It was not, however, till after long meditation, and the most careful consideration of the subject, that he finally adopted the measure proposed by the author of the Inquiry into the Wealth of Nations, and became a convert to the doctrine, that as "Labour was the first price, the original purchase money that was paid for all things,"[1] the value of every thing must be greater or less in proportion "as it is worth more or less of this original purchase money."'
That many eminent writers since the time of Adam Smith, should have rejected this measure, has probably arisen from their having given to the term value, a sense different from that which he gave to it, and which it is usually meant to express. According to their notion of value, it consists in the general power of purchasing,[2] or expresses the relation which commodities bear to each other, from which it would necessarily follow, that if the cost of producing all things were either increased or diminished, their value would nevertheless remain unaltered, provided they continued to exchange with each other in the same proportion as before; and by the same rule, that when a rise or fall takes place in any commodity or commodities, all other commodities must experience a corresponding fall or rise, or that, when some become cheaper, the rest must necessarily become dearer, and vice versa.
Now this definition makes the value of a commodity to depend as much upon the causes affecting all others which may be exchanged for
- ↑ Wealth of Nations, Book I. ch. v.
- ↑ It is true that Adam Smith has also defined value (Book I. ch. iv.) as the power of purchasing; but it is clear from the context, and from the whole tenor of his work, that he meant the power of purchasing which a commodity derives from causes peculiar to itself, and which depend upon the cost of procuring it. This limitation is most essential; but it has not been generally made.
