# Essay 4: Ad Valorem

> Broadly speaking this essay is organized as a examination and redefinition of the key economic terms value, wealth, and price, and produce (“production”), but the economic terms exchange, labor, and capital are considered as well, and Ruskin turns to the issues of over-population and the environment before concluding this essay (and the book) by focusing on the individual household.

> As a preliminary, Ruskin shows that Mill's definition of produce is erroneous. Then value is redefined that which enhances life, not what something sells for in the marketplace. Wealth must be understood in regard to the nature of the goods that are produced, how adequately they are distributed throughout society, and how well these goods can be used. Many men possess great riches, but these riches do not function as true wealth. Ruskin's discussion of price encompasses exchange value and labor. No profit can come from exchange. It is inherently exploitive. Labor is discussed as a means to understand production. Good production comes from good forms of labor and requires good consumption. Capital should be spent to achieve good production (which is finally good consumption), not just the accumulation of more capital.

> Ruskin is apalled by economists who use the fear of over-population to deny social justice. We can sustain a growing population through wise action, not cruelty. We will protect the environment because we need croplands to eat and because people instinctively value natural beauty. We will create a better world not by public effort but by individual action, and Ruskin describes a simple, wholesome, healthy, and moral way to live our lives.

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# «Mill is inconsistent, but admirably so, in defining produce (Sec 1)

We will examine the definitions of Value, Wealth, Price, and Produce, starting with Produce. Mill shows us a manufacturer of hardware (utensils) who—instead of buying silver plate and jewels—hires more workman. But why does Mill believe that utensils are produce (productive goods) and silverware is not? And what about producing bayonets? Mill, in fact, is inconsistent with his economic theory, and yet, admirable, in making moral judgements about the value of various kinds of produce.

# «What then is "Value"? (Sec 2)

In political economy value is value in exchange, and value is just what people will pay for. Therefore, political economy excludes moral considerations—a view I reject.

# «David Ricardo’s political economy offers no way to understand value(Sec 3)

Ricardo says that utility is essential to exchangeable value. But what level of quality is required for there to be value? If a hunter’s bow and arrow and the fisherman’s implements have equal value and the men put forth equal labor, then the produce of each must be the same regardless of what is caught—Really? Even if we take the average productivity of the fisherman and of the hunter, this reasoning makes no sense, so I move on to find a true definition of value.

# «Value is what enhances human life. It is inherent to each thing. (Sec 4)

The etymology of “value” is “strength for living.” It is related to “valor” and “valiant.” Value is independent of people’s opinions and of availability (quantity). Rather it comes from God. The real science of political economy is that which teaches nations to desire and labour for the things that lead to life. Primitive societies must learn this.

# «What is wealth? (Sec 5)

Mill says wealth is having a large stock of useful articles. OK, but to be precise let’s look first at “having” and “useful.” Examples show that “possession” is not an absolute quality and that people have “possessed” gold in strange and destructive ways. The expansion of “useful” to “can use” implies “can,” that wealth must have the capability to do something. “Useful” contrasts with not useful or “abuse.” Wine, for example, is of great use to human life but is also subject to great abuse. We see that to be useful wealth must be something of inherent value that is also put to good use. We can now describe wealth as the “possession of the valuable by the valiant.” Many “wealthy” people (lacking capacity) are incapable of wealth. They are useless like stagnant water or act as impediments or as a destructive force. Their wealth is only “illth.”

# «Understanding wealth and character (Sec 6)

A true science of political economy must not only develop many character to deal with material value but must understand the contradictions between them. We need to understand how wealth affects individuals, what kinds of people become rich, and whether the rich or poor do more for the world. Looking ahead, I can say now that those who become rich are typically , industrious, resolute, proud, covetous, prompt, methodical, sensible, unimaginative, insensitive, and ignorant. The poor include every sort of personality: foolish, wise, reckless, thoughtful, dull, the wicked and criminal, and the merciful, just, and godly.

# «The nature of Price, the value of exchange expressed by currency (Sec 7)

Profit comes only from labor—something is made. Exchange may be beneficial and necessary but there is no profit in exchange. If labor is necessary to effect the exchange, this labor can be regarded as profit. Acquisition is predatory. What I get you lose. We say “make a profit,” but no value is added in acquisition. For every plus, there is a minus. Everyone wishes to learn how to get the pluses, and the pluses are celebrated. The minuses retire to the back streets or to the grave, through starvation.

