This esteem of men for the objects and their consequent desire for the objects constitute the subjective part of value.

Value, therefore, is at once objective and subjective. Value arises not merely from the desire men have for an object. If it did so arise, value would be merely subjective. It arises also from the intrinsic goodness, absolute or relative, which is in the object. Value in general, then, may be defined to be the desirability of an object on account of its absolute or relative goodness.

The definition of economic value may be derived from this general definition.

Economic Value. The objects which enter into economics and to which may be attributed economic value, are all the various objects which constitute wealth. The intrinsic goodness which these objects have from the economic point of view is their economic utility, i.e. their capacity to satisfy a want, their production by labor, and their exchangeability. Herein consists the objective element of economic value. The subjective element is the desirability of this economic utility. The desirability arises when men perceive the utility of the object and as a consequence esteem the object.

Hence, economic value may be defined as the desirability of the economic utility of an object.

Economic value, then, arises from two elements an intrinsic element which is found in the object of value, and an extrinsic or relational element which consists in the estimation of the object by intelligent beings

Value in Use; Value in Exchange.

Value is divided by some

writers into Value in use and Value in exchange.

Value in use refers to the use an object is put to, the service it renders, the want it satisfies. Value in exchange refers to the worth of an object relative to other objects with which it can be compared and for which it can be exchanged.

Many economists reject this division of value in use and value in exchange. According to these writers, value in exchange is the only kind of value with which Political Economy has to deal. Value in use of an object, they say, might better be called the

utility of that object. Economic value implies comparison with other things. It is a relative term. Value is "the power of a commodity to command other commodities in exchange.' (Bullock, Introduction to the Study of Economics, p. 184; cf. J. Stuart Mill, Political Economy, I, p. 421; cf. also Ely, Seligman, Fetter, Gide, Davenport, Cairnes, Walker, Jevons.)

When the term "value" is used in the following pages, exchange value is meant.

Cause of Value.

- What is the cause of value? Why is it that one thing has more value than another? A diamond, a watch, a coat, a barrel of flour, a pair of shoes, a loaf of bread, a pencil, a pin, have different values. How account for the difference of values?

The proximate cause of the value of a thing is the desire men have for that thing; the remote causes are its utility to satisfy a want, its scarcity, and its difficulty of product on.

The wants of men may be natural or artificial, and man desires the various objects which satisfy his natural and his artificial wants, and thus these objects become of value. Thus, corn, coal, iron, are objects that satisfy man's natural wants, and man desires them and they have value. Gold, diamonds, laces, pianos, satisfy man's artificial wants, and man desires them and they have value. Thus, things have value because they are useful. Utility, therefore, is a primary cause of value.

If utility alone were the cause of value, the value of things should vary with the utility and dependent on the nature of the utility. The intrinsic utility of a thing that satisfies a natural want is greater than the intrinsic utility of a thing that satisfies an artificial want, and the things that have greater intrinsic utility should have a higher value than others that possess less intrinsic utility. Such, however, as we know by experience, is not the case. The value of many things useful to satisfy artificial wants is greater than the value of things useful to satisfy natural wants. A diamond, a small quantity of gold, a piece of old lace, a piano, have much higher value than a ton of coal, a bushel of corn, a pound of iron.

Utility alone, then, does not explain the relative disparity that exists in the value of things. We must seek an additional cause. This cause is the limitation of quantity or the scarcity of the objects. The more scarce a thing is, the more keen will be the desire of men for that thing. If diamonds were as plentiful as coals, diamonds would be as cheap as coals. They would not have the value they have to-day. Paintings of a certain kind are comparatively cheap and may be secured without much outlay. But the paintings of an ancient master may demand a fabulous sum, because of their scarcity. Scarcity, then, must be added to utility.

Furthermore, this scarcity or limitation of quantity will depend on the power men have of multiplying the objects in question. When shoes were made by hand, the scarcity of shoes was relatively great, because only a limited number of shoes could be manufactured in a given time; but when machinery was introduced that could turn out a great quantity of shoes in a day, the scarcity of shoes decreased, and the value of shoes decreased in proportion.

