The real value of a commodity having been shown to be dependent solely upon the quantity of labour necessary for its production, and the exchangeable value, for the causes stated, never varying materially either above or below the real value, it follows that the price paid for labour does not affect the exchangeable value of articles produced under similar circumstances. If the labourer gains a larger share, the profits of his employer are proportionately diminished; and if his share is less, then profits are increased : while both are generally preserved by competition from any great disproportion.
Equal quantities of labour however are not always equivalent ; the skill of one labourer, or the severity of his employment, may render the time for which he is engaged more than equivalent to the same time occupied in labour by another. But this circumstance, though it originally affects the comparative value of commodities produced by different descriptions of labour, is no cause of subsequent variation in their relative value. The relations of different qualities of labour are soon practically adjusted, and are not afterwards liable to much variation, Every reduction in the quantity of labour required to produce a commodity diminishes its real value, and therefore, for the causes already explained, its value in exchange. Improvements in tools and machinery, by saving the labour of man, reduce the value of com modities; but in estimating their influence, we must not omit to calculate the quantity of labour bestowed upon the article, directly and indirectly—from the growth of the raw material to its finished state —throughout the whole process of manufacture—upon the tools, machinery, buildings, and other appliances by which labour is assisted. Upon the same principles every increase in the quantity of labour directly or indirectly applied adds to the value of a commodity.
The amount of capital employed also enters into the computation of value. Capital is only accumulated labour. Where it is abundant a small interest is accepted, but where it is scarce a larger portion of interest has to be added. Labour can hardly ever be profitably exerted without the intervention of capital, as the labourer must be provided with subsistence until his labour has realised a profit. All improvident attacks, therefore, of the labourer upon the labour fund by lessening the amount of capital to be advanced for his support in view of prospective realisation, must inevitably react upon himself to his own disadvantage.
The effects of labour upon price become further complicated by the durability of the machinery employed to assist it. If two commodi ties are produced by machinery at an equal coat of labour, and if the same quantity of labour has also been bestowed, in each case, upon the machinery—the value of such commodities would appear to be the same ; but if one machine wears out in twoyears or needs much labour to keep it in repair, while the other lasts for ten years requiring but little repair—the relative quantities of labour expended indirectly upon the two commodities become so unequal, that a considerable disproportion must be found in their respective degrees of value.
DistUrbances of the relative value of different commodities apparently produced by the same amount of labour, are also caused by the comparative quantities of fixed and circulating capital employed, and by the length of time over which the labour is spread, and before the products are brought to market. Under these varying circum
stances in the production of articles, the price of labour becomes an element in their relative value, which is not the case when com• modities are produced under precisely similar circumstances. If all commodities were produced by an equal proportion of fixed and circulating capital, any rise or fall of wages would affect them all equally, and would not therefore disturb their relations to each other. If a yard of woollen cloth, for instance, exchanged for a yard of silk, and ways rose, the value of each would rise in an equal proportion, anti the articles would continue to exchange for each other as before. But if the cloth were produced almost entirely by machinery and the silk entirely by manual labour, a rise ofwould scarcely affect the former at all, while it would add the cost of producing the latter. They would therefore no longer exchange for each other, or, in other words, their relative value would be altered. Tho general law of such variations is thus stated by Mr. namely, that in the event of a rise in the price of labour, " only those commodities would rise which had less fixed capital employed upon them than the medium in which price was estimated, and that all those which had more would positively fall in price when was s rose. On the contrary, wages fall, those commodities only would fall which had a lees pro portion of fixed capital employed on them than the medium in which price was estimated ; all those which had more would positively rise in price." With all these causes of disturbance in the relations which the different products of labour bear to each other, It is obvious that no commodity can be a perfect standard by which to compare the varia tions in the value of other commodities; but as, in an advanced stage of society, labour cannot be the ordinary measure of value, some representative of labour must be selected, by which to carry on the exchanges of trade, and the more nearly it represents the amount of labour expended upon it, and the less that amount varies, the fitter 'will it be for a common standard of value.
The precious metals, or paper convertible into them, are the standards usually adopted. They are however articles of commerce varying in supply and demand, and in the quantity of labour required, nt diderent times, to produce them. They cannot therefore be invariable standards, but must fluctuate more or legs like other com modities. Practically, this variation is not, upon the whole, so great as in the MSC of other articles, but in the degree in which it prevails it makes gold and elver imperfect standards' of value. The circum stances and results of this imperfection and the means of obviating them are among the must important speculations of the political economist, but are more fitly treated of in other parte of this work. [Base; • BANKINO; CUSSENCY ; EXCLIANGE • WAGES.) (Adam Smith, Wealth of Nations; Principles of Political Erusomy and Taxation ; Mill, Elanests of Political Economy; Say, Ilidasse des