Cost of Production.
The cost of production of any commodity is simply the labour required to produce it; it does not matter whether the labourer be a Millais or a coal-heaver. Wealth being required, there is only one way of getting it, and that is by labour, and the labour of all is equally necessary to the production of the common stock. The problem to assess the utility of each man's production would be quite insoluble. There would even be a difficulty in deciding whether a day's labour of Turner or West, or of Browning or Tupper, were worth most. It would be easier to assess the relative value of two navvies' work, one of whom could dig ten and the other only five yards of earth in a day. Even in this latter case the labour of both men would be equally requisite to the production of the total stock, if it were necessary to dig fifteen yards a day. A capitalist must take into account not only the labour which was required to produce his wares, but also the rate of wages he was obliged to pay his workmen, and the interest he would be obliged to pay to other capitalists; from his point of view, therefore, both interest and wages form part of the cost of production.
It would be well to keep distinct what is essential under all circumstances from what is due to the accidental conditions under which society may happen to regulate its labour; and as a medium of exchange, like money, is necessary in a community divided into capitalists and labourers, I think the capitalists' costs of production should be called the “price of production.”
The exchange value of wealth tends to be in proportion to its price of production and not to its cost.
[Note.—Mill makes a note that the reviewer in the Edinburgh Review, (October, 1844), suggested a definition of implements very similar to that which I have proposed, but I have not been able to procure a copy of the review. See Book I., chap. ii., sec. 4.]