Value (economics)

“ Utility is an absolute term indicative of essential desirability. Value is a relative term indicative of the relative Utility of commodities; or, more precisely, of the degree of desirability of one variety of Labor or Land or form of Wealth in comparison with other varieties. One variety of Labor or of Land or of Wealth may be twice as desirable as another, unit for unit, in which case one unit of the former will exchange in Trade for two units of the latter. Thus the relative Utility of a Commodity is indicated in Trade by its Value. ”

“ It might seem that if the value of a commodity is determined by the quantity of labor bestowed upon its production, the lazier a man, or clumsier a man, the more valuable his commodity, because the greater the time of labor required for finishing the commodity. ”

“ It is of course involved in this simple-looking but far-reaching change from "Wealth" to "Value," that Economics become at once and throughout a science of Persons buying and selling, and no longer as before a science of Things howsoever manipulated for and in their market. ”

“ And since persons who want Money (which as a common medium of Trade is in effect everything in the channels of Trade) are so many in comparison with those who at a given time want shoes, Money infinitely66 diminishes the difficulties of trading commodities.
Money is also a common denominator of Value, as we have already observed. Without it each of us would be obliged to express the Value of each exchangeable object in the complicated terms of all other exchangeable objects. ”

“ Everyone knows, if he knows nothing else, that commodities have a value form common to them all, and presenting a marked contrast with the varied bodily forms of their use-values. I mean their money form. ”

“ By MONEY, I understand any commodity, which purely in itself is of no material use to man for the purposes above-mentioned, but which acquires such an estimation from his opinion of it, as to become the universal measure of what is called value, and an adequate equivalent for any thing alienable. ”

“ But this variation is not that of the economists, who place in their list of the causes of the variation of values, not only the means of production, but taste, caprice, fashion, and opinion. In short, the true value of a thing is invariable in its algebraic expression, although it may vary in its monetary expression.
2. The price of every product in demand should be its cost in time and outlay—neither more nor less: every product not in demand is a loss to the producer—a commercial non-value. ”

“ It is no part of us as objects. What, however, does belong to us as objects, is our value. Our natural intercourse as commodities proves it. In the eyes of each other we are nothing but exchange values. Now listen how those commodities speak through the mouth of the economist. "Value"— (i.e., exchange value) "is a property of things, riches"— (i.e., use-value) "of man. Value, in this sense, necessarily implies exchanges, riches do not." [34] "Riches" (use-value) "are the attribute of men, value is the attribute of commodities. A man or a community is rich, a pearl or a diamond is valuable ... ”

“ Economic values are dubiously objective. We use both forms of expression. We say on the one hand, "I want wheat," "There is a demand for wheat," or, on the other, "Wheat is worth one dollar a bushel." Conversely, "There is no demand for the old-fashioned high-framed bicycle" or "It is worthless." The Middle Ages regarded economic value as completely objective. A thing had a real value. ”

“ In the "Essays on Political Economy," since reprinted as "Munera Pulveris." See p. 10, § 12 of that book, where the passage is printed in italics: "The reader must, by anticipation, be warned against confusing value with cost, or with price. Value is the life-giving power of anything; cost, the quantity of labor required to produce it; price, the quantity of labor which its possessor will take in exchange for it." ”

“ In the first passage we are told, that if every thing fell to half its value, from abundance, the society would be equally rich, because there would be double the quantity of commodities at half their former value, or in other words, there would be the same value. ”

“ Neither utility nor costs nor supply and demand furnishes an adequate basis from which the quantity theory, or any other theory of the value of money can be deduced. The cost theory, and the supply and demand theory, in their present-day formulation, are really not theories of value at all, but are theories of prices, theories which presuppose value, and money, and a fixed value of money. ”

“ In order to decide this point, it must be considered, that value is a relative term: that the value of a commodity is not a name for an inherent and substantive quality of the thing itself, but means the quantity of other things which can be obtained in exchange for it. ”

“ 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. ”

“ Some have given the name of wealth to all things which tend to the use or enjoyment of mankind, and which possess exchangeable value. This last clause is added to exclude air, the light of the sun, and any other things which can be obtained in unlimited quantity without labour or sacrifice; together with all such things as, though produced by labour, are not held in sufficient general estimation to command any price in the market. ”

“ The value of Money, in a state of Freedom, conforms to the value of the Bullion contained in it. But money, no more than commodities in general, has its value definitely determined by demand and supply. The ultimate regulator of its value is Cost of Production. ”

“ It will come out in greater fulness and force when, having taken into consideration the theory of Value and Price, we shall be enabled to exhibit the law of profits in the concrete—in the complex entanglement of circumstances in which it actually works. ”

“ Every thing receives a value from its use, and the value is rated, according to its quality, quantity and demand. tho’ goods of different kinds are equal in value now, yet they will change their value, from any unequal change in their quality, quantity, or demand. ”

