with " the power which exists in the tool to
increase the productiveness of labour," but with the
amount of labour expended in making the plane. Ten
days are required to construct it : if James, before he
took to making planes, produced one plank per day,

VALUE. 99

that is, ten planks in ten days, and if, as the result of
his special knowledge in producing planes, he was now
able to obtain, by exchange, fifteen planks, then, soon
this special knowledge would induce others to follow the
additional industry, plane-making; and in order to sell
their planes, they would be prepared to take fourteen
planks for each one ; still others would follow, and a
plane would be sold for thirteen planks, twelve planks,
eleven, ten, unless we grant that plane making was
looked upon as a more highly skilled branch of joinery
than James had hitherto engaged in, and in that case,
and from this point of view, it is nothing to the point ;
moreover, the ease with which James slipped from one
to the other industry would make the degree of differ-
ence infinitesimal.

So it would come to pass that the Jameses and
Williams would estimate the value of the plane by the
labour embodied in it, and not by " the power which
exists in the tool to increase the productiveness of
labour." Thus capital is unproductive in the sense in
which political economy can use the term, that is,
unproductive of exchange value ; indeed the actual
productiveness of capital is of use-values, and use-
value increases as exchange-value of commodities
decreases, and if the joiners now produce more planks
and more planes than heretofore, the increased quantity
will exchange for no more than the smaller quantity
formerly did. .

The productiveness of the tool, the plane, over that of
the hatchet, saw, and hammer, then, cannot give morality
to James's advantages. The fact is, M. Bastiat has this
part of his illustration a rebours. Let us try to correct
it. Every commodity expresses a certain and definite

100 VALUE.

quantity of socially necessary labour, that is, society
knows how much labour it embodies on an average,
and if any one should expend more labour on its pro-
duction than this quantity which society says is neces-
sary, then so much is lost to him as an individual, and
in order that he can produce such a commodity at its
average cost, he must be in possession of such means of
production and wages-fund as the times have rendered
indispensable.

It is for the possession of these means of production
that men find it convenient to pay interest. The issue
is not at all as between the general use of one form of
capital represented by William's hatchet, and another
exceptional form represented by James's plane ; it is be-,
tween the possession of a general form of capital in use
and none, or at least, one that has become obsolete.
This puts a new light on the matter : it is no longer the
cleverness and diligence of dear, good James and his
inventive genius which command interest, nor the
improvidence of selfish, idle, William, which causes
it to be yielded up, but the historic development of
the means of production, of the form of production,
that is, of Capital. Clever Jameses and improvident
Williams do appear, but they are not typical, respec-
tively, of capitalists and workmen. The less said
about the relative historic positions of labourers to
capitalists and landowners, unless a solution is found,
the better for the latter classes. We have made a
little examination of this historic development of
property, or capital, and although M, Bastiat would
not have done it consciously, nevertheless, his illustra-
tion is a libel, a calumny, a vilification of the workers
of the world ; it carries an idea with it which mixes

VALUE. lOI

with the writings of some of the best of people, and
flings down wealth's insolence on the pages of otherwise
most enjoyable literature and thought, — all, because the
nature of Interest is as superficially handled as in the
illustration we quote.

Having thus far cleared the ground as to the reflection
the illustration casts upon the workers, and shown that
"the power which exists in the tool to increase the
productiveness of labour" is not that which commands
interest, it is now time to treat James as a capitalist
and William as a capitalist-undevtaher. The former is in
possession of capital; the latter wishes to use it. But if
James lends William his capital for a year, merely for
the return of the principal, he does in reality deprive
himself of advantages for the sake of William ; then
what is the matter with James, if he receives, besides his
plane (principal) a plank (interest) ? He does William a
service, and expects a reward. Why ? Because, while
supplying the means whereby William (supposing him
to be a single-handed capitalist-undertaker) is able to
produce commodities in accordance with the average
embodiment of labour-pow:er, instead of having to toil
longer, or at a lower grade of work, at the same time
deprives himself of facilities exactly in proportion as he
supplies them to William. But M. Bastiat so hopelessly
mixes and intermixes the functions of the different classes
of producers that we must stop to make yet further
distinctions. He wishes to point out, in a very simple
manner, a very complicated mechanism. The affair is
not so simple, and he fails. He would show that as the
invention of machinery, etc., adds to the power of capital
and labour to produce commodities, the labourers by
delivering up the increased quantity to the capitalists.

I02 VALUE.

lose nothing by the transaction, and are no worse oft
than if they laboured without it. Well, it appears a
little bit of the Shylock on the part of our capitalist
Jameses, to defend the exaction of all the improved
results, more especially as they are unlike M. Bastiat's
hero James, who, we will grant, invented, or at least put
all the labour into the plane that gave it value. Some
one else does the inventing for precious little pay, very
often ; our capitalists do but command that invention,
in virtue, largely, of their historic position,

M. Bastiat's little story covers, and that in a most
glaringly inadequate manner, a very different relation
from that of labour to capital. It so covers the relation
of the intermediary between these two, the capitalist-
undertaker, and the capitalist. We have granted the
benefits the former receives from the latter, viz., that
he has conferred upon him the advantages which the
owner of capital might, by keeping his capital, gain
himself. The capitalist-undertaker desires the money ;
the capitalist has the power to withhold it or not ; the
former cannot help himself, and there's an end of it ;
capitahst James has a right to make all he can of his
capital, the laws of production demand it, the law of
proportionalty of values would be inoperative without
its spirit.

Here, however, it is opportune to call attention to the
serious omission which M. Bastiat, and all those econo-
mists who have trumpeted after him, (including Henry
George, who gives the ditty with variations, equally
superficial), have made ; an omission which, I venture
to say, not one of them would make in actual life.

It is all very well for two workmen friends to have
sufficient confidence iii each other as to lend a few tools

VALUE. 103

for a consideiation ; but in commercial life, the borrower
and lender stand on no such friendly level, and money
is not obtained in so nice and confidential a manner.
Lending is altogether a misnomer, the transaction is
exchange. If one were to go to an economist to borrow
;^5oo, he would forget his arm-chair story of James and
the plane, he would say :— " ^500, H'm ; have you any
security ? " " No ; I've been reading of James and his
famous plane, and William too, and I thought it most
accurate justice, and if you will kindly lend me ;^5oo, I
think it nothing but right that I should pay you interest
for it ; I'm a British workman, you know, and I like
what's right, and " — but here he discovers a cloud on the
features of the economist, and he stops, then says,
" Perhaps you've a friend, if yours is too much locked
up just now ? " " Well," says the economist, " you see
we usually get security, and most of my friends would
prefer to let their money out where there is little risk,
that is to say, where the user holds property sufficient to
cover the amount." " I see," replies the British Work-
man, if I have two cottages of my own, unmortgaged,
and worth above ;^30o each, I might have little diffi-
culty in borrowing ^500 of an economist, if I handed
the deeds over to his solicitor. Ah, that plane wants
thinking about." And the economist repeats, (when the
British workman has gone), "that plane wants thinking
about." In order to borrow money I must be in
possession of property of sufficient value to realize the
amount at any time, on the market.

It is true, the borrower, as a result of borrowing,
possesses the use of two capitals instead of one, but the
money he borrows is of no use whatever, except as
money, a means of obtaining use-values ; interest,

104 VALUE.

therefore, reduces itself to a premium, paid for the
supply of the medium of exchange ; for the momentary
possession of one commodity through whose portals all
other commodities must enter. It is a premium paid
to that body of men who, having accomplished the
sale (received the gold) may withhold society's power o^
purchase (the same gold) until they receive a payment
for granting the privilege. I will explain.

