The Nature of Value
ATTEMPTS TO DETERMINE THE factors common to all forms of the value of goods, and thus to formulate the general concept of “value,” can be found in the works of all recent German authors who have independently treated the theory of value. Moreover, they have all tried to distinguish the use value of goods from mere utility.
Friedländer (“Theorie des Werthes,” Dorpater Universitäts Program, 1852, p. 48) defines value as “das im menschlichen Urtheil erkannte Verhältniss, wornach ein Ding Mittel für die Erfüllung eines erstrebenswerthen Zweckes sein kann.” (See also H. Storch, Cours d’économie politique, St. Petersbourg, 1815, I, 36.) Since the relationship described by Friedländer (provided that the end desired is the satisfaction of a human need or an end that is causally connected with the satisfaction of a human need) is what is responsible for the utility of a thing, his definition is identical with one in which the value of a good is conceived to consist in its recognized fitness for attaining an end, or as the recognized utility of a thing. But utility is a general prerequisite of goods character and Friedländer’s definition is therefore too broad, quite apart from the fact that it does not touch upon the nature of value. Indeed, Friedländer comes to the conclusion (op. cit., p. 50) that non-economic goods are just as much objects of human valuation as economic goods.
Like many of his predecessors, Karl Knies (“Die nationalökonomische Lehre vom Werth,” Zeitschriftfür die gesammte Stattswissenschaft, XI , 423) sees in value the degree of suitability of a good for serving human ends. (See also the earlier editions of Wilhelm Roscher’s Die Grundlagen der Nationalökonomie, e.g., the Fourth Edition, Stuttgart, 1861, p. 5.) I cannot concur in this view, because although value is a magnitude that can be measured, the measure of value belongs as little to the nature of value as the measure of space or time to the nature of space or time. In fact, Knies himself senses the difficulties to which his conception of value ultimately leads, since he also acknowledges usefulness, utility, and even goods-character as definitions of value and remarks that “die Werttheoriet. . . [ist] . . . an einzelnen Stellen thatsächlich im Ganzen auf die Combination beider Bedeutungen des Wortes Werth aufgebaut”  (ibid., pp. 423–424). He does not, therefore, reach any uniform principle of value.
A.E.F. Schäffle (“Die ethische Seite der nationalökonomischen Lehre vom Werthe” originally published in Akademisches Programm zur Feier des Geburtsfestes Sr. Majestät des Königs Wilhelm, Tübingen, 1862, and reprinted in A.E.F. Schäffle Gesammelte Aufsätze Tübingen, 1885, I, 184–195) proceeds from the view that “eine potentielle oder actuelle vom Menschen mit bewusstem Willen gestaltete Beziehung zwischen Person und unpersönlichen Aussendingen ist also stets erforderlich, wenn vom Wirthschaften und von wirthschaftlichen Gütern soll die Rede sein können. Diese Beziehung lässt sich nun sowohl von Seite des wirthschaftlichen Objectes als von Seite des wirthschaftlichen Subjectes auffassen. Objectiv ist sie die Brauchbarkeit, subjectiv der Werth des Gutes. Brauchbarkeit (Dienlichkeit, Nützlichkeit) ist die Tauglichkeit der Sache, einem menschlichen Zwecket. . . zu dienen. Werth aber ist die Bedeutung, welche das Gut vermöge seiner Brauchbarkeit für das ökonomische Zweckbewusstsein der wirthschaftlichen Persönlichkeit hat.”  (Ibid., p. 186). But Schäffie himself shows that this definition of value is certainly too broad when, in his later writings (e.g. Das gesellschaftliche System der menschlichen Wirthschaft, Tübingen, 1873, I, 162) he defines value as “die Bedeutung eines Gutes, um der dafür zu bringenden Opfer.” His earlier definition is too broad because non-economic goods also have utility and may be consciously applied to the purposes of men even though they have no value. It does not, therefore, confine value to economic goods, although Schäffie, a penetrating scholar, is fully aware of the fact that value is never attributed to non-economic goods (GesammelteiAufsätze, p. 187). His more recent definition, on the other hand, is clearly too narrow, for nothing is more certain than that there are numerous economic goods that come into the command of men without the least sacrifice (alluvial land, for instance), and still other economic goods that cannot be attained by any economic sacrifice at all (inborn talents, for example). But Schäffle nevertheless placed an important factor for the deeper understanding of the nature of value in the clearest possible light. For according to him it is not the objective suitability of a good in itself (ibid., p. 186), nor the degree of its utility (ibid., pp. 191–192), but the importance of a good to an economizing individual that constitutes the essence of its value.
