Friedrich von Wieser

“ Value in use and value in exchange, understood in the sense we have employed hitherto, are to be distinguished not only in extension but also in intension. Value in use is not only particular but also subjective; value in exchange is not only general but also objective. There is no doubt a subjective exchange-value as well, which plays an extremely important part in economy, but for brevity's sake there shall be no mention of that here.
If value is understood as subjective, then the question, why commodities are valuable, becomes equivalent to, why do men prize commodities? ”

“ A field cultivated with the same expenditure of capital and labour as another field of greater fertility yields a larger return. This surplus crop is by no means produced by the field alone, capital and labour as well are wrought into it; nevertheless every agriculturist will rightly charge not the capital nor the labour with the crop, but, simply and solely, the better field, the value of which is raised by just the amount of the surplus. ”

“ We value commodities for the sake of their utility, yet we do not value utility when it is coupled with abundance; in other commodities we value as a rule not the total, but only the marginal, utility; in the cost of production we value, instead of the utility of the product itself, the utility of other extraneous products ”

“ If it were not essentially required in economic procedure, that we should regard a number of commodities, similar in quality but affording different degrees of utility, as economically equal, the fact of their being held as equal in price would be an offence against economic procedure, detrimental to either buyer, or seller, or both. If there were no better explanation of this fact than competition, if its foundation did not lie deep in the nature of each individual economic subject, economy would go astray wherever and whenever it proceeded on the principle of prices reckoned in this manner. ”

“ The maximum price which the consumer can ever afford to give does not exceed what he, according to his own estimate of money, looks upon as the full equivalent of the value in use which the commodities he is buying will have for him. And if he wishes to buy several items of the same commodity he measures the value of an item by marginal utility. A wealthier purchaser therefore, whose need is equally insistent, will be able to afford a higher price, since he in his pecuniary estimates will equate with the same value in use a larger sum of money. ”

“ Sax, starting from this idea, has carried out the theory of value in a system of progressive taxation. I should only like to point out a remarkable political phenomenon. The state, in taxing citizens unequally, suffers itself to be paid unequally for its equal services,—and we find this equitable. In the market every purchaser, from the richest to the poorest, pays the same price for the same service, the millionaire paying for what he buys in common with the beggar by the beggars standard,—and this we find natural. ”

“ It would, for example, be impossible for me to decide whether to purchase a machine and what price to consent to give for it, if I did not know how to calculate the work it would do for me, i.e., what share in the total return to my undertaking should beimputed to it in particular. Without the art of imputation there would be no business calculations, no economic method, no economy, just as without the system of criminal charge, there could be no society. ”

“ I touch at this point on the difference, alluded to at the outset, which exists between Jevons and the Austrian school respecting the conception of value and the principle of the law of value. For us, Jevons holds too closely to the narrower view, which sees in price the only manifestation of value. We conform to an idea always firmly maintained in Germany, when we say that in economy value decides everything, not only the price of the bargain, but also what amount of consumption, productive employment, and outlay entering into it is permissible. ”

“ But precisely on this ground do we hold the view that the current mode of reckoning in economy by exchange-value is not a dictum of the market, but, in spite of many peculiarities conditioned by the market, a dictum of economy itself. ”

“ Land, capital, and labour yield a return only by their combined agency. Now what is the clue to the distribution amongst the separate effective factors of this joint return? The comparison with stocks and dividends is of no further use to us here, for one share in an investment is like another, while land, capital and labour are diverse. Even if labour alone be considered, the difficulty still confronts us. How are we to divide a machine, constructed by a number of labourers according to the instructions and under the direction of the inventor, so as to refer every part to its true originator? ”

“ The agents of production, land, capital, and labour, derive their value from the value of their products, ultimately, therefore, from the utility of those products. As stock is valued by the expected dividend, so is the field by the expected crop. ”

“ The guiding principle in devoting commodities to public purposes, as in consumption generally, should be the consideration of their value. The scale of state-consumption and state-mechanism, which each citizen will wish to see, must vary in proportion to his own valuation of commodities. It is only reasonable that the rich man, who retains, after covering his most pressing personal outgoings, a surplus of goods for any other purposes, should desire a more expanded public expenditure than the poor man. ”

“ The value of the productive elements is determined on the ground of utility as afforded by the products, and this holds good of the labour no less than of the coals, the machinery, and all the other means of production. To insist then on cost of production is ultimately to insist on some utility. There is no new principle to be discovered, none save utility. ”

“ Thus we see exchange value and price following the law of margins like value in use, with this qualification, that they are determined directly, not by marginal utility but by marginal equivalence, in which, not only supply and demand, but also the wealth of the purchasers is taken into account. Rare articles of luxury, e.g., precious stones, fetch very high prices, because the rich contend for them with the poor and the richest with the rich. Stock goods supplied for imperative needs command very low prices, corresponding to the purchasing power of the lowest strata of the population. ”

