Excerpt from Lecture Notes on Economics and Politics
Diamonds and pearls have great value, but almost no utility, as compared with their value. We often hear of "exchangeable value" and "intrinsic value." The former is value proper, the latter is utility. (5)
7. Value Not Price.
Value and price are often confounded. Price is value in money. Money is itself a coinmodity; and, like every other saleable thing, has value.
8. The Measure Of Value.
Men have differed widely in their views as to the true measure of value. The chief opinions are as follows: (1) Ricardo says it is labor, (2) Malthus, the labor which an article can command; (3) Adam Smith, corn; (4) J. S. Mill, the cost of production; (5) Carey, the cost of reproduction.
9. The Law Of Value.
The, one universal principle of value is the Law of Demand and Supply. Demand is the desire of purchasing something coupled with the power of purchasing it. Supply is any class of exchangeable things offered for sale against money or other exchangeable things. As long as demand an supply are equal values are unchanged. When the demand for anything increases, the supply remaining the same, the value increases. When the supply increases, the demand remaining the same, its value diminishes. To increase the demand or diminish the supply has the same effect upon values.
III.
Production.
1. Definition Of Production.
Production is effort with reference to a sale. As it is the effort to satisfy a desire, it is a creation of value. Only those efforts which aim at a sale are productive.
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