1906-7.] IGNORED DISTINCTIONS IN ECONOMICS. 307 
‘than one writer on this subject. The statement made by the French 
author, Gide, is very interesting. ‘‘Suppose,’’ he says, ‘‘that by some 
lucky miracle all products were to be multiplied so as to become as abun- 
dant as spring water, should we not have to regard this as an increase 
in wealth, nay, as the very climax of wealth? Yet all things, on account 
of their superabundance, would have lost all value, having no more value 
than so much spring water.’’ Healsosaysfurther: ‘This is the question 
which J. B. Say thought to be the most difficult in Political Economy, 
and which he stated thus: ‘Wealth being made up of the value of things 
which are possessed, how can it come about that a nation will be richer 
by lowering the price that is asked for these things? Prudhon, in his 
Contradictions Economiques, raised the same question and defied any 
serious economist to answer it.’ ”’ 
Smart, in his Theory of Value, page 13, gives a partial answer to this 
as follows: ‘‘Certain goods we have from nature, without money and with- 
out price, and the incessant effort of the industrial world is in the direction 
of bringing all goods into this category. The effort to cheapen production 
is nothing else than the effort to increase utility at the expense of value.” 
It is not to be wondered at that J. B. Say and Prudhon found them- 
selves in an economic cul-de-sac; for they tied themselves up in an utterly 
fallacious definition, confounding wealth with value. 
Division of labor and exchange are inseparably connected as the 
blades of a pair of scissors. Just as inseparably do exchange and value 
belong one to the other, the correct ratio of exchange being the proper 
value. Two conditions are essential to value, utility and scarcity. 
Value, therefore, may come in two different ways, either by adding the 
utility to something that is scarce, or by making something scarce which 
already has the utility. But these two conditions are not of like char- 
acter as an addend and an addend ; but are opposites as an addend and 
a subtrahend, or as wealth and poverty. To produce a locomotive is to 
add utility where the condition of scarcity already exists, therefore, the 
locomotive has value and this is an increase in wealth. When, however, 
water, which already possesses utility, becomes scarce, then it acquires 
value ; but this is an increase of poverty. 
A number of writers are now trying to prove that labor is the source 
of all wealth, while others are trying to prove the contrary. As many 
of these writers confound wealth with value, and as they pay no attention 
to the difference between the value of extension and the value of inten- 
sion, it is easy to see how inconclusive must be this controversy. 
