Do we, or can we, mean any thing but its power of purchasing? And what is its power ofpurchasing? Of course, the goods which come to market. What, on the other hand, is it we mean,when, speaking in like manner aggregately, and including the same circle, we say the supply ofthe nation? Do we, or can we mean any thing, but the goods which come to market? Theconclusion is too obvious to need to be drawn.
(4.iii.26) What produces the confusion of ideas, which so often occurs in the considerationof this subject, is the glut, which may, and does take place, of particular commodities. Does itfollow from this, that there can be a glut of commodities in the aggregate, when it is necessarilytrue that there cannot be an aggregate supply without an equal aggregate demand, equal both inquantity and in value?
(4.iii.27) To the argument, which shows that to the same degree, in which one or morecommodities may be in such abundance as exceeds the demand, some other commodities mustfall short of the demand, it has been replied, that the commodities which are supplied insuperabundance fall in value, that this involves all the evil of the glut, and is therefore a reply tothe whole of the argument which denies its existence.
(4.iii.28) This is a reply in words only. What is maintained in my argument is, that there canbe no glut of commodities in the aggregate, though there may be in particular instances. The answermade to me is that there may be a glut in particular instances.
(4.iii.29) In the very words of the pretended reply, the certainty of the disputed fact isadmitted.
The value, it is said, of the goods, which are in the state of superabundance, falls. If this is not aplay upon the word, it implies the very thing which it is brought to dispute, that whenever oneset of goods is supplied above the demand, another is supplied below the demand.
(4.iii.30) What is it that is necessarily meant, when we say that the supply and the demandare accommodated to one another? It is this: that goods which have been produced by a certainquantity of labour, exchange for goods which have been produced by an equal quantity of labour.
Let this proposition be duly attended to, and all the rest is clear.
(4.iii.31) Thus, if a pair of shoes is produced with an equal quantity of labour as a hat, solong as a hat exchanges for a pair of shoes, so long the supply and demand are accommodated to oneanother. If it should so happen that shoes fell in value, as compared with hats, which is the samething as hats rising in value compared with shoes, this would imply that more shoes had beenbrought to market, as compared with hats. Shoes would then be in more than the due abundance.
Why? Because in them the produce of a certain quantity of labour would not exchange for theproduce of an equal quantity. But for the very same reason hats would be in less than the dueabundance, because the produce of a certain quantity of labour in them would exchange for theproduce of more than an equal quantity in shoes.
(4.iii.32) What is true of any one instance is true of any number of instances. It is thereforeuniversally true, that, as the aggregate demand and aggregate supply of a nation never can beunequal to one another, so there never can be a superabundant supply in particular instances, andhence a fall in exchangeable value below the cost of production, without a correspondingdeficiency of supply, and hence a rise in exchangeable value, beyond cost of production, in otherinstances. The doctrine of the glut, therefore, seems to be disproved by reasoning perfectlyconclusive.
(4.iii.33) Let us recapitulate the points. A glut, as it is supposed in this doctrine, namely anexcess of production in the aggregate, can take place only by a continued increase of production.
Let us imagine that we have just come to the supposed point, when, the supply being full, anyadditional production will be so much of glut. The additional production takes place, and comesto market. What is the consequence? This new product seeks an equivalent. That is to say, it is anew demand. How then is it possible to say that every new supply is a glut, when a new demandis created equal to it? It is obviously nugatory to say, that this new supply may not findpurchasers, or the new demand may not find the commodities to which it is directed; for this isonly to say that in particular instances there may, from miscalculation, be superabundance ordefect. The natural effects, in such a case, may be easily traced, and they afford decisiveevidence. The commodities, of which the additional production consists, may be naturallysupposed to consist of some of the sorts which are previously in the market. By supposition, thegoods previously in the market were accommodated to one another, no species being either indefective, or superabundant supply. The addition which is made to some sorts of these goods, bythe new production, would render them superabundant, if there was not a new demand created.
