Exchange Value in the Subjective Sense The fact that goods can be bought and sold gives a new and powerful impulse to the estimating of values in all individual economies which exchange with one another. In the housekeeping of a Crusoe only the value in use of things obtains; whereas, in all individual economies which trade with each other, exchange value also has to be considered. The best explanation of the nature of exchange value, of its relation to value in use, and of the services which it renders to the individual economy, will be got if we examine separately the different cases of its occurrence.
Money is always, and by all who possess it, estimated according to its exchange value. Its use consists in the spending of it, -- in the parting with it in purchase of other goods (1*)that are expected to satisfy those sensations of want which would otherwise have no provision. The exchange value of money is the anticipated use value of the things which can be obtained for it.
The law, therefore, which obtains for the latter obtains for the former; it is demand and supply, according as these express themselves in marginal utility, that decide the exchange value.
The various things which determine money value to the individual are the following: -- the amount of money which is at his disposal; the nature and quantity of the goods which can be obtained under the existing market conditions and prices; the utility which those goods are able to give, as also the utility already secured by possessions otherwise acquired; and, lastly, the amount and urgency of demand.(2*)The unit of money always receives its value from the least important expenditure which, in the circumstances of the possessor, it serves economically to defray; every larger sum of money, and the entire amount of money owned, contains this marginal unit value as often as there are units. It is inevitable that different persons give very various estimates of value to the same sum of money. The circumstance which most largely influences these estimates is amount of wealth and income.(5*)The penny is more to the poor man than the shilling to the rich.
Every one must be conscious how very important it is, for the proper ordering of his own economic affairs, that he should have an exact idea of the value which money has for him. No one is utterly ignorant of this, and with every good householder the knowledge is almost a part of himself.
Besides money, all goods which are made or held for sale are estimated by their possessors according to this exchange value, -- whether it be that the owner cannot himself make use of them, because they are unsuited to his personal needs, or that, although he might be able to use them, the utility they would furnish seems too trifling to be weighed against the proceeds of a sale.(4*) The proximate basis of valuation is the expected money proceeds, or the exchange value of that money; the ultimate basis is that use value which is anticipated from the exchange value of the money proceeds. Again the estimate of value leads us back to use value, and again the law of marginal utility obtains.
The same good on the same market obtains for all sellers the same price, but how different are the valuations of that good on the part of those whose whole yearly income is dependent on their sale, as compared with those whose enjoyment would scarcely surer were they to do without selling them from one year's end to the other!
