Functional socialism

CAPITAL 125

there is an abundance of bread, the economic power of the baker likewise goes; if surgery is universally at our disposal, the surgeon’s fee or rent shrinks to small proportions. With the conquest of scarcity, plenty brings a long train of new economic principles.

Finally, we cannot leave Ricardo without thought of economic value.

When I was a very young man, William Morris said to me in his terse way: ““Find out value”. A little later, I repeated this to H. M. Hyndman. He stroked his beard for a moment and then said: “Odd, isn’t it? that it requires an artist to put his finger on the weak spot in all political economy”. Certainly Ricardo knew it. In his correspondence with his friend and disciple, McCulloch, he writes: “T am not satisfied with the explanation which I have given of the principles which regulate value. I wish a more able pen would undertake it”. Three years later and two years before his death, to the same correspondent and on the theory of value: “Both of us have failed”. The Knights had failed to find the Holy Grail.

Our economists have failed because they could not dissociate value from supply and demand from effective demand. Adam Smith, Ricardo, and Marx, all alike. Condillac, the French philosopher, comes nearest the truth: “But since the value of things is based upon need it is natural that a more keenly felt need should endow things with greater value, while a less urgent need endows them with less. Value increases with scarcity and diminishes with