BEFORE passing from subjective or personal value, there remains for consideration one point, which is at once important in itself, and decisive against the old division of the total phenomena under discussion into value in use and value in exchange. To the subtle analysis of Böhm-Bawerk and Wieser we owe the recognition of subjective exchange value, as distinct from the purely objective exchange value which we have to consider in following chapters.

THUS far we have considered each man’s wants as ranged on a scale; in correspondence with these wants, each man attaches degrees of importance to the goods that come within his knowledge and control, and ranges goods also on a similar scale. We have seen that, owing to the infinite subjective differences in men on the one hand, and the effect of provision on the dependence of want on the other, every man’s scale is different from every other man’s. That is to say, every man, subjectively, attaches his own valuation to goods.

IN an early chapter, it was said that the one class of objective values which had an interest for economic science was the (purely objective) value in exchange or purchasing power. We escape using this cumbrous expression if we substitute the word Price. The two terms are of course not equivalent: power in exchange is a different thing from the quantum of goods obtained by that power and measuring it: but obviously the two are inseparable, and the laws of the one are the laws of the other.

IT was said in the introductory chapter that we should find Objective Exchange Value to be a superstructure on Subjective Value. The typical scheme in last chapter will abundantly prove this. It is the valuations with which the parties on both sides enter the market that decide;—first, what parties will take part in the competition; second, what is the degree of each party’s “capability of exchange”; third, who are the parties that actually come to terms; fourth, who is the last buyer and who the last seller; and fifth, the price.

WE have now to compare the law of Value at which we have arrived with that most dwelt on by English economists. It is a matter of common experience that, in the case of articles manufactured on a large scale—“freely produced,” or reproducible at will—the price always tends towards equality with the cost of their production. On this experience is founded the familiar statement that the value of a good is determined by its cost.

THUS far the matter has been comparatively simple. We have looked at a concatenation of successive groups with one final product, and with, of course, one marginal utility and one value. But we have now to face the fact that productive groups may pass into a great number of final products, each with a different marginal utility and value. The more industry is divided, the more is this the case. Productive goods, such as coal, oil, labour, go more or less to the making of millions of products.

IF, finally, we take the case of those most many-sided productive goods, Iron and Labour, the proof of our theory may be considered fully tested.

THUS we have found that what determines the value of productive goods where the product is one single good directly connected with them, and what determines it in the most complicated cases, where the conduction of value is, first, to means of production, and, then, back again to product, is always the marginal utility, the utility of the marginal product.

WIESER’S chapter on the paradox of value (Natürlicher Werth, i. §§ 7 and 10) deserves more space than could appropriately be given it in the text. I therefore give the substance of it here. Suppose, he says, that I have a certain good the employment of which yields me a utility represented by 10, and that I add successively 10 similar goods to my stock, the marginal utility, at each addition diminishing by 1. The value of the stock will stand successively at 10, 18 (9x2), 24 (8x3), 28 (7x4), 30 (6x5), 30 (5x6), 28 (4x7), 24 (3x8), 18 (2x9), 10 (1x10), 0 (0x11).

MANY of the difficulties in the Theory of Value arise from not keeping clearly before us that it is a Theory of Human Valuation; of the values which men do—not of what they should—put on things. The idea of “intrinsic value” dies hard.

Connection with Wealth.—“Wealth consists of useful things.” “Wealth consists of valuable things.” Both statements reflect current views, and both are true, the one suggesting an Inventory, the other a Calculation of the same things.