FullReads

Phed
. Nothing at all, X. But what next?

X
. Next, let us suppose a case in which the labor of producing hats shall increase, not in value (as in the preceding case), but in quantity. Labor is still at its old value of three shillings a day; but, from increased difficulty in any part of the process, five days’ labor are now spent on the production of a hat instead of four. In this second case, Phaedrus, how much will be paid to the laborer?

Phed
. Precisely as much as in the first case: that is, fifteen shillings.

X
. True: the laborer on hats receives fifteen shillings in the second case as well as in the first; but in the first case for four days’ labor, in the second for five: consequently, in the second case, wages (or the value of labor) have not risen at all, whereas in the first case wages have risen by twenty-five per cent.

Phed
. Doubtless: but what is your inference?

X
. My inference is as follows: according to yourself and Adam Smith, and all those who overlook the momentous difference between the quantity and the value of labor, fancying that these are mere varieties of expression for the same thing, the price of hats ought, in the two cases stated, to be equally raised, namely, three shillings in each case. If, then, it be utterly untrue that the price of hats would be equally raised in the two cases, it will follow that an alteration in the value of the producing labor, and an alteration in its quantity, must terminate in a very different result; and, consequently, the one alteration cannot be the same as the other, as you insisted.

Phed
. Doubtless.

X
. Now, then, let me tell you, Phaedrus, that the price of hats would not be equally raised in the two cases: in the second case, the price of a hat will rise by three shillings, in the first case it will not rise at all.

Phed
. How so, X.? How so? Your own statement supposes that the laborer receives fifteen shillings for four days, instead of twelve shillings; that is, three shillings more. Now, if the price does not rise to meet this rise of labor, I demand to know whence the laborer is to obtain this additional three shillings. If the buyers of hats do not pay him in the price of hats, I presume that the buyers of shoes will not pay him. The poor devil must be paid by somebody.

X
. You are facetious, my friend. The man must be paid, as you say; but not by the buyers of hats any more than by the buyers of shoes: for the price of hats cannot possibly rise in such a case, as I have said before. And, that I may demonstrate this, let us assume that when the labor spent on a hat cost twelve shillings, the rate of profits was fifty per cent.; it is of no consequence what rate be fixed on: assuming this rate, therefore, the price of a hat would, at that time, be eighteen shillings. Now, when the quantity of labor rose from four to five days, this fifth day would add three shillings to the amount of wages; and the price of a hat would rise in consequence from eighteen shillings to a guinea. On the other hand, when the value of labor rose from twelve shillings to fifteen shillings, the price of a hat would not rise by one farthing, but would still continue at eighteen shillings.

Phed
. Again I ask, then, who is to pay the three shillings?

X
. The three shillings will be paid out of profits.