This, in outline, is the socialist programme of the future for the valuation of goods, -- although, of course, not expressed in the original language of its authors. In my opinion there has never been, in the whole course of history, a more important change contemplated in the social order than that now desired in economic life; and never has plan of alteration been more imperfectly thought out. To change a feudal kingdom into a modern administration, or a monarchy into a republic, or an aristocracy into a democracy, would be nothing to this; for it is the attempt at an economic revolution which would affect not only those few who are interested in political matters, but the whole body of the people, -- affect them, too, just where they are most strongly conscious of their own interests. Dreams of political *******, of equality, of brotherhood, even the religious dreams of a kingdom of God on the earth, however fantastically tricked out, have never betrayed so imperfect a knowledge of their object, as does the socialist theory of value. These have at least the excuse that they appeal to feelings of human nature which may soar to unknown heights, and which, of their very nature, give nourishment to the most extravagant expectations.
But value is a thing for the most unimpassioned thought. Here it is wrong for any one to let imagination speak instead of reason, -- wrong for the academic writer, and ever so much more wrong for the social reformer and agitator. Not for one day could the economic state of the future be administered according to any such reading of value; indeed the first preliminary arrangements for its introduction would show its utter uselessness.
To a certain extent, however, the socialists are justified by their very opponents. The idea of labour value, and many other ideas of socialist theory, originated among the bourgeois economists, and were found by the leaders of the labour party to be, theoretically, perfectly developed: it only refined to make a practical application of them for the benefit of the socialist party. It was hard not to make use of the advantage thus put into their hands. If it be acknowledged that labour alone creates value, it seems impossible to deny the claim that the labourer alone should enjoy the value. In the academic struggle the socialists undoubtedly got an important tactical advantage through the unqualified acceptance of that theory -- the theory held by a large section of their opponents, and a section which, under the circumstances, might be considered the most formidable.
If all the tremendous conflict of interests could have been ended by the arguments used by the spokesmen of the socialist party in their wordy warfare, at a certain period of the literary development the victory of socialism would probably have been complete. But, of course, what was good enough in argument would have broken down in face of facts, for no amount of plausibility can impose on them, -- and, after vanquishing their opponents with one theory, the socialists would have required to make up another to support their position.
In the socialist theory of value pretty nearly everything is wrong. The origin of value, which lies in utility and not in labour, is mistaken. The relation of supply to demand -- that fact which impels us to attribute utility to goods, and upon whose fluctuations depend, in the last resort, the fluctuations in amount of value -- is overlooked. The objects to which value attaches are not all embraced, for among those must be included productive land and capital, both as elements in the calculation of costs, and also per se. And the service rendered by value in economic life is only half understood, inasmuch as the most essential part of it, the material control of economy, is neglected.
All of this we shall require, -- now that we have made acquaintance with the elementary phenomena, -- to demonstrate in the circumstances of production. In particular we shall have to show that, in the natural order of economy, labour is valued according to its utility, value attaches to land and capital, and land rent, as well as interest on capital, is calculated among costs. If this were to be neglected production would become chaos.
