"In making labor the foundation of the value of commodities and the comparative quantity of labor which is necessary to their production, the rule which determines the respective quantities of goods which shall be given in exchange for each other, we must not be supposed to deny the accidental and temporary deviations of the actual or market price of commodities from this, their primary and natural price."(Vol.I, p.105, l. c.)
"It is the cost of production which must ultimately regulate the price of commodities, and not, as has been often said, the proportion between supply and demand."(Vol.II, p.253)
Lord Lauderdale had developed the variations of exchange value according to the law of supply and demand, or of scarcity and abundance relatively to demand. In his opinion the value of a thing can increase when its quantity decreases or when the demand for it increases; it can decrease owing to an increase of its quantity or owing to the decrease in demand. Thus the value of a thing can change through eight different causes, namely, four causes that apply to money or to any other commodity which serves as a measure of its value. Here is Ricardo's refutation:
"Commodities which are monopolized, either by an individual, or by a company, vary according to the law which Lord Laudersdale has laid down:
they fall in proportion as the sellers augment their quantity, and rise in proportion to the eagerness of the buyers to purchase them; their price has no necessary connexion with their natural value; but the prices of commodities, which are subject to competition, and whose quantity may be increased in any moderate degree, will ultimately depend, not on the state of demand and supply, but on the increased or diminished cost of their production."(Vol.II, p.259)
We shall leave it to the reader to make the comparison between this simple, clear, precise language of Ricardo's and M. Proudhon's rhetorical attempts to arrive at the determination of relative value by labor time.
Ricardo shows us the real movement of bourgeois production, which constitutes value. M. Proudhon, leaving the real movement out of account, "fumes and frets" in order to invent new processes and to achieve the reorganization of the world on a would-be new formula, which formula is no more than the theoretical expression of the real movement which exists and which is so well described by Ricardo. Ricardo takes his starting point from present-day society to demonstrate to us how it constitutes value -- M. Proudhon takes constituted value as his starting point to construct a new social world with the aid of this value. For him, M. Proudhon, constituted value must move around and become once more the constituting factor in a world already completely constituted according to this mode of evaluation. The determination of value by labor time, is, for Ricardo, the law of exchange value; for M. Proudhon. it is the synthesis of use value and exchange value. Ricardo's theory of values is the scientific interpretation of actual economic life;M. Proudhon's theory of values is the utopian interpretation of Ricardo's theory. Ricardo establishes the truth of his formula by deriving it from all economic relations, and by explaining in this way all phenomena, even those like ground rent, accumulation of capital and the relation of wages to profits, which at first sight seems to contradict it; it is precisely that which makes his doctrine a scientific system: M. Proudhon, who has rediscovered this formula of Ricardo's by means of quite arbitrary hypotheses, is forced thereafter to seek out isolated economic facts which he twists and falsifies to pass them off as examples, already existing applications, beginning of realization of his regenerating idea. (See our S.
