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Phed
. The matter is clear beyond what I require; yet, X., for the satisfaction of my “game” friend Philebus, give us a proof or two ex abundanti by applying what you have said to cases in Adam Smith or others.

X
. In general it is clear that, if the value of A increases in a duplicate ratio, yet if the value of B increases in a triplicate ratio, so far from commanding a greater quantity of B, A shall command a smaller quantity; and if A continually goes on squaring its former value, yet if B continually goes on cubing its former value, then, though A will continually augment in value, yet the quantity which it will command of B shall be continually less, until at length it shall become practically equal to nothing.

[Footnote: The reader may imagine that there is one exception to this case: namely, if the values of A and B were assumed at starting to be = 1; because, in that case, the squares, cubes, and all other powers alike, would be = I; and thus, under any apparent alteration, the real relations of A and B would always remain the same. But this is an impossible and unmeaning case in Political Economy, as might easily be shown. ]

Hence, therefore, I deduce,

1. That when I am told by Adam Smith that the money which I can obtain for my hat expresses only its nominal value, but that the labor which I can obtain for it expresses its real value–I reply, that the quantity of labor is no more any expression of the real value than the quantity of money; both are equally fallacious expressions, because equally equivocal. My hat, it is true, now buys me x quantity of labor, and some years ago it bought x/2 quantity of labor. But this no more proves that my hat has advanced in real value according to that proportion, than a double money price will prove it. For how will Adam Smith reply to him who urges the double money value as an argument of a double real value? He will say–No; non valet consequentia. Your proof is equivocal; for a double quantity of money will as inevitably arise from the sinking of money as from the rising of hats. And supposing money to have sunk to one fourth of its former value, in that case a double money value–so far from proving hats to have risen in real value–will prove that hats have absolutely fallen in real value by one half; and they will be seen to have done so by comparison with all things which have remained stationary; otherwise they would obtain not double merely, but four times the quantity of money price. This is what Adam Smith will reply in effect. Now, the very same objection I make to labor as any test of real value. My hat now obtains x labor; formerly it obtained only one half of
X
. Be it so; but the whole real change may be in the labor; labor may now be at one half its former value; in which case my hat obtains the same real price; double the quantity of labor being now required to express the same value. Nay, if labor has fallen to one tenth of its former value, so far from being proved to have risen one hundred per cent. in real value by now purchasing a double quantity of labor, my hat is proved to have fallen to one fifth of its former value; else, instead of buying me only x labor, which is but the double of its former value (x/2), it would buy me 5 x, or ten times its former value.

Phil
. Your objection, then, to the labor price, as any better expression of the real value than the money price, would be that it is an equivocal expression, leaving it doubtful on which side of the equation the disturbance had taken place, or whether on both sides. In which objection, as against others, you may be right; but you must not urge this against Adam Smith; because, on his theory, the expression is not equivocal; the disturbance can be only on one side of the equation, namely, in your hat. For as to the other side (the labor), that is secured from all disturbance by his doctrine that labor is always of the same value. When, therefore, your hat will purchase x quantity of labor instead of half x, the inference is irresistible that your hat has doubled its value. There lies no appeal from this; it cannot be evaded by alleging that the labor may have fallen, for the labor cannot fall.