(3.ii.7) Here motives arise, to diminish the quantity of corn, and increase the quantity ofcloth; because the men who have been producing corn, and purchasing cloth, can obtain more cloth, bytransferring their means of production from the one to the other. As soon, again, as no morecloth can be obtained by applying the same amount of means to the production of cloth, than byapplying them to corn, and exchanging it for cloth, all motive to alter the quantity of the one ascompared with that of the other is at an end. Nothing is to be gained by producing corn ratherthan cloth, or cloth rather than corn. The cost of production on both sides is equal.
(3.ii.8) It thus appears that the relative value of commodities, or in other words, the quantityof one which exchanges for a given quantity of another, depends upon demand and supply, in thefirst instance; but upon cost of production, ultimately; and hence, in accurate language, uponcost of production, entirely. An increase or diminution of demand or supply, may temporarilyincrease or diminish, beyond the point of productive cost, the quantity of one commodity whichexchanges for a given quantity of another; but the law of competition, wherever it is notobstructed, tends invariably to bring it to that point, and to keep it there.
(3.ii.9) Cost of production, then, regulates the exchangeable value of commodities. But costof production is itself involved in some obscurity.
(3.ii.10) Two instruments are commonly combined in production; Labour and Capital.
(3.ii.11) It follows, either that cost of production consists in labour and capital combined; orthat one of these may be resolved into the other. If one of them can be resolved into the other, itfollows that cost of production does not consist in both combined.
(3.ii.12) The opinion, which is suggested by first appearances, undoubtedly is, that cost ofproduction consists in capital alone. The capitalist pays the wages of his labourer, buys the rawmaterial, and expects that what he has expended shall be returned to him, in the price, with theordinary profits upon the whole of the capital employed. From this view of the subject, it wouldappear, that cost of production consists exclusively in the portion of capital expended, togetherwith the profits upon the whole of the capital employed in effecting the production.
(3.ii.13) It is easy, however, to see, that in the term capital, thus understood, an ambiguity,and hence a fallacy, is involved. When we say that capital and labour, the two instruments ofproduction, belong to two classes of persons; we mean that the labourers have contributed somuch to the production, and the capitalists so much; and that the commodity, when produced,belongs in certain proportions to both. It may so happen, however, that one of these parties haspurchased the share of the other, before the production is completed. In that case, the whole ofthe commodity belongs to the party who has purchased the share of the other. In point of fact, itdoes happen, that the capitalist, as often as he employs labourers, by the payment of wages,purchases the share of the labourers. When the labourers receive wages for their labour, withoutwaiting to be paid by a share of the commodity produced, it is evident that they sell their title tothat share. The capitalist is then the owner, not of the capital only, but of the labour also. If whatis paid as wages is included, as it commonly is, in the term capital, it is absurd to talk of labourseparately from capital. The word capital, as thus employed, includes labour and capital both. Tosay, therefore, that the exchangeable value of commodities is determined by capital, understoodin this sense, is to say that it is determined by labour and capital combined. This, however, isreturning to the point from which we set out. It is nugatory to include labour in the definition ofthe word capital, and then to say that, capital without labour, determines exchangeable value. Ifcapital is understood in a sense which does not include the purchase money of labour, and hencethe labour itself, it is obvious that capital does not regulate the exchangeable value ofcommodities.
(3.ii.14) If labour were the sole instrument of production, and capital not required, theproduce of one day's labour in one commodity would exchange against the produce of one day's labour inanother commodity. In the rude state of society, if the hunter and the fisherman desired to varytheir food, the one by a portion of game, the other by a portion of fish, the average quantitywhich they took in a day would form the standard of exchange. If it did not, one of the twowould be placed in a more unfavourable situation than his neighbour, with perfect power, whichhe would of course employ, to pass from the one situation to the other.
(3.ii.15) In estimating equal quantities of labour, an allowance would, of course, be includedfor different degrees of hardness and skill. If the products of each of two days' labour of equalhardness and skill exchanged for one another, the product of a day's labour, which was eitherharder, or required a greater degree of skill, would exchange for something more.
(3.ii.16) All capital consists really in commodities. The capital of the farmer is not themoney which he may be worth, because that he cannot apply to production. His capital consists in hisimplements and stock.
(3.ii.17) As all capital consists in commodities, it follows, of course, that the first capitalmust have been the result of pure labour. The first commodities could not be made by anycommodities existing before them.
