59

SECTION IV.

OF VALUE.-VALUE IN USE.

The economic value of goods is the importance they possess for the purposes of man, considered as engaged in economy (housekeeping, husbandry.1)

Looked at from the point of view of the person who wishes to employ them in his use directly, doubtless the oldest point of view, value appears first as value in use; and here, according to the difference of subjective purposes it is intended to subserve, we may speak of production value or enjoyment-value; and of this last, in turn, as utilization-value, or consumptionvalue. The value in use of goods, is greater in proportion as the number of wants they are calculated to satisfy are more general and more urgent, and in proportion as they are gratified by them more fully, surely, durably, easily and pleasantly.2 Hence, it is seldom possible to find an accurate mathematical expression of the relation which exists between the value in use of different goods. Thus, it is possible to estimate the

from things, compulsory custom or good-will of every description; as for instance, the seventy-two places of the agents de change in Paris, each of which was worth more than a million of francs; or the right of navigating the Elbe as far as Magdeburg, which, about the beginning of this century, was worth in every instance about 10,000 thalers. (Krug, Abriss. der St. ŒEkonomie, 62.)

1Schäffle, N. Ekonomie, 10. In the German language, this same word is used to designate utility, and sometimes useful objects (so called values). A clear distinction, however, should be made between utility and value in use. Utility is a quality of things themselves, in relation, it is true, to human Value in use is a quality imputed to them, the result of man's thought, or of his view of them. Thus, for instance, in a beleagured city, the stores of food do not increase in utility, but their value in use does. Compare Schäffle, System, III, I, 170.

wants.

2 Genovesi, Economia civile (1869), II, I, 7. L. Say; De la Richesse individuelle et de la Richesse publique (1827), 29, estimates the value of goods according to the degree of discomfort attendant on the privation of them.

3 Friedländer has, however, made a general attempt in this direction. Theorie des Werthes (Dorpat, 1852). But says Th. Fix (Journal des Econ

nutritive power of different kinds of goods, the value of wheat or of hay for instance, but not the goodness or quality of their taste, of the attractiveness of their appearance, etc.

But, the more men become used to comparing the aggregate of human wants, and the aggregate of the goods which minister to the satisfaction of these wants, as if they were two great wholes, gradually shading each into the other, the more does the value in use of the different kinds of goods assume, for purposes of social rating or estimation, a fungible character. If a new kind of goods be produced or discovered, which satisfies the same wants in a more complete manner than another, the latter, although it has suffered no change, generally loses in the value put upon it, especially if the new goods can be produced in any desired quantity. An instance of this is the change effected in the value of the dyers weed, woad, by the introduction of indigo.

Things present in quantities greater than the amount necessary to supply the want they satisfy, preserve their full value in use, to the limit of that want, after which they are simply an element of possible future value, dependent on an increase of the want; but they have no value for present use.5

The economic valuation of goods, however, is by no means exhausted, so far as the isolated individual housekeeper is concerned, by the mere establishing of its value in use. As the systematic effort of every rational individual in

omistes, 1844, IX, 12): "It is as impossible to establish a scale of values, as it is to find an exact mathematical and permanent measure of our wants, passions, desires, tastes and fancies."

4 Compare Knies, Geld und Credit, 1873, I, 126 ff. The very respectable attempt made by A. Samter, Sociallehre (1875), with the idea society-value (Gesellschaftswerth) covers too nearly the idea of value in exchange. Further research will here have to be made, with the idea of “impotent need," inasmuch as, from a high ethical, national-dietetical point of view, the question is asked whether, to what extent, and how, "impotent need" may be made a potent one.

Friedländer, loc. cit., 50. If too many copies of the very best book be published, there is a certainty that a number of them will remain little better than waste paper.

his household management is directed towards the obtaining, by a minimum of sacrifice of pleasure and energy, a maximum satisfaction of his wants, even an Adam or a Crusoe is, in his economy, compelled to estimate not only what the goods to be acquired accomplish (value in use) but also what they will cost-cost-value. Even the most indispensable kind of goods, for instance atmospheric air, is considered to have no value, when it can be obtained in sufficient quantity, without any sacrifice whatever."

SECTION V.

VALUE.-VALUE IN EXCHANGE.

The value in exchange of goods, or the quality which makes them exchangeable against other goods, is based on a combination of their value in use with their cost-value, such as men in their intercourse with one another will make. Without value in use, value in exchar.ge2 is unthinkable.

But there are many, and even indispensable goods which are not at all susceptible of being exchanged; for instance, the light and heat of the sun, the open sea etc.3 Other goods,

6 Schäffle, System, II, aufl., 55. See also his Kapitalismus und Socialismus, 1870, 31, 35, 43.

1 Thus Kleinwächter (Hildebrand's Jahrbücher für N. Oek. und Statistik, 1867, II, 318), defines value in exchange-value in use + costliness. According to Schäffle, it is "a covert comparison between the cost-value and the value in use of the two kinds of goods to be exchanged." (Kapitalismus und Socialismus, 35.)