The economists have neglected, overlooked, this
character of money, and have been content to sing its
praises. Professor Jevons, however, in his "Money"
says, " Might we not invent a legal tender note which
should be convertible, not into any one single com-
modity, but into an aggregate of small quantities of
various commodities, the quantity and quality of each
being rigorously defined ? Thus a hundred pound note
would give the owners a right to demand one quarter
of good wheat, one ton of ordinary merchant bar iron,
one hundred pounds weight of middling cotton, twenty
pounds of sugar, five pounds of tea, and other articles
sufficient to make up the value. All these commodities
will, of course, fluctuate in their relative values, but if
the holder of the note loses upon some, he will in all
probability gain upon others," etc. Such an arrange-
ment, however, he admits would be most inconvenient
" in practice ; " we may conclude, therefore, that there
is something wrong with the theory.

Speaking of Poulett Scrope's Tabular Standard of
value, — a very cumbersome, and as I believe, impractic-
able scheme, requiring tabulated hsts of prices, " a
permanent government commission, endowed with, a
kind of judicial power," to tabulate them, and publish
them monthly, payments to be adjusted in accordance

VALUE. 105

with them, — he expresses his opinion that, although
such a scheme would, no doubt, introduce a certain
complexity into the relations of debtors and creditors,
yet, "such a standard would add a wholly new
degree of stability to social relations, securing the
fixed incomes of individuals and public institutions
from depreciation which they have often suffered.
Speculation, too, based upon the frequent oscillations of
prices, which take place in the present state of com-
merce, would be to a certain extent discouraged.
Periodical collapses of credit . . . would be mitigated,
etc."

This scheme I quote to show that it is believed that
greater stability would result from the direct exchange
of commodities, without the intervention of gold, and
not because I do not take it to be the outcome of a false
conception of the theory of value, as well as an impos-
sible and impracticable project.

We see that gold is a commodity, and like other com-
modities, its exchange value is estimated by the pro-
portion of labour it contains. Its function as money is
analogous to that of the barometer ; it serves to indicate
the relations of commodities one with another, as a
means, a guide, to their exchange, nothing more ; as
money it can serve no other purpose; it cannot be
utilized productively, and the sole reason of its being so
much sought after, is, that, being possessed of it, our
minds are relieved of the anxiety which attaches to the
possession of other commodities in larger quantities
than we require for immediate consumption.

But as every other commodity is an embodiment of
labour, of known quantities, relatively and absolutely,
why cannot they, equally with the c9mmodity gold, serve

T06 VALUE.

as instruments of exchange, currency ; since, as com-
modities, they would serve as instuments of production,
as well as, at the same time, fulfil the function of currency
by means of their symbol. As I am about to show, the
one function need not necessarily exclude the other.
This is in part testified by the amount of lending
bankers are able to do with the money of their customers,
and the amount of gold in their vaults which is in
reserve for emergencies, an amount which is but a small
fraction of what would be required if all the bankers'
promises to pay on demand were presented. Indeed,
" the wliole fabric of our vast commerce is found to
depend upon the improbability that the merchants and
other customers of the bank will ever want, simulta-
neously and suddenly, so much as one twentieth part of
the gold money which they have a right to receive on
demand at any moment during banking hours."

The reader will now begin to see the importance of
our investigation of the condition of value, and the fact
that it is governed by laws which are rigorous and
immutable, not at all vague and arbitrary, and that
commodities contain a definite and ascertainable quan-
tity of labour.

All commodities (excepting some special cases) having
their values estimated and determined by the amount
of labour-power embodied therein, may, in this respect,
serve equally as well as gold as a medium of exchange ;
but unlike coined gold, their function as such need not
hinder their use as instruments of production. But if
this is so, that which is security must, by the means
of its symbol, also be the basis of the currency, and
there will be no necessity to borrow.

The course of our development demanded, as a neces-

VALUE. . 107

sity and convenience, that, at certain periods, one com-
modity should be looked upon as pre-eminent, and
accepted in payment in preference to any other. The
precious metals do undoubtedly possess characteristics
which should cause them to be singled out for this
purpose ; in selecting them society made no mistake.
They centralise a large amount of labour in a small
compass, they are desirable, easily transportable, etc.,
the convenience of the individual demanded that they
should be crowned king of commodities, and partners,
with government, in perpetuating interest by rendering
it necessary.

But it is different with the world to-day. Gold could
not effect and serve as a medium for the present stupen-
dous amount of commercial transactions, and had we not
effected an economy by substituting something infinitely
lighter, (a symbol) all industry would be much impeded.
But we have effected economy, and millions of pounds
worth of exchanges are carried on daily by the use
only of a surprisingly small quantity of gold. The
mechanism by which this feat is accomplished is the
Banking Industry. The most important, perfect, least
fraudulent, most secure branch of this industry is the
cheque and clearing-house system, and this, be it
observed, arose spontaneously, in response to individual
convenience, with no Act of Parliament to control the
bankers' clearing process.*

It is to this branch of Banking that we must look for
the solution of the social antinomies.

* The Mechanism of the Banking Industry may be read in,
among many other works, " Currency and Banking," by
Bonomy Price ; Bagehot's " Lombard St. " ; Gilbart on Bank-
ing " ; " Money," by Jevons, etc.

I08 VALUE,

Instead of upon gold, why cannot cheques be based
upon values, no matter in what material they may be
dressed ? The saime machinery, the same books, with
little substitution, comparatively, could just as easily
strike the balance of values represented by other goods
as they pass from one individual to the other, through
one Banking Company to another, as they now do, of
millions of pounds worth of gold values per day, as they
pass from one individual's account to another's, and
from one Banking Company's account to another's.

Nor would this involve any greater complications, or
risks, and only additional labour ; on the contrary the
stability and well-being of .every body that would
follow, as I shall show, would reduce risk to zero, and
speculation to its legitimate form.

As to the incomes of individuals, I propose nothing
that would confiscate," in any way, a single farthing of
their salaries, but something that will admit of every
item of capital being used to its fullest advantage while
making ill-paid labour impossible.

In order to inaugurate the new system of Banking
it will not be necessary to call for the exercise of
philanthropy in any form, or self-sacrifice ; but only to
appeal to the individual interests of a certain section of
the commercial world ; all that is required is for some
few customers of the various banks to see the possibility
of obtaining unheard of facilities for carrying on
production. This point once gained, a very little
pressure would start some enterprising individual, or
company of individuals, on the road to supply this
demand, and once in operation' it could not stop until
it had compassed the whole system of our cosmopolitan
industry.

Value. 109

There could be no better organisers of this new
system than our present bankers. They would at first
proceed cautiously ; and no one better than they know
who are the business people of the soundest position
and honesty, that is, most able and desirous of fulfilling
their commercial obligations.

Either as a desire on the part of some of our Banking
companies to capture fresh figlds of enterprise, or in
response to a demand on the part of some of their
customers in various districts, they would announce
that a new branch or feature wa."= about to be added to
their present system, and that a few tradesmen and
manufacturers in each of the districts where they were re-
presented, and comprising as many of the various trades
as possible, were wanted to supply goods to their order.
What tradesmen or manufacturers would not respond ?
Every branch manager of Banks would be overwhelmed
with letters and applications ; they would run thus :

Supply Associaton
Dec.

