POLITICAL ECONOMY. 



as will tempt the owner to part with it. Fabulous 

 prices are accordingly sometimes paid for unique 

 wines, jewels, and similar valuables. 



Where the supply is practically limited, by the 

 owner or owners possessing either a natural or 

 an artificial monopoly, the exchangeable value 

 depends, in the manner already explained, on 

 the amount of price the purchaser is willing to 

 give ; and on a calculation by the monopolist 

 whether it will be more profitable, by limiting 

 the supply, to obtain a higher price, or, by in- 

 creasing the supply, to effect larger sales at a 

 lower price. 



When, however, the commodity is entirely the 

 produce of labour, unfettered either by natural or 

 by artificial monopoly, another important agency 

 comes into play, for it will be recollected that, 

 while the market value depends on the supply as 

 compared with the demand, the supply of any 

 particular commodity will, in the case supposed, 

 depend on the labourer giving his time to its 

 production, and that the prime end of the labourer 

 is to obtain, in return for the produce of his 

 labour, an adequate supply of the necessaries and 

 comforts of life. Accordingly, so soon as a com- 

 modity ceases to fetch in exchange enough to 

 meet this prime purpose for which the labourer 

 made it, he will leave off producing, till the 

 decrease in the supply so caused induces those 

 who are willing to pay a higher price to overbid 

 others in order to obtain the article, and till the 

 labourer be thus once more remunerated ade- 

 quately. It is the same with the employer of 

 labour and the capitalist ; as soon as a commodity 

 ceases to bring the price, to obtain which was the 

 purpose of the manufacturer and the capitalist in 

 spending their money on its manufacture, they 

 will stop producing that commodity. 



From all this, it follows that the minimum 

 exchangeable value to which a commodity tends, 

 in so far as referrible to the labour bestowed upon 

 it, is the amount that will adequately remunerate 

 the labourer that is, will enable him to supply 

 himself with the necessaries and ordinary comforts 

 of life. 



On the other hand, when the exchangeable 

 value of any commodity manufactured by labour 

 exceeds for a time what will afford the labourer 

 a fair remuneration, other labourers are tempted 

 to share in the benefit thus held out ; and soon, 

 by increasing the supply, the value of the com- 

 modity is reduced to its normal measure. 



If the market value of every commodity manu- 

 factured by labour tends, in its constant fluctua- 

 tion, to that medium which fulfils the prime 

 object of labour namely, the comfortable main- 

 tenance of the labourer it follows that the mar- 

 ketable value of all articles produced by labour 

 may, in the long-run, be measured by the amount 

 of labour bestowed upon them, and that they will 

 exchange with each other accordingly. But 

 though all tends to this normal level, market 

 values are in fact in constant fluctuation, articles 

 of rude manufacture occasionally fetching high 

 prices, of fine manufacture being occasionally 

 unsaleable ; for the passing moment, the price 

 depends strictly on the immediate supply and 

 demand ; it is only in the long-run that the tend- 

 ency to a level is seen. 



A similar course of remark might be offered on 

 the part capital has in determining exchangeable 



value. It presents a mixed case according as 

 capital is composed of natural objects existing 

 independently of "labour, or is itself composed of 

 savings from the products of labour. In the first 

 case being limited in supply it follows the rule 

 applicable to the exchangeable value of natural 

 products ; in the latter case, it is dependent on 

 the exchangeable value of labour. In either case, 

 however, it must be recollected that for the time 

 the price of the use of capital depends, like the 

 price of any other commodity, on the mutual 

 relation of supply and demand. 



Of Money as an Instrument of Exchange. 



In several of our illustrations of exchangeable 

 value, we have supposed one useful commodity 

 to be directly exchanged for another cloth for 

 coffee, fuel for wheat, &c. ; but such a mode of 

 exchange known as barter seldom takes place 

 in practice. Purchase and sale are usually 

 effected in money, the amount of which, given or 

 received, is termed the price of the article. 



Money is substantially a certain weight of the 

 metals, gold or silver, in a certain degree of 

 purity such, at least, is the money of civilised 

 countries ; in barbarous countries, it consists of 

 shells and other substances. 



Gold and silver, in themselves, possess market- 

 able value, apart altogether from their use as a 

 means of exchanging other goods, and that value 

 originally contributed to their usefulness as a 

 medium of exchange ; though now, perhaps, the 

 chief demand for them arises from their useful- 

 ness as a medium of exchange. 



The qualities fitting gold and silver to serve as 

 instruments of exchange, are chiefly these : high 

 marketable value in comparison with their bulk 

 and weight ; great durability ; and uniformity of 

 marketable value. 



It will be at once seen how advantageous such 

 qualities are in instruments of exchange. Grain, 

 for example, compared with them, is bulky and 

 difficult of transport, very perishable, and subject 

 to rapid and constant fluctuation in price. 



The high marketable value of gold and silver 

 as is also the case with diamonds and other jewels 

 originally arose from the scarcity of these 

 metals, combined with their beauty and their 

 durability ; but since gold and silver mines were 

 wrought on an extensive scale, the supply is com- 

 paratively abundant. Fortunately for the interests 

 of commerce, along with this increase in abund- 

 ance, first, the demand has kept about an even 

 pace with the supply ; second, labour in mining 

 for the precious metals cannot be indefinitely 

 reduced by artificial means ; and, on the whole, 

 the normal level of their exchangeable value, as 

 measured by the labour required for their pro- 

 duction, remains much the same. It can at least 

 be said, that in the supply and demand of gold 

 and silver, and in the labour required to produce 

 them, there is, within the limits of each generation 

 of man, less fluctuation than in any other com- 

 modity whatever. 



Hence the great fitness of these metals for 

 serving as a medium of exchange. In place of 

 each commodity being bartered for a measure of 

 other commodities, it is sold for money, which 

 in turn serves to purchase these other commod- 

 ities. 



475 



