SUBJECTIVE EXCHANGE VALUE
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.
Aristotle said that every good had two uses, “both belonging to the
thing as such”: similarly we say that every good has two subjective
importances, that which it can directly afford, and that which the
things got in exchange for it can afford. A little reflection will
convince us that subjective value contains these two distinct branches,
use value and exchange value.
It may occasionally suit the economist, for purposes of illustration,
to discuss the economy of a Crusoe—particularly in problems of
production where the essential features of society, as at once a
producing and consuming body, are obscured by the division of
labour—but, in the simplest form of society known to experience, there
is always some barter or exchange of goods. But, wherever this is the
case, every good acquires a second possible value as an exchange form
of other goods, or a potentiality of obtaining other goods. In the
organism called society, each man becomes—at least potentially—richer
or poorer with the increase or decrease of its wealth. Some part of our
neighbour’s goods becomes available for the satisfaction of our want
whenever exchange becomes possible between us, inasmuch as the actual
existence of his surplus—not to mention his enjoyment of it—depends
on our co-operation. Thus the goods which were first valuable to us
personally, as possible satisfaction of our want, get a secondary
value. Every good becomes potentially a number of other goods, and the
range of our possible satisfactions becomes by so much widened. The
presence of exchange, in short, gives us a choice of values.
These two kinds of value are possessed in varying degree by different
goods. In some, the exchange value may be greater than the use
value—as, for instance, when a change in productiveness in the
community increases the quantity or improves the quality of things
I can get in exchange, while the use value of things I can give in
exchange remains unaltered: in others it may be less, as in all cases
where habit and association root the goods in our affection. What has
to be emphasised is, that the position which every man occupies as a
member of society gives to all goods of personal use this other value,
and that, as we saw on p. 37, whichever of the two valuations we place
higher determines the total subjective value. In other words; there
is, as we shall see later, a direct and an indirect satisfaction of
wants, corresponding to the division of goods into consumption goods
and production goods. Just as grain may be used for bread or for seed,
and just as the value of the grain is determined by calculations
of marginal utility which take both bread and seed into account as
possible uses, so has every good, subjectively considered, a use value
and an exchange value, and the total subjective value is calculated on
the consideration of both of these as possible uses of the good.
On the other side, there is no doubt that the analysis of exchange
value into subjective and objective is subtle, and that it is difficult
to keep the two distinct. The real difference may be most easily seen
by an illustration. Say that the first edition of _Modern Painters_,
which cost me £18 some years ago, now stands in the booksellers’
catalogues at £30. It may be assumed that my pleasure, as a cultured
man, in the possession of this first edition is measured by something
like £30. But suppose I now suffer a reverse of fortune. The subjective
use value of the book remains as before: the objective exchange value
also remains as before: but the _subjective exchange_ value has
immensely risen. In my former circumstances the price of £30 was a
bagatelle: now it may perhaps pay my insurance premium: this second
subjective value is distinct alike from subjective use value and
objective exchange value.
In former chapters, we have seen that the value of a good is determined
by the marginal utility which depends on it: in the same way this
secondary value will be determined by the marginal utility which
depends on the things obtained in exchange for the good. This being
so, the _amount_ of this exchange value will depend on two things:
(1) on the objective value, or price, of the goods—which determines
what or how many things can be got for them: (2) on the existing state
of the owner’s want and provision—which determines what place the
satisfactions, obtainable from the goods got in exchange, have in his
scale of living. For instance: the use to me of the one riding horse
which I can just afford may be quite definite, as giving me a pleasant
form of exercise. But its subjective _exchange_ value depends (1) on
the sum of money I could get for him, and (2) what part this sum of
money plays in my scale of living.
And here we come in sight of the decisive distinction between
subjective and objective exchange value. The objective exchange value
of the horse is the same to every one; the subjective exchange value
varies from person to person according to the previous state of his
wants and resources. An article in a poor man’s house which he can, in
case of need, sell for 20/ has a very different importance to him from
what a similar article has to a rich man—20/ is a large part of a £50
wage, but a very small proportion of a £1000 income.
The necessity of drawing this distinction lies in the fact that Money
has _no_ subjective value other than its exchange value. As the tool of
exchange the only use to which we can put it is to part with it. It is
one of the virtues of a good money that it is never “used,” say, as a
metal, but passes from hand to hand without question in satisfaction of
debt. And yet, as a pound note in a man’s pocket is the temporary form
of so much bread, meat, lodging, clothes, etc., it is clear that the
pound note to the working man has just the marginal utility which these
things have. To use Wieser’s terse expression: The exchange value of
money is the anticipated use value of the things it buys.