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price. In business and in political economy it always means the worth, including utility and cost.


Adam Smith and other economists have tried to rid their discussions of the ambiguity growing out of this double use of the word value, by discriminating between "value in use" and value in exchange." Chapters have been written to show that the former is simple utility, and is not the same as the other. The device of substituting a phrase for the word is awkward in form, if not also incorrect in fact. "Value in use" can only mean useful in use, a tautology which comes near being an absurdity.

It is better to reclaim the word at once to the only meaning it can have in economic science, as covering the complex idea presented in our triangle. If the student, after a simple explanation, can not thereafter distinguish between utility and value, he should be sent back to begin his education.

But while value differs from utility, let it be carefully noted that it does not exclude it. There is no value without utility. Value is utility and something more.

Water has high utility, but not, commonly, any value. Let it become scarce, and so require labor to obtain it, and the owners of water find it valuable, and get a price for it.

28. Effort defined.-Effort, the second side in our triangle, and the second element in value, includes all labor of mind or body-all exertion of strength or skill needed to procure or produce the object of value.

How effort enters into value is easily shown. What can be had for the taking, and without effort, men will not buy. Such objects cost nothing and carry no price. Sunlight is vastly better than gas light, but no man offers sunlight for sale, or thinks of it as a commodity. It comes without effort, and is enjoyed without cost. Whatever has cost effort to procure, or would cost effort to replace, the owner will not part with, except for an equivalent.

All effort is more or less painful or exhausting, and men will

not undertake efforts without compensation.

The pain or

trouble of the effort is weighed against the gratification to be

gained by it.

All value represents effort or labor. In general, all value is produced by labor. In some cases the utility is the result of the labor, and in others it is the product of nature, and collected by labor. The utility of a watch is given it by the labor bestowed upon it; the utility of an apple is its natural quality. In each case the value is due to the labor, or, in other words, the labor must be added to the utility in making up the value. If the first question to be asked concerns the utility of an object, the second as certainly concerns the effort necessary to obtain it.

In the place of effort, J. Stuart Mill and others have chosen to consider the " 'difficulty of attainment" as the true element in value. Properly, neither of them reside in the object, but both stand related to it. The difficulty of attainment represents the obstacles to be overcome; the effort represents the pain or trouble of overcoming them. The one involves the other. The efforts must equal the difficulties. Each in turn will naturally be in mind, in thinking of value. In estimating the value of a fish, or of a rare work of art, the difficulty of attainment may be first thought of; but in valuing manufactured goods, or ordinary commodities, the effort required in their production is uppermost in mind. It seems clear that most commonly, if not also most naturally, the efforts are counted as the element of value.

N. W. Senior, an eminent English economist, regarded scarcity as an element of value. But scarcity is only one of the forms of difficulty of attainment. Gold in the mine is difficult to obtain, because of the rocks to be removed; but diamonds, in the sands of Golconda, are difficult of attainment because of their scarcity. Whatever increases the effort necessary to gain any useful or desirable object will add to its value, whether it be obstacles or scarcity.

It is obvious that the efforts to be taken into account in

estimating value, are not those which were actually expended in producing the object, but those which would now be necessary to produce or replace it. In the oft-used and well-worn illustration of the man who found a diamond in his path, the jewel was priced not according to the effort which it cost him to pick it up, but according to the effort which it would, on the average, cost him or others to find another like it. This aver

age effort required is supposed to be indicated by the price put upon diamonds by those who work the diamond mines as a business.

The effort expended by the producer saves effort to the purchaser. The producer may still think of his own effort in counting value; but the purchaser will naturally think only of effort saved.

Both parties will, in fact, compare his own efforts saved and expended. The producer or seller compares the effort it cost him to produce or procure the goods, or that which it will cost to reproduce or replace them, with the effort it would cost to produce or procure the goods or money offered in exchange. The purchaser compares, likewise, the efforts required on his side to produce the goods, and those which the means of purchase have cost or will cost.

29. Ownership defined.-The two elements, utility and effort, may seem at first to be the only essential ones. They have been treated as such by De Quincey, Mill, and others. But a little observation, or a fresh appeal to the business world, will reveal another.

In actual life, ownership is always thought of as a part of value, or, at least, as one of its essential adjuncts. No one will purchase what he can not own. The word property, in the sense of something owned or appropriated, is used as a common name-the commonest, perhaps for all objects of value. The very notion of all purchase is that of gaining rightful possession or ownership. Honest men will not, knowingly, buy stolen goods, because a thief can not give good and lawful ownership.

Nearly all economists have recognized and affirmed that value can not attach to that which can not be appropriated. They account for the absence of value in air and sunshine by the palpable fact that these things can not be appropriated or made property. No ownership in them can be established or conveyed. President Sturtevant makes ownership not only an element of value, but the fundamental law of economic science. Roscher says ("Principles of Political Economy," Vol. 1, page 62), "Goods, to obtain value in exchange, must, in addition to their value in use, have the capacity of becoming the exclusive property of some one individual." The clear-thinking President Wayland said, many years ago, "Another element which enters into the notion of wealth is the idea of possession.”

The notion of ownership is the basis of all transferability in values. Utility and effort can not be conveyed as property without this. They may be abandoned, but they can not be transferred either as a purchase or gift without recognizing ownership. Only he who owns them can rightfully sell or give them.

This third element of value, though so long almost unrecognized by leading economists, has come to hold the chief place in the world of trade and in the esteem of men. The severer

pressure of present want having been relieved, utility is now thought of chiefly as a means of appeal to the cupidity of others. Large masses of values, or property, being in existence, the efforts which they cost are partly forgotten. But ownership remains a present fact, full of power and rich significance-full, also, of all promises of future good. To gain this ownership becomes naturally the leading aim of industry and enterprise. Men work to increase their possessions. They struggle for a larger share of what is called the world's wealth. After meeting and providing for the day's needs, all efforts and products. go to purchase permanent possessions.

The ownership of wealth gives so much of power and dignity-so many advantages in the struggle for honor and influ

ence that ownership is sought for its own sake, even when the wealth itself is unneeded if not a burden.

30. The three elements essential.-These three elements, though different in their nature, are all equally essential to the full notion of value as it exists in the industrial world, and as it enters into political economy. Strike out either side of the triangle and the triangle is destroyed. In any object of value, obliterate either its utility, its demand for effort in its production, or its property relation to some owner, and in either case the value will disappear. It will no longer have a price, nor be salable. Men may still desire it for its usefulness as they desire fresh air; they may appreciate the labor it has cost, as they appreciate the well-worked highway; they may even recognize the right of property as that of a man to a letter he has written or to some short-hand notes he has made for his own advantage, and which are wholly illegible and useless to any one else; but till these three qualities unite in one object, there is no merchantable value.

These three are the only essential elements in value, since, if these are all present, value is present in all its power and function.

In general trade, values are based not upon the desires or efforts of the actual owner or purchaser, but upon the presumption of general desires which are assumed to exist, and upon an average effort which it is assumed will be required to obtain the article. Thus the price of flour depends upon the assumption of the general hunger which it will feed, and upon the effort which in general will be required to obtain it in the given time and place. It thus happens that goods often bear a fictitious or exaggerated value. But false values presuppose the true, just as counterfeit bank notes presuppose true ones.

31. The three elements compared.-Utility, efforts, and ownership, here called elements, are not elements in the strict sense of the term; they are rather parts of a complex whole, not elements of a compound. A comparison of them

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