Among the interesting questions that rise out of Greene’s early mutual bank writings is this one: did Greene really believe in a “labor theory of value” in the same way as other socialists of his era? In the 1850 Mutual Banking he writes:
It is affirmed by some, that labor is the only true measure of value, that every thing is worth precisely what it costs in labor to produce it, and that the price of every thing ought always to be determined by the relative amount of labor expended in its production. We would remark, in answer to these affirmations, that there is such a thing as misdirected labor; and that a man may produce an article for which there is no demand, and which has, consequently, no exchangeable value. Again, Peter, working upon a poor soil, may, with an incredible expenditure of labor, produce a bushel of corn, while John, working on rich land, may raise a like quantity, in the same time, and with comparatively little labor: now we venture to affirm that the market value of these two bushels of corn, will (and ought to) depend, not on the relative quantities of labor expended in their production, but on the relative excellence of the grain: and if the bushel raised by Peter be of precisely the same quality as that raised by John, it is very probable that both bushels will sell in the market at precisely the same price. Price, or value, is therefore, determined by the law of supply and demand.
Here, as elsewhere, he seems content to let value be largely a subjective measure, although we would probably be naive to expect Greene to advance any theory so straightforward, without at once attempting to harmonize apparently conflicting approaches.
The utility of an article is one thing, its value is another, and the cost of its production is still another. But the amount of labor expended in production, though not the measure, is, in the long run, the regulator of value. For every new invention which abridges labor, and enables an individual or company to offer an increased supply of valuable articles in the market, brings with it an increase of competition; for if one man by a certain process can produce an article valued in the market at $1.00, in a half a day’s labor, other men will take advantage of the same process, and undersell the first man, in order to get possession of the market: thus, by the effect of competition, the price of the article will probably be ultimately reduced to 0.50. Labor is the true regulator of value; for every laboring man who comes into competition with others, increases the supply of the products of labor, and thus diminishes their value, while at the same time, and because he is a living man, he increases the demand for those products to precisely the same extent, and thus restores the balance; for the laborer must be housed, clothed; and subsisted by the products of his labor. Thus the addition of a laboring man, or of any number of laboring men, to the mass of producers, ought to have no effect, either upon the price of labor, or upon that of commodities; since, if the laborer by his presence, increases the productive power, he, at the same time, increases the demand for consumption. We know that things do not always fall out thus in practise, but the irregularity is explained by the fact that the laborer, who ought himself to have the produce of his labor, or its equivalent in exchange, has, by the present false organisation of credit, his wages abstracted from him. Want and over production arise sometimes from mistakes in the direction of labor, but generally from that false organization of credit which now obtains throughout the civilized world. There is a market price of commodities, depending on supply and demand, and a natural price, depending on the cost of production; and the market price is in a state of continual oscillation, being sometimes above, and sometimes below, the natural price; but, in the long run, the average of a series of years being taken, it coincides with it. It is probable that under a true organization of credit, the natural price and the market price would coincide at every moment. Under the present system, there are no articles whose market and natural prices coincide so nearly and so constantly as those of the precious metals: and it is for this reason that they have been adopted by the various nations, as standards of value.
“Labor is the true regulator of value,” but only because it is a major component of cost. If ultimately, cost and price converge in Greene’s model, it is because of market forces. There is no sign here that Greene adhere’s to anything like a “cost principle” akin to Warren’s.
It may be a different matter in the writings on interest where, after all, Greene does propose a bank which takes no interest as such, charging only so much on the use of credit as it needed to keep the bank functioning. But, again, my reading of the material is that Greene proposes this interest-free anti-bank because he believes it can compete against banks ordered on principles that he finds “unscientific,” principles which seem to reward to the wrong folks.
When Adam Smith and Malthus [1] say that labor is a measure of value, they speak, not of the labor which an article cost, or ought to have cost, in its production, but of the quantity of labor which the article may purchase or command. It is very well for those who write out the philosophy of speculation on human misfortune and necessities, to take for measure of value the amount of labor which different commodities can command. Considered from this point of view, the price of commodities is regulated not by the labor expended in their production, but by the distress and want of the laboring class. The greater the distress of the laborer, the more willing will he be to work for low wages, that is, the higher will be the price he is willing to give for the necessaries of life. When the wife and children of the laborer ask for bread, and he has none to give them, then, according to the political economists, is the community prosperous and happy; for then the rate of wages is low, and commodities command a high price in labor. There is no device of the political economists so infernal as the one which ranks labor as a commodity, varying in value according to supply and demand: neither is there any device so unphilosophical; since the ratio of the supply of labor to the demand for it, is unvarying; for every producer is also a consumer, and rightfully, to the precise extent of the amount of his products—the laborer who saves up his wages, being, so far as society is concerned, and in the long run, a consumer of those wages. The supply and demand for labor is unvarying, and its price ought therefore to be constant. Labor is said to be value, not because it is itself merchandise, but because of the values it contains as it were in solution, or, to use the correct metaphysical term, in potentia. The value of labor is a figurative expression, and a fiction like the productiveness of capital. Labor, like liberty, love, ambition, genius, is something vague and indeterminate in its nature, and is rendered definite by its object only: misdirected labor produces no value. Labor is said to be valuable, not because it can itself be valued, but because the products of labor may be truly valuable. When we say: John’s labor is worth a dollar a day, it is as though we said: The daily product of John’s labor is worth a dollar. To speak of labor as merchandise, is treason: for such speech denies the true dignity of man, who is the king of the earth. Where labor is merchandise in fact (not by a mere inaccuracy of language) there man is merchandise also, whether it be in England or South Carolina.
This appears to be a rejection of at least the language of the LTV, rooted in a concern for the “dignity of the laboring classes.” I think the work of teasing out exactly what the various early mutualists really believed is still in its early phases. As great a service as James Martin and others have done in keeping the memory of these figures alive, I keep finding these figures genuinely strange and unfamiliar in the details, often very different from what I had been lead to believe I would find.
