Absolute value

“ But with the enlargement of mind and its more perfect organization, there arises a new method of appraising values, and so a new type of value altogether. I mean of course the so-called absolute values. Absolute values are never absolute in the sense of absolute completeness; they are relative to two things—to external reality and to our mental powers and organization. [48] They are abstractions; we generalize the value in our minds, and at the same time raise it to the highest pitch of intensity we can. ”

“ Bearer of options.
The common measure of value function rests in the intellectual needs of man. It grows out of the necessity for calculation, for bookkeeping, for understanding what is going on. Any object of value may be used to measure [Pg 419] the value of anything else, just as any object of weight—say an irregular mass of iron—may be put in the balance against some other object, and the relation between the absolute weights of the two objects thus more or less definitely ascertained. ”

“ The value of any commodity estimated in a measure of this kind might with propriety be called its absolute or natural value; while the value of a commodity estimated in others which were liable to variation, whether they were one or many, could only be considered as its nominal or relative value, that is, its value in relation to any particular commodity, or to commodities in general. ”

“ Whenever there is occasion to go back to the fundamental conceptions on which any science rests, and to formulate them with accuracy, we almost always encounter difficulties, which come, sometimes from the very nature of these conceptions, but more often from the imperfections of language. For instance, in the writings of economists, the definition of value, and the distinction between absolute and relative value, are rather obscure: a very simple and strikingly exact comparison will serve to throw light on this. ”

“ Of course there is no such thing as absolute value in this world. You can only estimate what a thing is worth to you. ”

“ The quantity theory, in its usual formulations, is a theory, not of the value of money, in the absolute sense of value, but of the general price-level, the average price of goods exchanged for money. It is not a psychological theory. ”

“ Although we may use the terms final utility and effective utility in a way that makes them nearly interchangeable, it is clear that the qualities for which the two terms stand are by no means identical, and that effective utility must be studied in any complete analysis of value. In distinguishing final utility we assume that the units of the supply of goods of a particular kind are furnished one by one, and we measure the absolute utility of each unit. ”

“ Whether there is any object, which, though it cannot measure the power of purchasing generally under the varying facilities of production and varying state of the demand and supply by which different commodities are affected, may be a correct measure of absolute and natural value as above described, is the specific object of the present inquiry. ”

“ The Value, or WORTH of a man, is as of all other things, his Price; that is to say, so much as would be given for the use of his Power: and therefore is not absolute; ”

“ It is, however, a notable truth that the standard for valuation can be nothing better than an empirical one. Like mathematical quantities, value has no independent existence, but, unlike mathematical quantities, value has not even existence as a quality of one object. ”

“ But when we consider what such a measure implies, we must feel certain that no one object exists, or can be supposed to exist, with such qualities as would fit it to become a standard measure of this kind. It would imply steadiness of value, not merely in one object, but in a great number, which is contrary to all theory and experience. ”

“ If we then ask him what he means by value, he tells us that things are valuable in proportion as they possess utility. If again we ask him to explain to us by what means we are to judge of the utility of objects, he answers, by their value. Thus then the measure of value is utility, and the measure of utility is value. ”

“ This consideration appears to me wholly foreign to the question under discussion.
We agree, I believe, that nothing can be a measure of value which does not itself possess value. We agree too, I believe, that a measure of value to be a good one should itself be invariable, and further that in selecting one thing as a measure of value rather than another we are bound to show some good reason for such selection, for, if a good reason be not given, the choice is altogether arbitrary. ”

“ The mind grasps such a notion with difficulty, if at all. Logic is mechanical and mathematical, and mathematics and mechanics are static. [592] But further, we may in large measure bring the historical considerations into a cross-section picture, when it is a value system that is involved. Past facts exert their influence through present values; and future facts, which may be expected to modify future values, come into the present equilibrium as discounted present worths. ”

“ Nothing can be used as a standard which has not properties in common with the thing to be estimated. That which has length can alone measure length; and that which has value can alone measure value.”
“How then can an ideal standard of value be used at all?”
“Because an ideal value alone is referred to it. But that abstract value is obtained through the reality which is ascertained by the comparison of commodities. ”

“ This principle is that the intrinsic value of a whole is neither identical with nor proportional to the sum of the values of its parts. It follows from this that, though in order to obtain the greatest possible sum of values in its parts, the Ideal would necessarily contain all the things which have all these parts might not be so valuable as some other whole, from which certain positive goods were omitted. ”

“ The differing values of men in a social population are determined, as other values are measured, by the working of the law of diminishing returns.
Roughly stated, this law is that successive additions of any valued thing bring ever diminished returns. The first quantity of anything is of infinite value. ”

“ For my thesis is, that no such connection subsists between the two as warrants any inference that the real value is great because the quantity it buys is great, or small because the quantity it buys is small; or, reciprocally, that, because the real value is great or small, therefore the quantities bought shall be great or small. From, or to, the real value in these cases, I contend that there is no more valid inference, than from, or to, the nominal value with which it is contrasted. ”

“ But if it can be show^n, that any object, the value of which is composed of two elements, is of such a nature that while the value of one of these elements increases, the value of the other decreases exactly in the same degree, such object must be of a constant value. ”