An intermediate dealer can, so far as he is himself concerned, attribute value in exchange to goods only to the extent that they have use for the last person who has acquired them. Hence, Storch calls value in use immediate, and value in exchange, mediate value. As the English are always wont to express the immediate in words of Germanic origin, and the mediate in words borrowed from the Latin, Locke calls value in use "worth," and value in exchange, simply "value.” (K. Marx, Das Kapital. Kritik der politischen Ekonomie, 1867, 1, 2.)

It is, of course, otherwise when, for instance, a beautiful sea view, or a desirable position as regards air and sunshine, is connected with a piece of land.

although capable of being exchanged, have no value in exchange, because they exist in superabundance, and may be obtained by everyone, without trouble and without reward; for instance, drinking-water in most places, ice in winter, and wood in the primeval forest. Moreover, the idea of such "free goods" is in great part relative. The water of a river may, for drinking purposes, be "free" goods, and yet, for purposes of irrigation, have great value in exchange. (John Stuart Mill).

But, goods, to obtain value in exchange, must, in addition to their value in use, a value which must be recognized by a certain number of persons, at least, have the capacity of becoming the exclusive property of some one individual, and therefore of being alienated or transferred; and this alienation or transfer must be desired because of the difficulty to become possessed of them in any other way.

4 In Ravenna a cistern had greater value in exchange than a vineyard: Martial, III, 56. In Paris, too, drinking water, which is transported only with considerable trouble, costs 13 thalers per cubic meter. We may also mention snow and ice in summer, which last sells in the capitals of southern Europe at 0.34, silber groschens per pound. According to Carey, "utility" is the measure of man's power over nature, "value," the measure of nature's power over man. He very inaccurately adds, that both are always in an opposite direction. (Principles of Social Science, 1861, VI, ch. 9.)

Hence Ad. Müller calls value in use, individual value, and value in exchange, social value. The Germans call the value of goods whose value in use is recognized by only one person, Affectionswerth, (affection-value) a value which influences its value in exchange only when the individual who holds it in high esteem is not himself the possessor of the goods. An instance of this latter is a piece of paper covered with notes, intelligible only to the maker of them.

The very important difference between value in use and value in exchange was recognized even by Aristotle. Aristot. Pol. I, 9. Hutchinson, System of Moral Philosophy (1755), II, 53 ff. The Physiocrates speak very frequently of valeur usuelle and vénale, on which, according to Dupont, Physiocratie, CXVIII, the difference between biens and richesses is based. La valeur d'un septier de blé, considéré comme richesse ne consiste que dans son prix. (Quesnay, éd. Dairc, 300.) Turgot distinguishes between "valeur estimative" and "échangeable or appréciative;" the former designating the relation between the amount of energy, physical and mental, which one

SECTION VI.

VALUE. ALLEGED CONTRADICTION BETWEEN VALUE IN USE AND VALUE IN EXCHANGE.

Recent, and especially socialistic,' writers have alluded to the great "contradiction" between value in use and value in exchange. This contradiction, however, vanishes when the above idea of economy, and the two sides or aspects, which economic value presents, are kept steadily in view. It is said, for instance, that a pound of gold has a much greater value in exchange than a pound of iron; while the value in use of iron, is incomparably greater than that of gold. I question

is willing to spend in order to obtain the goods, to the sum total of his ener⚫gies, physical and mental; the latter the relation between the aggregate like ∙energy of two persons which they are willing to spend in order to procure cach of the goods to be exchanged, and the sum total of their energies in ⚫ general. (Valeurs et Monnaies, p. 87, seq., éd. Daire.) Ad. Smith, in his Wealth of Nations, I, ch. 4, shows that he knew the difference between value in use and value in exchange; but he afterwards drops the consideration of the former, altogether. In this respect he has had only too faithful and one-sided followers among his countrymen, so that Ricardo, Principles, ch. 28, asks what value in exchange can have in common with the capacity of commodities to serve as food or clothing. (See, however, ch. XIX seq.) Many "free traders" would have no cbjection to interpose, if a people should abandon the cultivation of wheat, etc., to devote themselves exclusively to the manufacture of point lace, provided the latter had a greater value in exchange. The two degrees of the idea of value have been examined with much thoroughness by Hufeland in his Neue Grundlegung der Staatswirthschaftskunst (1807), I, 118 ff.; Lotz, Revision der Grundbegriffe (1811 ff.), I, 31, ff.; Storch, Handbuch, 1; Rau, Lehrbuch, I, 56, ff.; Thomas, Theorie des Verkehrs, I, p. 11; Knies, Tübing. Zeitschr. 1855; Bastiat's declaration (Harmonies, p. 171 ff.): that "valeur" (by which Bastiat means only value in exchange),=le rapport de deux services échangés, contains a two-fold error: the ambiguity of the word services, which applies equally to a yielding or affording of utility, as to useful labor, and the error that the labor necessary to produce a commodity, and of which the purchaser is relieved, alone determines its value in exchange. Compare infra §§ 47, 107, 110, 115 ff., and Knies, loc. cit., p. 644 ff.

'Proudhon, Système des Contradictions économiques, 1846, ch. 2.