Reviews of the Theory of Political Economy

This book claims to “call in question not a few of the favourite doctrines of economists.” Its main purpose is to substitute for Mill’s Theory of Value the doctrine that “value depends entirely upon utility.” The rate of exchange of two commodities will, when the equilibrium has been attained, be such that the utility to each individual of the last portion of the commodity which he obtains is only just equal to that of the last portion of the other commodity which at this rate he gives in exchange for it. The utility of a commodity is in part “prospective,” that is, dependent on the benefit which will at a future time accrue from its possession: and this depends partly upon the difficulty that there might be in obtaining something before that time to supply its place. Though “labour is often found to determine value,” it yet does so “only in an indirect manner by varying the degree of the utility of the commodity through an increase in the supply.” Bearing in mind what has been said about prospective utility, it is almost startling to find that the author regards the Ricardian theory as maintaining labour to be the origin of value in a sense inconsistent with this last position. But the language of Ricardo on this point was loose with system: and that of many of his more prominent followers differs from his only in that its looseness is not systematic. By a natural reaction, attempts have been made by a series of able men to found the theory of value exclusively upon the neglected truth.