Note 200 — Chapter XI · THE ULTIMATE RELATION OF COST TO VALUE

Since the chapter on Ricardo herein contained was written, it has been suggested to the writer that he is mistaken in attributing any “philosophical” account whatsoever to Ricardo, that in fact Ricardo’s whole treatment is purely empirical. The writer cannot concur in this judgment. It is admitted that Ricardo virtually takes this philosophy for granted, instead of endeavoring to establish it, but the almost appalling confusion into which his exposition of value falls when the difficulty of interest is reached (see ante, chap. v, §§ 5-9) can be explained, so it is believed, only according to Wieser’s interpretation of Ricardo’s work. This is, namely, that he is endeavoring to force the empirical principles, or the “facts” of entrepreneur’s cost, to fit the labor philosophy. A thinker who confined himself to a purely empirical analysis would never reach the labor-cost thesis with which Ricardo opens at once his chapter on value and his Principles of Political Economy. The thesis is a priori, that is, as contrasted with the theory of entrepreneur’s cost. If Ricardo were working with merely an empirical account of value, and were not embarrassed by an uncertain philosophy of value, how would he ever come to speak of the cost of production, which determines value, as consisting of “labor and profits!” He should say “wages and profits.” Again, how would he be led to commence his chapter on “Natural and Market Price,” by the assertion that the market price of a commodity can deviate temporarily from its “natural price, or the quantity of labor which it has cost!” No empirical theory would lead to the statement that the normal price toward which competition forces actual prices is a quantity of labor. This natural price is Adam Smith’s “philosophical” natural price or “first price,” namely, labor.