The central idea in the “philosophical” account is that labor-cost is the essence of value. It appeals primarily to the reader’s introspective judgment for confirmation. The primitive state of society by which it is illustrated is quite imaginary. The “empirical” account is an outwardly observed tendency of market competition. In the progress of the thought of English economists upon value, the “philosophical” labor-cost account becomes more and more attenuate, until in the _Principles_ of Professor Marshall, as before observed, nothing remains of it but a note on “Ricardo’s Theory of Value.” Professor Marshall’s general theory of the equilibrium of normal demand and supply is the classical “empirical” account enlarged and greatly improved, with some of the more general laws of the newer utility theory incorporated into the whole to serve as the ultimate principles of demand. While the “philosophical” account was fading away, the “empirical” account was becoming virtually the whole theory of value. Strange to say, Ricardo contributed very little to the advancement of the empirical account as such. The direct line of descent of this doctrine is traceable from Smith’s _Wealth of Nations_, through the _Principles_ of Malthus and J. S. Mill, to Marshall. Neither Ricardo nor Cairnes can be considered to stand in the line.[6] Adam Smith and Malthus considered ground-rent to be a “component part” of entrepreneur’s cost (not that they employed the term entrepreneur’s cost), co-ordinate with wages and “profits of stock.” Ricardo never stated a law of entrepreneur’s cost plainly, formally, as such, though he gave it an obscure recognition as a source of difficulty to the pure labor theory of value. But he influenced its form profoundly, for when the doctrine passed into the hands of J. S. Mill, the latter removed the rent of land from among the elements of cost, leaving wages and interest.[7] While many points of detail will appear in the following pages, it will be found necessary to trace the relations of the two great accounts of value, the “philosophical” and the “empirical,” in the writings of every economist hereafter considered. CHAPTER II ADAM SMITH’S PHILOSOPHICAL OR PRIMITIVE ACCOUNT OF VALUE.