81 



Although Eicardo and Adam Smith did not at first suffi- 

 ciently qualify their observations to avoid adverse criticism, 

 it is now manifest that their ideas regarding the origin of 

 price and equivalence of exchange require very little modifi- 

 cation to be accepted as true by the most advanced economic 

 thinkers of the present day. If we simply substitute " cost 

 of maris services," which embraces quality and effectiveness 

 of labour, iu plice of their original expression "quantity of 

 labour," even Gunton, the most recent of thorough exponents 

 of the true origin of the " Primary Law of Price," would 

 give assent to Eicardo's original stat. ment regarding " the 

 equivalence of exchange value," or, as he (Eicardo) states it, 

 " the rule which determines how much of oue (commodity) 

 shall be given for another depends almost exclusively on the 

 comparative quantity of labour expended on each." Substi- 

 tute cost of man's service " for quantity of labour," and we 

 have the true explanation of the origin of economic price or 

 the " primary law which regulates and determines the 

 respective ratios and prices at which . . . commodities 

 and services exchange with each other." 



Eicardo very clearly and succinctly establishes this funda- 

 mental truth as to the origin of value and ratio of exchange 

 in his Principles of Political Economy (chap. i. pp. 9, 10. 

 M'Culloch's new edition of " The Works of David Eicardo," 

 1888) in the following statement: — 



" There are some commodities, the value of which is 

 determined by their scarcity alone. No labour can increase 

 the quantity of such goods, and therefore their value cannot 

 be lowered by an increased supply. Some rare pictures, 

 scarce books and coins, wines of a peculiar quality, which can 

 be made only from grapes grown on a particular soil of which 

 there is a very limited quantity, are all of this descriptioa. 

 Their value a is wholly independent of the quantity of labour 

 originally necessary to produce them, and varies with the 

 varying wealth and inclination of those who are desirous to 

 possess them." 



" These commodities, however, form a very small part of 

 the mass of commodities daily exchanged in the market. By 

 far the greatest part of these goods (fully 99 per cent.) which 

 are the objects of desire are procured by labour ; and they 

 may be multiplied, nut in one country alone, but in many, 

 almost without any assignable limit, if we are disposed to 

 bestow the labour necessary to obtain them." 



"In speaking, then, of commodities, of their exchangeable 

 value, and of the laws which regulate their relative prices, b 

 We mean always such commodities only as can be increased in 



a. Fancy Price, as distinguished from Economic Price. 



o. Fully 99 per cent, of all commodities in exchange fall within this definition, 

 and are governed by the Primary Law which determines Economic Price, 



