Chapter V: Ricardo and the True Classical Labor Theory

§ 1. General estimate of Ricardo’s theory 41

§ 2. At foundation an attempt to reconcile the “philosophical”
and “empirical” accounts 42

§ 3. Preliminary conditions of the theory laid down by Ricardo
himself 44

§ 4. How determine quantity of labor; unsatisfactory treatment
of skilled labor; labor indirectly applied 46

§ 5. The introduction of interest on capital as an element in
cost of production (i. e., entrepreneur’s cost) 49

§ 6. In Ricardo’s conception, interest enters into Natural Price
or Normal Value, though he does not make this clear 50

§ 7. Essence of Ricardo’s explanation of the complication of
interest 52

§ 8. Peculiarly round-about form of statement of the same 53

§ 9. Ricardo’s explanation of the complication also positively
misleading 55

§ 10. Summary 56

CHAPTER VI

MCCULLOCH, JAMES MILL AND TORRENS.
ANTICIPATION OF MARX’S THIRD VOLUME

§ 1. The interest which attaches to these three minor writers 61

§ 2. Samples of McCulloch’s extravagant dogmatism 62

§ 3. McCulloch anticipates Marx’s solution of the “organic
composition of capital” complication 64

§ 4. James Mill’s complete misapprehension of the nature of
the interest difficulty 70

§ 5. False move made by Torrens in defining the concept of
entrepreneur’s cost 74

§ 6. Shallow attempt of Torrens to avoid the interest difficulty
by a theory of “accumulated labour” 76

CHAPTER VII

THE EMPIRICAL THEORY AS DEVELOPED BY MALTHUS

§ 1. Malthus a prolific writer on value, and opponent of Ricardo 79

§ 2. An important transfer of emphasis from the “philosophical”
to the “empirical” account 79

§ 3. The law of costs made subordinate to the law of supply and
demand 80

§ 4. Detailed criticism of Ricardo’s labor-cost theory 83

§ 5. Majority of these points of criticism provided for by Ricardo
himself 85

§ 6. Difference between the two economists partly one of emphasis:
ultimate gain of Malthus’ theory 86

§ 7. Note on the question of the invariable measure of value for
all times and places 88

CHAPTER VIII

SENIOR

§ 1. Opening of his discussion very unfavorable to old labor cost
philosophy 93

§ 2. Originates a consistent conception of subjective cost of
production,—labor and abstinence 95

§ 3. Approaches a theory of final equivalence of utility and
disutility 96

§ 4. Values produced would be in proportion to subjective cost
of production were there no rents 98

§ 5. Remarkable extension of the rent concept 99

§ 6. The universal prevalence of rent in real life nullifies
the law of subjective costs 101

§ 7. Net result of Senior’s reasonings very destructive of
labor-cost theory 102

CHAPTER IX

JOHN STUART MILL

§ 1. Begins with “empirical” laws of supply and demand, and of
entrepreneur’s costs 104

§ 2. Scant attention paid to subjective costs 106

§ 3. Wavers concerning inclusion of “profits” in cost: an
illustration of the inadequacy of the ancient
philosophy of value 107

§ 4. Follows Ricardo, without the slightest improvement in
his explanation of the interest complication 108

§ 5. Departs from Ricardo in admitting that case of skilled
labor necessitates qualification of the labor-cost theory 110

§ 6. Summary: the labor theory weakened; comparison with Malthus
and Senior 112