To conclude, then, the cause of value is the desire men have for things useful to satisfy their wants. This desire depends on the scarcity of things, and the scarcity depends on the power to multiply the things more or less easily.

Various Theories of Value. - - The theories of value advanced by various economists may be summed up under the following heads Utility, Scarcity, Difficulty of attainment, Labor. It would only lead to confusion to attempt to explain and refute all these several theories.

It may be worth while, however, to notice the theory that declares Labor to be the cause of value.

Labor as a Cause of Value. It is the theory advanced by Adam Smith and Ricardo and, with some modifications, by Bastiat and Carey. It is especially the theory of the Socialist School, and because of the importance attributed to it by Socialists, it is advisable to consider the grounds of the assertion. Marx, the practical founder of modern "scientific " Socialism,

distinguishes between value in use and value in exchange. Value in use is the utility of an object to satisfy human wants; value in exchange is the ratio of exchangeability of an object for other objects.

The two values, value in use and value in exchange, says Marx, have no connection between them; they are wholly distinct. Value in exchange does not depend on value in use. Value in exchange of an object depends on the amount of human labor put into it. Objects differ in exchange value because they have entailed in their production a greater or a less amount of labor. It is labor alone which gives them their exchange value, and not their utility to satisfy wants, not the estimation men have of them as things useful and desirable. A ton of coal, for example, has required a certain amount of labor to produce it. The exchange value of the ton of coal will be equal to every other commodity or sum of commodities which have required the same amount of labor. If the labor expended on the production of the ton of coal has taken five hours, and the labor expended on the production of a dozen pairs of shoes has taken five hours, the values of the ton of coal and of the dozen pairs of shoes are equal.

Marx's theory of value cannot be accepted. It is not true to say that the value of a thing depends solely on the labor put into it. A person may labor for days in the manufacture of an article it may not therefore acquire value. If men do not desire the article, it will remain unexchangeable and of no value. And men will desire it only in so far as it has the property of being able to satisfy a want, in so far as it is useful.

A thing does not become more desirable or more useful because of the greater amount of labor that has been required to produce it. There is something behind the labor, which makes the object desirable, and which is the cause of the labor which has produced it; namely, its utility in relation to some want of man.

Moreover, as a matter of fact, objects produced with the same amount of labor have different values under different conditions. Such conditions will be the greater or less demand there is for the objects, and this demand again will depend on the greater

or less degree of utility perceived by men in the objects. Hence labor cannot be the sole cause of the value of such objects.

"Although the labor theory of value is still held by many followers of Marx, its place in the creed of scientific socialism is diminishing in importance." (Ely, Outlines of Economics, 1908, p. 184.)

Marginal Value. As mentioned in a preceding page, the Austrian School attempts to explain value from a psychological and subjective point of view.

Value, they say, will depend on the estimation men have of the utility of a commodity. The commodity can be divided or conceived to be divided into small portions, the several portions serving to satisfy some want of man.

The want may be conceived to be divided into small portions or into degrees which range from absolute or relative necessity to a wholly dispensable want.

One portion of the commodity will satisfy an absolutely or relatively necessary portion or degree of the want, and other portions of the commodity will satisfy other portions or degrees of want, the portions and degrees of want gradually diminishing until the want reaches a stage where it almost ceases to be a want.

Each portion of the commodity will have a value dependent on the degree of want it satisfies. That portion of the commodity which satisfies an absolutely necessary want will have an infinite value. The last portion of the commodity which satisfies a want of the lowest degree, and which is on the margin where the want ceases to be a want, will have a very small value.

Now it is this last want, the marginal want, which determines the value of the commodity in the market. This constitutes the marginal value. Thus all commodities will have a marginal utility and a marginal value.

The marginal utility will differ for each individual, depending on many circumstances, but primarily on the amount of the commodity possessed by the individual. Thus, an acre of land is valued less by a man who has one thousand acres than it would be if he had only ten acres. A dollar is valued more by the