Section CXXVIII.. Value in Exchange Estimated in Labor.

Value In Exchange Estimated In Labor.

Adam Smith is of opinion that different kinds of goods, no matter how far removed from one another they may be in time or space, have equal value in exchange, when an equal quantum of human labor may be purchased by their means. He adopts, because of the great differences in work, the average work of the common manual laborer. One work-day, and the sacrifice of “rest, freedom and happiness” therewith connected, are, under all circumstances, attended with the same inconvenience (value). If at one time this day’s labor will exchange for more, and at another for less, of any kind of goods, it is only because the price of the latter has fallen or risen.(775)

But we may ask whether the same sacrifice of liberty is as great a hardship to a Russian as to a Bedouin; or whether the sacrifice of an equal amount of rest is as hard for the New Englander as it is for a Turk, or as difficult to endure on a hot day in July as in the cold of winter. Besides, we have here to do primarily only with value in exchange; and that value in the case of day-laborers’ work is subject to very great fluctuations.

The elements on which the demand and supply of labor depend are not, in themselves, invariable, nor do their variations usually compensate for one another. In progressive nations, the value in use of day-laborers’ work increases as well as the capacity of their employers to pay them; but, at the same time, as a rule, and at least relatively speaking, the supply of labor diminishes on account of the increase in the cost of production of workmen. Precisely the reverse of this happens in nations in their decline, and in over-populated nations. The workman is subjected to the necessity of accepting distress-prices for his work, and especially of accepting them for a long space of time.(776) How often it happens that, if only transitorily, when wages are declining, work improves, and vice versa.(777)

Ricardo’s school employs, as the measure of the price of various kinds of goods, the quantity of work by which the goods themselves are produced.(778) It is evident that the same amount of common labor produces very different results, according as it is well or badly conducted. Hence Ricardo must have used the word labor in the sense of labor ideally adapted to its end. But in this way it would be impossible to reduce all the different kinds of labor to a common denominator.(779) Nor could the peculiar effects of capitalization, or the influence of the natural or artificial limitations of competition be estimated in terms of such a measure. (See §§ 47, 107, 189.)(780)