“ According to the economic stratification of any given nation, we may reproduce in terms of money the marginal utility of stock commodities by a very low equivalent, and that of articles of luxury by a very high equivalent. Hence from prices as such we can draw no inference whatever as to the national economic significance implied by commodities, in virtue of the relation of their supply to need as such; the picture they reveal is distorted, because it is unequally projected. Prices cannot be taken without qualification as the social expression of the valuation of commodities ”

“ I impute utility only to those commodities which are not to be had in profusion, and on which I feel myself dependent in consequence, I meanwhile reflecting, that with every portion lost from my possession I lose a definite utility not to be had without it. Now the agriculturist, in losing a cow from his yand, does not forfeit with her the whole return on his farming, but suffers only a certain diminution in it, just as in the opposite event of his introducing some improved machinery he gains a certain increase. ”

“ It is concerned only with the relations between commodities, nowhere with those between men. There is no definition under which we may combine both conceptions of value, the subjective and the objective. We must be content with showing their mutual relation.
In economy both find application. Every decision arrived at by any one respecting a commodity is based upon his subjective judgment of value. Price and exchange-value on the other hand furnish the general principles of exchange and of the calculus of production. ”

“ Rent is paid for land, interest for capital, wages for labour, because in subjective valuation a share of the aggregate return is imputed to land, a share to capital, a share to labour; nor could any more precisely quantitative expression be found for price, were it not that subjective value, by its bearing on supply, number, and cost of production, already admitted of computation. ”

“ Experience shows, that in very many cases the value of products is less than equivalent to the utility they bestow, because it is adjusted to the measure of the expense required for their production. Hence a great many theorists have concluded that value is not derived from utility, but is governed by another principle, viz., cost of production. ”

“ The phenomenon requiring explanation is, the love of men for material goods, auri sacra fames, side by side with the love of men for men, and their love for moral goods. The Austrian school, while indicating utility as the root and measure of that love, seeks to establish this principle in the sphere of material objects, as the utilitarians do in estimating moral values. And yet how complicated even in the material world is the calculus of self-interest! ”

“ Taken thus, products present themselves not merely according to their sources, but according to their value as well, as the syntheses of their productive elements. That product which requires them in greater quantity has the greater value. ”

“ It does not copy nature, but gives us a simplified representation of it, which is no misrepresentation, but such as sharpens our vision in view of the complexities of reality,—like the ideal picture which the geographer draws in his map, as a means not to deception but to more effective guidance, he meanwhile assuming, that they who are to profit by the map will know how to read it, i.e., to interpret it in accordance with nature. ”

“ Those misshapen prices which are engendered by monopolies may be abolished by the suppression of monopolies, and those which, especially in the matter of wages, arise from the distress in the position of the labourer, may be removed by a general coalition of labourers; but those which result from inequality in the means of purchasers are, I take it, inextricably bound up with our economic régime. ”

“ The reason is, that it would thereby leave unexplained all individual decisions in economic matters, e.g. it would not even explain why any one buys. For by objective standards wares and prices have the same value; by objective standards we give equals for equals, for which we should have no motive. ”

“ But it is just in this sense that the problem does not admit of statement, if it is to be correctly stated in the light of practical economy. What is required in economy is, not physical division of the product amongst all its creative factors, but the practical imputation of it, imputation in the sense used by a magistrate in speaking of a legal 'charge.' A sophist might maintain the impossibility of determining, amongst the thousand conditions, without the conjunction of which a murder could not have been effected, what share in the deed fell on the murderer ”

“ The readiest way of expressing in figures the expenditure of materials and labour required to produce any article is to give the supplies to be consumed, the number of working days, the number of tons of coal, the time during which machinery is at work, the figure of each of the infinite number of items used in the production, and so on. ”

“ Thus, to take as example a simple though comparatively unimportant case, the effective capacity of two machines would be judged by the quantity of products they yielded, in which it would not occur to any one to assume the value of those products, equal quality being assumed, as other than equal. ”

“ That which can be sold dear is produced more eagerly at greater cost in larger quantities. To this extent is our production diverted from its purely economic aim, to minister to wants as such and allay them as far as possible. ”

“ A just system of taxation will take account of these variations in the valuations made by different classes of people, and adjust the fiscal burdens to the citizens by covering the costs of state-administration with contributions graduated accordingly. ”

“ If Ricardo's idea were correct, and commodities were, in the strict sense of the word, of no importance to us, except that the possession of them saved us labour, which we should otherwise have to apply elsewhere, then the difference between rich and poor would perforce be quite other than what it unfortunately is. The rich man's privileges would consist only in possessing those things which the poor man will also pcrsssss, but which he must first give himself the trouble of acquiring ”