Value

The development of McCulloch's theory of value has been obscured by his retention of a popular theory of value which made no concessions to analytical refinement, while his ‘scientific’ theory developed continuously. The simple popular theory was a straightforward labour quantity theory of value. But alongside this McCulloch developed a cost of production theory of value in which he recognized and was at pains to solve the problem of capital. The contrast between the two theories is shown in the following exchange between McCulloch and Ricardo. After reading some of the lectures which McCulloch had prepared Ricardo wrote: ‘You go a little farther than I go in estimating the value of commodities by the quantity of labour required to produce them: you appear to admit of no exception or qualification whatever, whereas I am always willing to allow that some of the variations in the relative value of commodities may be referred to causes distinct from the quantity of labour necessary to produce them.’ ⁸⁰⁵ To this McCulloch replied: ‘In order to give any chance of making the subject popular I must pass slightly over some of the more difficult parts.’ ⁸⁰⁶ McCulloch is clear that he is simplifying, and his reason for doing so is most instructive. As a pioneer of popular exposition, he wanted a simplified version of the theory. By assuming away the problem of capital he was able to provide a simplified version. This version ⁸⁰⁷ he tended to retain while his scientific theory developed. The main concern of this chapter is to trace the development of the ‘scientific’ theory; but it should constantly be borne in mind that McCulloch continued to point to the simplified version as suitable for the ‘non-scientific’ reader, ⁸⁰⁸ and it is this which has led to his being referred to as more Ricardian than Ricardo. In tracing the scientific theory this chapter will attempt to establish that this charge was less than fair. But it is true that for McCulloch as for Ricardo labour was ninety-three per cent of the value of commodities. When examining the economic system as a whole as for instance in the Principles, an operation designed as in any textbook to disseminate a particular view of the economic system, it was natural to stress the primacy of labour. The problem of capital could largely be relegated to a limbo for ‘scientific’ readers. However, when pressed for a definition of ‘price’ taken in isolation, McCulloch clearly felt obliged to be comprehensive and to mention the problem of capital; and in his definitional work in the Commercial Dictionary and in his contributions to Brande's Dictionary ⁸⁰⁹ he used a definition of price which included both labour and capital.