ABSTRACT
McCulloch neglects to mention that it was he who suggested the view in which it is now, five years later, easy to see the fallacy. But since additional value no longer results from the labour of natural agents but from the accrual of profit on capital,2 this is a volte-face. Unfortunately he had now apparently adopted Ricardo's version of the confusion between necessary and sufficient conditions although he had now also become more obviously aware of the role of capital in value and in his discussion of capital3 he recognized both productivity and abstinence. Moreover, he now shed, though he did not correct, his confusion over Torrens.4 The analysis presented here remained substantially unchanged in the three final editions of the Principles,s despite many detailed changes, notably the frequent substitution of 'cost' for 'real value'. He had by now arrived at a (marginal) cost of production theory and the presentation in his 'practical' works followed the 1830 Principles. In the various editions of the Commercial Dictionary he included an article 'Price' which contained a long-run cost of production theory. Both labour and capital (including profit on that capital) are explicitly included in costs of production and there is no attempt to reduce capital to accumulated labour, and more prominence is given to demand and supply.6 The same statement appeared in the various editions of Brande's Dictionary? (where, it is worth noting, profit is defined as 'a premium on accumulation').8 The statements in the seventh and eighth
1 Principles, 1830, pp. 352-4. McCulloch made a similar change in the Encyclopaedia article: compare EB6 Political Economy, p. 267, with EB7 Political Economy, pp. 297-8, and EB8 Political Economy, p. 251. Yet in both the seventh and eighth editions (pp. 294, 248) he carried over from the sixth edition (p. 294) the statement that accumulation of capital did not affect his theory of value because profits were merely the wages of accumulated labour.