Dear Sir, — I notice your announcement and request for
the supply of goods of all kinds, to your order; we have a
large variety and we are depended upon, by the public,
to supply a uniform quality. We shall be most happy to-
respond to your esteemed commands, and if you should
honour us with your attention, I will personally superintend
the enumeration of departments, or the carrying out of other
instructions you may give. I shall be at liberty to call on
you at your convenience.

I remain. Dear Sir,
Yours Faithfully,
F. S , Esq. G- W.

Banking Co. (Manager.)

Each accepted applicant would agree with their
bankers as to how much value, in commodities, they
would be prepared to supply on demand, let the demand

no VALUE.

be ever so simultaneous ; a hundred, a thousand, ten
thousand pounds worth, or what not. It must be agreed
that the banker's demands shall have precedence over
any other, creditors or whatever they may be. It would
have been explained, before now, to each tradesman
and manufacturer, that in exchange for their goods,
which they supply to the banker's order, they would
receive no cash ; the prospective beauties of the busi-
ness would thereby be a little marred, but only for the
moment. It is soon further demonstrated that cash
to the business man is of no further service than giving
him the trouble to count it and place it in the bank ;
he knows, or seems to possess a happy feeling that it is
there, but in reality, he does not use it at all, it is the
banker who profits by that, and he profits by the
handling of the values, which his money, as it passes
through the bank, is but the indicator of. Gold no
sooner enters his cashTbox and safe than it is carried
to the bank, and no sooner there than he puts his
name to paper and receives commodities. Now, it will
be shown, this is quite unnecessary, and that instead
of taking gold to the bank, now that he has engaged
to supply a certain quantity of goods on demand,
all the business man of the future will have to do
is to write out his orders and get what he wants in
exchange from any of the numerous manufacturers,
importers, or what not, who are allies, and engaged like
himself, to supply commodities on demand. Moreover,
these allies will be the best firms of the kingdom, and,
as the banks are a world-wide net-work, any ally of the
bank will have the best of facilities for obtaining the
best goods from the best markets known. But how if I
wish to realize, and obtain gold for my business and stock?

VALUE. Ill

Oh, well, the banker will answer, we have secured the
adhesion ot the principle gold mining companies, and you
can just as easily order on nuggets of gold, as tea, sugar,
coffee, boots, cloth, etc. ; and we have a most generous
government, the mint will coin it fpr you for nothing.
The trader is satisfied ; he is now a partner in a world-
wide company, indeed, one that must take the whole of
society under its wings, and yet he does not give up
one iota of his individual liberty ; he is not responsible
for the foolish acts of any other ally of the company,
nor can they affect him any more than they do now.
Bankers now know how to adjust their profits to risks>
and will continue to do so in the future.

Manufacturers (under exactly the same conditions of
competition as now, and without giving up their supply
in the usual way) would undertake to supply the whole-
sale houses; the wholesale houses would supply the
retail, and the retail cater to the general public.

Now in order for the retail dealer to purchase from
the wholesale merchant, he must, as I have said, lodge
at the bank a guarantee that he can at any moment
supply goods, in his own business, and in a retail
manner, to the value of a certain specified amount,
or it may be that he has property besides, and if so,
this also is added to values which he is able to supply.
These two amounts would be entered to his credit
in the banker's book, and cheques could be drawn
upon that amount, just as it is now drawn upon
gold actually depositee in the bank ; but instead
of being in the bank, and the banker ready himself to
hand the gold over if required, he now has agents,
allies, who will supply instead of one commodity, gold,
my commodity of any description.

112 VALUE.

In the payment of the cheques, however, which are
drawn upon gold, to-day, that metal is not passed from
one town to the other, or from one banker to the other, it
stops in the hands of the different companies with whom
it is deposited. If the amount deposited in one Bank
in one day be ;^io,ooo, and ^"9,000 is drawn upon it by
cheques, this latter amount is due to various banks, that
is, the cheques are handed to various bankers who either
cash them or place them to the credit of their customers.
But the ;^9,ooo gold is not forwarded to these banks ;
for if cheques to that amount are drawn upon this one
banker, and handed into many other banks for payment,
these same banks will have cheques drawn upon them,
some of which from each bank will be presented for
payment at this one bank, and the difference in the two
amounts — the ;f 9,000 which other banks pay for it, and
that which it pays for them — will be surprisingly small.
To further facilitate the process of this balancing of
accounts, and consequent economy in the use of gold, the
Clearing House was established and, by a similar pro-
cess of balancing, the enormous total of twenty or thirty
millions of pounds of Bankers' transactions per day
are conducted with the use of only a fraction per cent,
of gold. With the transmission of values, without
the use of gold for effecting their exchanges, the debit
and credit account would more nearly balance than
now.

The cheques drawn upon the values the retailer
guarantees to supply on demand, are presented to
the wholesale merchant who forwards him values to the
amount the cheques indicate. However, to enter a
certain quantity of values at the bank, and draw upon
them by cheque, thereby utilizing them as currency,

V.AI.VZ. 113

could not be at all permissible without some qounter
claim on the part of the rest of the value owners ; for
if I enter ;^5oo values and with a cheque book issued
to that amount, may be,* purchase ;^5oo worth more
of commodities, then, increasing the entry to £1000
and purchasing a further amount of commodities, I
should soon be able to pull down my barns and build
greater; so that by some system or other this ;^5oo
worth of commodities which I purchase with the like
amount entered at the Dank, must filter its way back
in some kind of value form, — and such as they require,
— to the persons from whence it came ; that is why
every depositor of values must be prepared to supply
on demand, as well as use for currency the amount
of values deposited, or rather registered, with the
banker.

The manufacturers of a certain district having
deposited, or registered, certain values, could with
cheques drawn upon them, pay the wages of their
employees ; these same would go to the retailers of the

*To those ■ who are unaccustomed to contemplate the
amount of commercial transactions which are carried out
upon the good faith of the dealers, I may say that, if con-
sidered necessary by the banker, the principle introduced in
the issue of the Cheque Bank cheque, might be adopted, and
overdrawing thereby be prevented. " The Cheque Bank
proceeds upon the new principle of issuing cheques which
can be filled up only to limited amounts, as shown by printed
and indelible perforated notices upon the forms. These
cheques, too, are only to be had in exchange for the utmost
sum for w hich they can be drawn, which sum is retained as
deposit until each corresponding cheque has been presented.
It follows that each cheque, when duly filled up and signed
by the owner, is as good as a bank note issued against a
documentary reserve." — Jevons' " Money."
8

14 VALUE.

town who had undertaken to supply the company and
who would be numerous, — ^indeed more than would have
actually given in their- adherence to the scheme, for the
cheques would be transferable, — and who would be

careful to announce that the " Banking Co's

cheques are taken here " and they, having made their
register of values, and supplied themselves with
commodities, would, in accordance with their promises
to supply on demand, and in order to accomplish as
much trade transaction as possible and thereby enrich
themselves, do their utmost to supply such goods as
would best suit their customers. Every trader would
know the proportion of the different products required,
and buy accordingly ; if he were incapable of properly
measuring their wants, his customers would soon go
elsewhere as they do now. In every way and in every
sphere, the relations of buyer and seller would be what
they are to-day.

The retailer , having parted with a certain amount of
his commodities for cheques, would be anxious to show
the banker that he had fulfilled so much of his obliga-
tions, and would hand in the cheques for -verification.
After being stamped they would be placed to the debit
account of the various manufacturers who had given
them out, and placed to the credit account of the
retailer. But the retailer, by the purchase of com-
modities, has thereby reduced his account by that
amount, so that it would now stand at the amount
originally entered, debited by the amount of cheques
given out, credited by the amount to which he has
supplied commodities. The balance can be drawn
upon in like manner.

