Memorials and Other Papers — Complete

X. For which, Phćdrus, I shall feel greatly indebted to you. We are told of Trajan, that, in the camp exercises, he not only tolerated hard blows, but courted them; "alacer virtute militum, et lćtus quoties aut cassidi suć aut clypeo gravior ictus incideret. Laudabat quippe ferientes, hortabaturque ut auderent." When one of our theatres let down an iron curtain upon the stage as a means of insulating the audience from any fire amongst the scenery, and sent men to prove the strength of this curtain by playing upon it with sledge-hammers in the sight and hearing of the public, who would not have laughed at the hollowness of the mummery, if the blows had been gentle, considerate, and forbearing? A "make-believe" blow would have implied a "make- believe" hammer and a "make-believe" curtain. No!—hammer away, like Charles Martel; "fillip me with a three-man beetle;" be to me a malleus hćreticorum; come like Spenser's Talus—an iron man with an iron flail, and thresh out the straw of my logic; rack me; put me to the question; get me down; jump upon me; kick me; throttle me; put an end to me in any way you can.

Phćd. I will, I will, my dear friend; anything to oblige you; anything for peace. So now tie yourself to the stake, whilst we bait you. And you begin, Philebus; unmuzzle.

Phil. I shall be brief. The case of the hat is what I stand upon; and, by the way, I am much obliged to you, X., for having stated the question in that shape; it has furnished me with a very manageable formula for recalling the principle at issue. The wages alter from two different causes—in one case, because there is the same quantity of labor at a different rate; in another case, because there is a different quantity at the same rate. In the latter case, it is agreed that the alteration settles upon price; in the former case you affirm that it will not: I affirm that it will. I bring an argument to prove it; which argument you attempt to parry by another. But in this counter argument of yours it strikes me that there lurks a petitio principii. Indeed, I am sure of it. For observe the course of our reasoning. I charge it upon your doctrine as an absurd consequence— that, if the increase of wages must be paid out of profits, then this fund will at length be eaten out; and as soon as it is, there will be no fund at all for paying any further increase; and the production must cease. Now, what in effect is your answer? Why, that as soon as profits are all eaten up, the production will cease. And this you call reducing me to an absurdity. But where is the absurdity? Your answer is, in fact, an identical proposition; for, when you say, "As soon as profits are absorbed," I retort, Ay, no doubt "as soon" as they are; but when will that be? It requires no Ricardo to tell us that, when profits are absorbed, they will be absorbed; what I deny is, that they ever can be absorbed. For, as fast as wages increase, what is to hinder price from increasing pari passu? In which case profits will never be absorbed. It is easy enough to prove that price will not increase, if you may assume that profits will not remain stationary. For then you have assumed the whole point in dispute; and after that, of course you have the game in your own hands; since it is self-evident that if anybody is made up of two parts P and W, so adjusted that all which is gained by either must be lost by the other, then that body can never increase.

Phćd. Nor decrease.

Phil. No, nor decrease. If my head must of necessity lose as much weight as my trunk gains, and vice versa, then it is a clear case that I shall never be heavier. But why cannot my head remain stationary, whilst my trunk grows heavier? This is what you had to prove, and you have not proved it.

Phćd. O! it's scandalous to think how he has duped us; his "reductio" turns out to the merest swindling.

X. No, Phćdrus, I beg your pardon. It is very true I did not attempt to prove that your head might not remain stationary; I could not have proved this directly, without anticipating a doctrine out of its place; but I proved it indirectly, by showing that, if it were supposed possible, an absurdity would follow from that supposition. I said, and I say again, that the doctrine of wages will show the very supposition itself to be absurd; but, until we come to that doctrine, I content myself with proving that, let that supposition seem otherwise ever so reasonable (the supposition, namely, that profits may be stationary whilst wages are advancing), yet it draws after it one absurd consequence, namely, that a thing may be bigger than that to which it is confessedly equal. Look back to the notes of our conversation, and you will see that this is as I say. You say, Philebus, that I prove profits in a particular case to be incapable of remaining stationary, by assuming that price cannot increase; or, if I am called upon to prove that assumption—namely, that price cannot increase—I do it only by assuming that profits in that case are incapable of remaining stationary. But, if I had reasoned thus, I should not only have been guilty of a petitio principii (as you alleged), but also of a circle. Here, then, I utterly disclaim and renounce either assumption: I do not ask you to grant me that price must continue stationary in the case supposed; I do not ask you to grant me that profits must recede in the case supposed. On the contrary, I will not have them granted to me; I insist on your refusing both of these principles.

Phil. Well, I do refuse them.

Phćd. So do I. I'll do anything in reason as well as another. "If one knight give a testril—" [Footnote: Sir Andrew Aguecheek, in "Twelfth Night."]

