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_X_. No, Phaedrus, 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.
_Phaed_. 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.
_Phaed_. 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.
_Phaed_. 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?
_Phaed_. 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, Phaedrus, 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.
_Phaed_. 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, Phaedrus.
_Phaed_. 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.
_Phaed_. 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, Phaedrus, 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.
"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.
_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.
"Why, then, know this, Thou think'st amiss; And, to think right, thou must think o'er again."
[Footnote: Suckling's well-known song.]
_Phaed_. 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.
_Phaed_. Why, then, "chaos is come again!" Is this the unparadoxical Ricardo?
_X_. Yes, Phaedrus; 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 _prima 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).
_Phaed_. 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?