In this way the whole affair of the world's commercial

VALUE. 1 1 5

transactions could be carried on, gathering security and
perfection as it developed, the various Banking Go's
checking and striking the balances of values just as they
now act with gold. The cheques of the different banks
will circulate and interchange just in proportion as they
are sound and deserving of reputation ; one inter-
changing with another so that the possessor of values
may not be inconv enienced, no matter where he goes.

If in the initiation of the scheme, the numbers of traders
adhering to the system were small, still the holders of
cheques would no doubt be able anywhere to get them
accepted, directly or indirectly, on account of the security
behind them in the shape of a large company, and the
small number of shop-keepers and manufacturers would
not therefore escape competition ; but even if they were
limited to those who exp ressly undertake to accept them
still their businesses would not depend solely upon the
bank cheque holders, therefore they would be obliged to
move with the times ; moreover, the greater facilities
which these traders would receive in .very many ways,
would enable them to offer greater advantages to the
public.

As to possibilities of fraud, the only danger would be
the remote possibility of a trader being tempted to make
a flagrantly false registration of values, and this would
bring too speedy a punishment in the shape of injured
commercial reputation, to be likely to occur ; but there
are means of guarding against that. Then as to the
check system itself, there is no safer method of trans-
ferring money to-day than by the cheque system, and
this could be still more edged for smaller transactions.
As regards the payment of employees with cheques,
Jevons says: " The mariagers of the Cheque Bank hope

Il6 VALUE.

to substitute their cheques for the coin now used by
manufacturers in payment of wages. If this could be
accomplished it would be convenient rather than other-
wise to bankers, who are weekly called upon to furnish
large sums of gold and silver coin, and have the trouble
and cost of holding and counting a sufficient stock.
Now, if a master in paying his men presented them
with small cheques, or, perhaps better still, with
cheques for even sums, and the balance in silver, the
cheques would be cashed by shop-keepers and would
be deposited by them in the banks, or might even be
bought back in large sums by the masters for further
use." The difficulties which stand in the way of accom-
plishing this to-day, however, would not exist under the
system of drawing cheques upon values instead of gold.

But, what a revolution ! Interest would be a thing of
the past, and with it. Rent.

We saw how completely the British workman was
misled by the story of the plane, and that the economist
was wider awake in' actual transactions than when he
sits in his study to theorise ; that the sine qua non of the
borrower is security ; and with security, one can obtain
the fullest amount of the means of purchase that it is
possible to get, and this by the very simple process of
registration at currency centres, the Banks. Neither
would the limits of credit stop at this point: to say
nothing of the terms such a system would enable the
wholesaler and retailer to make between them, and also
between manufacturers and importers, the cheque system
is an extensive means of Credit in itself, even when
based upon that eagerly sought, crowned commodity,
gold,* but when based upon values no matter how

See p. io6.

VALUE. 117

embodied, the differences between promises and demands
will be even greater ; and^ just as to-day the difference
'between the banker's promises to pay gold and the
demands made upon him, give him a large capital, so
the differences between the tradesmens' promises to
supply and what they actually supply will be equal to
a large addition of capital for them. The gratuitousness
of credit, which M. Bastiat so little understood, would
be an accomplished fact.

' This would be setting capital free with a vengeance ;
and the only cost would be a certain percentage charged
on the part of the banker for keeping accounts (the source
of his income instead of interest), a charge which in pro-
portion to the volume of trade done would not exceed
that now made for keeping present money accounts.

The effect of this change in our commercial system
would be startling. Money payments would become
less and less, because quite unnecessary, although, for
a time, money payments and cheque payments would
exist side by side ; indeed, as to whether a small pro-
portion of money would always be needed as a matter
of convenience, time alone can prove, but money pay-
ments would no longer be the only method of final
liquidation. Gold would pass from the position of king
of commodities to that of a scapegrace.

We should arrive at those conditions which in the
third chapter we assumed, (pp. 49-50) whefe interest
had no place and where products were bought with
products, and consequently under which every increase
in the productiveness of labour distributes itself, by the
law of proportionality of values, among the whole of the
labourers ; in which every impetus to invention would
enrich the whole of the community , the inventors included ;

Il8 VALUE.

in which the standard of comfort would be continually,
and inevitably, augmented, and where the workers of
allgrades, from the Bank manager to the scavenger!
whether he willed it or no, would find himself rapidly
pushed on to wealth, health, and liberty — I might add
to equality and fraternity.

Everywhere industry would expand ; for the more
commodities there were produced the more they would
purchase ; capital would everywhere be looking out for
labour while wage-labour might probably become less ;
at least there would be every facility for it to do so, if it
did not find it more convenient to remain wage-labour
still. With such abundance of capital as the new
banking system will set free, and with such universal
and effective demand for use-values, large capitals would
seek more and more for unheard-of fields of enterprise ;
one of these, we may safely predict, would be the supply
of motor force, by central companies, to small home-
workers, — a most important consideration.

Money-lending having banished itself from commer-
cial transactions, and Rent fast reducing itself to zero,
interest on money or capital engaged in production
would no longer enter into prices ; there would be nothing
more than a risk premium, the same tending to zero jn
proportion as stability appeared. Services alone could
gain reward, and Corporations and large Company-
organizations would take their true form, viz., that
of a working partnership.

The remuneration of the master-man, which follows
from the interest on his capital, that is, the remuneration
which he receives by virtue of the capital and credit
he can command, under a system which pays for
capital, namely, a system established upon interest,

VALUE, 1 19

would gradually be cleared away ; yet his standard ot
comfort would not decline, since the impetus given to
industry, and the cheapness of all commodities that
would proceed, pari passu, with the elimination of
interest, would more than compensate him, and make
up the deficiency. Money wages would not fall with
the price of commodities, at least, only in such propor-
tion as would secure the general distribution of
intensified productiveness. Monopoly would cease,
unhealthy competition wirh its evil effects of insecurity
and " cutting" for the tradesman, and starvation wages
and irregular employment for the workmen, would
come to an end ; competition of a healthy and desirable
character would be secured, and by the effective opera-
tion of the law of proportionality, all services would
tend to be levelled up to such a degree of equality of
remuneration that is now little thought of.

The limits which I have set upon this volume will
not admit of any more than a passing notice of one or
two other points. Our apprentice system, for instance,
calls for thorough discussion, but I must leave the
reader to draw conclusions as to what effect the new
system would have upon it. At present it is as
pernicious as it can be conceived to be; and all because
capital thrusts itself forward and claims reward (interest)
for its possessor. Everyone should be able to make
himself master of one, and capable of turning his hand
to several, branches of industry. Technical education
(not state- propped, I hope), will do much in this
direction.

Interest would not enter into the cost of the construc-
tion of houses ; it would not therefore enter into their
rental — they would be made to sell, principally, I should

120 VALUE,

say. The same with land, present legal documents will
become historical relics, in virtue of which they will be
possessed of value. The hiring of land may still be
continued, but in a very small degree, since its only
value will be the services expended upon it, and rent
would be no more than payment for this ; therefore it
would cease to be rent. Every landlord will then be
a land-user. Land, with monopolies removed, would
rapidly be brought to the uses for which it is most
fitting, and differences of soil would thus become
equalised by dififerences of use — economic rent would
disappear.