An interesting contribution to the correct conception of value has been made by H. Roesler (“Zur Theorie des Werthes,” Jahrbücher für Nationalökonomie und Statistik, XI , 279–313 and 406–419). Roesler comes to the conclusion that “die herkömmliche Unterscheidung zwischen Gebrauchs- und Tauschwert unrichtig sei und mit dem Moment des nützlichen Gebrauchs der Dinge der Begriff des Werthes absolut nicht verbunden werden könne; dass vielmehr der Begriff des Werthes nur ein einheitlicher sei, die Vermögensqualität der Dinge bezeichne und durch Realisirung der Vermögensrechtsordnung zur concreten Erscheinung komme.” (Ibid., p. 406.) Roesler’s peculiar point of view is evident in this passage, but so also is the fact that his conception is a forward step. For he correctly delimits the sphere of objects that constitute wealth and strictly separates the utility of goods from their value. But I cannot agree with Roesler if he makes the wealth-character of a good the determining principle of its value, since both a good’s wealth-character and its value are consequences of the same quantitative relationship (the relationship described in the text above). Moreover, Roesler’s conception of wealth character seems questionable to me because it was borrowed from jurisprudence (see ibid.,pp. 295 and 302ff., and also Christian von Schlözer, Anfangsgründeider Staatswirthschaft, Riga, 1805, p. 14). Like their economic character the value of goods is independent of social economy, of the legal order and even of the existence of human society itself. For value can be observed in an isolated economy, and cannot therefore be founded upon the legal order.
Among earlier attempts to define the general concept of value I wish also to mention those of: Geminiano Montanari (Della moneta, in Scrittoriiclassici Italiani di economia politica, Milano, 1803–5, II, 43); A.R.J. Turgot (“Valeurs et Monnaies” in Oeuvres de Turgot, ed. by G. Schelle, Paris, 1913–23, III, 79ff.); E.B. de Condillac (Le commerce et le gouvernement, reprinted in E. Daire, [ed.] Mélanges d’économie politique, Paris, 1847, I, 251ff.); G. Gamier (in the Preface to his French translation of A. Smith’s Wealth of Nations under the title La Richesse des Nations,iParis, 1843, I, xlviff.); and H. Storch (op. cit., I, 56ff.) Among these, it is Condillac’s definition of value in particular that bears no small resemblance to the recent developments of the theory of value in Germany.
To Chapter III, Section 1. See note 1 of Chapter III.—TR.
We were unable to locate this item. We suspect, however, that Menger’s reference is to the following work: Dorpat, Kaiserliche Universität, Facultätsschriftender Kaiserlichen Universität Dorpat, dargebracht zur Feier ihres funfzigjährigen Bestehens, etc. Dorpat, 1852, (see Catalogue of the Printed Books in the Library of the British Museum, London, 1881–1900, I, 202).—TR.
“the relationship recognized by human judgment that a thing can be a means to the fulfilment of some desired end.”
“in a number of instances, the theory of value . . . [is] . . . actually erected entirely on a combination of the two meanings of the word value.”
“in order to be able to speak of economizing or of economic goods, a potential or actual relationship between persons and impersonal external objects consciously established by men must always exist. This relationship can be considered with reference to the economic object or from the standpoint of the economizing individual. Looked at objectively itis the utility of the good. Looked at subjectively itis the value of the good. Utility (serviceability, usefulness) is the suitability of a thing to serve a human purpose. . . . But value is the importance the good has, because of its utility, for the conscious economic purposes of the economizing individual.”
“the importance of a good because of the sacrifices made in obtaining it.”
“the traditional distinction between use value and exchange value is incorrect, and the concept of value cannot by any means be tied to the factor of things having useful employments. On the contrary, the concept of value is uniform, designating the wealth-character of things, and becoming a concrete phenomenon as a result of the institution of laws with respect to property.” (The italics in the quotation were added by Menger).—TR.