ABSTRACT
In the theory of price two terms are in constant use,—cost of production, and expenses of production. The former, though used with ambiguity by Adam Smith, Ricardo, and Mill, is now generally understood to mean the aggregate of those efforts and sacrifices required for making a piece of wealth : the latter implies the money payment necessary to evoke these various efforts and sacrifices. But there is one important fact implied in the passage from cost to expenses of production, the full significance of which is not yet generally recognized. Though cost is a singular noun and expenses plural, the cost of production of a commodity in its commonly accepted meaning, is not presented to us as a single sum, but as so much of this kind of effort, so much of that, so much of the other ; while the expenses of production show them expressed in terms of a single commodity, money, reduced to unity. Now, how is this reduction to unity effected? It must 48imply a common property in all kinds of effort and sacrifice that are included in cost of production, which can be measured and expressed in terms of money. That is to say, the cost of production which takes into consideration so much of this, that, or the other quality of effort or sacrifice, is not the final possible analysis. Most modern economists reject the abstract conception of “common labor” suggested, though not consistently adhered to, by Ricardo, and adopted by Marx and other socialist writers, as the starting-point of economic analysis. But it seems clear that the reduction of a bundle of heterogeneous efforts and sacrifices to a unity expressed in money, absolutely requires some such common quality, whether of time, productivity, suffering, or an amalgam of these. The measurement is done, and it can only be effected, by reference to some common or abstract quality, which may be called by the name “common labor” as well as by any other, if the term be used in its wide sense, and if capital be regarded, as Ricardo regarded it, as “accumulated labor.” This abstract thing, whatever it be called, must be held to lie at the back of cost of production. Nor is it an empty abstraction. It is eminently practical, for we see that it is the real common measure by which “cost” is converted into “expenses” of production. Unqualified or “common” labor may seem impalpable and immeasurable, but it is not really so.