I need not stop to dwell upon the necessary
connection between the poverty, squalor, and inequality
of our present system, and the existence of present-day
crime and immorality of all sorts ; the Socialists have
ably worried political economy on this point ; I do but
emphasize their theory in this respect and declare that
with easy economic conditions, which present a nearer
approach to equality, nearly, if not all, crime would
disappear.

CHAPTER VI.
Malthusianism ; or the Law of Population.

By implication, on pages ji and 72, the theory of
the pressure of population against subsistence has
already been met ; still, at the risk of being accused of
" thrashing a dead horse " (as it is claimed that Mal-
thusianism has so often been slain) I think a definite
analysis of the theory will not be out of place. I have
heard Socialists say that the chief merit of Henry
George's "Progress and Poverty" lies in his effectual
disposal of the theory of Malthus. As a matter of fact,
Malthusians who know their theory donot consider it at
all disproved by what Henry George has said : he has
not attacked the vital point of Malthusianism. In his
chapter on the Cause of Industrial Depressions, he
says : — " Given a progressive community, in which
population is increasing, and one improvement succeeds
another, and land must constantly increase in value.
This steady increase naturally leads to speculation in
which future increase is anticipated, and land values
are carried beyond the point at which, under the exist-
ing conditions of production, their accustomed returns
would be left to labour and capital. Production,
therefore, begins to stop. Not that there is necessarily,
or even probably, an absolute diminution in production ;

122 VALUE.

but that there is what in a progressive community would
be an equivalent to an absolute diminution of produc-
tion in a stationary community — a failure in production
to increase proportionately, owing to the failure of new
increments of labour and capital to find employment at
the accustomed rates."* This manner of stating what
he conceives to be facts, shows that he has not grasped
the central point of Malthusianism as it is applied to
modern civilization. In pointing out that speculative
land values impede the growth of a community and
prevent new increments of labour and capital from
finding employment, he does but point out what
Malthusians themselves proclaim, namely, that the
community has populated up to available means of sub-
sistence. If George's theory is accurate, and his
proposals sound — which cannot be the case if the reason-
in'g of this volume is correct — then, in order to over-
throw the theory of Malthus, what he should have
proved is not that speculative land values stay the
growth of production (population) at a certain t)oint,
but that, granting a stationary population, speculative
land values would so contract industry as to produce
that phenomenon which we call over-population. This
should shed a different light upon Malthusianism.

Before coming to a philosophic conclusion from the
development of the theory of value and the Banking
system which I have proclaimed to be essential to the
proper effect of the laws of the distribution of products,
I will, therefore, examine this theory of the pressure
of population against the means of subsistence from
the point of view of our theory of value ; and in

♦Progress and Poverty, p. 186.

VALUE. 123

order to do so, I shall have to take up the challenge of
" England's greatest thinker," J. S. Mill.

Nearly everybody is Malthusian; all trades and
professions are more than overcrowded, says the parent,
as it becomes more and more a necessity to choose a
calling for his child. Indeed, there is no social theory
so universally accepted and at the same time practically
ignored, none in which the reasonings of the writers are
more often exploded, yet constantly reappear, as the
theory we are about to examine. There must be some
reason for this phoenix-like survival ; and is it not that
the troublesome phenomena which serve as data
admit of equivocal explanation,, and are, up to now,
unsolved ?

Malthusianism survives because in its less irrational
form it contains this plausibility of truth which only a
thorough grasp of the economic enigma can make plain
and sift out from the chaff. One cannot take up a
Malthusian treatise without finding the theory, as
applied to modern society, stated in one form, while
it is continually argued from another point of view,
hence while the argument is exploded the theory
remains.

My objection to Malthusianism is that it gives a false
impression of the phenomenon of industrial depressions.
If it were practically adopted in its modern form,
very little, if any improvement would result to the
working-classes, no more than from any other economy
of life. Indeed, not until we have learned to make
effectual the law of the proportionality of values can
the law of the rapid increase of population so express
itself as to find the true and adequate anti-thesis which
will result in the solution of what Professor Huxley, for

124 VALUE.

want of a better knowledge of economic laws, calls
the riddle of the Sphinx-.

When Henry George argues that " even during the
famine [of Ireland] , grain and meat and butter and
cheese were carted for exportation along roads lined
with the starving, and past trenches in which the dead
were piled," and that " had this food been left to those
who raised it ; had the cultivators of the soil been
permitted to retain and use the capital their labour
produced ; had security stimulated industry and
permitted the adoption of economical methods, there
would have been enough to support in bounteous
comfort, the largest population Ireland ever had,"
he does but state what Malthus himself calls attention
to, thus : — " Every increase of the stock or revenue of
a country cannot be considered as an increase of the
real funds for the maintenance of labour." That it
might be otherwise, it is argued, does not alter the
fact that the wages-fund, being the only means of
subsistence for the majority of mankind, population
increases faster than, and continually presses against,
this fund of maintenance, as it has with respect to all
other means of subsistence. This pressure, we are told,
is the constant cause of an over-stocked labour market,
and we are asked to limit accordingly, the number of
labourers. This is substantially their statement of
fact, and may be termed the actual of Malthusianism.

From one end of Malthusian literature to the other
there is a continual admixture of the actual and
the speculative, (of the fact, or supposed fact, and the
inference.) The latter, notwithstanding its repeated
refutation, is taken as truth ; the former passing as its
justification.

VALUE. 125

The theory that population, in modern society, tends
continually to outstrip the means of subsistence, for
the majority of mankind, is taken almost as an axiom of
political economy, and from this supposed fact, the
inference is drawn that population would outstrip the
means of procuring food even were the produce of the
earth unlimited. " Allowing the produce of the earth
to be absolutely unlimited, scarcely removes the weight
of a hair from the argument, which depends entirely
upon the increasing ratios of population and food."

Let us examine what we have called the actual
of Malthusianism, namely, that in modern society (for
that is what we are ] concerned about), the number of
labourers continually press against the wages-fund, and
that this is the cause of an overstocked labour market.
" I ask " says Mill, •' is it true or not that if their
numbers-were fewer they would obtain higher wages ?
This is the question and no other: and it is idle to
divert attention from it by attacking any incidental
position of Malthus or some other writer."* I accept
this : and although as an existing fact, population does
bear too great a proportion to the wages-fund, I answer,
No ! it is not a fact that if the numbers of the labourers
were fewer, they would obtain higher wages.

In section 2 of the chapter just referred to, we are
told that " higher wages are paid when there is a brisk
demand for the commodity produced" and vice versa.
This is intended to indicate that in times of depression
wages are low and that in times of prosperity they are
high. If this were true, then the fluctuation of prices,
which is caused by the alternation of depression and

Mill's Principles, Book II., Ch. XL, Sec. 6.

126 VALUE.

brisk, trade would not affect the labourer ; but preceding
chapters have already prepared.the reader for an under-
standing of this monstrous error which political economy
has fallen into. He will remember that in Chapter IV.
it was pointed out that " nearly all products are at first
dead stock. The rate of profit itself depends upon the
amount of dead stock, and any increase of dead stock,
others things remaining the same, lowers its money
value without affecting wages. . . . Proportional
wages rise at the expense of profit. But if an increase
of dead stock lowers profit, and a decrease of profit
discourages the conversion of dead stock into active
* stock, it follows that the wages fund will be the
smallest when dead stock is relatively most abundant,
and when the rate of proportional wages is the highest."
This being the case, and it having been proved that
the disproportion of dead stock to active stock, in times
of depression, is the result of our present "system of ex-
change, it follows that labourers will find themselves, all
at once, thrown out of employment, even if their numbers
were not increased ; for it is obvious that the discourage-
ment of the employment of capital through the undue
augmentation of dead stock means a diminution of the
wages-fund,, and a consequent discharge of hands — a
surplus population without any increase whatever.

