Before commencing the inquiry into the laws of value and price, I have one further observation to make. I must give warning, once for all, that the cases I contemplate are those in which values and prices are determined by competition alone. In so far only as they are thus determined, can they be reduced to any assignable law. The buyers must be supposed as studious to buy cheap as the sellers to sell dear.
The reader is advised to study the definitions of value given by other writers. Cairnes[190] defines value as “the ratio in which commodities in open market are exchanged against each other.” F. A. Walker[191] holds that “value is the power which an article confers upon its possessor, irrespective of legal authority or personal sentiments, of commanding, in exchange for itself, the labor, or the products of the labor, of others.” Carey[192] says, “Value is the measure of the resistance to be overcome in obtaining those commodities or things required for our purposes—of the power of nature over man.” Value is thus, with him, the antithesis of wealth, which is (according to Carey) the power of man over nature. In this school, value is the service rendered by any one who supplies the article for the use of another. This is also Bastiat's idea,[193] “le rapport de deux services échangés.” Following Bastiat, A. L. Perry[194] defines value as “always and everywhere the relation of mutual purchase established between two services by their exchange.” Roscher[195] explains exchange value as “the quality which makes them exchangeable against other goods.” He also makes a distinction between utility and value in use: “Utility is a quality of things themselves, in relation, it is true, to human wants. Value in use is a quality imputed to them, the result of man's thought, or his view of them. Thus, for instance, in a beleaguered city, the stores of food do not increase in utility, but their value in use does.” Levasseur[196] regards value as “the relation resulting from exchange”—le rapport resultant de l'échange. Cherbuliez[197] asserts that “the value of a product or [pg 252] of a service can be expressed only as the products or services which it obtains in exchange.... If I exchange the thing A against B, A is the value of B, B is the value of A.” Jevons[198] defines value as “proportion in exchange.”
§ 2. Conditions of Value: Utility, Difficulty of Attainment, and Transferableness.
That a thing may have any value in exchange, two conditions are necessary. 1. It must be of some use; that is (as already explained), it must conduce to some purpose, satisfy some desire. No one will pay a price, or part with anything which serves some of his purposes, to obtain a thing which serves none of them. 2. But, secondly, the thing must not only have some utility, there must also be some difficulty in its attainment.
The question is one as to the conditions essential to the existence of any value. Very justly Cairnes[199] adds also a third condition, “the possibility of transferring the possession of the articles which are the subject of the exchange.” For instance, a cargo of wheat at the bottom of the sea has value in use and difficulty of attainment, but it is not transferable. Jevons (following J. B. Say) maintains that “value depends entirely on utility.” If utility means the power to satisfy a desire, things which merely have utility and no difficulty of attainment could have no exchange value.[200] F. A. Walker[201] believes that “value depends wholly on the relation between demand and supply.” Carey[202] holds that value depends merely on the cost of reproduction of the given article. Roscher[203] finds that exchange value is “based on a combination of value in use with cost value.” Cherbuliez[204] calls the conditions of value two, “the ability to give satisfaction, and inability of attainment without effort. The first element is subjective; it is determined wholly by the needs or desires of the parties to the exchange. The second is objective; it depends upon material considerations, which are the conditions of the existence of the thing, and upon which the needs of the persons exchanging have no influence whatever.” It is, as usual, one of Cherbuliez's clear expositions. A. L. Perry[205] states that, “while value always takes its rise in the desires of men, it is never realized except through the efforts of men, and through these efforts as mutually exchanged.”
The difficulty of attainment which determines value is not always the same kind of difficulty: (1.) It sometimes consists in an absolute limitation of the supply. There are things of which it is physically impossible to increase the quantity beyond certain narrow limits. Such are those wines which can be grown only in peculiar circumstances of soil, climate, and exposure. Such also are ancient sculptures; pictures by the old masters; rare books or coins, or other articles of antiquarian curiosity. Among such may also be reckoned houses and building-ground, in a town of definite extent.
De Quincey[206] has presented some ingenious diagrams to represent the operations of the two constituents of value in each of the three following cases: U represents the power of the article to satisfy some desire, and D difficulty of attainment. In the first case, exchange value is not hindered by D from going up to any height, and so it rises and falls entirely according to the force of U. D being practically infinite, the horizontal line, exchange value, is not kept down by D, but it rises just as far as U, the desires of purchasers, may carry it.
(2.) But there is another category (embracing the majority of all things that are bought and sold), in which the obstacle to attainment consists only in the labor and expense requisite to produce the commodity. Without a certain labor and expense it can not be had; but, when any one is willing to incur these, there needs be no limit to the multiplication of the product. If there were laborers enough and machinery enough, cottons, woolens, or linens might be produced by thousands of yards for every single yard now manufactured.