CH. 8 COMPARISONS OF PURCHASING POWER 109

for tlie value of gold or silver money over the past3000 years, I doubt if we can do better than to baseour composite on the price of wheat and on the priceof a day’s labour throughout that period. 1 We can-not hope to find a ratio of equivalent substitution forgladiators against cinemas, or for the conveniences ofbeing able to buy motor-cars against the conveniencesof being able to buy slaves.

2. The Method of Limits

Let us now confine ourselves to the cases where wecan assume that tastes, etc., are substantially the samein the two positions under comparison and that nothinghas changed except relative prices. In these circum-stances it is legitimate to argue that a given incomein terms of commodities would yield the same real-income in both positions. Although, therefore, the-character of consumption in the second position haschanged as a result of changes in relative prices, wecan nevertheless be sure that the corresponding real-income is the same as would have been yielded by asimilar distribution of consumption in the first position.

These considerations permit a method of establish-

1 Cf. Marshall, Money Credit and Commerce, pp. 21, 22 : “ Records ofprices of staple grain have a double significance. For in every age exceptour own, by far the greater part of the wages of ordinary labour has beengenerally taken out in these grains ; and by far the greater part of thatproduce of the fields, which the actual cultivators in past times have retainedfor themselves, has consisted of them. Further, the methods of raisinggrain have remained nearly constant throughout the ages. . . . Hence itarises that the wages of ordinary labour and the price of the standard grainin the country, or district, under observation were commonly taken as repre-sentatives of value in general. Such a course would be wholly unreasonablenow in regard to any country of the western world. But it was reasonablein the times of Adam Smith and Ricardo ; and it is necessary to interpret‘ classical ’ doctrines as to value by reference to it. Locke, writing twogenerations earlier, had said ‘ that grain which is the constant general foodof any country is the fittest measure to judge of the altered value of thingsin any long tract of time.’ See Works, vol. v. p. 47.” This traditional methodfor dealing with the value of money is, it will be seen, an example of theHighest Common Factor Method. Cf., also, Adam Smith , The Wealth ofNations, Bk. I. chap. xi.