But surely, it will be said, if the number of labourers
were fewer in times of depression they would receive
higher wages, for is it not a fact that twenty persons
applying for one situation lessens the remuneration?
It can make no difference in the long run. K, when
the shock of depression is felt, when the panic ensues,
when the action and reaction of dead and active stock
have created the reserve army of labour, this reserve

VALUE. 127

was straightway shipped to Timbuctoo, the immediate
effect would be that the labourers would refuse to
accept lower wages. But the consequence of this,
reached by many stages, would be a further cessation
of employment ; for the reduction of wages would be
the only thing to induce many of the capitalists to go
on producing.

But there will still be something lurking in the
minds of Malthusians. We are asked to observe the
marrying and giving in marriage which takes place
at any extension of industry. The fallacy of this
reasoning is apparent. Industry, after a certain
amount of vigour, suddenly retrenches, and this irre-
spective of any increase of population, but solely as a
result pf our inadequate system of exchange, as we
have seen. Such retrenchment causes an insecurity of
employment, and many who would otherwise have
entered the matrimonial state are obliged to wait, and
the result is a more than ordinary number of marriages
at the least sign of an increasing constancy of employ-
ment. This ever-recurring oscillation of false security
and decided insecurity of modern industry, and therefore
of employment, accounts in part for the comparatively
rapid increase of population under our present regime,
notwithstanding the continual apparent super-abundance
of labourers.

The actual of Malthusianism fails to stand the test of
examination ; the speculative, the inference from the
fact, will be found equally untenable. Although
Malthus investigates numerous forms of society in
various parts of the globe, I am unable to remember
any instance where " the pressure of population against
subsistence" is at all an adequate expression of the

128 VALUE.

cause of their ignorance and wretchedness ; just as in
modern civilization, we have found that the pressure of
the number of labourers against the wages-fund is
al):ogether a false expression, arising from a false con-
ception of actual facts.

We are told that were society established upon the
most perfect basis of equality and brotherhood, "not
thirty years could elapse before its utter destruction
from the simple principle of population."* Had our
economists ever understood the nature of value, they
would have seen the absurdity of talking of the pressure
of population against the means of subsistence, in
modern society. Not until the whole world is so full
and entirely cultivated that its maximum yield is
reached, need we fear that population will outstrip pro-
duction or the means of subsistence ; and long before
that time can by any possibility be reached, so long as
the free will of man is allowed to play upon the con-
tradictory nature of value, the decline of population,
and not its increase, is the more likely to be the trouble.
The economic independence of women, ' which will
result from a society in which the conditions of equit'
able exchange obtains, would soon do much towards
relieving Professor Huxley of his anxiety on the
question of population. Moreover, talk with any of
the working classes to-day, and how many of them ever
dream of the possibility of raising themselves out of
their present condition.

On the face of it, the effort looks too Herculean ; and
besides, the safety of society, while it is attempting to
find the universal equations, lies in the adaptability of

See the " Essay on Population." Malthus.

VALUE. 129

the majority of workers to their conditions and mode ot
life. Any great unrest of temperament which is likely
to accompany a general aspiration for better things is
a questionable element for modern society, I mean for
monopoly. Should such unrest ferment, it might result
in a social cataclysm ; therefore, that apathy which all
social reformers complain so bitterly of, is, up to a
certain point, necessary to the safety of society, and at
the same time a barrier to the adoption of the principles
which Malthusianism would propagate.

Also Malthus himself admits, in more than one
place, that insecurity and hopelessness are conducive
to a more rapid increase of population than security
and good prospects, and among the upper classes,
where the standard of comfort is higher, early
marriages are more infrequent than amongst the
lower classes.

Finally, given the establishment of an equitable
system of exchange, and society being established upon
a basis of perfect justice, so far is it from true that
" not thirty years could elapse before its utter destruc-
tion from the simple principle of population," that, the
standard-of-comfort, being the foundation upon which
competition works, and in the form of remuneration,
entering into prices, no more values can be purchased
than are produced ; that, as invention must precede a
rise in the standard of comfort, and as invention or
economy in production is always going on, society is
constantly and unconsciously creating its capital, labour
inevitably leaves an excess ; and that, as before values
can be brought into general consumption and become
necessities, we must have found time and means to
produce them in due proportion of labour-time to that
9

130 VALUE.

n which other commodities are produced, over-con-
sumption, or the pressure of population against subsistence, is
an economic impossibility.

CHAPTER VII.
The Philosophy of the Constitution of Values.

Objections to the new system of banking can only-
come as criticisms of its economic basis and its practica.
bility : politically it is indisputable ; that is to say, it cannot
be objected to on the score of immoral, unjust, or
unscientific methods ; no force towards any individual
is asked for, and its truth is given to the world of thought
as an hypothesis, based upon a thorough analysis of the
laws which govern production and exchange, the bottom
principle of all, value, being here especially treated. I
do not bring it forth as a dogma to be forced upon the
world at the point of the bayonet. Also, as a conse"
quence, it follows that there is no violation of societary
laws of a subjective character.

Political economists cannot object : since it is in
accordance with their fundamental principles of tewe^-
faire, and depends for its success upon laws which they
have sought and demonstrated the existence of, but not
followed out in their sequences. Property, too, is
placed upon a basis which is infinitely more impregnable
than its present title.

Socialists cannot object : since, if its economic basis
is correct, and if it is practical, it cannot but commend
itself to a large proportion of them, whose primary

131

132 VALUE.

endeavours are to make poverty a thing of the past, to
give to labour its full reward, and to abolish Rent
and Interest, which they truly declare to be the robbery
enslavement, and degradation of present-day workers.
The methods Socialistswnuld adopt for the consummation
of this desire, are resorted to, not because many of them
are not anxious to secure individual liberty, but because
they look upon them as economically inevitable. In-
deed, their retort to old-time Individualism is, that the
workers have had enough of abstract notions of liberty,
and unless better proof and demonstration can be given
that the economic laws they proclaim will not eternally
condemn the mass of mankind to comparative poverty,
and a large proportion to actual poverty, then, they say.
Socialism will give the largest amount of liberty possible.
I am not here concerned, however, with the quarrel, or
differences of the two schools of thought ; I only wish to
point out that individual liberty is an item of their
thoughts, and that they only insist upon its suppression
where they think such a course would result in the
establishment of the maximum amount. So the
difference between Individualists and Socialists, is, that
one, the former, considers a little suppression of the
individual necessary, the other, that a good deal is
necessary, in order to establish the maximum of liberty.
The reasoning of both seems to me to be bad, and I
require neither power to defend, nor force to establish
my system.

Co-operators cannot object : since it imposes no re-
strictions upon their principles, while it places greater
facilities in their hands.

It leaves everyone, and all parties, a free hand, and
establishes conditions under which individual produc-

VALUE. 133

tion and the co-operative form, small businesses and
large ones, would be able to demonstrate which could
render the most service to the public, and what are their
respective spheres ; and the terms of the competition
would not be as now, where services are thwarted and
everywhere misapplied by the inequality of opportunities
and the wasteful efforts which monopoly and the ostenta-
tion of large capitals force forward in all directions.

