PRIE. Political economists speak both of natural or necessary price and market price. The natural price of com modities, it is said, is as a general rule determined by the cost of production, or, in other words, by the amount of labour expended on them ; and consequently equal quantities of labour will exchange for equal quantities of labour. The mode of ascertaining what are equal amounts of labour is not and cannot be clearly explained ; and it is admitted that the equality of labour is not to be measured by time only, but the kind of labour must be taken into the account. This natural price is the same thing which is meant by the expression Real Value, which is said to be dependent solely on the quantity of labour necessary for the production of a thing. The market price or exchangeable value is that value in exchange which is actually got for anything, which will not always be the same as the price called natural or real ; but the exchangeable value, it is said, never varies materially either above or below the real value. Accordingly the cost of production is considered to be that which regulates market price, when industry is not re stricted; but this doctrine is sometimes announced with a limitation : the things produced must be such as can be indefi nitely increased in quantity by the appli cation of fresh capital and labour to their production.
According to this doctrine labour is the measure of real value, and real value never varies much from exchangeable value. But labour itself requires a repre sentative, something that shall measure one kind of labour compared with another; and gold and silver are commonly used for this purpose. But gold and silver also vary both in real value, as above explained, and in exchangeable value : the result of all which is, that there is no measure of the exchangeable value of a thing other than the amount of gold or silver or anything else that can be got for it. Things must be exchanged either by
simple barter without any price being fixed on the things exchanged, or by an exchange of commodities in which ex change the commodities have a money price fixed upon them, or by giving gold and silver or other things which are cur rent as coin for commodities.
In nations called civilized the ex changes are actually made by giving stamped metal for other things, or by some arrangement which is equivalent to giving stamped metal, so far as concerns the price of things. The exchangeable value or the market price of a thing is therefore the money which it really brings. He who has labour to offer for hire, and he who by labour, or by labour and capital combined, which is the accumu lated result of labour, produces a thing for sale, under the ordinary circumstances of society know pretty nearly what they will get for their labour; for the price which they will get is either a matter of contract with some determinate person or persons, or it is that market price which, as a general rule, varies during li mited periods of time within certain limits that are tolerably well ascertained. The principle which determines whether a man will continue to offer his labour for the hire or price which at any particular time he can have for it, or will continue to produce things for the price which at any particular time he may be able to get for them, is stated in Pouncet. Eco