The Service of Exchange Value in General Economy If we consider the elements which go to form exchange value, we are forced to the conclusion that the charge of antinomy is not the heaviest that may be raised against it. Entirely apart from this, the law of its formation remains such that, even in the most favourable circumstances -- say when there is no disturbing element, no suspicion of force, dishonesty, or error, and when the transaction is one we are accustomed to call free and just, -- exchange value is calculated to render its service in economic life only in an imperfect manner, and with consequences which society feels to be serious evils.
It must be premised that the service rendered by exchange value to general or industrial economy, as compared with the service rendered by subjective value to the self-contained economy, is greater by one additional task. In the latter, value has only to measure outlay and return materially against each other, in the former, it must also do so personally. The material or economic-technical service of exchange value relates chiefly to production. Here it has the function of control. It gives the measure for production and for expenditure of costs. Goods should be produced according to the rank of their value, and other goods should be sacrificed for them as costs only in so far as the comparison between the value of amount produced and the value of costs allows. The personal service of exchange value, on the other hand, comes in, principally, in the distribution of the products acquired among the separate individuals taking part in the exchange; in this case value is the measure of the personal acquisition. To every participator in the great economic process must be assigned a return equal in value to the amount of his outlay -- whether it be outlay of wealth or expenditure of labour.
The exchange value of all goods which are brought upon the market in stocks or quantities, is measured as a marginal value.
That is to say, each unit of the stock is valued at the same as the marginal equivalent, and the whole stock is estimated as a multiple of the unit, -- as product of the amount into the unit value. So far exchange value gives the same appropriate and faultless assistance in the economic calculation as marginal value generally does. Its applicability to this kind of calculation is indisputable. It is, then, unnecessary to repeat in detail what has already been said on the subject in general in in Book I chapter xi.
In order, however, properly to appraise the service of exchange value in economic life, it must be remembered that it does not contain exactly the same elements as does value in use in the self-contained economy. The latter simply depends upon utility: the former is besides dependent upon purchasing power (see Book II. chap. i). Value in use measures utility; exchange value measures a combination of utility and purchasing power. The stock which is greater in use value (in the "up grade") is also always the richer in utility; the stock which is greater in exchange value is not necessarily so. In the latter case the higher value may arise from higher utility, but it may also arise from the greater wealth of the buyers, and the strong inducement held out to them to throw their riches into the balance in the war of competition.
In the material service of exchange value, as well as in the personal, this peculiar method of its formation obtains importance. As a consequence of it, production is ordered not only according to simple want, but also according to wealth.
