Wealth and Value
Epigraphs to Book II
Definitions are the basis of systematic reasoning.
The mixture of those things by speech which are by nature divided is the mother of all error.
Bacon made us sensible of the emptiness of the Aristotelian philosophy; Smith, in like manner, caused us to perceive the fallaciousness of all the previous systems of political economy; but the latter no more raised the superstructure of this science, than the former created logic.... We are, however, not yet in possession of an established text-book on the science of political economy, in which the fruits of an enlarged and accurate observation are referred to general principles that can be admitted by every reflecting mind; a work in which these results are so complete and well arranged as to afford to each other mutual support, and that many everywhere and at all times be studied with advantage.
-- J.B. Say, 1803
We may cite as examples of such inchoate but yet incomplete discoveries the great Wealth of Nations by Adam Smith -- a work which still stands out, and will ever stand out, as that of a pioneer, and the only book on political economy which displays its genius to every kind of intelligent reader. But among the specialists and the schools, this work of genius which swayed all Europe in its day, is laid upon the shelf as an antiquated affair, superseded by the smaller and duller men who have pulled his system to pieces and are offering us the fragments as a science most of whose first principles are still under dispute.
-- Professor (Greek) J.P. Mahaffy, "The Present Position of Egyptology," "Nineteenth Century," August, 1894.
The Science of Political Economy
Book II, The Nature of Wealth
Wealth and Value
Showing the Reason For Considering the Nature of Value Before That of Wealth
We have seen the utter confusion that exists among economists as to the nature of wealth, and have sufficiently shown its causes and results. Let us return now to the question we have in hand, and that must first be settled before we can advance on solid ground: What is the meaning of wealth as an economic term?
The lack of definiteness and want of consistency as to the nature of the wealth of nations, with which Adam Smith began, have in the hands of his accredited successors resulted in confusion so much worse confounded that the only proposition as to wealth on which we may say that all economists are agreed is that all wealth has value. But as to whether all that has value is wealth, or as to what forms of value are wealth and what not, there is wide divergence. And if we consider the definitions that are given in accepted works either of the term wealth or of the sub-term of wealth, capital, it will be seen that the confusions as to the nature of wealth which they show seem to proceed from confusions as to the nature of value.
It is quite possible, I think, to fix the meaning of the term wealth without first fixing the meaning of the term value. This I did in Progress and Poverty, where my purpose in defining the meaning of wealth was to fix the meaning of its sub-term, capital, in order to see whether or not it is true that wages are drawn from capital. But as in the present work, being a treatise on the whole subject of political economy, it will be necessary to treat independently of the nature of value, it will, I think, be more conducive to orderly and concise arrangement to consider the nature of value before proceeding definitely to the consideration of the nature of wealth.
And since minds that have been befogged by accepted confusions may be more easily opened to the truth by pointing out in what these confusions consist, and how they originate, this mode of proceeding to a determination of the nature of wealth through an examination of the nature of value will have the advantage of meeting on the way the confusions as to value which in the minds of the students of the scholastic economy have perplexed the idea of wealth.