It satisfies all the conditions of philosophic and
scientific research and demonstration ; it forces no
one to accept the hypothesis ; asks for no philan-
thropy, appeals to the interest and convenience of each
individual who is likely to be engaged in its promotion,
and cannot, therefore, fall to pieces by the breakdown of
the altruistic principle, as such schemes as communism,
etc., ever have done.

Justice to every individual must first be satisfied before
we can afford, or even know, how to be truly generous ;
indeed the generosity of communism comes as a duty
imposed upon all, and as such loses its character, and
would be shirked as often as possible. Generosity
demands that the individual exercising it shall be free
in his choice of the time, place, and object ; and if it be
called for, at all times, and towards a central object,
state, or institution, it is no longer generosity, but, as an
enforced duty, something evil, which will bring forth fruit
after its kind. " It is in vain, that, following Jesus Christ,
they preach the necessity, and set the example, of sacri-
fice ; selfishness is stronger, and only the law of severity,
economic fatality, is capable of mastering it. Humani-
tarian enthusiasm may produce shocks favourable to
the progress of civilisation ; but these crises of sentiment)
like the oscillations of value, must always result only

134 VALUE.

in a firmer and more absolute establishment of justice."
Egoism is the principle upon the predominance of
which all reformers must count, and those systems of
reform which depend upon, and call for, universal
actions in the supposed interest of society ,and which do
not at the same time satisfy the egoism of every in-
dividual, or leave it full play, are foredoomed to failure-

A little discussion on this matter of Egoism, perhaps'
will not be out of place ; but first let me premise it by
acknowledging the slipperiness of the two terms,
egoism and altruism, and the almost impossibility of
making oneself quite clear upon them, edge them with
definitions never so elaborate. By egoism I do not
mean that worse than animal empiricism which
some people, if I understand them, theorize upon.
Nevertheless, it is a fact that at one time, the
reason why men abstained from wholesale and continuai
massacre was because of mutual fear. It is the same
in other directions ; mutual fear of consequences known
by the experience of society to follow, breeds such a
continuity of abstention from, or commission of, acts, as
the case may be, as to develop into a custom, a morality ;
and when, in any sphere, this once establishes itself, the
reason why individuals abstain from, or commit certain
actions, is because they have an inclination, or rather,
have a decided bias, not to commit, or to commit such
actions. It is no longer by reason purely, but by
sentiment, reason only coming to our aid should
sentiment have a tendency to unduly exhibit itself.

One writer says his only reason for not joining a
band of brigands (highway robbers and murderers) is
because he would probably get the worst of it. Never-
theless, I don't believe him ; his reason is no reason at

VALUE. 135

all, but simply sentiment, and the former would only
come to his assistance if the latter failed, or was likely
to be overridden by other sentiments, such as an in-
ordinate desire to possess without producing. We
abstain from murder, theft, etc., spontaneously, if I
may so speak, and only commit such deeds when other
circumstances outweigh this natural inclination, such
for instance, as engendered hatred, which may lead to
murder, calculated or otherwise. Where calculated, it
shows the inability of the individual to conduct suffi-
ciently long processes of the balance of pros and cons
as to arrive at, the same conclusion as does society, by
its vast accumulation of experience. Here, of course, I
speak of murder and theft in the form in which society
recognises it as such, not forgetting some other varieties
of the same order which it has yet to discover as
abhorrent. Society discountenances murder, theft,
lying, because its accumulated experience teaches it
that such things must cease ; indeed, that unless they
are committed only under circumstances which are
exceptional, and which outweigh the natural inclination,
and not under the influence of the general inclination
itself, present society would be impossible. The
negation of dishonesty and lying of all sorts, is the
necessary condition of the affirmation of society, and
wherever society comes to recognise lying, or robbery,
or murder, or dishonesty in any form, indeed when
certain actions come to be looked upon as right or
wrong, to violate its dogmas is to bring punishment, in
some form, on the individual who thus affronts it.
Thus it is that the force of the revolutionist comes to
be looked upon as horrible in the extreme, because
society knows its existence depends upon a certain

136 VALUE.

amount of acquiescence and stability, and only justifies
force when it knows the quantity, time, and circum-
stances of its operation, such for instance as govern-
mental force ; and then only on condition of its being
exercised in a manner which has the appearance, if not
the reality, of non-interference with what society's
general concepts have proclaimed to be the rights of
every individual. These general concepts of society
may be partially true, or partially false, but never
wholly wrong ; whichever they may be, when govern-
ments arrive at that inevitable complexity of being
unable to any further act, without violating, in a
flagrant manner, some of these concepts, or unable to
right conditions which exist in violation of them, then
acts of violence towards governments come to be
extenuated, excused, or treated indifferently, when the
individuals, or section of individuals exercising it, can
show that they do so in virtue of these rights, as against
the government which is fast manifesting its failure to
fulfil the mission it is expected to accomplish ; a sort of
earthly omniscient omnipotence government is looked
upon as, which society's collective faith calls upon in
its distress, and honours with its praises ; a something
which can control the nature of things and act without
dependence ; just as the individual calls upon some
power to act especially in his favour, calls upon it in
distress and sings in its praise for aU the good he
possesses. At such times, the principals of wholly
successful risings against such, so conceived, abortive
governments become prominently historic, and are
looked upon as heroes; and indeed they carry their life
in their hand ; but for long periods have exceedingly
questionable reputations, if they fail.

VALUE. 137

Sociology enables us to say that, even as societies
come to understand and select, for general consump-
tion, commodities in proportion as they cost less and
less labour and exertion, so, gradually they come to
select those actions which experience teaches them are
the best they know ot. Conduct so selected is looked
upon as right, and its violation as wrong ; thus society's
evolution is a continual war between its acquired
general concepts of right, and the conditions under
which these rights are in conflict. Conscience and
reason, therefore, are in continual opposition,* and by
their conflict new paths of action are struck and new
moralities acquired.

The experience by which society arrives at its con-
clusions as to right and wrong, is long and laborious ;
every morality must be tried over and over again by
coming in contact with counter forces, and being tried
by the side of other of its general concepts. Some of
these succumb by force of superior acquirements ;
some, for a time, by force of inferior acquirements, but
if they are necessary, if they are useful to a sufficient
degree for further perfection, once appearing, they will
eventually reassert themselves. Sentiment, common-
sense understanding, accumulated experience, general
concepts, synthetic propositions, call it what you may,
and no matter in what form it expresses itself, warrants
most careful attention and analysis in every such form
of its expression. Society arrives at such conclusions
by its collective and historic reasoning (a very different
thing to majority edicts) and it is expressed by the

* An expression of Proudhon's in accordance with his
proposition of the opposition between right a.nd fad.

138 VALUE.

individual in the form of sentiment — we are a bundle
of sentiments.

There are two forms of right; one form we may
express by that word, and another by the word, just.
The former we might use to denote actions which,
having regard to the past and the future, are links in
that chain of experience ; which are the best forms of
conduct society knows ; which may not be truly just,
since they clash with other forms of right which are too
well tried and acknowledged, from all time, to be such.
Such conduct, thus clashing with other forms of action
of a more definitely and eternally just character, may
be said to be dynamically in order. However, whether
customs partake of the form of right, or of justice, they
have been built up by the same process, and equally
express the best knowledge which society has attained
to ; and the reasoning which ignores them, the 'ism which
endeavours by force to suppress them, or, by the same
method, to bolster up one sentiment at the expense of
another, as Socialism and some forms of Individualism
would do, is impolitic, unscientific, and disastrous, how-
ever inevitable. Yet the very yaison d'etre of this sup-
pression, this use of governmental force, is a sentiment
of the justice of obliging others to conform to society's
necessities. That sentiment could not have obtained
unless at some time or other society had found it the
readiest means at its disposal of preserving itself against
individual excesses.

