As a promoter of colonisation, Edward Gibbon Wakefield wrote schemes for the settlement of South Australia and New Zealand from a cell in Newgate. He was a fascinating man, a conversationalist, full of energy. He dressed like a gentleman, conservatively but expensively, and his expensive tastes always carried a hint of risk. He married heiresses, first as a love match and then as a desperate act of self-sabotage that saw him in prison after abducting fifteen-year-old Ellen Turner to marry her and inherit her fortune. It was in prison that his writing took shape. Wakefield was not by all accounts a great theorist. But Marx gave him the last chapter of Capital, Volume I, a position no other living economist held, and called what he found in Wakefield’s writings a great discovery. And this is because, presumably inadvertently, what Wakefield’s policy prescriptions revealed was something about capitalism and labour.
The history of the labour theory of value is a history of thinkers and metaphors. Smith’s deer and beaver, Ricardo’s invariable measure, Marx’s abstract labour, Böhm-Bawerk’s rejoinder, Sraffa’s equations. But Wakefield’s "contribution" is not his ideas, but the evidence uncovered in his writings and his actions that illustrated what we might call a natural experiment. In the British colonies the background conditions that classical political economy took as given were (arguably) absent, or at least presented in a form that the European political thinkers did not recognise. Without knowing it, Wakefield had been recording the events.
Marx happily lifted his tale from Wakefield. This is the unfortunate Mr Peel, who shipped £50,000 of means of production, and three hundred working-class men, women and children, to the Swan River colony in Western Australia. On his arrival his workers left to work for themselves on the plentiful free land, and Mr Peel was left without a servant to make his bed, or fetch him water from the river. Peel thought he had remembered all. He came with capital in the shape of things — tools, provisions, money — and discovered that things are not capital.
Capital, to Marx, is a relation and only exists where there is a class of people who have no alternative but to sell their labour. In England that class was already there, the result of centuries of enclosure so complete that it seemed like nature. It had to be manufactured in the colony, and its absence revealed the whole machinery.
What Wakefield did was to see this clearly and to propose a remedy. His "systematic colonisation" depended upon the sufficient price: colonial land was to be sold, not granted, at a price deliberately high enough that arriving labourers could not immediately purchase it. First, they would have to work for wages for some years, and the proceeds of land sales would finance the emigration of more labourers, who in turn would be priced out of the land, and so on. This has been disguised as a way of forcing capitalists (buying land) to finance the emigration of others to Australia and New Zealand. But it is really a way of guaranteeing workers work, away from what we might now call free market forces. Particularly because the sufficient price is not dependent on the cost of production of the land, its fertility, the labour put into it, or the natural supply of land. It is a price calculated backward from the desired social outcome, which was the existence of a dependent workforce. That is why Marx loved this story so much: price as an instrument of power, recorded in an official document.
And that is why Wakefield is so important for the labour theory of value, understood as a framework for distinguishing what people contribute from what markets and institutions allow them to keep (as opposed to the simplistic and, in my view, wrong equation of labour hours with price). It is commonly objected against the LTV that prices diverge from labour values before our very eyes, and that this divergence disproves the theory. Wakefield is the demonstration that the objection is beside the point. Prices diverge from values, of course: Wakefield shows us prices being deliberately set to diverge, openly, to construct a particular distribution of dependence. The sufficient price is not a market outcome that value theory did not predict. It is a political institutional outcome, and it shows that the gap between value and price is not noise in the data but the very place where power dwells.
By example, Wakefield also settles a question the theorists quarrelled over for a century: whether so-called primitive accumulation — the separation of producers from the means of production — was a one-off historical episode, a regrettable prelude, or a permanent structural requirement. As a matter of theory this can be argued forever. For the record, the principles of Wakefield were adopted by the Colonial Office, the systematic colonies were founded upon them, separation was legislated, administered, budgeted for and renewed. Policy is the precondition of the wage relation, and wherever abundance threatens to dissolve it, policy must be actively maintained. For a contemporary test of this claim, all one needs to do is ask what happens in any domain when an uncommodified commons appears: the reflex to enclose it, to price it "sufficiently," and to convert its users into customers or workers has outlived the Colonial Office by two centuries. (Sound familiar, AIs?)
So examples can have more authority than the thinker. You can answer thinkers, but you have to explain examples. Böhm-Bawerk can contest Marx’s derivations, Samuelson can dismiss the transformation as a rubber exercise, and the argument continues in terms that lie within the domain of price theory. But the deserted bedstead of Mr Peel is not a derivation, and the sufficient price is not an equation. They are real records of the social conditions in which value relations exist at all — and of the candour of a man who needed to build those conditions from scratch and who wrote down exactly what they were and what they would cost. Political economy rarely has a control group. In the colonies it got one, and Wakefield, a voluble engineer, became a wonderful (un)reliable witness because he was not trying to be one. It has never had a better demonstration than the labour theory of value.