This section is from the "The Science Of Wealth" book, by Amasa Walker.
We have now gone over all the ground belonging to the theory of value: but we cannot leave it without dwelling a while on one part of it ; without clearly marking the boundary which separates it from the domain of utility, — a most troublesome and intrusive neighbor.
There is between utility and value a distinction as real as between weight and color.
Suppose a farmer in Vermont has one thousand bushels of wheat; its value is two thousand dollars. Its utility is, that it will make forty thousand pounds of bread.
A farmer in Illinois has one thousand bushels of wheat, equally good; but its value is only one thousand dollars. Its utility is just the same. It will make as much bread, and as good, as the wheat of Vermont. The value, then, does not reside in the utility, but in the power in exchange. The wheat of Vermont commands a higher price than that of Illinois, because Of its location nearer to the market. Here location means labor; that is, the labor required to overcome it. This will be still more apparent, if we suppose the farmer removed a thousand miles by land from any market. His wheat might then have no value; yet its natural, inherent utility would be as great as ever.
Take another illustration. A pound of small nails or tacks formerly had the value of twenty-five cents, equal to one-fourth of a day's labor. By the introduction of machinery, the value was reduced to ten, then to five cents, or the twentieth part of a day's labor; the utility remaining all the time as at first. The value of many articles, especially those called manufactures, are, in the ordinary progress of human effort, constantly diminishing, though never annihilated. This is because the labor or service to be appreciated in such values is constantly lessening, though it can never wholly disappear. In this is seen, not only the certain distinction between value and utility, but one of the most beneficent laws of the science, which may be stated as follows: Value moves, diminished constantly by the substitution of the gratuitous agencies of Nature, by the ingenuity and industry of man. Utility remains fast-anchored in the wants of man and the properties of matter. This is the primary fact. But value moves again, — not to increase, but to multiply. Values arc no greater, but there are more of them. The factor that multiplies is the evergrowing wants of man. Now, utility begins to move, expanding with the enlargement of man's activities, and the increase of the fruits of labor. Here we have the promise that the human race is destined to a constant augmentation of utilities, bringing in a great amelioration of its condition. Man is relieved from part of his labor only to feel new wants, and so, through fresh efforts, to find greater satisfactions in life.
Political economy mates no inquiry whether the increase of material objects of desire is, in truth and on the whole, a good. It assumes this. It leaves to others the discussion whether the highest interests of society are attained by repelling the kindness of Nature, and by denying the instincts of man. This kindness, and those instincts, political economy accepts, and goes forward from them. It can never become stoic. It is not a science, unless wealth is a good.
It is a science; and it has no doubt that the healthful, honest increase of physical necessaries, comforts, luxuries, and refinements, with the opportunities which they bring for mental improvement and moral culture, with the safeguards they place upon social order and personal rights, and with the manifold strong and subtile motives which they contribute to the exertion of all the human faculties, and the full, friendly intercourse of all communities and peoples, — it has no doubt that this is desirable. But it does not labor to prove it so. It does not found itself on any supposed refutation of asceticism. It takes without inquiry the universal inclination to the accumulation of wealth, under the restraints of mutual duties and common rights.
We have said that Nature adds value to nothing. Though unceasingly at work for man, she receives no compensation. She creates utilities beyond computation, but does all gratuitously. Wind, water, and steam are most efficiently engaged in producing commodities necessary to the welfare of mankind; and the earth is unceasingly active to bring forth man's food in its many forms. Yet all is done without adding to the wealth of the world. The forces " work for nothing," and hence confer no value. The power of the wind, for example, in propelling vessels, adds no value to the articles transported. But, it may be objected, would it not cost a great deal more to transport that merchandise, if it had to be done by human hands working at the oar? Certainly; and, from the very illustration, it appears that the power of the wind has not increased the value, but rather diminished it. It has taken the slaves from the bench, and does the merchant's rowing for him. It is Nature's work, not man's labor; and hence value goes down, while utility stands fast.
Transportation does, indeed, add to the value, but only because man's vessels and man's labor are employed in effecting it. All the natural forces that come in take off from value. If a merchant were to make a charge for the use of his vessel, the payment of his hands, and the ordinary rate of profit on his voyage, and, besides these, for the use of the wind, it would not be allowed. Competition would correct his philosophy; and the eloquence of unsold merchandise would be his teacher in the theory of value. Take steam for an example in point. The services of this great agent in England are probably equal to the muscular effort of one hundred millions of men; but the whole of it is gratuitous. All that is required to secure these services is machinery and fuel, whose whole value has been given by labor.
If we look to the fertility of the land, by far the greatest of all the natural forces engaged in production, we shall find that it confers no value. Is it asked, " Why, then, do men pay for the use of it? Why buy it at a large price? " The answer at length to this question will be deferred till the discussion of rent; but it will be sufficient for the purpose of the present argument to say, that it is because appropriated or owned (whether rightly or wrongly) by individuals who can make a profitable use of it themselves.
There are many special products which have been presented, in discussion of this subject, as exceptions to the principle, that value comes only with and by labor; e.g., precious stones, curiosities, the precious metals, monopolies, patents, &c, &c. The relations of the first two are fully defined in the extract, already offered from the work of M. Bastiat. Of gold and silver, it is enough to say, that, whatever the theories of the past, it is now an abundantly recognized fact, that the mining of these metals proceeds strictly according to the laws of industry, with hardly its ordinary accidents and chances. It is estimated, that, when brought to market, these metals have cost sixty-six cents on the dollar. The remaining thirty-four cents constitute the remuneration of the laborer and the capitalist; which cannot be regarded as excessive when the privations, risks, and hardships of the occupation are kept in view. Monopolies and patents confer no value, but simply contravene its laws. This is their object. They are designed, by giving the exclusive right to produce or sell a given article, to reward the favored party for his skill in invention, or for a general good supposed to be conferred upon the community. They are compulsory contributions levied upon the public for the benefit of individuals. .