X. Then let us suppose the mines from which we obtain our silver to be in England.

Phćd. What for? Why am I to suppose this? I don't know but you have some trap in it.

X. No; a Newcastle coal-mine, or a Cornwall tin-mine, will answer the purpose of my argument just as well. But it is more convenient to use silver as the illustration; and I suppose it to be in England simply to avoid intermixing any question about foreign trade. Now, when the hat sold for eighteen shillings, on Mr. Ricardo's principle why did it sell for that sum?

Phil. I suppose, because the quantity of silver in that sum is assumed to be the product of four days' labor in a silver-mine.

X. Certainly; because it is the product of the same quantity of labor as that which produced the hat. Calling twenty shillings, therefore, four ounces of silver, the hat was worth nine tenths of four ounces. Now, when wages advance from twelve shillings to fourteen shillings, profits (you allege) will not pay this advance, but price. On this supposition the price of the hat will now be—what?

Phil. Twenty shillings; leaving, as before, six shillings for profit.

X. Six shillings upon fourteen shillings are not the same rate of profit as six shillings upon twelve shillings; but no matter; it does not affect the argument. The hat is now worth four entire ounces of silver, having previously been worth four ounces minus a tenth of four ounces. But the product of four days' labor in a silver-mine must also advance in value, for the same cause. Four ounces of silver, which is that product, will now have the same power or value as 22.22_s_. had before. Consequently the four ounces of silver, which had previously commanded in exchange a hat and the ninth of a hat, will now command a hat and two ninths, fractions neglected. Hence, therefore, a hat will, upon any Anti-Ricardian theory, manifestly buy four ounces of silver; and yet, at the same time, it will not buy four ounces by one fifth part of four ounces. Silver and the denominations of its qualities, being familiar, make it more convenient to use that metal; but substitute lead, iron, coal, or anything whatsoever—the argument is the same, being in fact a universal demonstration that variations in wages cannot produce corresponding variations in price.

Phćd. Say no more, X.; I see that you are right; and it's all over with our cause; unless I retrieve it. To think that the whole cause of the Anti-Ricardian economy should devolve upon me! that fate should ordain me to be the Atlas on whose unworthy shoulders the whole system is to rest! This being my destiny, I ought to have been built a little stronger. However, no matter. I heartily pray that I may prove too strong for you; though, at the same time, I am convinced I shall not. Remember, therefore, that you have no right to exult if you toss and gore me, for I tell you beforehand that you will. And, if you do, that only proves me to be in the right, and a very sagacious person; since my argument has all the appearance of being irresistible, and yet such is my discernment that I foresee most acutely that it will turn out a most absurd one. It is this: your answer to Philebus issues in this—that a thing A is shown to be at once more valuable and yet not more valuable than the same thing B. Now, this answer I take by the horns; it is possible for A to be more and yet not more valuable than the same thing. For example, my hat shall be more valuable than the gloves; more valuable, that is, than the gloves were: and yet not more valuable than the gloves; not more valuable, that is, than the gloves now are. So of the wages; all things preserve their former relations, because all are equally raised. This is my little argument. What do you think of it? Will it do?

X. No.

Phćd. Why, so I told you.

X. I have the pleasure, then, to assure you that you were perfectly right. It will not do. But I understand you perfectly. You mean to evade my argument that the increase of wages shall settle upon profits; according to this argument, it will settle upon price, and not upon profits; yet again on price in such a way as to escape the absurdity of two relations of value existing between the very same things. But, Phćdrus, this rise will be a mere metaphysical one, and no real rise. The hat, you say, has risen; but still it commands no more of the gloves, because they also have risen. How, then, has either risen? The rise is purely ideal.

Phćd. It is so, X.; but that I did not overlook; for tell me—on Mr. Ricardo's principle, will not all things double their value simultaneously, if the quantity of labor spent in producing all should double simultaneously?

X. It will, Phćdrus.

Phćd. And yet nothing will exchange for more or less than before.

X. True; but the rise is not ideal, for all that, but will affect everybody. A pound of wheat, which previously bought three pounds of salt, will still buy three pounds; but, then, the salt-maker and the wheat-maker will have only one pound of those articles where before he had two. However, the difference between the two cases cannot fully be understood, without a previous examination of certain distinctions, which I will make the subject of our next dialogue; and the rather, because, apart from our present question, at every step we should else be embarrassed, as all others have been, by the perplexity attending these distinctions. Meantime, as an answer to your argument, the following consideration will be quite sufficient. The case which your argument respects is that in which wages are supposed to rise? Why? In consequence of a real rise in corn or something else. As a means of meeting this rise, wages rise; but the increased value of wages is only a means to an end, and the laborer cares about the rise only in that light. The end is—to give him the same quantity of corn, suppose. That end attained, he cares nothing about the means by which it is attained. Now, your ideal rise of wages does not attain this end. The corn has really risen; this is the first step. In consequence of this, an ideal rise follows in all things, which evades the absurdities of a real rise—and evades the Ricardian doctrine of profits; but, then, only by also evading any real rise in wages, the necessity of which (in order to meet the real rise in corn) first led to the whole movement of price. But this you will more clearly see after our next dialogue.

