Page images
PDF
EPUB
[ocr errors]

posed that the denunciation of socialistic doctrines would be less passionate and declamatory.

Space does not permit a description of the various modifications of socialistic doctrines which have been propounded in France by Fourier and St Simon, and in England by Robert Owen. For a detailed and most interesting account of these schemes, and of the manner in which modifications of them have been carried into practice in the American Communistic Societies, the reader is recommended to turn to M. Reybaud's Les Réformateurs Modernes, to Mr A. J. Booth's works on Saint-Simon and Robert Owen, and to Mr Nordhoff's Communistic Societies of the United States. There is also a short and interesting sketch of the leading socialistic schemes of the present century in Mr J. S. Mill's Principles of Political Economy (pp. 245-263, vol. 1). It is important to remember that socialism, or, as it is sometimes called, communism, has no connection with the principles of the commune of Paris. The name that was given to the section of the French people who, in the year 1871, resisted the authority of the Versailles Government, was derived from the demand they made for the communal, i.e. municipal independence of Paris. None of the leaders of that party upheld socialistic principles.

QUESTIONS ON THE INTRODUCTORY REMARKS OF
SECTION II. On the Exchange of Wealth.

I. What is Socialism?

2. What economic disadvantages are connected with Socialism?

3. Name some of the principal promoters of socialistic theories.

I. Do you think Socialism would interfere with the present division of labour? If every one received the same reward, who would do the disagreeable work?

2. If Socialism caused diminished production and a multiplication of the consumers of wealth, would it ultimately benefit even the very poorest?

CHAPTER I. Value and Price.

A thorough comprehension of the terms "value" and "price," their difference and their relation to each other, is essential to a firm grasp of nearly all economic truths.

Definition of Value. The value of any commodity is estimated by comparing it with other commodities, or by ascertaining the quantity of other commodities for which it will exchange. Thus if a pound of tea will exchange for four pounds of beef, it may be said that the value of a pound of tea is four pounds of beef. It is therefore evident that the term "value" implies a comparison; for when it is said that the value of a pound of tea is four pounds of beef a comparison is made between beef and tea.

As value implies a comparison, it is also evident that the value of a commodity varies from either of two causes -from something having its source in the particular commodity, or from something having its source in the commodities for which it is exchanged; or, as it has elsewhere been expressed, the value of a commodity varies from either intrinsic or extrinsic causes. For instance, tea may increase in value through a diminution in the supply; this would be a variation produced by an intrinsic cause. Or it may increase in value owing to a decrease in the value of some commodity for which it is exchanged, such as cloth; this would be a variation produced by an extrinsic cause. From this conception of value as a relation existing among commodities in general, it necessarily

follows that there never can be a general rise or fall in values. For the expression "a general rise in the value of commodities" implies that all commodities will exchange for more of all other commodities; and this is as absurd as saying that every tree in a garden is higher than every other tree. When there is a rise in the value of any commodity there is a corresponding fall in the value of some other commodity. Thus if it is said that the value of meat is greater now than it was twenty years ago, it is virtually affirmed that a given quantity of meat will now exchange for a larger quantity of some other commodity, such as corn, than it would twenty years ago. In this case the value of corn as compared with meat has declined. Value also implies exchange, for it is by ascertaining the number of other commodities for which any particular article will exchange, that its value is determined.

Barter as a medium of exchange. In some barbarous communities all buying and selling is carried on without the use of money, by the exchange of commodities. Thus if one man had more food than he wished to consume he would seek to exchange it with some other man who could give him in return some article which he required, such as a coat or a set of bows and arrows. This method of exchange, some modern examples of which could be suggested by any schoolboy, is called barter; it is necessarily very clumsy, and as long as it is the sole means of exchange in any country commerce is always extremely restricted. The inconvenience arising from barter suggested the use of money. A substance was by universal consent selected to serve as a measure of the value of all other commodities and also as a medium of exchange. By the use of this substance the necessity of barter was obviated. The man who had more oxen than he required and who wished to obtain clothing or armour in exchange

for them, was no longer obliged to seek some other man who was willing to make such an exchange with him; he simply had to sell his oxen to any one who was willing to purchase them for so much money; and with this money he could purchase the other commodities which he required from any persons who were willing to dispose of them.

A Definition of Price. The value of a commodity estimated in money is termed its price. Price, therefore, has been defined as a particular case of value; for, as previously stated, the value of a commodity is estimated by the quantity of other commodities for which it will exchange. If therefore a commodity, such as a yard of cloth, will exchange for five shillings, it may truly be said that the value of a yard of cloth is 5s.; but because money has been selected to serve as a universal measure of value and medium of exchange, it is more convenient to give another name to its exchange power. The sum of money for which a commodity will exchange is therefore called its price.

When the price of a commodity such as meat is spoken of, a comparison is made between meat and the precious metals; but when the value of meat is spoken of, a comparison is made between meat and all other commodities. Hence it is evident that though there cannot be a general rise or fall in values, there can be a general rise or fall in prices, because it is quite possible that various circumstances might cause all commodities to exchange for an increased or decreased amount of money. For instance, if the money circulating in any particular country were suddenly doubled, while population and trade remained stationary, there would inevitably be a general rise in prices.

From the above definitions it is proved that the value of all commodities except money would not necessarily

be affected if prices were doubled or trebled. Such an event would not effect any change in the relations of various commodities to each other. If, formerly, a yard of velvet was worth 3 lbs. of tea, the relative value of these commodities would not be disturbed if the tea were 75. instead of 3s. 6d. a lb., and the velvet 21s. a yard instead of 10s. 6d. It is therefore evident that a rise or fall of general prices does not affect the value of any commodity except money. If there is a rise in prices an increased amount of money has to be given in exchange for commodities; or, in other words, the value of money has decreased. If, on the other hand, prices fall, the same amount of money will exchange for an increased quantity of other commodities, or, in other words, the value of money has increased. These considerations, however, lead to a further explanation of the nature and functions of money, which must be deferred to the next chapter.

QUESTIONS ON CHAPTER I. Value and Price.

I. What is value?

2. Prove that there cannot be a general rise or fall in values.

3. What is meant by bartering commodities?

4. By what means has the necessity for barter been obviated?

5. What is Price?

6. Can there be a general rise or fall in prices?

7. If prices were suddenly doubled what would be the effect of such a change on the value of commodities?

I. Is a rise in the value of bread resulting from a bad harvest produced by an extrinsic or an intrinsic cause? 2. Is a country richer if the prices of all commodities rise?

« PreviousContinue »