“ The value of all commodities which can be made in any quantity desired consists in the quantity of labour which is expended for the purpose of producing them. The value is expressed in the costs of production, the most important components of which are wages and profit. ”

“ In a state of society, however, in which the industrial system is entirely founded on purchase and sale, each individual, for the most part, living not on things in the production of which he himself bears a part, but on things obtained by a double exchange, a sale followed by a purchase—the question of Value is fundamental. Almost every speculation respecting the economical interests of a society thus constituted, implies some theory of Value: the smallest error on that subject infects with corresponding error all our other conclusions ”

“ It will be interesting to consider the effort to solve the problem of the value of money by means of supply and demand on the lines employed by Mill, where demand for money is defined as quantity of goods to be exchanged, and supply of money as quantity of money times rapidity of circulation, and where physical quantities are treated as the relevant factor, no value concept of the sort here contended for being presupposed. ”

“ The difference between the numbers in the last column, and the uniform num ber expressing the value of labour, shows exactly the difference between the value of the labour which has been employed upon a production, or its cost, and the labour which that, production will command, or its natural, and exchangeable value; which, where profits and wages are alone concerned, must be exactly equal to the additional value occasioned by the amount of profits. ”

“ Our analysis has shown, that the form or expression of the value of a commodity originates in the nature of value, and not that value and its magnitude originate in the mode of their expression as exchange value. ”

“ Modern economists—chiefly those of the Austrian school—have analyzed the subject more thoroughly, especially the relation between the two conceptions, and have shown that utility or subjective value, as it is generally termed by them, is an expression both of human desire and of the quantity of the necessary commodity available to satisfy such desire. ”

“ If we assume the quantity of goods on sale, and the number of times those goods are resold, to be fixed quantities, the value of money will depend upon its quantity, together with the average number of times that each piece changes hands in the process. ”

“ According to this analysis, value, considered from the point of view of the association which producers, by division of labor and by exchange, naturally form among themselves, is the PROPORTIONAL RELATION OF THE PRODUCTS WHICH CONSTITUTE WEALTH, and what we call the value of any special product is a formula which expresses, in terms of money, the proportion of this product to the general wealth.—Utility is the basis of value; labor fixes the relation ”

“ It follows, therefore, that to say that "a thing should bring what it is worth," which is the same as to say that "its price should be measured by its value," is quite the opposite of affirming that it should bring as much as it cost the producer to produce it. ”

“ In the last resort production will not be carried on unless labour and capital receive a sufficient reward and the sufficient reward is the normal value of the factors of production. But when we are comparing the relative values of commodities and are seeking to explain, for example, how it is that for long periods of time these relative values are stable, or conform to some regular law, we have to break up the elements of value into the constituents of the expenses of the various factors of production. ”

“ It should however be carefully remembered, that in this whole argument I am supposing money to be of an invariable value; in other words, to be always the produce of the same quantity of unassisted labour. Money, however, is a variable commodity; and the rise of wages as well as of commodities, is frequently occasioned by a fall in the value of money. ”

“ My own theory of value, which finds the roots of economic value ramifying through the total social psychological situation, rather than in utility or labor-pain alone, involves possibilities like these. ”

“ In order for a commodity to derive value from consumption our possessor of money must be fortunate enough to discover a commodity whose use-value has the peculiar property of being a source of value, whose consumption would imply the expenditure of labor and thus be value-producing. ”

“ Value then essentially differs from riches, for value depends not on abundance, but on the difficulty or facility of production. The labour of a million of men in manufactures, will always produce the same value, but will not always produce the same riches. ”

“ If exchange value is nothing but mere labor-time contained in commodities, how can commodities which contain no labor possess exchange-value, or in other words, whence the exchange value of mere forces of nature? ”

“ This average rate of profits, added to the actual cost price of a given commodity, constitutes its price of production, and it is this price of production which appears to the empirical mind of the business man as the value of the commodity. The real law of value, on the contrary, disappears from the surface in a society where, as to-day, commodities are bought and sold against money and not exchanged against other commodities. ”

“ In considering Value, we were only concerned with causes which acted upon particular commodities apart from the rest. Causes which affect all commodities alike, do not act upon values. But in considering the relation between goods and money, it is with the causes that operate upon all goods whatever, that we are specially concerned. We are comparing goods of all sorts on one side, with money on the other side, as things to be exchanged against each other. ”

“ Here is the illicit leap from marginal demand price to marginal utility which all utility theorists make, sooner or later! It is true that costs in one place are reflections of demand elsewhere. But it is not true that costs in one place have any definite quantitative relation to utilities in another place! ”

“ 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, 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 wealth consists of things exchangeable at rated prices. ”

“ The values of these goods may be measured and compared by means of the quantity of labor that the man has thought it worth while to perform in order to get them. If he values one of them highly enough to think it worth while to work for an extra period of twenty minutes at the end of a day in order to get it, it may be said to have one unit of value ”