* * * * * DIALOGUE THE FOURTH ON THE USE AND ABUSE OF TWO CELEBRATED DISTINCTIONS IN THE THEORY OF VALUE

X. Now, gentlemen, I come to a question which on a double account is interesting: first, because it is indispensable to the fluency of our future progress that this question should be once for all decided; secondly, because it furnishes an experimentum crucis for distinguishing a true knowledge of Mr. Ricardo's theory from a spurious or half-knowledge. Many a man will accompany Mr. Ricardo thus far, and will keep his seat pretty well until he comes to the point which we have now reached—at which point scarcely one in a thousand will escape being unhorsed.

Phćd. Which one most assuredly will not be myself. For I have a natural alacrity in losing my seat, and gravitate so determinately to the ground, that (like a Roman of old) I ride without stirrups, by way of holding myself in constant readiness for projection; upon the least hint, anticipating my horse's wishes on that point, and throwing myself off as fast as possible; for what's the use of taking the negative side in a dispute where one's horse takes the affirmative? So I leave it to Philebus to ride through the steeple-chase you will lead him; his be the honor of the day—and his the labor.

X. But that cannot be; Philebus is bound in duty to be dismounted, for the sake of keeping Mr. Malthus with many others in countenance. For at this point, Phćdrus, more than at any other almost, there is a sad confusion of lords and gentlemen that I could name thrown out of the saddle pell-mell upon their mother earth.

Phil.

"So they among themselves in pleasant vein Stood scoffing."

I suppose I may add—

"Heightened in their thoughts beyond All doubts of victory."

Meantime, what is it you allude to?

X. You are acquainted, I doubt not, Philebus, with the common distinction between real and nominal value; and in your judgment upon that distinction I presume that you adopt the doctrine of Mr. Malthus.

Phil. I do; but I know not why you should call it the doctrine of Mr. Malthus; for, though he has reurged it against Mr. Ricardo, yet originally it belongs to Adam Smith.

X. Not so, Philebus; a distinction between real and nominal value was made by Adam Smith, but not altogether the distinction of Mr. Malthus. It is true that Mr. Malthus tells us ("Polit. Econ.," p. 63) that the distinction is "exactly the same." But in this he is inaccurate; for neither is it exactly the same; nor, if it had been, could Mr. Malthus have urged it in his "Political Economy" with the same consistency as its original author. This you will see hereafter. But no matter; how do you understand the distinction?

Phil. "I continue to think," with Mr. Malthus, and in his words, "that the most proper definition of real value in exchange, in contradistinction to nominal value in exchange, is the power of commanding the necessaries and conveniences of life, including labor, as distinguished from the power of commanding the precious metals."

X. You think, for instance, that if the wages of a laborer should in England be at the rate of five shillings a day, and in France of no more than one shilling a day, it could not, therefore, be inferred that wages were at a high real value in England, or a low real value in France. Until we know how much food, &c., could be had for the five shillings in England, and how much in France for the one shilling, all that we could fairly assert would be, that wages were at a high nominal value in England and at a low nominal value in France; but the moment it should be ascertained that the English wages would procure twice as much comfort as the French, or the French twice as much as the English, we might then peremptorily affirm that wages were at a high real value in England on the first supposition, or in France on the second:—this is what you think?

Phil. It is, and very fairly stated, I think this, in common with Mr. Malthus; and can hold out but little hope that I shall ever cease to think it.

X.

"Why, then, know this, Thou think'st amiss; And, to think right, thou must think o'er again." [Footnote: Suckling's well-known song.]

Phćd. But is it possible that Mr. Ricardo can require me to abjure an inference so reasonable as this? If so, I must frankly acknowledge that I am out of the saddle already.

X. Reasonable inference? So far from that, there is an end of all logic if such an inference be tolerated. That man may rest assured that his vocation in this world is not logical, who feels disposed (after a few minutes' consideration) to question the following proposition,—namely: That it is very possible for A continually to increase in value—in real value, observe—and yet to command a continually decreasing quantity of B; in short, that A may acquire a thousand times higher value, and yet exchange for ten thousand times less of B.

Phćd. Why, then, "chaos is come again!" Is this the unparadoxical Ricardo?

