This law of value unites the conceptions of value and of utility in a way that is fully confirmed by facts. When experience shows that iron is worth less than gold, and that an abundant harvest may be of less value than a poor one, our law can give the explanation. In the main, it clears up all the contradictions which appear to separate the conceptions of value and utility from each other; and it only remains for us now to combine the fact of costs with the law of marginal utility, -- a task we shall undertake later. Meanwhile we have not yet completely exhausted the elementary theory of value. In the first place we have only externally resolved the contradictions between value and utility. Under certain conditions iron must be of less value than gold, and the rich harvest of less value than the poor one -- but what hidden import is contained in this? However unconditionally one adopts our law and is convinced by our logic, he will nevertheless scarcely be able to deny that its inmost content is veiled in darkness. In one connection it appears paradoxical; in another it even seems to comprehend within itself a complete antinomy. The final task of the elementary theory of value will be to clear up this paradox and explain away this antinomy. Only when this is done, shall we obtain a clear idea of the essential nature of the phenomenon of value.(2*)NOTES:
1. The amount of supply depends chiefly on the result of production, and thus the elements of production come into relation with value. The nature of this relation we shall first discuss, however, in Book V, under the head of "Costs." Meantime we shall assume that supplies exist without production.
2. We have here reached a decisive point in our examination.
Experience shows us daily that similar goods obtain similar prices; and the majority of theorists (although they may use different names for the same thing) are agreed that these prices are fixed by a marginal law. In this is involved that exchange value, which rests on prices, is the same for all similar goods, and obeys a marginal law. We, however, have gone still further, and say that Value generally and in every form, even in that of use, and even where there is no exchange -- as e.g. in a community organised on a socialist basis -- must be the same for all similar goods, and must obey a marginal law. Jevons, Gossen, and Walras have not gone so far as to assert this. To these writers the utility of the separate portions or items of one supply is different, according to the amount of use which each actually gives. I can scarcely hope to have brought home to the reader, and still less to have converted him all at once to such an unfamiliar aspect of the question. But I trust that the following presentation of the theory of value, which is founded on the foregoing, and which examines, and -- so far as my judgment goes -- explains all the different relations of value, will be found convincing.
There is just one more point to which I should like now to draw special attention. Price not only regulates the amount paid by buyers, but also the amount of production by sellers: it gives to the latter its level. All goods produced for the market are produced under a valuation which considers similar goods as equal to one another, and which subjects them to a marginal law, and it is with reference to this valuation that the costs permissible are calculated, that all stocks are inventoried, that all undertakings make up their balance-sheets, and that all profit and loss is reckoned. If a socialist community were to give up exchange -- the payment of buyer to seller -- it would not on that amount require to give up this measuring scale for the valuation of goods. It could continue to value similar goods at the same figure, and to bring them all under a marginal law. And might we not gave some right to ask, what reasons it would have to discontinue this? Certainly it would require weighty ones to justify a change in a method of valuation which has been followed ever since, if not before, human economics began to be enlarged through trade. And, finally, we have still to ask whether it would ever be possible to cease valuing goods in this way. Is it possible to value equal things unequally? Can we ever regard the useful but unimportant as important?
Menger's theory of value differs essentially from its rivals on this point. He asserts that the law of equality and the marginal law refer not only to price but to value. In my opinion this places his theory in advance of all the others, and wins for him the fame of being the first to lay a perfect foundation for the theory of value. The other authors we have named examine only the laws of want and the laws of price. Menger alone includes the laws of value. His view of the question is the most wide-reaching, inasmuch as it not only aids us to the clearest comprehension of the present economy, but also enables us to think out possible future forms of economy.
