Front Page Titles (by Subject) CHAPTER II: exchange value in the subjective sense - Natural Value
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CHAPTER II: exchange value in the subjective sense - Friedrich von Wieser, Natural Value 
Natural Value, edited with a Preface and Analysis by William Smart (London: Macmillan, 1893).
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exchange value in the subjective sense
The fact that goods can be bought and sold gives a new and powerful impulse to the estimating of values in all individual economies which exchange with one another. In the housekeeping of a Crusoe only the value in use of things obtains; whereas, in all individual economies which trade with each other, exchange value also has to be considere. The best explanation of the nature of exchange value, of its relation to value in use, and of the services which it renders to the individual economy, will be got if we examine separately the different cases of its occurrence.
Money is always, and by all who possess it, estimated according to its exchange value. Its use consists in the spending of it,—in the parting with it in purchase of other goods1 that are expected to satisfy those sensations of want which would otherwise have no provision. The exchange value of money is the anticipated use value of the things which can be obtained for it. The law, therefore, which obtains for the latter obtains for the former; it is demand and supply, according as these express themselves in marginal utility, that decide the exchange value. The various things which determine money value to the individual are the following:—the amount of money which is at his disposal; the nature and quantity of the goods which can be obtained under the existing market conditions and prices; the utility which those goods are able to give, as also the utility already secured by possessions otherwise acquired; and, lastly, the amount and urgency of demand2 The unit of money always receives its value from the least important expenditure which, in the circumstances of the possessor, it serves economically to defray; every larger sum of money, and the entire amount of money owned, contains this marginal unit value as often as there are units. It is inevitable that different persons give very various estimates of value to the same sum of money. The circumstance which most largely influences these estimates is amount of wealth and income.1 The penny is more to the poor man than the shilling to the rich. Every one must be conscious how very important it is, for the proper ordering of his own economic affairs, that he should have an exact idea of the value which money has for him. No one is utterly ignorant of this, and with every good householder the knowledge is almost a part of himself.
Besides money, all goods which are made or held for sale are estimated by their possessors according to this exchange value,—whether it be that the owner cannot himself make use of them, because they are unsuited to his personal needs, or that, although he might be able to use them, the utility they would furnish seems too trifling to be weighed against the proceeds of a sale.2 The proximate basis of valuetion is the expected money proceeds, or the exchange value of that money; the ultimate basis is that use value which is anticipated from the exchange value of the money proceeds. Again the estimate of value leads us back to use value, and again the law of marshal utility obtains. The same good on the same market obtains for all sellers the same price, but how different are the valuetions of that good on the part of those whose whole yearly income is dependent on their sale, as compared with those whose enjoyment would scarcely suffer were they to do without selling them from one year's end to the other!
Finally, numerous goods which their owners have not the smallest intention of selling, are estimated by their exchange value. In illustration we may make use of the example which Böhm-Bawerk, who was the first to examine this particular instance, gives in his Werth (p. 37). A poor man values his overcoat on account of the use he expects from it as a defence against cold, knowing well that, should he lose the coat, he will be exposed to all the severity of the winter weather, as he does not possess sufficient means to purchase another. Even to a man in better circumstances the loss of his overcoat would be a loss; but in this case it could and would be replaced at the price of making another. The rich man, therefore, will not value his coat according to its utility, but according to the cost of procuring it; in his estimation this cost will stand lower than the utility, and to that cost he can always reduce the injury he suffers from its loss. Cases of this kind of valuetion by exchange value are innumerable. All household goods which, when lost or stolen, can be replaced by purchase are thus valued. Here we see that the proximate basis for valuetion is the market price at which the purchase can be made, while the ultimate basis is again a use value; that, namely, which is anticipated in the valuetion of the purchase price.1
To sum up. The exchange value which we have here explained is that value which is ascribed to goods, either by reason of the owners' intention to sell them, or because of the possibility of replacing them by purchase. More briefly stated, it is that value which attaches to goods on account of an anticipated act of exchange. Exchange value in this sense and use value are of the same nature; the former is derived from the latter, and is one of its forms of development Both forms of value follow the same general laws; both are subjective; and the amount of both varies according to personal circumstancea The price of an article never completely expresses the exchange value it has for its owner. This depends further upon the“personal equation”of money to him.
Subjective exchange value cannot be absent in any individual economy without causing the greatest confusion in all its exchange relations. The“personal equation”of money is indispensable in every economy, in order that we may weigh against each other goods estimated according to their use value, and goods estimated according to their exchange value. Without it no expenditure, no purchase, no sale could be logically made. The poor man could not enter the market as a poor man, nor the rich man as a rich. Every separate act of exchange depends upon it, and thus not only the regulation of individual economies, but the whole of exchange depends upon it.
It is most wonderful that a fact of such universal practice, and of so great importance, has, until quite lately, been almost entirely neglected by theory. Menger was the first to give it a clear theoretical explanation, and to adopt it in his system;— and it is not the least of his many services to economics.
Or, as we say simply, in purchase of good— money and goods being generally thought of as in opposition to each other.
For instance, the value of a shilling to me depends (1) on the number of shillings I have to spend; (2) on what and how much I can buy in the shope for a shilling; (3) on what use I can make of the shilling's worth of goods when I get them—which, again, depends (a) on how much I have of similar goods already; and (b) on my natural or acquired capacity of consuming or employing stich goods.—W. S.
See Jevons, p. 152.
Of course the author does not mean that the consideration of possible personal use of his goods ever comes into the mind of the maker or merchant who supplies the market. Their“use”to him is their“exchange.”Wieser is only making out the logical point that even goods made for sale would not be estimated at their exchange value if it were not that the personal use is less than the exchange use.— W. S.
On the change of motive which results from this in the conflict of price see Böhm-Bawerk's Werth (p. 515). I may perhaps be allowed to point out that in my Ursprung des Werthes (p. 185) I alluded briefly to the case described above.