§ 10. Imputation of value to labor and to uses of wealth. Labor does not work with an equipment of free goods even on Robinson Crusoe's island. (See section 4 above.) Crusoe had a limited stock of cleared land and of other agents, some of which were irreplaceable. His valuation of them was im plied in the choice and use made by him of these various agents when used in connection with his labor. A part of the total product of an isolated worker as a matter of value estimation or imputation is a labor-income. Tho Crusoe had no occasion to apportion exactly the two parts of his divisible income, even a Crusoe in his choices would not attribute the total value of the product to his own labor. He is valuing material agents and labor together in a given economic situa tion. He might perhaps think and say, "I made this," or, "I made that," but he would constantly and necessarily act in a way that imputed a value to scarce material agents no matter whether much or little labor had been put upon them.
Each kind of goods and each act of labor is valued in ac cordance with the psychic income which it helps to secure. The value of the psychic income is reflected to the agents of production. An isolated laborer, such as Crusoe, would, how ever, not have as definite and complete a scale of values as that which arises in an exchange economy where money serves as a common denominator of values. The independent farmer, producing on his own farm nearly everything he consumes, is able to think somewhat more clearly of his labor and his wealth as separate sources of income, for he can earn wages by working for some one else and he can let his farm for a money-rent. Moreover, he, like Crusoe, is constantly
imputing, in his mode of use, a value to the farm and to his own labor. This being true, the phrase "labor produces" is always misleading, for it suggests that the whole product is the result of labor alone, whereas products result from the combined action of the uses of materials and the services of labor. The total value is reflected back and imputed to the various agents in due proportion. The phrase used should always be "labor helps to produce." The "labor theory of value" survives from the time when the workman's kit of tools was so small that the true labor-income of the handworker was little less than his total receipts. The tinker, the shoemaker, and the tailor, who went from house to house in the old days, thought only in the vaguest way of marking off from their incomes a part to be accounted as the yield of their little outfit of tools. Labor therefore was thought of as the chief and almost the sole cause of the value of goods produced by artisans. The error in this view grew greater and greater with the increase of modern machinery, and it persists in many fallacious notions not only in popular thought but in systematic economics.