Value theory

“ The theory of value, in its concrete fulness, is the special interest of the active business man, and especially of the business man who wishes, not merely to adapt himself to changes in values, but also in part, to control and manipulate those values. ”

“ 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. ”

“ 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. ”

“ The logical starting-point in the theory of value is in those goods that are in closest touch with feeling, and on this basis may be built up an explanation of values in which reason and forethought have a greater part. Starting from the proposition that psychic income is the foundation of all values, we shall go on, however, to trace causes that give value to all the physical agents, and to the most indirect of want-gratifiers. ”

“ The things, then, to which the state of commercial relations and civil institutions permits a value in exchange to be attached, are those which in the language of to-day are characterized by the word wealth; and to form an intelligible theory we ought to absolutely identify the sense of the word wealth with that which is presented to us by the words exchangeable values. ”

“ It is as though the whole social organism were an individual counting the sacrifices of his most costly labor and getting therefrom a unit for comparing the effective utilities of different goods.
How Primitive Man tests Value.—It is a mistake to suppose that what is essential in value depends on the existence of an actual market in which things are exchanged for each other. In a market, it is true, values are established and their amounts are expressed in ways that cannot be adopted in primitive life. When we buy a thing, we help to fix the value of it and of other things which are like it. ”

“ It is not essential to the purpose of this3 work to enter into an abstract discussion of the theory of value further than is necessary to make clear the fact that the present analysis in no way lessens or invalidates the distinction between the two conceptions of value noted by the earlier economists,—a fact which has been overlooked by some who have accepted the marginal utility theory. ”

“ 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 ”

“ Economic values, and the objects of economic value, have been the data of the static theorist. Given scales of economic value, such that for one quantity of goods of a given kind, a given value per unit will obtain, given all of these value-scales, and given the quantities of goods and services whose values are in question, and static theory will furnish an equilibrium picture, in which the price relations of different kinds of goods are made clear, and their values are measured. ”

“ It makes two abstractions, neither of which is legitimate: first, it abstracts the individual from his vital and organic connections with his fellows, and then, second, it takes from the individual, thus abstracted, only a small part, that part immediately concerned with the consumption or production of wealth. In this process of abstraction, very much of the explanation of value is left out. The whole man, in his social relations, must be taken into account before we can get an adequate theory of value. ”

“ 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. ”

“ Its problems are problems of human nature and social relationships, its laws are psychological laws, particularly the laws of suggestion, [Pg 578] imitation, and the like, its tools are the newspaper, the sign-board, the whispered word, the cigar and the dinner with wine, sound logic, money and credit instruments, the prestiges of men and institutions. For men whose work lies in controlling and making values, rather than in making passive technical adjustments to existing values, the theory of value, as I have defined it, is of supreme importance. ”

“ The abstract idea of wealth or of value in exchange, a definite idea, and consequently susceptible of rigorous treatment in combinations, must be carefully distinguished from the accessory ideas of utility, scarcity, and suitability to the needs and enjoyments of mankind, which the word wealth still suggests in common speech. ”

“ The division of economists into schools, and the war waged between practical men and theorists, have arisen in large measure from the ambiguity of the word wealth in ordinary speech, and the confusion which has continued to obtain between the fixed, definite idea of value in exchange, and the ideas of utility which every one estimates in his own way, because there is no fixed standard for the utility of things. ”

“ It would be easy to elaborate the points in which morals, laws, and economic values are alike, and to show in detail that the theory of economic value is merely a special case of the general theory of social value. ”

“ We may show that all static prices presuppose values whose explanation is in terms of the same phenomena with which dynamics, the theory of prosperity, etc., have busied themselves, namely, considerations drawn from the study of social psychology, including the psychology of suggestion, imitation, mob-mind, the functional organization of minds into a social mind, social beliefs, social values of other than economic nature, and social institutions. ”

“ It is, in fact, obvious that in order to decide correctly at what state of things we ought to aim, we must not only consider what results it is possible for us to obtain, but also which, among equally possible results, will have the greatest value. And upon this second enquiry the comparative valuation of known goods has a no less important bearing than upon the investigation of the Absolute Good. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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 ... ”

“ I expressed this important need in the following passage of my book. “The true ‘value’ of a thing is neither the price paid for it, nor the amount of present satisfaction it yields to the consumer, but the intrinsic service it is capable of yielding by its right use. ”

“ 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. ”

“ 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. ”

“ Hence, he instinctively and incessantly employs this mode of valuation and applies it to everything, including the productions of art and science, and of thinkers, scholars, artists, statesmen, nations, political parties, and even entire ages: with respect to everything produced or created he inquires into the supply and demand in order to estimate for himself the value of a thing. ”

“ Why people want what, why their esteem of the same thing varies from time to time, why they prefer one thing to another, are questions that cannot be answered mathematically. When we look to the taproot of value we come to an enigma of life. And yet, like so many phenomena that defy analysis, value as a function is quite understandable, and as a function it explains the market place, which is the alter ego of Society. ”

“ In this way a single individual, who has wants to be gratified only by exertion, forms an idea of value as founded upon some relation between his [pg 064] wants and his powers, between the desires to be gratified and the qualities of the object expected to give satisfaction.
Since wealth always implies an accumulated store of good things, every one comes to think of the worth of his accumulation as estimated by what it will do at any time, in any place, in satisfying any need. So, most naturally, we associate our ideas of value with trade. ”

“ Wealth, it has been said, consists of things essentially valuable. We now, therefore, need a definition of "value."
Value signifies the strength or "availing" of anything towards the sustaining of life, and is always twofold; that is to say, primarily, Intrinsic, and, secondarily, Effectual.
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 labour required to produce it; price, the quantity of labour which its possessor will take in exchange for it. ”

“ And you will find that the essence of the mis-teaching, of your day, concerning wealth of any kind, is in this denial of intrinsic value. What anything is worth, or not worth, it cannot tell you: all that it can tell is the exchange value. What Judas, in the present state of Demand and Supply, can get for the article he has to sell, in a given market, that is the value of his article:—Yet you do not find that Judas had joy of his bargain. ”

“ What do we say, in fact?
To determine value,—in other words, to organize within itself the production and distribution of wealth,—society proceeds exactly as the mind does in the generation of concepts. ”

“ To a given individual in the market, the economic value of a good [Pg 26] is a fact as external, as objective, as opaque and stubborn, as is the weight of the object, or the law against murder. There are individual values, marginal utilities, of goods which may differ in magnitude and in quality from man to man, but there is, over and above these, influenced by them in part, influencing them much more than they influence it, a social value for each commodity, a product of a complex social psychology, which includes the individual values, but includes very much more as well. ”

“ The doctrine of Value is first presented by him as extremely simple,—the value of a thing depends on the labour employed in producing it. Then, as we go on, we find this is only true of 'the early stages of society before much machinery or durable capital is used,' while it is not meant to be true, even there, of objects that have a 'fancy' value, due purely to their scarcity. ”

“ Remembering the poetic rendering of our concrete experience, we see at once that the element of value, of being valuable, of having value, of being an end in itself, of being something which is for its own sake, must not be omitted in any account of an event as the most concrete actual something. ‘Value’ is the word I use for the intrinsic reality of an event. ”