# «Just and unjust exchange (Sec 8)

The Science of Exchange is exploitive. Advantage arises from the ignorance or incapacity of the other person. All other sciences seek enlightenment. Only this science requires and looks for ignorance. A just exchange requires advantage on all sides—producer, consumer, and intermediary (the merchant). The merchant’s legitimate share by his time and labor must be understood by all. Advantage means both getting what we need and what we wish for. And much of what we seek comes from our wishes rather than our needs. Pricing rests on how (1) how strongly the purchaser wants something vs. how strongly the owner wants to keep it and (2) how much the purchaser can pay vs. the owner’s need for that labor. The complexities of pricing are finally calculated on the basis of labor, so it is necessary to define labor.

# «Labor (Sec 9)

Labor is the life of a man striving against various kinds of difficuly. “Life” includes the man’s intellect, soul, and physical power. Good labor calls for enough intellect and feeling harmonious regulate physical force. The quality and and kind of labor has an invariable value. Only the quantity varies, and the price of something must be calculated as the quantity of labor it required. As the apple-planting example shows, if two objects with equal exchange value required different amounts of labor, the one requiring more labor may or may not sell for more. But the extra labor it required does not make that labor “cheaper.”

# «Labor and production (Sec 10)

Production is now defined (in the context of labor). Almost all labor is either positive—it produces life—or negative—it produces death. A nation’s wealth depends on the quantity of labor it spends obtaining and employing the means of life. “Employing” means distributing and consuming. Consumption, if it is wise consumption, is the true end of production (despite what economists say), and wise consumption is actually much more difficult than just wise production. Twenty people can gain money for one who can use it. The vital question for an individual and a nation, is, never “how much do they make?” but “to what purpose do they spend?”

# «True capital produces what is good for life. THERE IS NO WEALTH BUT LIFE (Sec 11)

Capital and its functions are now defined. Capital is the root from which appears either flowers and bread or just more bulbs and seeds. The political economy of Europe’s focuses on production and accumulation. It’s always about more bulbs; it never sees a tulip. True production leads directly, or indirectly, to consumption. The greedy value production as accumulation: wheat in the granary but not eaten. The true goal of political economy is to good consumption on a large scale. Mill's errs in stating that a demand for commodities (in contrast to direct service) is not labor. From an economic standpoint, the various forms of consumption are the same to the worker. But the worker does have an interest in what is produced and how it is used, and the manner of consumption—how much life is produced— is the real test of production. My key point is this: THERE IS NO WEALTH BUT LIFE. That country is richest that produces the greatest number of noble, happy people.

# «The consideration of population growth (Sec 12)

Because we are human, we can can bravely and lovingly manage population growth. Political economists often oppose raising wages for fear that an increased population (or drunkenness) will negate the benefit. Why so? Few will say the poor are a different species of humankind, and so why can’t the poor advance if given the same benefits that you received? Some argue that the poor cannot benefit from education, but refusing education is actually crueler than refusing food. Even the most wretched of the poor are purer and more holy than those who have left them like this.

# «Economists propose false remedies for over-population (Sec 13)

Economists propose (1) colonization, (2) land restoration, and (3) discouraging marriage. But the real solution is good use of our existing land. To Ricardo the issue is simply how many people can survive on the land (“the natural law of wages.”) A working girl responds: What about their quality of life? Ricardo doesn’t recognize that a well-managed community can support many more people and might free some for intellectual inquiry. How does “the natural law of wages” account for this? A badly managed community will require many police and those who bring people back to God.

# «How we should live on the land (Sec 14)

Mill recognizes the importance of nature and regrets its destruction, but the need for food, water, and air will ensure the survival of unspolied agricultural and natural land. As we provide for population growth, we will necessarily prize nature and fields and orchards made beautiful by joyful human labor. As the art of life is learned, it will be found that lovely things are necessary things. While laws can help, human progress toward happiness is individual, centered in the home. People need to be content with their position in life and learn to be happy through hard work, simple living, and the calm pursuit of peace.

# «Let our consumption of goods be equitable and our lives be a force for good (Sec 15)

Justice is the fruit of those who make peace, the givers of calm. Business, however, is active and likely contentious. The paths of Wisdom are also those of peace. Wisdom begins in the home. All true economy is the “Law of the house.” Live well but live simply. When you buy, think of the lives of the producers and whether your payment is fair exchange. Think also of the good uses to which your purchase can be put and how soon this can happen. Look for fineness and purity of commodities and don’t fail to value good commodities just because they are inexpensive and available to all. In the future luxury may be possible for all. But now your luxury is someone’s hardship. Be a force for good until Christ’s gifts of bread and peace shall be given to the last one as it is to thee and there is holy reconciliation between the Wicked and the Weary.