cause. I have proved that by the law of the Creator, it is ordained that man shall live in society by the action of his fellow-man, and his fellow-man by his action, that is, by the conjoined operation of human will, and of human effort or labour.

In order to try the character of this doctrine respecting the cause, and the sole cause, of value, let the simple premises which I have laid down be subjected, in the first place, to a thorough examination. It will be found that value in exchange, which constitutes property or capital, cannot be formed by any other process than that of which I have given a constructive example; and then, in the second place, let any person, who is practically conversant with the subject, examine what the cause is by which his property or capital is affected, he will find that he is under the necessity of assigning the influence and action of demand as this cause. Thus: no demand, result - no value; demand,-result-value; increased demand without a corresponding increased supply,result increased value; diminished demand, supply remaining undiminished,—result-decreased value.

Every person conversant with trade-which is the exchange of all commodities- knows well that what affects his property, capital, or trade, is the bearing which supply and demand have upon the commodities in which he deals. He knows well that a great increased supply, taking place without a proportionate increased demand, the necessary result is, a destruction, in part, of the value of the commodities in which he deals, and hence that he must sell in the markets at a lower price; whilst, on the other hand, he knows, also, that a greatly increased demand taking place for the commodities in which he deals, without a proportionately increased supply being offered at the same time, the result is an enhancement in the value of his commodities. action of the law of relative proportions is in constant and

This

simultaneous operation, affecting, in one degree or another, all property, rendering the scale of value either higher or lower; and it is within this operation that the physical wellbeing or ill-being of mankind resides.

I treat thus minutely of the cause of value, because it constitutes that elementary part of the subject which is essential to be known, and to be admitted, before any correct advancement can be made in the knowledge of the science. Every student of Social and Political Science, and every statesman, must see that he can make no solid or satisfactory progress in a knowledge of the subjects with which he has to deal, unless that course of social facts which constitutes the cause of value be thoroughly established and clearly apprehended. It was, as I have already remarked, by a neglect of this great primary source of scientific truth, that the author of "The Wealth of Nations," and other writers on Political Economy who have expatiated in the same field, and who have followed, more or less, the track chosen by Adam Smith, the chief of whom are Dugald Stewart, Malthus, Ricardo, and M'Culloch, having been rendered incapable of giving a correct and full exposition of the subjects of which they have undertaken to treat, were led to introduce, as component elements in the creation of value, besides the two great principles of supply and demand, extraneous, irrelevant, and false matter, whereby errors were imported by them into the very rudiments of the science; these errors being of a character so formidable, as to vitiate the greater part of their inductions and conclusions. Every student of Political Economy who has entered upon his labour with a power of mind in any degree fit to sustain him in his undertaking, must have experienced insuperable difficulty when reading "The Wealth of Nations," and other works on the science, on account of the absence, to which I have now referred, of a true and luminous exposition of the cause of value.

The errors, and consequent confusion, to which I have just alluded, were, as I have shown in a preceding chapter, discovered and announced by Mr. Francis Horner, who was one of the few modern statesmen who have attempted to acquire a real serviceable knowledge of the science of Social and Political Economy. The defect in Adam Smith's treatment of the cause of value-which is the foundation-proposition of the whole science as it became apparent to Mr. Horner, as also to Dugald Stewart and other writers, will become equally apparent to every man who will conduct an examination of Dr. Smith's work with ability, perseverance, and due judgment.

The precise character of the error committed by Adam Smith consists in mixing up labour, the instrument by which all productions are acquired, with the commodity or production itself which is the subject-matter of exchange, and through which all value is constituted. I have shown that no value did or could arise simply by the operation of labour. I have shown that, under the first natural law and course, man had to provide himself with the means that were necessary for his subsistence, and with other commodities required for his comfort, by means of his own labour; and that in this condition of self-maintenance, or that which has been called the savage state of human existence, no value could be constituted; the term could not, in this state, have been suggested, or have been originated; for a man could not have exchanged any commodity with himself. Not until he had entered upon an agreed division of labour, and upon an exchange with another man of the commodity procured by him, for another commodity procured by another man, could Value have been constituted. It was under the law of Union-united labour, resulting in an exchange of the productions so acquired, that Value arose,

w

and has continued to be constituted. By this the great fact is proved to us, that man's material condition on earth is ordained to be a united, dependent, and social condition. All matter being first supplied and sustained under the providence of his Creator, this matter, so provided, has to be acquired, distributed, and enjoyed, under a law of united action, united labour, and united exchange of the productions of labour.

Adam Smith, having unhappily neglected to mark the important difference here pointed out between labour and the exchange of commodities, the productions or acquisitions of labour, ventured upon his course of reasoning whilst the main fundamental proposition - the Cause of Value - remained undiscovered and unworked by him. Consequently, he could not carry with him, in his onward course, the light and power of truth. Not having power to establish a just conclusion by means of evidence discerned and applied, he was under the necessity of assuming a conclusion without proof, for a conclusion of one kind or of another was indispensable for the construction of his course of reasoning and his argument. Being, then, in the difficulty just noticed, the celebrated writer hastily adopted his conclusion by means of the following passages. These are passages which, as I have before shown, have thrown the whole subject-matter of the science into a state of the deepest confusion, and which have perplexed and puzzled the minds of all readers who have directed to the subject any real or scientific attempt and examination :

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"The value of every commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities."

Again: "The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."

Again: "Labour was the first price, the original purchase-money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command."

Again:"Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can, at all times and places, be estimated and compared."

Again: "Labour, therefore, it appears evidently, is the only universal, as well as the only accurate, measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places."

It is not required that I should enter upon a minute analysation of the matter here presented by Adam Smith's treatment of the great subject- Value. The careful reader must perform this task for himself. I will content myself with the re-selection of one particular passage. This:- "Labour alone, never varying in its own value, is the ultimate and real standard by which the value of all commodities can, at all times and places, be estimated and compared."

Let the student of the science try, as Mr. Horner, his companion in study, Lord Webb Seymour, and as many other men also must have tried, what sense solid practical sense - he can extract from, or import into, the matter here advanced.

By treating the great proposition-the Cause of Value

* The Wealth of Nations, by Adam Smith, book 1, pp. 44, 48, 54.