Front Page Titles (by Subject) Popular use of the term Value. - The Theory of Political Economy
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Popular use of the term Value. - William Stanley Jevons, The Theory of Political Economy 
The Theory of Political Economy (London: Macmillan, 1888) 3rd ed.
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Popular use of the term Value.
In the popular use of the word value no less than three distinct though connected meanings seem to be confused together. These may be described as
Adam Smith, in the familiar passage already referred to, distinguished between the first and the third meanings. He said,1 "The word value, it is to be observed, has two different meanings, and sometimes expresses the power of purchasing other goods which the possession of that object conveys. The one may be called 'value in use;' the other 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it."
It is sufficiently plain that, when Smith speaks of water as being highly useful and yet devoid of purchasing power, he means water in abundance, that is to say, water so abundantly supplied that it has exerted its full useful effect, or its total utility. Water, when it becomes very scarce, as in a dry desert, acquires exceedingly great purchasing power. Thus Smith evidently means by value in use, the total utility of a substance of which the degree of utility has sunk very low, because the want of such substance has been well nigh satisfied. By purchasing power he clearly means the ratio of exchange for other commodities. But here he fails to point out that the quantity of goods received in exchange depends just as much upon the nature of the goods received, as on the nature of those given for them. In exchange for a diamond we can get a great quantity of iron, or corn, or paving stones, or other commodity of which there is abundance; but we can get very few rubies, sapphires, or other precious stones. Silver is of high purchasing power compared with zinc, or lead, or iron, but of small purchasing power compared with gold, platinum, or iridium. Yet we might well say in any case that diamond and silver are things of high value. Thus I am led to think that the word value is often used in reality to mean intensity of desire or esteem for a thing. A silver ornament is a beautiful object apart from all ideas of traffic; it may thus be valued or esteemed simply because it suits the taste and fancy of its owner, and is the only one possessed. Even Robinson Crusoe must have looked upon each of his possessions with varying esteem and desire for more, although he was incapable of exchanging with any other person. Now, in this sense value seems to be identical with the final degree of utility of a commodity, as defined in a previous page (p. 49); it is measured by the intensity of the pleasure or benefit which would be obtained from a new increment of the same commodity. No doubt there is a close connection between value in this meaning, and value as ratio of exchange. Nothing can have a high purchasing power unless it be highly esteemed in itself; but it may be highly esteemed apart from all comparison with other things; and, though highly esteemed, it may have a low purchasing power. because those things against which it is measured are still more esteemed.
Thus I come to the conclusion that, in the use of the word value, three distinct meanings are habitually confused together, and require to be thus distinguished—
It is not to be expected that we could profitably discuss such matters as economical doctrines, while the fundamental ideas of the subject are thus jumbled up together in one ambiguous word. The only thorough remedy consists in substituting for the dangerous name value that one of three stated meanings which is intended in each case. In this work, therefore, I shall discontinue the use of the word value altogether, and when, as will be most often the case in the remainder of the book, I need to refer to the third meaning, often called by economists exchange or exchangeable value, I shall substitute the wholly unequivocal expression Ratio of exchange, specifying at the same time what are the two articles exchanged. When we speak of the ratio of exchange of pig-iron and gold, there can be no possible doubt that we intend to refer to the ratio of the number of units of the one commodity to the number of units of the other commodity for which it exchanges, the units being arbitrary concrete magnitudes, but the ratio an abstract number.
When I proposed, in the first edition of this book, to use Ratio of Exchange instead of the word value, the expression had been so little, if at all, employed by English economists, that it amounted to an innovation. J. S. Mill, indeed, in his chapters on Value, speaks once and again of things exchanging for each other "in the ratio of their cost of production;" but he always omits to say distinctly that exchange value is itself a matter of ratio. As to Ricardo, Malthus, Adam Smith, and other great English economists, although they usually discourse at some length upon the meanings of the word value, I am not aware that they ever explicitly apply the name ratio to exchange or exchangeable value. Yet ratio is unquestionably the correct scientific term, and the only term which is strictly and entirely correct.
It is interesting, therefore, to find that, although overlooked by English economists, the expression had been used by two or more of the truly scientific French economists, namely, Le Trosne and Condillac. Le Trosne carefully defines value in the following terms:1 "La valeur consiste dans le rapport d'échange qui se trouve entre telle chose et telle autre, entre telle mesure d'une production et telle mesure des autres." Condillac apparently adopts the words of Le Trosne, saying1 of value: "Qu'elle consiste dans le rapport d'échange entre telle chose et telle autre." Such economical works as those of Baudeau, Le Trosne, and Condillac were almost wholly unknown to English readers until attention was drawn to them by Mr. H. D. Mácleod and Professor Adamson; but I shall endeavour for the future to make proper use of them.
[]Wealth of Nations, book i., chap. iv., near the end.
[]De l'Intérêt Social, 1777, chap. i. sec. 4.
[]Le Commerce et le Gouvernement, 1776; Œuvres Complètes de Condillac, 1803, tom. 6me, p. 20.