“ And reverting for one moment, before we part, to the difficulty of Philebus about the difference between this principle as a principium cognoscendi or measure, and a principium essendi or determining ground, let me desire you to consider these two essential marks of distinction: 1. that by all respectable economists any true measure of value has been doubted or denied as a possibility: but no man can doubt the existence of a ground of value ”

“ You augment the fundamental value: the circumstances which have before fixed the proportion which the current value bears to this fundamental value cannot but cause the current value to rise until the proportion is re-established. ”

“ Let us conceive of wealth as a mass whose elements are held together permanently by a chemical force, and into which new elements incessantly enter and combine in different proportions, but according to a definite law: value is the proportion (the measure) in which each of these elements forms a part of the whole. ”

“ The fact is, on the contrary, that, since the whole may be organic, the other element need have no value whatever, and that even if it have some, the value of the whole may be very much greater. For this reason, as well as to avoid confusion between means and end, it is absolutely essential to consider each distinguishing quality, in isolation, in order to decide what value it possesses. ”

“ If the quantity theory is not valid here, if the price-level is not absolutely fixed, helpless to change, with these assumptions, then the quantity theory, even as a minor tendency, must be surrendered, and the quantity theorist must admit that the whole line of thought has been fallacious. ”

“ We say that a man is tall, or heavy, or that the room is hot—qualitative statements; or we may say exactly how tall, or how heavy, or how hot—quantitative statements. The distinction between qualitative analysis and quantitative analysis in chemistry implies the same idea. Thus we may speak of a piece of wealth as having a definite quantity of value, or say that the value of the piece of wealth is a definite quantity. ”

“ But, of course, as a matter of fact, none of them do exist quite alone, and hence it may quite consistently allow that, as it is, many of them do have very great value. Concerning kinds of value, other than intrinsic value, it does not profess to lay down any general rules at all. ”

“ But as a measure of quantity, such as the natural foot, fathom, or handful, which is continually varying in its own quantity, can never be an accurate measure of the quantity of other things; so a commodity which is itself continually varying in its own value, can never be an accurate measure of the value of other commodities. ”

“ Value being a ratio, it is impossible for all values to rise or fall simultaneously. The sum of subjective values may increase or decrease,—indeed it is one of the great objects of human endeavour to increase the sum of want-satisfying power,—but the sum of the ratios between these subjective values is constant. ”

“ You are an integral factor, so to speak, of the social problem, but your value is determined by your relation to other quantifies in the complex system with which you are identified. As a segregated unit, you diminish in value. ”

“ It must be allowed, then, that whenever two elements are necessary to the supply, and enter into the composition of commodities, their value cannot depend exclusively upon one of them, except by accident, or when the other can be considered as a given or common quantity. ”

“ We believe it right to attempt to give as logically deduced from the preceding formulas this note of precision in a rather complex question, which, as we think, has not always been rightly looked at, and that, in consequence of the fact that in money, a marketable article of variable value, is associated with a unity which ought to be invariable. ”

“ In the assertion that value is primarily intrinsic, it opposes the idea that anything which is an object of desire to numbers, and is limited in quantity, so as to have rated worth in exchange, may be called, or virtually become, wealth. And in the assertion that value is, secondarily, dependent upon power in the possessor, it opposes the idea that the worth of things depends on the demand for them, instead of on the use of them. ”

“ A thing, for instance, which has evident value with reference to the greatest durability of a race might possess quite another value, if it were a question of creating a higher type. The good of the greatest number and the good of the smallest number are antithetical points of view in valuation ”

“ With respect to the variations in value, of which every thing valuable is susceptible, if we could for a moment suppose that any substance possessed intrinsic and fixed value, so as to render an assumed quantity of it constantly, under all circumstances, of an equal value, then the degree of value of all things, ascertained by such a fixed standard, would vary according to the proportion betwixt the quantity of them, and the demand for them, and every commodity would of course be subject to a variation in its value, from four different circumstances. ”

“ Quit of these three sources of misconception, the reader will have little farther difficulty in apprehending the real nature of Effectual value. He may, however, at first not without surprise, perceive the consequences involved in his acceptance of the definition. For if the actual existence of wealth be dependent on the power of its possessor, it follows that the sum of wealth held by the nation, instead of being constant, or calculable, varies hourly, nay, momentarily, with the number and character of its holders! and that in changing hands, it changes in quantity. ”

“ Chapter IX. Value The Basis Of Exchange. The nature of value.—Perhaps no question in the discussion of wealth is of greater importance than the nature of value. Certainly the measurement of value in all our property is the basis of all exchanges, of all book accounts, and of all inventories. The worth of any piece of property in such estimates always involves some comparison, either of things possessed or of exertion required or of satisfaction yielded. In comparing an apple and a peach, both equally attainable, we may value the peach most highly because it gratifies desires in higher degree. ”

“ Consequently, the value of the variable quantity of produce which, under different circumstances, forms the wages of a given number of men, being composed of the values of the two elements, labour and profits, varying as above described, must be constant, and may therefore, with propriety, be proposed as a standard measure. ”

“ If, therefore, we reject the theory that intrinsic value is always in proportion to quantity of pleasure, it does seem as if we may be compelled to accept the principle that the amount by which the value of a whole exceeds that of one of its factors is not necessarily equal to that of the remaining factor—a principle which, if true, is very important in many other cases. ”