BOOK III

VALUE

Book III, Chapter I

The Two Conceptions of Value^*1

In the science of Political Economy, as in ordinary speech, two very distinct things have usually been classed together under the one name of Value. From the first it could scarcely escape notice that there was a difference between them, but the full extent of the difference was certainly underrated. Instead of being recognised as phenomena belonging to entirely distinct categories of thought, they were, quite falsely, represented as members of one and the same group of phenomena, and, under the not very felicitous names of Use Value and Exchange Value, they were assumed to be sub-species of one universal conception of Value, and distinguished from each other as such. This distinction once made, however, the so-called Use Value was almost entirely dropped out of sight. Economists took no trouble to inquire any deeper into its nature, nor did they make any use of it in further investigations. They simply catalogued it, as it were, among the conceptions of political economy, and left it lying in a corner of their systems like a stone for which there was no use. It is only of very recent date that economical investigation has discovered in this "stone rejected of the builders" the basis and support of one of the most important conceptions of economics, and has awaked to the fact that on it depends a group of most notable laws—laws with consequences reaching far beyond the boundaries of the theory of value, and laws to which almost every branch of economic theory must go back for its root and spring.

But, first of all, it is important that we give right names to those things which tradition has handed down to us under the inadequate designations of Use Value and Exchange Value. The two groups of phenomena, to both of which popular usage has given the ambiguous name "Value," we shall distinguish as value in the Subjective and value in the Objective sense.^*2

Value in the Subjective sense is the importance which a good, or a complex of goods, possesses with regard to the wellbeing of a subject. In this sense I should say of any particular good that it was valuable to me, if I recognised that my wellbeing was so associated with it that the possession of it satisfied some want, secured me a gratification or a feeling of pleasure which I should not have had without it, or saved me from a pain which, otherwise, I should have had to endure. In this case the existence of the good means my gain, the absence of it my loss, in wellbeing: to me it is a matter of importance, for me it has value.

By Objective value, on the other hand, is meant the Power or Capacity of a good to procure some one objective result. In this sense there are as many kinds of value as there are external results with which man may be connected. There is a nutritive value of food, a heating value of wood and coal, a fertilising value of manures, a blasting value of explosives, and so on. In any expressions of this kind all reference to the wellbeing or illbeing of a subject is excluded from the conception of value. If we affirm that beech has a superior heating value over pine, we only express the purely objective and, as it were, mechanical fact that with a definite weight of beech a greater amount of heat can be raised than with the same weight of pine. In the above connections, then, instead of the word "Value" we use, as entirely synonymous with it, the expressions "Power" or "Capacity"—expressions which themselves suggest a purely objective relation. Instead of "nutritive value," "heat value;" "explosive value," we use "nutritive power" or "nutritive capacity;" "heating power," "explosive power," and so on, as meaning exactly the same thing.

The varieties of Objective value just mentioned by way of illustration do not, however, belong to economical but to purely technical relations; and, however frequently they are referred to in economical text-books, they do not properly belong to political economy at all. It does not fall within the province of our science to expound the heating value of wood, nor, in explaining other economical phenomena, has it occasion to lay stress on this heating value any more than it does on any other physical or technical fact. I have given these illustrations purely as illustrations, with the intention of putting in clearer relief the very intimately related nature with the above of that branch of objective values which, of course, has the greatest possible importance for political economy, namely, the objective Exchange value of goods. By this expression I mean the objective worth of goods in exchange; or, in other words, the possibility of obtaining in exchange for them a quantity of other economical goods, this possibility being looked upon as a power or a property of the former goods. In this sense we say that a horse is worth £50, or a house worth £1000, if, in exchange for these, we can obtain, respectively, £50 or £1000.

Here, again, it must be noted that, as in the kindred expressions heating value and the like, we say nothing at all as to the influence which goods may exert on the wellbeing of any subject whatever; we simply indicate the objective relation that for a particular good a certain amount of other goods may be had in exchange. In this case also the characteristic phenomenon recurs, that the word "Value" can be, quite adequately, replaced by the word "Power," and is, indeed, so replaced in popular speech. Besides the expression "value in exchange" English economists use, quite indifferently, the expression "purchasing power," and we Germans are beginning in the same way to put in general use the term Tauschkraft.

The economical theory of value has, then, the double task of interpreting, on the one hand, the laws of Subjective Value, and, on the other, the laws of Objective Exchange Value, as from the economic point of view by far the most important branch of objective value. The first part of this task we shall take up in the present book, the second in the following book dealing with the theory of Price. It is true that the two conceptions, "Price" and "Exchange Value," are by no means identical. Exchange Value is the capacity of a good to obtain in exchange a quantity of other goods. Price is that other quantity of goods. But the laws of these two coincide. So far as the law of price explains that a good actually obtains such and such a price, and why it obtains it, it affords at the same time the explanation that the good is capable; and why it is capable, of obtaining a definite price. The law of Price, in fact, contains the law of Exchange Value.^*3