X. Yes, Phćdrus; but lay not this unction to your old prejudices, which you must now prepare to part with forever, that it is any spirit of wilful paradox which is now speaking; for get rid of Mr. Ricardo, if you can, but you will not, therefore, get rid of this paradox. On any other theory of value whatsoever, it will still continue to be an irresistible truth, though it is the Ricardian theory only which can consistently explain it. Here, by the way, is a specimen of paradox in the true and laudable sense—in that sense according to which Boyle entitled a book "Hydrostatical Paradoxes;" for, though it wears a primâ facie appearance of falsehood, yet in the end you will be sensible that it is not only true, but true in that way and degree which will oblige him who denies it to maintain an absurdity. Again, therefore, I affirm that, when the laborer obtains a large quantity of corn, for instance, it is so far from being any fair inference that wages are then at a high real value, that in all probability they are at a very low real value; and inversely I affirm, that when wages are at their very highest real value, the laborer will obtain the very smallest quantity of corn. Or, quitting wages altogether (because such an illustration would drive me into too much anticipation), I affirm universally of Y (that is, of any assignable thing whatsoever), that it shall grow more valuable ad infinitum, and yet by possibility exchange for less and less ad infinitum of Z (that is, of any other assignable thing).

Phćd. Well, all I shall say is this,—am I in a world where men stand on their heads or on their feet? But there is some trick in all this; there is some snare. And now I consider—what's the meaning of your saying "by possibility"? If the doctrine you would force upon me be a plain, broad, straightforward truth, why fetter it with such a suspicious restriction?

X. Think, for a moment, Phćdrus, what doctrine it is which I would force upon you; not, as you seem to suppose, that the quantity obtained by Y is in the inverse ratio of the value of Y; on the contrary, if that were so, it would still remain true that an irresistible inference might be drawn from the quantity purchased to the value of the thing purchasing, and vice versa, from the value of the thing purchasing to the quantity which it would purchase. There would still be a connection between the two; and the sole difference between my doctrine and the old doctrine would be this—that the connection would be no longer direct (as by your doctrine), but inverse. This would be the difference, and the sole difference. But what is it that I assert? Why, that there is no connection at all, or of any kind, direct or inverse, between the quantity commanded and the value commanding. My object is to get rid of your inference, not to substitute any new inference of my own. I put, therefore, an extreme case. This case ought by your doctrine to be impossible. If, therefore, it be not impossible, your doctrine is upset. Simply as a possible case, it is sufficient to destroy you. But, if it were more than a possible case, it would destroy me. For if, instead of demonstrating the possibility of such a case, I had attempted to show that it were a universal and necessary case, I should again be introducing the notion of a connection between the quantity obtained and the value obtaining, which it is the very purpose of my whole argument to exterminate. For my thesis is, that no such connection subsists between the two as warrants any inference that the real value is great because the quantity it buys is great, or small because the quantity it buys is small; or, reciprocally, that, because the real value is great or small, therefore the quantities bought shall be great or small. From, or to, the real value in these cases, I contend that there is no more valid inference, than from, or to, the nominal value with which it is contrasted.

Phil. Your thesis, then, as I understand it, is this: that if A double its value, it will not command double the quantity of B. I have a barouche which is worth about six hundred guineas at this moment. Now, if I should keep this barouche unused in my coach-house for five years, and at the end of this term it should happen from any cause that carriages had doubled in value, my understanding would lead me to expect double the quantity of any commodity for which I might then exchange it, whether that were money, sugar, besoms, or anything whatsoever. But you tell me—no. And vice versa, if I found that my barouche at the end of five years obtained for me double the quantity of sugar, or besoms, or political economists, which it would now obtain, I should think myself warranted in drawing an inference that carriages had doubled their value. But you tell me—no; "non valet consequentia."

X. You are in the right, Phćdrus; I do tell you so. But you do not express my thesis quite accurately, which is, that if A double its value, it will not therefore command double the former quantity of B. It may do so; and it may also command five hundred times more, or five hundred times less.

Phćd. O tempora! O mores! Here is my friend X., that in any other times would have been a man of incorruptible virtue; and yet, in our unprincipled age, he is content to barter the interests of truth and the "majesty of plain-dealing" for a brilliant paradox, or (shall I say?) for the glory of being reputed an accomplished disputant.

X. But, Phćdrus, there could be little brilliancy in a paradox which in the way you understand it will be nothing better than a bold defiance of common sense. In fact, I should be ashamed to give the air of a paradox to so evident a truth as that which I am now urging, if I did not continually remind myself that, evident as it may appear, it yet escaped Adam Smith. This consideration, and the spectacle of so many writers since his day thrown out and at a fault precisely at this point of the chase, make it prudent to present it in as startling a shape as possible; in order that, the attention being thoroughly roused, the final assent may not be languid or easily forgotten. Suffer me, therefore, Phćdrus, in a Socratic way, to extort an assent from your own arguments—allow me to drive you into an absurdity.