But national wealth includes the individual as well as the collective property of its members.And in estimating the aggregate sum of their individual wealth, we may save some trouble by omitting all debts and other obligations due to one member of a nation from another.For instance, so far as the English national debt and the bonds of an English railway are owned within the nation, we can adopt the simple plan of counting the railway itself as part of the national wealth, and neglecting railway and government bonds altogether.But we still have to deduct for those bonds etc.issued by the English Government or by private Englishmen, and held by foreigners; and to add for those foreign bonds etc.held by Englishmen.(7*)Cosmopolitan wealth differs from national wealth much as that differs from individual wealth.In reckoning it, debts due from members of one nation to those of another may conveniently be omitted from both sides of the account.Again, just as rivers are important elements of national wealth, the ocean is one of the most valuable properties of the world.The notion of cosmopolitan wealth is indeed nothing more than that of national wealth extended over the whole area of the globe.
Individual and national rights to wealth rest on the basis of civil and international law, or at least of custom that has the force of law.An exhaustive investigation of the economic conditions of any time and place requires therefore an inquiry into law and custom; and economics owes much to those who have worked in this direction.But its boundaries are already wide;and the historical and juridical bases of the conceptions of property are vast subj ects which may best be discussed in separate treatises.
6.The notion of Value is intimately connected with that of Wealth; and a little may be said about it here."The word value"says Adam Smith "has two different meanings, and sometimes expresses the utility of some particular object and sometimes the power of purchasing other goods which the possession of that object conveys." But experience has shown that it is not well to use the word in the former sense.
The value, that is the exchange value, of one thing in terms of another at any place and time, is the amount of that second thing which can be got there and then in exchange for the first.
Thus the term value is relative, and expresses the relation between two things at a particular place and time.
Civilized countries generally adopt gold or silver or both as money.Instead of expressing the values of lead and tin, and wood, and corn and other things in terms of one another, we express them in terms of money in the first instance; and call the value of each thing thus expressed its price.If we know that a ton of lead will exchange for fifteen sovereigns at any place and time, while a ton of tin will exchange for ninety sovereigns, we say that their prices then and there are ?5 and ?0respectively, and we know that the value of a ton of tin in terms of lead is six tons then and there.
The price of every thing rises and falls from time to time and place to place; and with every such change the purchasing power of money changes so far as that thing goes.If the purchasing power of money rises with regard to some things, and at the same time falls equally with regard to equally important things, its general purchasing power (or its power of purchasing things in general) has remained stationary.This phrase conceals some difficulties, which we must study later on.But meanwhile we may take it in its popular sense, which is sufficiently clear and we may throughout this volume neglect possible changes in the general purchasing power of money.Thus the price of anything will be taken as representative of its exchange value relatively to things in general, or in other words as representative of its general purchasing power.(8*)But if inventions have increased man's power over nature very much, then the real value of money is better measured for some purposes in labour than in commodities.This difficulty however will not much affect our work in the present volume, which is only a study of the "Foundations" of economics.
NOTES:
1.For, in the words in which Hermann begins his masterly analysis of wealth, "Some Goods are internal, others external, to the individual.An internal good is that which he finds in himself given to him by nature, or which he educates in himself by his own free action, such as muscular strength, health, mental attainments.Everything that the outer world offers for the satisfaction of his wants is an external good to him."2.The above classification of goods may be expressed thus:
