Appendix D: The Measure of Value

As early as Aristotle we find an attempt to discover a measure of the use value of goods and to represent use value as the foundation of exchange value. In the Ethica Nicomachea (v. 5. 1133ᵃ, 26–1133ᵇ, 10) he says that “there must be something that can be the measure of all goods. . . . This measure is, in reality, nothing other than need, which compares all goods. For if men desire nothing or if they desire all goods in the same way, there would be no trade in goods.” In the same spirit Ferdinando Galiani (Della moneta in Scrittori classici Italiani di economia politica, Milano, 1803–5, X, 58) writes “ch’essendo varie le disposizioni degli animi umani e varj i bisogni, vario è il valor delle cose.”

A.R.J. Turgot deals with this problem in an essay of which only a fragment survives (“Valeurs et Monnaies” in Oeuvres de Turgot, ed. by G. Schelle, Paris, 1913–23, III, 79–98). He explains (pp. 85ff.) that when human civilization has reached a certain stage man begins to compare his needs one with another, in order to adjust his efforts in procuring different goods to the degree of necessity and utility of these goods (besoins, a word used frequently in this sense by the Physiocrats). In evaluating goods man also takes into account the greater or less difficulty of procuring them, and Turgot thus comes to the conclusion that “la valeur estimative d’un objet, pour l’homme isolé, est précisément la portion du total de ses facultés qui répond au désir qu’il a de cet objet, ou celle qu’il veut employer à satisfaire ce désir.” (Ibid., p. 88.)

E.B. de Condillac comes to another result. In his Le commerce et le gouvernement (published originally in 1777 and reprinted in E. Daire [ed.], Mélanges d’économie politique, Paris, 1843, I, 247–445) he says: “On dit qu’une chose est utile, lorsqu’elle sert à quelques-uns de nos besoins; . . . D’après cette utilité, nous l’estimons plus ou moins; . . . Or cette estime est ce que nous appellons valeur.” (Ibid., pp. 250–251.) Whereas Turgot makes the effort a person employs in procuring a good the measure of its use value, Condillac contends that its utility is the measure of its use value. These two fundamental views have frequently reappeared since that time in the writings of English and French economists.

A deeper treatment of the problem of the measure of use value is to be found only among the German writers. In an often quoted passage, refuting Proudhon’s arguments against the prevailing theory of value, Bruno Hildebrand (Die Nationalökonomie der Gegenwart und Zukunft, Frankfurt, 1848, pp. 318ff.) says: “Da der Nutzwerth immer eine Relation der Sache zum Menschen ist, so hat jede Gütergattung das Mass ihres Nutzwerthes an der Summe und Rangordnung der menschlichen Bedürfnisse, welche sie befriedigt, und wo keine Menschen und keine Bedürfnisse existieren, dort giebt es auch keinen Nutzwerth. Die Summe des Nutzwerthes, welche jede Gütergattung besitzt, bleibt daher, sobald sich nicht die Bedürfnisse der menschlichen Gesellschaft ändern, unveränderlich, und vertheilt sich auf die einzelnen Stücke der Gattung, je nach der Quantität derselben. Je mehr die Summe der Stücke vergrössert, desto geringer wird der Antheil, welcher jedem Stücke vom Nutzwerthe der Gattung zufällt und umgekehrt.” Hildebrand’s treatment gave an incomparable impetus to investigation, but it suffered from two shortcomings, which were felt (as we shall see) by later students of the theory who endeavored to eliminate them. In the passage quoted, the only thing that the value of a given “species of goods” can possibly mean is the value to human society of the total available quantity of all goods of that one kind. This value, however, has no real existence. It cannot anywhere be observed in the real world. For value arises only for an individual and for him only with respect to concrete quantities of a good (see p. 116 of the text). And even if we were to overlook this inaccuracy and conceive of Hildebrand’s “value of the species” as the sum of value of all concrete goods of a given kind for the different members of society possessing them, his statement would still be unacceptable, since it is clear that a different distribution of these goods, and even more a change in the quantity of them available, would change the “value of the species” in this sense, and in certain circumstances, reduce it completely to zero. If the term is taken literally, therefore, the “value of a species of goods” has no real nature and does not exist, unless “utility,” “recognized utility,” or the “degree of utility” is confounded with “value.” On the other hand, the value of a species of goods, in the sense of the sum of the value to the various members of society of all concrete goods of a given kind, is not an unchanging magnitude, even if the needs of the various members of society remain unchanged. The foundation upon which Hildebrand builds his calculus is therefore contestable. To this must be added the fact that Hildebrand does not consider differences in the degree of importance of satisfaction of the various concrete needs of men, if he attributes the “value of a species” to the various units of the species according to quantity. (See already the essay by Karl Knies, “Die nationalökonomische Lehre vom Werth,” Zeitschrift für die gesammte Staatswissenschaft, XI ²³, 463ff.) The correct element in Hildebrand’s theory lies in the acute and universally valid observation that the use value of goods increases when their available quantity is diminished, and vice versa. But he definitely goes too far in assuming that there is always a strict proportionality between the two.

Friedländer (“Die Theorie des Werthes,” Dorpater Universitäts Schrift, 1852, pp. 60ff.) adopts a different approach in his attempt to solve the problem, and comes to the conclusion that “die durchschnittliche concrete Bedürfnisseinheit (das Mittel der innerhalb der verschiedenen Classen der Gesellschaft gefundenen besonderen Bedürfnisseinheiten) der allgemeine Ausdruck für den objectiven volkswirthschaftlichen Gebrauchswerth sei, und der Bruch, welcher die Quoten ausdrückt, welche die einzelnen Brauchlichkeiten zur Bedürfnisseinheit beitragen und das Werthverhältnis derselben zur mittleren concreten Bedürfnisseinheit anzeigt, das Mass für den objectiven Werth der einzelnen Brauchlichkeiten abgebe.” I believe that this solution of the problem is vulnerable, above all, in that it involves a complete misunderstanding of the subjective character of value if an “average man” with “average needs” is posited. For the use value of one and the same good is usually very different for two different individuals, since it depends upon the requirements of and quantities available to each of them. The “determination of the use value to the average man” does not, therefore, really solve the problem, since we are interested in a measure of the use value of goods that can be observed in real cases and with respect to specific persons. Friedländer therefore arrives merely at the definition of a measure of the “objective value” of different goods (ibid., p. 68), although a measure of this sort does not, in reality, exist.

Karl Knies too has made a penetrating attempt to solve the problem in the essay to which I have already referred. He says quite correctly on p. 429 that “die Bedingungen für die Abschätzung des Gebrauchswerthes der Güter können in nichts Anderem als in den wesentlichen Elementen für den Begriff des Gebrauchswerthes gefunden werden.” But the fact that Knies does not circumscribe the concept of use value narrowly enough (as we have seen earlier in Appendix C, p. 293) leads him to several doubtful conclusions about the determination of the measure of value. Knies continues: “Sonach hängt die Grösse des Gebrauchswerthes der Güter ab (a) von der Intensivität des menschlichen Bedürfnisses, welches sie befriedigen, (b) von der Intensivität, in welcher sie ein menschliches Bedürfniss befriedigen. . . . Hiernach stellt sich eine Classification und Stufenleiter der menschlichen Bedürfnisse ein, mit welcher eine Classification und Stufenleiter der Gütergattungen correspondirt.” But the need for water is one of the most intense of human needs, since our lives depend on its satisfaction, and no one will deny that fresh spring water satisfies this need most adequately. Hence, if Knies’ principle of the measure of value were correct, fresh spring water would occupy one of the highest points on the scale of species of goods. But concrete quantities of this good normally have no value, and species of goods cannot have value at all, as I already have shown. Although, in the course of his article, after an extensive examination of the measure of the "abstract value of goods," Knies also touches upon the use value of concrete goods in the economy of a single individual (ibid., p. 461) he does so only in order to elucidate the difference between the "value of a species of goods" (really "utility") and the value of concrete goods, thus very correctly formulating the proposition that the measure of the utility of a thing is something fundamentally different from the measure of its value. But Knies does not succeed in formulating a principle for determining the magnitude of use value in its concrete form, although he comes very close to it at one point (ibid., p. 441) in his richly suggestive essay.

A.E.F. Schäffle has approached the solution of the problem from another standpoint ("Die ethische Seite der nationalökonomischen Lehre vom Werthe," in Gesammelte Aufsätze, Tübingen, 1885, I, 184–195). This penetrating scholar writes: "Die Thätigkeit des Wirthschaftens wird um so energischer in Anregung kommen, je dringender das persönliche Bedürfniss für ein Gut, und je schwieriger das diesem Bedürfniss entsprechende Gut zu beschaffen ist. Je mehr diese beiden Factoren: Intensivität des Begehrens und Intensivität der Schwierigkeit des Erlangens, auf einander wirken, desto stärker tritt die Bedeutung des Gutes in das die wirthschaftliche Thätigkeit leitende Bewusstsein. Auf dieses Grundverhältniss führen alle Sätze über Mass und Bewegung des Werthes zurück." I fully agree with Schäffle when he says that the more pressing one’s need for a good the more energetic will be one’s economizing activity whenever it is necessary to procure the good in question. But it is just as certain that many goods for which we experience the most urgent needs (water, for instance) ordinarily have no value, while other goods that are only suitable for the satisfaction of needs of much less importance (hunting lodges, artificial duck ponds, etc.) have a considerable value to us. The urgency of the needs a good can satisfy cannot therefore by itself be the determining factor of the value of that good, even if we were to overlook the fact that most goods are suited to the satisfaction of several different needs that differ in intensity. Hence in this proposition, since the determining magnitude is not established with certainty, the very thing that was in question remains in doubt. But it is equally certain that the degree of difficulty of procuring a good is not, by itself, a measure of its value. Goods of very little value can often be procured only with the greatest difficulty, and it is not true that the economizing activity of men becomes more energetic the greater the difficulty. On the contrary, men always direct their economizing activity toward the procurement of those goods which, given equal urgency of the needs for them, can be acquired with the least difficulty. Neither the one nor the other part of Schäffle's two-horned principle provides, by itself, the determining principle for the measure of value. Although he says that the more these two factors (intensity of desire and difficulty of procurement) operate upon one another, the more strongly does the importance of the good enter into the consciousness that guides the economic activity, and even if we assume, as Schäffle explicitly does, that economizing activity is "mit Bewusstsein gerichtet auf die allseitige Erfüllung der sittlich vernünftigen Lebenszwecke," (ibid., p. 185) (that is, in other words, even if we assume goods to be in the hands of rational economizing individuals, a fact that constitutes, as Schäffle quite correctly sees, an essential factor for the resolution of his dilemma) the question how these two factors influence each other, and how in consequence of this mutual influence each good attains a definite magnitude of importance for economizing men, still remains unsolved.

Among the most recent economists who have treated the theory of the measure of value as parts of their systems, L. v. Stein must be mentioned in particular because of his original treatment of the subject. Stein defines value as "das Verhältniss des Masses eines bestimmten Gutes zum Leben der Güter überhaupt." (System der Staatswissenschaft, Stuttgart, 1852, I, 169–170.) On page 171 he arrives at the following formula for the determination of the measure of value: "Das wirkliche Wertmass eines Gutes wird daher gefunden, indem die Masse der übrigen Güter mit der Masse des fraglichen Gutes dividiert wird. Um dieses aber zu können, muss zuerst für die gesamte Gütermasse ein gleichnamiger Nenner gefunden werden. Dieser gleichartige Nennner oder die Gleichartigkeit der Güter ist für sie aber nur gegeben in ihrem gleichartigen Wesen; darin dass alles wirkliche Gut wieder aus den sechs Elementen des Stoffes, der Arbeit, des Erzeugnisses, des Bedürfnisses, der Verwendung und der wirklichen Consumption besteht, indem, wo eins dieser Elemente wegfällt, das Objekt ein Gut zu sein aufhört. Diese Elemente eines jeden wirklichen Gutes sind nun in diesem Gute wieder in bestimmtem Masse enthalten, und das Mass dieser Elemente bestimmt das Mass des einzelnen, wirklichen Gutes für sich. Daraus folgt, dass das Massenverhältnis aller einzelnen Güter untereinander, oder ihr allgemeines Wertmass gegeben ist in dem Verhältniss der Güterelemente und ihrer Masse innerhalb des einen Gutes zu demjenigen innerhalb des andern. Und die Bestimmung und Berechnung dieses Verhältnisses ist mithin die Bestimmung des wirklichen Wertmasses." (See also ibid., pp. 181ff. for a formula of the value equation.)

The next paragraph appears here as a footnote in the original.,TR. ↩
“Werthquote.” Menger presents the argument underlying this proposition at length on pages 163 to 165. But an explanatory note may ↩
The remainder of this paragraph is a footnote in the original.,TR. ↩
It is not just the technical means of production that must be regarded as goods of higher order, but in general, all goods that can be used for the satisfaction of human needs only by being combined with other goods of higher order. The commodities that a wholesale merchant can pass on to the retailer only by employing capital, incurring costs of shipping, and using various specific labor services, must be regarded as goods of higher order. The same is true of the commodities in the hands of a grocer. Even the speculator adds to the objects of his speculation at least his entrepreneurial activities and his capital services, and often storage services, warehousing, etc., as well (see Hermann, op. cit., p. 65). ↩
“gebunden.”,TR. ↩
Since, other things being equal, the productiveness of a production process and the value of the capital services used are both greater the longer the time period required for the production process, the values of goods of higher order, which can be employed in productive processes of very different duration, and which therefore assure us, at our choice, consumption goods of different values at different points in time, are brought into equilibrium with respect to the present. ↩
The next paragraph appears here as a footnote in the original.,TR. ↩
The remainder of this paragraph is a footnote in the original.,TR. ↩
H.v. Mangoldt, Die Lehre vom Unternehmergewinn, Leipzig, 1855, pp. 36ff. ↩
Menger here appends a lengthy footnote which has been incorporated into the text as the last three paragraphs of this chapter.,TR. ↩
N.F. Canard, Principes d’économie politique, Paris, 1901, pp. 5ff.; Carey, op. cit., III, 131ff.; Frédéric Bastiat, Harmonies économiques, in Oeuvres complètes de F. Bastiat, Paris, 1893, VI, 297ff.; Max Wirth, Grundzüge der National-Oekonomie, Köln, 1871, I, 284ff.; Hermann Roesler, Grundsätze der Volkswirthschaftslehre, Rostock, 1864, pp. 500–513. ↩
The remainder of this paragraph is a footnote in the original.,TR. ↩ ↩²
Ricardo, Principles of Political Economy and Taxation, ed. by E.C.K. Gonner, London, 1891, pp. 44–61 and 392–420. ↩
See Karl Rodbertus, Zur Beleuchtung der sozialen Frage, Berlin, 1890, I, 89ff. ↩
Rodbertus (op. cit., pp. 117 ff.) argues that our social institutions make it possible for the owners of capital and land to take a part of the product of labor away from the laborers, and thereby live without working. His argument is based on the erroneous assumption that the entire result of a production process must be regarded as the product of labor. Labor services are only one of the factors of the production process, however, and are not economic goods in any higher degree than the other factors of production including the services of land and capital. Capitalists and landowners do not, therefore, live on what they take away from laborers, but upon the services of their land and capital which have value, just as do labor services, both to individuals and to society. ↩
The value of a piece of land is determined by the expected value of its services, and not the other way around. The value of a piece of land is nothing but the expected value of all its future services discounted to the present. Hence the higher the expected value of the services of land and the lower the value of the services of capital (rate of interest), the higher will be the value of land. We shall see later that the value of goods is the foundation for their prices. That the price of land can regularly be observed to rise rapidly in periods of a people’s economic growth is due to an increase in land rent on the one hand, and to a decrease in the rate of interest on the other. ↩
In Berlin, a seamstress working 15 hours a day cannot earn what she needs for her subsistence. Her income covers food, shelter, and firewood, but even with the most strenuous industry she cannot earn enough for clothing (see Carnap, in Deutsche Vierteljahrsschrift, 1868, part II, p. 165). Similar conditions can be observed in most other large cities. ↩
A laborer’s standard of living is determined by his income, and not his income by his standard of living. In a strange confusion of cause and effect, however, the latter relationship has nevertheless often been maintained. ↩
To Chapter VII. See notes 3 and 4 of Chapter VII.—TR. ↩
The next two paragraphs appear in the original as a single footnote after “labor services” at the beginning of the third paragraph preceding.,TR. ↩
A special characteristic of price formation in the case of the services of capital is due, as we shall see later, to the fact that these services cannot ordinarily be sold without transferring the capital itself into the hands of the buyer of the services of capital. There is a resulting risk for the owner of the capital for which he must be compensated by a premium. ↩
See Schüz, “Ueber die Renten der Grundeigenthümer und den angeblichen Conflict ihrer Interessen mit denen der übrigen Volksklassen,” Zeitschrift für die gesammte Staatswissenschaft, XI (1855), 171ff. ↩
Adam Smith, op. cit., p. 13. ↩
The remainder of this paragraph appears here as a footnote in the original.,TR. ↩
I need hardly point out that the figures in the text are not intended to express numerically the absolute but merely the relative magnitudes of importance of the satisfactions in question. Thus when I designate the importance of two satisfactions with 40 and 20 for example, I am merely saying that the first of the two satisfactions has twice the importance of the second to the economizing individual concerned. ↩
These considerations completely disprove the contention of a number of economic writers (Lotz and Rau, for example, among the more recent German writers) who have denied the productivity of trade. The effect of an economic exchange of goods upon the economic position of each of the two traders is always the same as if a new object of wealth had entered his possession. Trade is therefore no less productive than industrial or agricultural activity. ↩
The next paragraph appears here as a footnote in the original.,TR. ↩
“die menschlichen Wirthschaften”,TR. ↩
Carey’s portrayal of merchants as economic parasites because they claim a portion of the gain arising from the exploitation of the available opportunities for economic exchange transactions (op. cit., III, 23–25) is based on his erroneous ideas about the productivity of trade. ↩
See Appendix F (p. 305) for the material originally appearing at this point as a footnote.,TR. ↩
When I say that $B_{1}$ economically excludes $B_{2}$ , I do not mean that $B_{2}$ is excluded from the exchange by the use of physical force or because of legal incapacity. The distinction is important, since $B_{2}$ could easily own several hundred bushels of grain and thus have the power, physically and legally, to acquire A's horse and still not choose to acquire it. If he does not acquire it, his reason must be economic in nature,that is, by giving up a larger quantity of grain than 29 bushels, he would not provide better for the satisfaction of his needs than he would without the exchange. ↩
The opinion could arise that instead of the price in the case we have been discussing being formed between 30 and 80 bushels of grain it will be established at exactly 30 units. This conclusion would be correct if we were dealing with an auction sale in which no minimum price had been set in advance or if it had been set below 30 bushels of grain. In either case A would be compelled by the very nature of an auction to be satisfied with the price of 30 bushels, and the causes of the unusual price formation in auctions in general are to be sought in analogous relationships. But if economizing individual A does not bind himself from the beginning with an auction contract and can pursue his interest with complete freedom, there is no economic reason why the price of a horse should not reach 79 bushels of grain in an exchange between A and B, just as there is no reason why it should not be set at 30 bushels. ↩
The next paragraph appears here as a footnote in the original.,TR. ↩
No phenomenon is more common than that of a monopolist defending his position against the entry of a competitor in the most belligerent manner. But it is just as common to find him coming to an understanding with a competitor once the competitor has established himself. The monopolist’s first interest is to prevent a competitor from becoming established. But if a competitor has nevertheless succeeded in firmly entrenching himself, his economic interest consists in pursuing a modified monopoly policy in combination with this second firm whenever a monopoly policy proves to be possible even after the establishment of a competitor. Sharp competition is usually disadvantageous to both economizing individuals in cases of this kind. Hence two competitors, initially so hostile to each other, generally come to a quick understanding ↩
See Gustav Schmoller, “Die Lehre vom Einkommen in ihrem Zusammenhang mit den Grundprinzipien der Steuerlehre,” Zeitschrift für die gesammte Staatswissenschaft, XIX (1863), 53. ↩
Menger’s use of the term “utility” may prove confusing to modern readers unless the meaning he attaches to it is kept constantly in mind. This meaning does not permit him to use the term in designating the concept now called “marginal utility.” A thing has “utility” (in Menger’s sense of the term) if all the available units of the thing together yield a total utility (in our sense of the term) greater than zero even if the thing’s marginal utility (in our sense) is zero. In general, he contends that the concept “utility” is entirely objective and lacking in psychological content. He pictures it as an abstract relation between a species of goods and a human need (in a general sense as distinguished from the “concrete needs” of an individual — see note 4 of Chapter II). Utility is therefore, according to Menger, merely a prerequisite of goods-character (and hence of economic character), but has no quantitative relationship to value. For this reason, he repudiates any identification of “utility” with “use value” (see also note 3 of this chapter and Appendices C, D, and G). It is of course obvious that his lack of the term “marginal utility” was no barrier to his expression and elaboration of the concept. — TR. ↩
It was this error that misled Proudhon, op. cit., pp. 59ff., into stating that there is an irreconcilable contradiction between use value and exchange value. ↩
Wilhelm Roscher, Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte, Leipzig, 1861, p. 117; Bruno Hildebrand, “Naturalwirthschaft, Geldwirthschaft und Creditwirthschaft,” Jahrbücher für National-Oekonomie und Statistik, II (1864), 17; H.v. Scheel, ↩
The remainder of this paragraph and the next paragraph appear here as a single footnote in the original.,TR. ↩
See the first paragraph of Appendix H (p. 308) for the material originally appearing here as a footnote.,TR. ↩
"consciously directed to the all-around fulfilment of ethically rational purposes of life." ↩
See the last seven paragraphs of Appendix H (p. 309) for the material originally appended here as a footnote.,TR. ↩
The next paragraph appears here as a footnote in the original.,TR. ↩
The marketability of commodities is generally considerably increased by the growing needs and increasing wealth of a people. The marketability of a few commodities, however, is diminished by these factors. There are a number of commodities that can easily be sold in a poor country, but become practically unsaleable as soon as the country attains economic maturity (see pp. 234–5). ↩
Theodor Mommsen, Geschichte des römischen Münzwesens, Berlin, 1860, pp. v–xx, and 167 ff.; Carnap, “Zur Geschichte der Münzwissenschaft und der Werthzeichen,” Zeitschrift für die gesamte Staatswissenschaft, XVI (1860), 348–396; Friedrich Kenner, “Die Anfänge des Geldes in Alterthume,” Sitzungsberichte der Kaiserlichen Akademie der Wissenschaften zu Wien: Philologisch-Historische Classe, XLIII (1863), 382–490; Roscher, op. cit., pp. 36–40; Hildebrand, op. cit., p. 5; Scheel, op. cit., pp. 12–29; A.N. Bernardakis, “De l’origine des monnaies et de leurs noms,” Journal des Economistes, (Third Series), XVIII (1870), 209–245. ↩
For obvious reasons, the words “Geld” and “gelten” in this and the following sentence are left untranslated.,TR. ↩
See the first two paragraphs of Appendix I (p. 312) for material originally appearing here as a footnote.,TR. ↩
Custom as a factor in the origin of money is stressed by Condillac, op. cit., pp. 286–290 and by G.F. Le Trosne, De l’intérêt social, Paris, 1777, pp. 43f. ↩
See Appendix J (p. 315) for material originally appended here as a footnote.,TR. ↩
See Stein, op. cit., p. 55; especially also Karl Knies, “Ueber die Geldentwerthung und die mit ihr in Verbindung gebrachten Erscheinungen,” Zeitschrift für die gesammte Staatswissenschaft, XIV (1858), 266; and Mommsen, op. cit., pp. vii–viii. ↩
August Böckh, Metrologische Untersuchungen über Gewichte, Münzfusse und Masse des Alterthums, Berlin, 1838, pp. 385 ff., 420 ff.; Mommsen, op. cit., p. 169; Friedrich O. Hultsch, Griechische und römische Metrologie, Berlin, 1862, pp. 124ff., 188ff. ↩
Wilh. Wackernagel, “Gewerbe, Handel und Schiffahrt der Germanen,” Zeitschrift für deutsches Alterthum, IX (1853), 548ff.; Jakob Grimm, Deutsche Rechtsalterthümer, 4th edition prepared by A. Heusler and R. Hübner, Leipzig, 1899, II, 123–124; Ad. Soetbeer, “Beiträge zur Geschichte des Geld- und Münzwesens in Deutschland,” Forschungen zur deutschen Geschichte, I (1862), 215. ↩
Aloys Sprenger, Das Leben und die Lehre des Mohammad, Berlin, 1861–65, III, 139. ↩
Friedrich v. Spiegel, Commentar über das Avesta, Wien, 1864–68, I, 94ff. ↩
Plutarch, Lives, with an English translation by Bernadotte Perrin, London: William Heinemann, 1914, I, 55; Pliny, The Natural History, translated by John Bostock and H.T. Riley, London: H.G. Bohn, 1856, IV, 5–6; Heinrich Schreiber, “Die Metallringe der Kelten als Schmuck und Geld,” Taschenbuch für Geschichte und Alterthum, II, 67–152, 240–247, and III, 401–408. ↩
Francesco Saverio Clavigero, The History of Mexico, Richmond, 1806, II, 188ff. ↩
A beaver skin is still the unit of exchange value in several regions of the Hudson’s Bay Company. Three martens are equal to one beaver, one white fox to two beavers, one black fox or one bear equal to four beavers, and one rifle equal to 15 beavers (“Die Jäger im nördlichen ↩
Roscher, op. cit., note 13 on pp. 313–314. ↩
Réflexions sur la formation et la distribution des richesses, reprinted in Oeuvres de Turgot, ed. by G. Schelle, Paris, 1913–23, II, 554. See also Roscher, op. cit., pp. 297–303, Knies, op. cit., p. 262. ↩
See on this especially J.A.R. v. Helferich, Von den periodischen Schwankungen im Werth der edeln Metalle von der Entdeckung Amerikas bis zum Jahre 1830, Nürnberg, 1843. ↩
It is perhaps equally obvious that these are not the limits described in Chapter V as those between which price formation must take place. Other interpretations may be possible, but it seems likely that the “limits” of this passage are simply the bids and offers chosen by two bargainers as arbitrary starting points in a haggling process, the seller intending to come down and the buyer to come up. In spite of Menger’s apparent implication in the second paragraph following that “the demand price” and “the supply price” of that paragraph are the limits described in Chapter V, they are evidently of the same character as the wool market “limits” here.,TR. ↩
See note 20 above.,TR. ↩
That is, the subjective equivalent of these goods to A is the price expected by A. The original German passage runs as follows: “der voraussichtlich dafür zu erzielende Preis ist für das wirthschaftende Subject A allerdings der Regel nach das Aequivalent dieser Güter.” ,TR. ↩
Although this difference has not yet been sufficiently observed in our science, it has long been the object of detailed investigations on the part of students of the law. This question is of practical interest to them in cases in which there are claims for damages as well as in ↩
Aristotle already observed that money serves as a measure in the trade of men (Ethica Nicomachea V. 5. 1133ᵇ, 16; and ix, 1. 1164ᵃ, 1). Among the writers who trace back the origin of money exclusively or predominantly to the need of economizing men for a measure of “exchange value,” or of prices, and who regard the money character of the precious metals as due to their special suitability for this purpose, I should like to mention here the following: Carlo Antonio Broggia, Trattato delle monete, (published 1743) in Scrittori classici Italiani di economia politica, Milano, 1803–05, IV, 304; Pompeo Neri, Osservazioni sopra il prezzo legale delle monete, (published 1751) in ibid., VI, 134ff.; Ferdinando Galiani, Della moneta, in ibid., XII, 23ff. and 120ff.; Antonio Genovesi, Lezioni di economia civile, in ibid., XV, 291–313 and 333–341; Francis Hutcheson, A System of Moral Philosophy, London, 1755, II, 55–58; David Ricardo, op. cit., p. 40; Storch, op. cit., I, 45ff.; Lorenz v. Stein, System der Staatswissenschaft, Stuttgart, 1852, I, 217ff.; Albert E.F. Schäffle, Das gesellschaftliche System der menschlichen Wirthschaft, Tübingen, 1873, I, 221 f. ↩
The next two paragraphs appear here as a footnote in the original.,TR. ↩
The chief representatives of this theory are the great English philosophers of the seventeenth century. Hobbes starts with the need of men for conserving perishable wealth that they do not intend to use for immediate consumption, and he shows how this end can be achieved by transformation (“concoctio”) of the perishable wealth into metallic money. He also shows how wealth can thereby be carried about more easily (Leviathan, ed. by A.D. Lindsay, “Everyman’s Library,” London, 1914, p. 133). Locke makes the same point (Two Treatises of Government, and Further Considerations concerning Raising the Value of Money, in The Works of John Locke, 12th edition, London, 1824, IV, 364–365 and 139ff.). ↩
Menger does not give references to the passages he quotes from Bastian and we were unable to find them in the published works of Adolph Bastian that were accessible to us. It is possible that Menger’s information was based on an unpublished lecture or on a personal communication from Bastian.,TR. ↩
The next paragraph appears in the original as a footnote appended at the end of the previous paragraph.,TR. ↩
See Adam Smith, op. cit., p. 26. ↩
To Chapter I. See notes 2 and 8 of Chapter I.,TR. ↩
“nothing is useful but what serves to the salvation of one’s eternal life.” ↩
“utility itself is measured by considerations of eternal life.” ↩
“Center of gravity” is the literal translation for “Schwerpunkt.” Menger’s title is “Ueber den Wechsel im ökonomischen Schwerpunkte des Güterwerthes.” A less awkward translation is not possible without loss of the flavor of the original.—TR. ↩
I classify indifferent exchanges such as this as definitely non-economic since in them the provident activity of men is set in motion aimlessly quite apart from all the economic sacrifices they may entail. ↩
“possessions that do not yield an annual product, such as precious objects, products destined for consumption.” ↩
“what is suited to the satisfaction of human needs.” ↩
“every means to a purpose of a man.” ↩
“the judgment we pass upon the utility of things . . . makes goods of them.” ↩
“those [things) which man recognizes as means to this end [satisfaction of psychological and physical needs].” ↩
“all that is recognized as being applicable to the satisfaction of a true human need” (Menger’s italics). ↩
“transferable rents made exclusive by private control of supply and elimination of competition.” ↩
To Chapter II. See notes 9 and 14 of Chapter II.,TR. ↩
“what can be obtained only for a definite sacrifice in the form of labor or monetary consideration.” ↩
“that are capable of being traded, or that, at least, facilitate trade.” ↩
“ends and means of economizing.” ↩
We are forced, so to speak, to buy these . . . goods by labor, economy, abstinence,,in a word by real sacrifices. ↩
“One cannot separate the idea of property from these goods. They would not exist if exclusive possession of them were not assured to the person who has acquired them. . . . On the other hand, property presupposes some form of society, contracts, and laws. Hence wealth so acquired may be called social wealth.” ↩
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, Facultätsschriften der 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 it is the utility of the good. Looked at subjectively it is 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. ↩
To Chapter III, Section 2. See note 11 of Chapter III.,TR. ↩
The passage from Aristotle given here is a literal English translation of the German translation offered by Menger. In the standard English translation by W. D. Ross (The Works of Aristotle, London, Oxford University Press, 1925, Vol. IX), the passage runs as follows: “all goods must therefore be measured by some one thing. . . . That demand holds things together as a single unit is shown by the fact that when men do not need one another . . . they do not exchange, as we do when someone wants what one has oneself.”,TR. ↩
“since the dispositions of human minds vary, the value of things varies.” ↩
“the esteem value of an object, for an isolated individual, is precisely equal to the portion of his total faculties [labor] that answers his desire for the object or that he wishes to employ for its satisfaction.” ↩
“A thing is said to be useful when it serves for one of our needs; … according to this utility we esteem it more or less. … Now, this esteem is what we call value.” ↩
“Since use value is always a relation of a thing to man, the use value of every species of goods is determined by the magnitude and rank of the human needs the species of goods satisfies. Where there are no men and no needs, no use value exists. The total use value of any species of goods remains unchanged, therefore, as long as the needs of human society remain unchanged, and the use value of a single unit of the species is equal to this total use value divided by the number of units. Hence the larger the total number of units, the smaller becomes the portion of use value attributed to each unit from the total use value of the species and vice versa.” ↩
“the requisites for the estimation of the use value of goods cannot be found anywhere but in the fundamental elements of the concept of use value itself.” ↩
“Thus the magnitudes of the use value of goods depend (a) on the intensity of the human needs they satisfy, and (b) on the intensity with which they satisfy these human needs. . . . Hence we find a classification and scale of human needs to which corresponds a classification and scale of species of goods.” ↩
“Economic activity will be engaged in more energetically the more urgent a person’s need for a good and the more difficult it is to procure the good corresponding to that need. The more these two factors (intensity of desire and degree of difficulty of procurement) operate upon one another, the more strongly does the importance of the good enter into the consciousness that guides economic activity. All propositions about the magnitude of value and its changes are reducible to this fundamental relationship.” This passage could not be located in the reprinted edition of Schäffle’s essay, which alone was available to us. It is likely that the reprint constitutes only an incomplete version of Schäffle’s original article. But whether or not this is the case, it is quite clear from Schäffle’s other writings, for example, Das gesellschaftliche System der menschlichen Wirthschaft (Tübingen, 1873, I, 172), that Menger’s quotation accurately represents Schäffle’s thought.,TR. ↩
"The relationship of the measure of a given good to the run of goods in general." ↩
"The true measure of the value of a good is found by dividing the magnitude of the good in question into the magnitudes of other goods. In order to be able to do this a common denominator for the magnitudes of all goods must be found. But this common denominator, or homogeneous element in goods can be found only in their homogeneous nature,that is, in the fact that all true goods originate from the six elements, matter, labor, production, need, usefulness, and true consumability, since if one of these elements disappears, an object ceases to be a good. These elements are contained in a given good only to a particular degree, and their magnitude determines the measure of each true good taken separately. From this it follows that the quantitative relationship of all the separate goods to one another, or the general measure of their value, is given by the ratio between these component elements of goods and their magnitude in one good relative to another. To determine and calculate this relationship is therefore to determine the true measure of value." ↩
To Chapter III, Section 3. See note 15 of Chapter III.,TR. ↩
"We find that the development of all nations was analogous to this extent, that capital was everywhere able to develop its economic power strongly only after the introduction and widespread use of metallic money and to reveal its more extensive power only at higher levels of civilization." ↩
To Chapter V See note 1 of Chapter V.,TR ↩
“what is sold or supplied, wholesale or retail, in shops, stores, at fairs, markets, etc.” ↩
“what is superfluous to a person for his support and which he passes on to others.” ↩
“A commodity is anything . . . that . . . can be given to someone else, especially in exchange for something else.” ↩
“stocks of goods that are kept ready for exchange.” ↩
"each product of an enterprise appearing as an independent good." ↩
To Chapter VIII, Section 1. See note 5 of Chapter VIII,TR. ↩
“a horse . . . or some other monetary payment.” ↩
We were unable to verify this reference.,TR. ↩
"goods kept ready for exchange or sale." ↩
"every good intended for sale." ↩
"surplus goods intended for trade." ↩
"valuables and goods destined for sale." ↩
"products that circulate or are destined for circulation." ↩
"the various products intended for trade." ↩

In this paragraph Menger implicitly assumes his time periods to be of equal duration. Reference to the definitions of the second paragraph preceding will confirm that this need not be the case.—TR.
See Appendix D (p. 295) for the material originally appearing here as a footnote.—TR.
Leopold v. Hasner, System der politischen Oekonomie, Prag, 1860, I, 29.
See John Prince-Smith, “Der Markt, eine Skizze,” Vierteljahrschrift für Volkswirtschaft und Kulturgeschichte, I (1863), part IV, 148ff.
In the original Menger repeats the table printed on p. 204. Since the two tables are identical it was considered permissible to omit it the second time.—TR.
From this it is at once evident that the great importance to human economy of markets, fairs, exchanges, and all points of concentration of trade in general, is due to the fact that as trading relationships become more complex the formation of economic prices becomes virtually impossible without these institutions. The speculation that develops on these markets has the effect of impeding uneconomic price formation from whatever causes it may arise, or of mitigating at least its harmful effects on the economy of men. (Prince-Smith, op. cit., pp. 143ff.; Otto Michaelis, “Die wirthschaftliche Rolle des Spekulationshandels,” Vierteljahrschrift für Volkswirthschaft und Kulturgeschichte, II, ¹⁷ part IV, 130ff., III ¹⁸ part II, 77ff.; Karl Scholz, “Der Wochenmarkt,” ibid., V ¹⁹ part I, 25ff.; A. Emminghaus, “Markte und Messen,” ibid., 61ff.)
“Absatzfähigkeit”, TR.
See note 2 of Appendix C concerning this work.—TR.
The average concrete need-unit (the average of all the separate need-units found among the various classes of society) is the general expression for objective economic use value. The fraction that expresses the shares that the various useful things contribute toward [satisfaction of] the need-unit, and that indicates their value relationship to the average concrete need-unit, furnishes the measure for the objective value of the various useful things.
To Chapter VIII, Section 1. See note 5 of Chapter VIII.—TR.
“either from its own nature or from man’s design” (see Gabriel Biel, Treatise on the Power and Utility of Moneys, translated and edited by R.B. Burke, Philadelphia, 1930, pp. 20–21).
“the invention and institution of money . . . comes from the law of nations.”
“That which has no value cannot be wealth. These things are not within the domain of political economy.”
To Chapter VI. See note 2 of Chapter VI.,TR.