st add to the quantity of labor last employed, the quantity of labor previously worked up in the raw material of a commodity, and the labor bestowed in the implements, tools, machinery, and buildings, with which labor is assisted." (Value, Price and Profit, page 60).
The value of barrels, for example, is determined by the social (factory) labor spent in producing staves and hoops and the labor time used in producing the portion of machinery worn out in making them, as well as the necessary social labor spent in cutting and hauling (producing) raw logs for use in the mill.
Every time more social labor is needed in making commodities–shoes, hats, gloves, stoves or cigars–whatever these commodities may be–their value is increased. Every time the quantity of socially necessary labor is lessened in the production of commodities, their value is decreased.
Nearly all kinds of furniture have greatly decreased in value the past few years owing to the improved machines used in their production and the relatively small quantity of labor contained in furniture.
Gold has steadily been decreasing in value in the past ten years owing to the improved methods of producing gold and the decreasing quantity of labor contained in it.
Rubber is steadily growing more valuable because the available world supply has been nearly exhausted and it requires more time hunting or planting, and caring for rubber trees–more labor is contained in a pound of rubber than a few years ago.
Gradually we see huge machines replacing the smaller ones in all the great producing industries and, with the constant introduction of more improved machinery, the quantity of human labor contained in commodities produced by modern methods–grows less and less. Such commodities decrease in value with every decrease in the labor embodied in them.
Price is the money name for which commodities exchange. We are accustomed to figure in gold prices. All our bank-notes read "payable in–so much–gold." But gold is a commodity just like bread, or overcoats, or dresses or automobiles. And commodities tend to exchange for the sum of gold containing a quantity of labor equal to the quantity of labor contained in them.
That is, if ten dollars in gold contains forty hours of necessary labor, that gold will exchange for (or will buy) as many pairs of shoes as forty hours of social labor will produce.
Generally speaking, a commodity containing ten hours of necessary labor will tend to exchange for gold, or any other commodity containing ten hours of necessary labor.
This is true whom price and value are equal. But supply and demand cause commodities to exchange (or sell) above or below their value, temporarily.
A temporary shortage in coal–when the supply does not equal the demand–may enable the dealers to exchange coal above its value for a short time. An over supply of automobiles may cause the manufacturers to offer to sell (or exchange) autos below their value, for a time.
Prices are often a little above or below the value of commodities, but they are always inclining toward the value of commodities.
(Please remember that we are not here speaking of monopoly prices. We shall consider them in a later lesson.)
"If supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say with their values, as determined by the respective quantities of labor required for their production...If, instead of considering only the daily fluctuations, you analyze the movement of market prices for longer periods...you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyze and compensate each other; to that, apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on the average, sold at their respective values or natural prices.
"If, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their respective values, it is nonsense to suppose that profit, not in individual cases, but th