This' suppression of sentiment by force — whether it
be the sentiment of Property or the sentiment of
Socialism, or the hypothesis of Property or the
hypothesis of Socialism — I declare to be not truly just,
only dynamically in order, and therefore doomed to dis-

VALUE. 139

appear. But some people define government as a
defensive institution for securing individual rights:
just for the present I will say that I have never heard
of the existence of such a government, but rather that
all we know of are first, and above everything, aggressive,
and necessarily so. It is a force which philosophy
should have no more to do with than to understand its
" why and wherefore," and which it has no right to
count upon or utilize as a necessary part of its con-
ditions of human relations, that is, its ideal conditions.
Therefore, as well as being contrary to scientific
methods of research — because its users are under the
necessity of enforcing certain customs or moralities
which may be or may not be eternally just, and which
experience and long periods of time, indeed all time,
alone can prove to be so, and of enforcing as truth
customs which may be only dynamically in order, or
right in a limited sense — any system of society which
needs government to establish it or maintain it, is a
system which imposes itself above collective know-
ledge; which being based upon suppression, and
disorganizing the balance of society's laws, must keep
on with suppression, gathering in quantity and com-
plexity as it goes, and, finally, produce that inextrica-
bility which, as I have before said, renders it incapable
of further action without flagrantly violating some of
the universal principles which experience says are
pre-eminently just. We know what follows. Govern-
ment makes society impossible, tends inevitably to
Revolution.

A philosophy of society then, which requires govern-
ment as its corollary, that is, whose form of property
exists in violation of the rights of some individuals, or

140 VALUE.

of all, is a philosophy which carries with it^its own con-
demnation ; and if it does not violate the rights of any
individual, government will not be its necessary
counterpart.

But if actions, in defiance of society's general con-
cepts, bring punishment to individuals and to govern-
ments, still there are actions which are prejudicial to
every individual, indirectly, that is to society as a
whole, while directly they have an appearance of
decided benefit, and do not bring punishment, individu-
ally, as each act is committed, because society has not
had sufiicient experience of its evil effects, or, may be,
having that in abundance, has not yet traced the evil
to its source and found a way of escape. Of this latter
character is the giving and receiving of interest. It is
a custom, or necessity if you will, which nearly every-
one acquiesces in ; we are collectively responsible and
sufier only collectively, and not as individual violators
of morality.

The taking of Interest, — including, of course, Rent —
is the whole mystery of economic iniquity, possible only
as a result of conditions in which labour is robbed of its
productiveness, and the whole of industry perpetually
perplexed with panics, crises, and depressions. But if
this is so, if by interest, the right of the labourer to the
produce of his labour is violated, we shall not mend
matters by violating other rights, such as the right to
borrow and to lend on whatever terms the contracting
parties think best to make. — All the conditions of this
philosophy are satisfied by the new system of Banking.

Also, these principles of societary evolution have
established the doctrine of Egoism, namely, the
doctrine of the non-suppression of the convenience of

VALUE. 141

the individual ; for the development of society is a
continual war between right and fact, between con-
science and reason, between society's dogmas of justice,
and the conditions under which it is impossible to
satisfy them, therefore, between justice and the con-
venience of the individual. This is manifest in many
ways. Justice says the hours of labour should be
shortened; circumstances are full of difEculties and
barriers to such a consummation. Justice says, -treat
your employees better, more as men, and less as
machines ; circumstances say that such treatment is
altogether impossible to be carried out unless the
whole conditions of industry are changed. Justice says
more wealth to the labourer ; individual conveni-
ence demands the taking of interest until the present
currency is superseded. To abolish or regulate either
one of these forces, either the sentiments of men or
their individual conveniences, is like attempting to
regulate or abolish the centrifugal or centripetal
forces of the solar system.

This being so, the right of everyone to do that which
to him seemeth best, is philosophically established, and,
for the individual, no qualification of this is logically per-
missible ; for as soon as we add the usual proviso, " so
long as we do not infringe the equal right of others '' we
put up a shelter behind which all kinds of crotchets are
protected and by which mischievous meddling is excused,
and use a vagueness which does but mystify ; which
defines nothing ; which covers many sins, and which
admits of the forcing of any form of property upon the
world, which any party, when it becomes strong enough,
may have conceived of. Not only is this so, but the fact
itself is the explanation of the mystical proviso. Force

142 VALUE.

is necessary to maintain the present form of property ;
force is necessary to maintain and establish the com-
munal form ; and every party, showing that the amount
of force it proposes is indispensable, declares its line of
demarcation to be the minimum amount necessary to
prevent other individuals from infringing the equal
rights of all. But we have shown society's method
of ascertaining the equal rights of others, of establish-
ing rights. There is no other ; and although govern-
ment may be a necessary accompaniment of the present
day unconscious and empirical movements, philosophy
and science can only call in that force in aid of their
conclusions by violating their recognised methods, and
leading society on by a rnirage.

Those forms of property alone need government for
their protection which exist in violation of the rights of
individuals and in spite of the unsolved state of the
problem of value ; and if any form should obtain which
satisfies justice, that is, whose possession is based upon
a true movement of values, then no government will be
needed for its protection. Such a form of property
will result from the new system of banking. The fetish
of government, and the mystical proviso about other
people's rights, which philosophy presumes to have
ascertained, and concerns itself to defend, is the result
of its inability to conceive of the Constitution of Values.

The economic diiEculty being disposed of, the Con-
stitution of Values being proclaimed, Sociology may
be classed as a science. Philosophy proclaim the laws
of society without violation of its methods, and equit-
able exchange, being realized in the concrete, we shall
move rapidly on to the generation of the anti-thesis of
what Malthus calls the law of population, and to the

VALUE. 143

consummation of that perfection which Herbert Spencer
speaks of thus : ". The adaptation of man's nature to
the condition of his existence, cannot cease until the
interna] forces which we know as feelings are in
equilibrium with the external forces they encounter ;
and the establishment of this equilibrium is the arrival
at a state of human nature and social organisation such
that the individual has no desires but those which may be
satisfied without exceeding his proper sphere of action,
while society maintains no restraints but those which
the individual voluntarily respects." Then egoism
would not be merely the best form or guide to conduct,
it would be the perfect guide, for society's experience
of rights, would be in perfect accord with facts, with
every individual's convenience, and consequently
individual suppression would be a thing of the
past.

But we must make no mistake ; this consummation
is impossible of realization — all societies will die in
their attempt to reach it — if their economists and
philosophers, in the face of all evidence to the contrary,
delude themselves and befog mankind, either by a
happy conclusion as to the perfection of their theory, or
by the desperation of the impossibility of solving the
problem of value.

There is no evidence that the present civilization is
more likely than previous ones to hit on the happy
solution by its unconscious movements, and philos-
ophers who delude themselves with this happy faith,
do but bury their heads in the sand, while the danger is
still threatening. Philosophy must point the road as
well as the goal, not indefinitely and vaguely, by asking
for the negation of political power which the economic

144 VALUE.

embroglio renders impossible, but by definitely
analyzing and solving the economic contradictions.

But where is the philosopher and economist who
has heard of these contradictions and antithetical
economic movements, much more found their social
equation ?

Finis,