Front Page Titles (by Subject) CHAPTER III: exchange value in the objective sense - Natural Value
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CHAPTER III: exchange value in the objective 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 objective sense
No one can take his own personal valuetion of money, and of the money value of goods, outside of himself, and apply it to other people. No one will persuade a business man to let him have a commodity at half-price simply by proving that it is more difficult for him to procure the half-price than for some other person to procure double the price. And no business man could sell an article at twice the market price, simply because he could prove that the double gain was necessary to enable him to satisfy his most urgent wants. Every one needs to have an exact subjective estimate of the value of money to himself, as a private individual economising his own resources, in order to decide for himself what attitude he may take up with regard to things outside of him. But this personal attitude can have no effect on the movement of goods in the great economic exchange between one economy and another, or in the end between any economy and his own, except in so far as he may succeed in influencing the prices of gooda It is the prices that absolutely decide in exchange Goods fall to those who pay the highest prices, and—what is most important—the amount expended upon production is regulated by the prices expected from the sale of the goods Those goods which will be sold at the highest prices attract the most means of production. The rank of goods in economic exchange—their external economic power—is absolutely decided by their prices, however individuals may judge as to their intrinsic importance.
When we speak generally of the value of goods we mean the economic rank given them by their prices. A good whose market price is £100 has, in the common usage of speech, absolutely, and for every one, ten times more value than one whose price is only £10. The dearest good is, in the ordinary use of words, also the most valuable. But we must make one single limitation: goods have ascribed to them as value only those prices which are paid for them in the usual run of cases. Exceptional prices, usurious prices, and “cut”prices form no foundation for value; and accordingly goods whose prices fluctuate greatly have, in common usage, no fixed“intrinsic” value.
As a matter of fact some particular designation is indispensable for the ranking of goods in economic exchange, and it is impossible to find any other designation than that of value. And this not simply because we are forced to it from the outside as it were, by ordinary usage of speech, but because it essentially justifies itself. What subjective value does for the individual economy,—measuring every outlay and every return, and deciding the amount of consumption that is permissible and the extent to which production may be extended,—is done for economy generally by this ranking of goods as it is determined by relation to the objective prices. It is the measure for outlay and returns, and upon it distribution and production are dependent But it must be emphasised that the word value alters its original sense somewhat, when transferred from the subjective relation to wants to the objective relation to price. Subjective value represents a distinct feeling; that of being dependent upon the possession of a good for the satisfaction of a want,—a distinct degree of personal interest in goods Objective value, on the other hand, merely represents a definite price; a definite amount of payment which is expected or required in buying and selling. The former has its measure in the different gradations of desire, the latter in the quantities of coin,—in the figures of the price.
Of course internal valuetions of personal interest do, always and without exception, attach to objective value also, but these valuetions are only subjective, being greater for one and smaller for another. Objective value or price is not in the least the expression of the economic valuetion of goods, even when it is the result of economic competition, and of the individual valuetions of all the different members of the economic community. Price is a social fact, but it does not denote the estimate put upon goods by society1 Luxuries are paid for more highly than necessaries, but who would affirm that they are therefore of greater social importance ? Those very persons who, on the market, come to an agreement regarding the price of goods—compelled thereto by the power of circumstances— will each reserve his own judgment upon the importance of the goods to him personally; and that authority which is earliest called upon to deliver the social judgment, the government, is universally considered to be the furthest removed from recognising the prices of goods as a measure of their social importance. A government, indeed, is, for the most part, concerned with the carrying through of just such economic tasks as could not be justified by their money return, if they were not justified by their utility.
In what follows, when the word“exchange value”occurs, I shall always mean“exchange value in the objective sense.” There is no need to formulate the law of“exchange value”; we know it already, if only in a general way. It is the law of price.1
The ordinary conception, which makes price the social estimate put upon goods, has to the superficial judgment the attraction of simplicity. A good A whose market price is £100 is not only ten times as dear as B whose market price is £10, but it is also absolutely and for every one ten times as valuable. In our conception the matter is much more complicated, and according to it we obtain the following propositions. 1. A is paid for with ten times as much money as B: its price is ten times greater. 2. Its objective exchange value is also ten times greater—the weightiest consequence of which is that ten times the cost may, and, if practicable, will be expended upon its production. 3. But these relations of price and of objective value do not in the least degree correspond with the relative position of the two goods in regard to their economic importance or subjective valuation. Price alone forms no basis whatever for an estimate of the economic importance of the goods. We must go further and find out their relation to wants. But this relation to want can only be realised and measured individually. Suppose both goods are owned by the same person (or by people under exactly similar conditions of want and provision), A will, of course, have ten times the importance of B. But it may just as well happen that A has exactly the same importance for one owner as B has for another; it may indeed happen that A, in spite of its greater exchange value, has for its owner, supposing him to be a rich man, even less value than B has to its owner, supposing him to be a poor man. If there are many goods of the class A and many of the clans B, the individual valuetions of the various owners will be widely diverse, and a unanimous judgment is not to be expected. And the question how it is possible to unite those divergent individual valuetions into one social valuetion, is one that cannot be answered quite so easily as those imagine who are rash enough to conclude that price represents the social estimate of value.
Exchange value is, so far as concerns its application, without doubt the most important form of value, inasmuch as it governs the largest sphere;—that of industrial economy generally. Political economy, outside that chapter where the theory of value is given, is almost exclusively concerned with it. No wonder, then, that theoretical treatises have taken it as their end. But application is one thing and explanation another. To explanation subjective value is chief in importance, for only through it can exchange value be reached. Subjective value is the original and perfect form of value; exchange value taken by itself and unrelated to subjective value is imperfect and unintelligible. What does it signify to say that one article costs this and another that price in money, if we cannot say how money and prices are themselves valued? Theorists who have confined themselves to the examination of exchange value, or, what comes to the same thing, of price, may have succeeded in discovering certain empirical laws of changes in amounts of value, but they could never unfold the real nature of value, and discover its true measure. As regards these questions, so long as examination was confined to exchange value, it was impossible to get beyond the formula that value lies in the relation of exchange;—that everything is so much more valueble the more of other things it can be exchanged for. Why the exchanged things had value; why things generally were worth anything to us; and how this value was to be measured;-—these theories could never explain nor hope to explain. Value was conceived of relatively, by referring one thing to another;—as the ratio of valueble things. Absolutely and by itself value was not to be understood. It is significant of this conception to state that one thing cannot be an object of value in itself; that a second must be present before the first can be valued.