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exchange, power, supply, scarcity, ordinary, offered and food

VALUE. Value is the most important word in the whole science of economics. Funda mentally it means the esteem in which a thing is held, but under ordinary commercial condi tions it means power in exchange. There is no contradiction between these two ideas, because the higher the esteem in which a thing is held, the greater will be its power in exchange under normal conditions. Under certain abnormal conditions this would not be true. Travelers in a desert who are dying of thirst might es teem water very highly, but if they had nothing to give in exchange for it, water would have very little power in exchange, even if some one came along with a supply of water. The citing of such abnormal cases as this, however, does not go very far toward clearing up the subject of value. On the ordinary market, in the ordinary commercial community, there are always many things to give in exchange for any commodity that happens to be offered; and if the commodity which is offered is highly esteemed or intensely desired, many things usually will be offered in exchange for it If it is held in low esteem, or not intensely desired, few things will be offered in exchange for it.

When we say that value in an ordinary com mercial community is power in exchange, we must not be understood as saying it is merely a ratio of exchange. Power in exchange is power to command other desirable things in peaceful and voluntary exchange. When things are exchanged, however, they must of necessity be exchanged in some ratio, but the ratio is purely accidental and is not the real essence of value.

Value depends upon two things and two things alone: namely desirability and scarcity. Any material thing which can be transferred will have value if it possesses both these quali ties and will have no value if it lacks either of them. However scarce or rare a thing may be, if nobody desires it, of course it will have no value or power in exchange. However de sirable it may be in itself, if every one has all he wants of it, nobody will pay a price to get any more. Consequently it will have no power in exchange.

With a given degree of scarcity, the more desirable the object is, the higher its value, and the less desirable it is, the lower its value. At the same time, with a given degree of de sirability the greater its scarcity, the greater its value; and the less its scarcity or the greater its abundance, the lower its value. That is to say, when everybody has nearly as much as he wants, he will not be very anxious to get any more, and he will no be anxious to pay a high price or give mu exchange for an additional qjiantity. But if it is very scarce, so that every one would like to have a great deal more than he has got, then he will give a great deal in exchange for it.

The reason why scarcity makes for high value and abundance for low value is mainly physiological. Wants are satiable. When one has had little food, hunger or the desire for W food is intense. When one has had much food, hunger or the desire for food is less in tense and gradually approaches the point of satiety, or actually reaches it. This is true not only of hunger but of every other human de sire,—that is, for the desire for every other specific form of satisfaction. Even music palls, especially if there is little variety. One becomes weary of looking at the same work of art or at works of art of a given type. Were it not for this principle of satiety, there is no reason why the value of a commodity should diminish as the supply increases. If the tenth apple con sumed by a given person furnished as much satisfaction as the first, there is no reason why the tenfold increase in the supply of apples should not sell at as high a price per barrel as the smaller supply.

This principle of valuation as suggested above rests upon physiology and not upon social ar rangements. The law of demand and supply is much deeper than the organization of the market, the type of government, or the organi zation of society itself. It has its basis in human physiology. Market values and prices are only expressions of this fundamental physiological law. See ECONOMICS.