ON VARIATIONS IN THE VALUE OF THE MONETARY STANDARD. 161 



For further illastrationa and suggestions the reader is referred to the 

 writer's paper, On some new Methods of ascertaining Variation in general 

 Prices, in the ' Journal ' of the Royal Statistical Society for June 1888. It 

 is hoped that the familiarity of the arithmetic mean will not prevent 

 statisticians from attending to the reasons for preferring in certain 

 circumstances the Median. 



Section VII. 

 Bicardo's Method. 



Ricardo suggests a method of measuring variation in the value of 

 money, when he lays down that a commodity ' which at all times requires 

 the same sacrifice of toil and labour to produce it ' is invariable in value.' 

 From this point of view the Labour Standard is to be regarded as inde- 

 pendent and substantive, not subsidiary to the ' Consumption' (or any 

 other) Standard, as represented in the first report of the Committee. 

 The Labour Standard thus conceived and the Consumption Standard 

 are to each other as 'value' and 'riches' in Ricardo's terminology. 

 ' The labour of a million of men in manufactures will always produce the* 

 same value, but will not always produce the same riches .... A million of 

 men may produce double or treble the amount of riches of '■ necessaries, 

 conveniences, and amusements," in one state of society that they could 

 produce in another, but they will not on that account add anything to 

 value.' ^ The Consumption Standard measures the change of money 

 with respect to ' riches ' ; the Labour Standard with respect to ' real 

 value.' The former relates to the utility of consumption; the latter to 

 the disutility of toil. 



Ricardo only proposes the idea of an invariable commodity, of which 

 ' we have no knowledge, but may hypothetically argue and speak ^ about 

 it as if we had.' He does not assist us to ascertain the change in the 

 pecuniary worth of that hypothetical commodity. A more definite scheme 

 is suggested by the remarkable passage of Professor Marshall's evi- 

 dence before the Royal Commission on Gold and Silver, where he says, 

 speaking of appreciation of gold : ' When it is used as denoting a rise in 

 the real value of gold, I then regard it as measured by the diminution in 

 the power which gold has of purchasing labour of all kinds — that is, 

 not only manual labour, but the labour of business men and all others 

 engaged in industry of any kind.' 



It may be remarked on this that the Labour Standard and the Con- 

 sumption Standard present a certain analogy, the former standing in 

 much the same relation to the fundamental laws of Supply as the latter 

 to those of Demand. As before we posited as normal certain quan- 

 tities of purchasable commodities, and compared the pecuniary worth at 

 different epochs of that constant sum of commodities ; so now we should 

 posit certain amounts of work of various sorts, and compare the pecu- 

 niary wages required at different epochs for the same quantity of work. 

 Or, in other words, we should form the ratio of 'new' to 'old ' rate of 

 wages in each department of industry, and take the mean of this set 



' Principles, iii. Chapter XX. (On Value and Riclies). = Ibid. 



' ' And,' he adds, in the exclusive spirit -wliicli has characterised .almost every 

 propounder of an original method, ' may improve our knowledge of the science, by 

 showing distinctly the absolute inapplicability of all the standards which have been 

 hitherto adopted.' 



1889. M 



