NOMY.
Some writers who have laid down the doctrines of natural and market price as above stated, have, however, not over looked the facts which are exceptions to the doctrine. Professor Tucker remarks (The Laws of Wages, Profits, and Rent, Introduction, p. 8), " All commodities may therefore be divided into two kinds as to their exchangeable value : one, that class which, being the product of man, will command as much labour in the market as it has cost to procure them ; the other, the product in part of nature, in which the labour they will command may greatly exceed that expended in ob taining them, according to the proportion between the competition to possess them and the supply." The distinction here made is cited for the purpose of showing that some economists have perceived that the labour expended on things is not always the measure of their exchangeable value. It remains for economists to con sider whether the labour expended upon anything can in any case with any pro priety of language be considered the measure of its exchangeable value. La bour, it is affirmed, gives to everything its exchangeable value, which is true. It is also said that the amount of labour regulates or determines the exchangeable value. But it is admitted that the value of labour itself depends on the demand for it and the supply. Therefore, accord ing to this theory, exchangeable value is regulated or determined by labour ; the exchangeable value of which labour is determined by something else. The term labour is here of course used in its comprehensive sense, as including all means, material and not material, by which anything is brought into that form in which men desire to have it, and brought to that place in which the men are who desire to have it.
The terms Natural Price and Real va lue, if they are taken to signify merely, as they must be taken, the value which a man in his own estimation puts on the things which he has produced, may be convenient terms ; though the word Na tural is a word always liable to abuse, and Real is a singular kind of term to in dicate the value which a man sets on his own labour. If he wants to keep the product of his labour for himself, he may call it by any name that he likes. But as a general rule, the real value of a man's labour, that which he can realize for it, is the value of it to others, its exchangeable value. The exchangeable value of a thing is its realization : the so called Real value is idealization, which often fails to become Reality.
A man may admit that labour is the sole source of wealth, and of all exchange able value, and that the cost of production is an essential element in the exchange able value of all commodities, without admitting that the cost of production is the regulator of selling prices. He may contend that in the actual operation of exchanges it is the efficient demand, the will and the power to purchase, com bined with the supply that really regu lates the selling price of all things. These two opinions are not so directly opposed as at first sight may appear. There are two ways of viewing the sub ject of exchangeable value. The mode which some economists adopt is to trace it from the operations of a rude and savage state to the complicated conditions of modern society—a process something like that of tracing government from a sup posed state of nature to the actual condi tion of existing governments. There is nothing gained by this mode of viewing the subject, and it involves the introduc tion of certain hypotheses not necessary to the investigation. The other method is to view societies as they exist, and to analyse the complicated movements, in which consist their activity and energy.
In this actual condition We know on what terms buyers and sellers meet in the market Each brings to market what he does not want, and he gets what he can. Each knows that the other expects and desires to make a profit by the exchange, and that if there is not profit on both sides, or what both parties consider to be profit, the exchange will not continue. Each therefore has his own measure of that which he would give iu exchange, and he is moved to produce what he offers in exchange by the general market price of that which he gives in exchange. His power to produce and his motive to produce are therefore regulated at each moment by something which is anterior to his production and which regulates his production. The exchangeable value of a thing therefore, as determined by the selling price at a given time or by the average of selling prices for a certain period, is in practice the real regulator of the labour of him who produces for sale. A man who ventures on the production of a new article can only guess whether it will exchange for such a value as will give him a profit: and he is often de ceived. If he can produce a thing that is already in demand cheaper than it has been hitherto produced, he has a certainty of a profit, and a larger profit on each single article than before, unless there are competitors in the market. Competition will reduce his rate of profit. Practically, the selling prices of any given time, or the average of such prices for a given period, regulate the operations of pro ducers both as to the quality and the amount of the articles which they pro duce. The producer has always regard both to the cost of that which he produces and the probable price that he can get for it. The price that he can get cannot determine the cost of his production, nor can the cost of his production determine the price that he can get for it; but he does produce with reference to a certain price which he expects to get. The consumer who buys his commodity never considers the cost of its production. He simply avails himself of the competition of the sellers to get it at the lowest market price : if it is an article of necessity, he must buy so long as he has the means of buying; if it is an article of luxury, he will often do without it, if the amount of the supply does not allow him to have it on his own terms ; and he leaves the pro ducers to make the best of their wares.
The difficulty of attaining clear con ceptions on all such subjects as price is inseparable from the complicated nature of the elements which enter into them. The fault of most economical writers consists in the absoluteness of the prin ciples which they lay down, for there is perhaps no principle applicable to the operations of industry which is suscep tible of being laid down in absolute un qualified terms. Another obvious fault in some economical writers consists in not analysing the operations of society as they actually are, but in building up their theories almost entirely on certain axioms.
Adam Smith's opinions on Price are contained in his seventh chapter : upon which see the notes in the edition of Smith, published by Knight & Co., 1840: the opinions of a modern school are contained in the article Political Economy' in the Edinburgh Supplement to the Encyclo pxdia Britannica.' This article, with some notes upon it by the Rev. J. M'Vickar, has been republished at New York.