Value

We come now to value — the centre subject of political economy. When we began, the subject matter of the science was said to be Wealth: and the synonym of that is, what has value. Senior defines wealth thus: things which are transferable, limited in supply, productive of pleasure and preventive of pain.1 If this is so, then we have a definition of what value is. But now we must go more carefully into the matter. The word value comes from the Latin through the French valour to be strong — and therefore means power or strength. But it is one of the most difficult and ambiguous words we have to deal with. Smith discriminated between value in use and value in exchange, and he remarked that the most difficult paradox of the whole subject was: things that have greatest value in use have often little or no value in exchange. I have no doubt that remark contains the fundamental difficulty in political economy, because it shows that value in one sense can be founded upon use, upon value in use, or, what is the same, utility. Value in use is doubtless coincident in meaning with utility in one of its senses; but then utility as I shall show is vaguely used and it is because the word utility is so used that we have this paradox: but first of all I must distinguish and particularise the way in which we use the word value. Value in exchange means the proportion or ratio in wh. things are exchanged.