The Value of Money

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Problem of value of money special case of general theory of value; present chapter concerned with general theory 1

Formal and logical aspects of value: value as quality; value as quantity; value and wealth 5-6

Absolute vs. relative conceptions of value: value of money vs. "reciprocal of price-level"; value prior to exchange; value and exchangeability; do prices correctly express values? 6-12

Doctrine so far in accord with main current of economic opinion 12-14

Causal theory of value new: marginal utility, labor theory, etc., rejected 14-16

Social explanation required: "individual" a social product, both in history of individual and in history of race 16-19

And above individual impersonal psychic forces, law, public opinion, morality, economic values 19-20

Three types of theory have dealt with these: theory of extra-human objective forces; extreme individualism; social value theory 20-21

Illustrated in jurisprudence, ethics, and economic theory 21-26

Law, morals, and economic values generically alike, but have differenti? 26-28

But not differentiated on basis of states of consciousness of individual immediately moved by them, because many minds in organic interplay involved 28-33

Economic social value (a) of consumers' goods and services: "utility" and scarcity; "marginal utility"; social explanation of marginal utility; marginal utilities the conscious focus of economic values of consumers' goods; but only minor part of these values; individuals, classes and institutions heavily weighted by legal, moral, and other social values, in power over economic values of consumers' goods 33-38

Economic social value (b) of labor, land, stocks, bonds, "good will," etc.; based only in part on values of consumers' goods; partially independent, directly influenced by contagion, and centers of power and prestige 38-41

Pragmatic character of theory 41-43

Relation of social values to individual values 43-45

Hiatus between general theory of value and theory of value of money 46-47

Partly because former has been developed by different writers from those who have developed latter 47-49

But chiefly because supply and demand, cost of production, etc., assume fixed value of money, and are theories of price, rather than value 49

Supply and demand useful but superficial formula, common property of many value theories 49-50

Crude and unanalyzed in Smith and Ricardo; first made precise by J. S. Mill, who gives essentials of modern doctrine 49-51

B?hm-Bawerk's pseudo-psychology spoils Mill's clean-cut doctrine 51-52

Supply and demand assumes fixed value of money-unit, and hence inapplicable to money itself 52-56

But supply and demand does not assume fixed price-level 56-57

Cairnes vs. Mill 57-58

Mill's unsuccessful effort to apply supply and demand to money 59-62

Walker's attempt 62

Supply and demand in the "money market" 62-63

Types of cost theory: modern cost doctrine is "money costs" doctrine, and inapplicable to value of money 64

Labor cost: Smith; Ricardo; Ricardo's confession of failure; "real costs" in Senior and Cairnes; Mill's "money-outlay" cost doctrine, and Cairnes' criticism; but "money-cost" has survived 64-67

Because "real cost" doctrine does not square with facts 67-69

"Money-cost" of producing money-metal 69-70

Austrian cost doctrine runs still in money terms, assuming value, money, and fixed value of money 70-71

"Negative social values" as "real costs" note, 71