Article I. Preliminary Notions of Value and Price

338. The importance and difficulty of the disputation. From the general disputation concerning contracts, the rationale of beneficent agreements has become sufficiently known that henceforth it is permissible to direct attention to onerous agreements alone. In these, the sum and chief point is to establish a correct doctrine concerning value and the just price. For from these is to be sought almost every rationale for judging the equity or iniquity of an onerous contract.

Moreover, modern economists experience and proclaim this question to be grave equally in utility and in difficulty.¹

¹ Bastiat, Harmonies économiques [Economic Harmonies], V, De la valeur [On Value], expressed the importance of the matter thus: “Every truth and every error introduced into minds by this word (value) is a social truth or a social error”; while Rev. Fr. Antoine, place cited, bears witness to the difficulty in these words: “Ask the scholars beyond the Rhine; they will answer you that the theory of value is the dragon which guards the entrance to economic science.” Cauwès, work cited, no. 190, affirmed that the question was at once great and arduous when he said: “The social question, at least in theory, would be settled if the notion of value could be the object of an indisputable analysis. This is what makes Proudhon say that value is the cornerstone of political economy. Unfortunately, there is no subject more thorny, nor one concerning which one can count more divergent opinions.”

Hence a marvelous variety of opinions is observed, and the number of studies which treat this argument every day can scarcely be reckoned.

Therefore, we judge it better first to set forth briefly the rationales which commend themselves to us, rather than to report confused modes of speaking which easily pour darkness over the very eyes of the mind.

339. The true rationale of value. 1. Value, in general, can be called a quality on account of which, in some order, a person or thing comes into estimation. In this manner we speak of intellectual value, moral value, and so forth. It is apparent, however, that the peculiar force of this word in the economic order—that is, in the order of goods which are the object of economic science—is not yet thereby indicated. In order that we may attain it:

2. It must be observed, with Aristotle, place cited, that there is a twofold use of things: one proper to each thing, by which, to adhere to his example, we fit a shoe, for example, to the foot; the other common with other things, by which we exchange the shoe for money or food. Each use, the Philosopher continues, belongs to things per se and not per accidens: in each we use the shoe insofar as it is a shoe.

a) There is therefore a certain prior rationale by which a thing becomes estimable: the thing’s own utility, or its aptitude for satisfying some necessity or desire of the person possessing it. For the goodness of the thing is esteemed. But those things which exist for the sake of another derive their goodness from their relation to that end. Therefore, things which exist for the sake of the human person will be good and worthy of estimation by reason of their relation to the good of the person. Knowledge of that goodness is nevertheless required as a condition, for there is no desire or estimation of the unknown. The value which is called value in use rests upon this known goodness.² This designation, however, which is employed by some economists and rejected by others, is better omitted as superfluous. For, as Liberatore observes after J. B. Say,³ it is convertible with the perceived utility of the generic or singular qualities of some thing.⁴

² Valeur en usage [value in use], Gebrauchswerth [value in use], value in use, valore di uso [value in use].

³ Work cited, pt. 1, no. 14.

⁴ Thus the function of water is rather generic; in a horse, singular endowments are considered chiefly.

b) The faculty of exchanging things is, however, most precious to man, since it is the way of obtaining all the things by which we provide for our various necessities. Therefore, things which furnish this faculty have, by this very rationale, a certain weight worthy of estimation, that is, value. And this value, which some call value in exchange,⁵ is value properly so called in the economic order.

⁵ Valeur en échange [value in exchange], Tauschwerth [value in exchange], value in exchange, valore di cambio [value in exchange].

3. But what things are endowed with this value? It appears without much difficulty that they are those which at the same time:

a) Contribute to temporal prosperity. For there is no estimation of a useless thing. And temporal utility alone is considered in the economic order. Yet you should observe that this goodness is not absent from many goods which are spiritual per se, nor from virtue itself.

b) Are useful insofar as they are possessed or owned, and of which, consequently, there is not an infinite abundance. For in every exchange some ownership is intended. Hence, per se, there is no value of water or air, although their use is very great. Therefore, things must be rare in some manner.

c) Are useful in that society where the exchange is to be made. For example, a book will have no value in a wholly barbarous region.

d) Whose utility is commonly known in that society. Otherwise, an occasion for exchanging the thing will be present only per accidens, and this will scarcely confer any estimation upon the thing. The thing will then be desired and possessed only for the sake of that use which we called proper (339, 2).

4. From this we are led to the following conclusions of the greatest importance, by which we embrace almost the entire matter:

a) Value properly so called is the proximate aptitude by which, in a certain society, goods can be exchanged for other goods. Thus it is considered in first act; but in second act, when the exchange itself takes place. The very degree of value is defined by the quantity of those things which are given for obtaining another thing; it is therefore defined by the comparison which is made of this thing with others.

b) It depends proximately upon the common estimation of a thing in some region. Yet this estimation does not arise from caprice. To one asking why a thing is esteemed so highly, rationales will be adduced, various circumstances of the thing: the uses which it has, the abundance in which it is available, and the mode of selling it.

c) This value is most closely connected with the commonly recognized advantages of possessing the thing, but not with those alone. For we have just said that there is weight in the very mode of selling. Thus, if there are many who immediately desire to exchange some thing, it is apparent that from their increasing number there comes to be for each a lesser faculty of exchanging; and conversely, if there are few. But if, in the rule handed down in this place, you put the acquisition of the thing in place of its possession, you will perhaps say in a manner accommodated to the truth: that the common estimation, and consequently the value of the thing, which depends proximately upon the common estimation, is accommodated to the utility of acquiring the thing, as this utility is commonly perceived. For in this manner, what efficacy the mode of selling also has is not neglected.

d) Among the uses to which a thing is applied, some correspond to the natural necessity of feeding and clothing oneself, and so forth; others are devised more by the will of men itself, as are many ornaments, and so forth. But—and this must be kept well in mind—by reason of the very custom introduced, things acquire a true utility in that society. For, as C. de Lugo, vol. 2, disp. 26, no. 48, says, “it is honorable to possess precious things, or things which are thought precious by everyone.”

e) Briefly, therefore, it is permissible to connect in the following manner the ordered series of causes which, in this matter, succeed one another:

Value — Common estimation — The utilities of acquiring a thing as one’s own which are commonly perceived —
Nature or human customs, as the sources of these utilities.

f) The rationale of value, therefore, is not something merely subjective, since common estimation itself rests proximately also upon the objective utility of procuring the thing for oneself; but it is something relative and exceedingly variable according to the circumstances of time and place.

Indeed—and this must be carefully noted—the thing with which another thing is compared and which is assumed as the measure is itself subject to similar vicissitudes, that is, variations. If, for example, today you exchange a chair for three measures of wheat, and after some time for only two and a half, the cause can equally be either that chairs have become of less account or that grain has become dearer.

Finally, the foundation of value can be intrinsic to the thing by its nature, as when a quality or power has been adapted by nature itself to our uses—for example, food for the body—or it can come to the thing from without, from human customs. But even an intrinsic quality of a thing will not produce value except through the mediation of common knowledge of the quality.

5. Nor should it displease us, on account of the importance of the matter, to direct attention to these two conclusions.

a) Common estimation is indeed the rule of value.⁶ Yet it will not be present unless men have freely judged concerning the thing as it can be known of itself. Therefore, a price which an artisan who alone practices a craft in some place, or another who has acquired a monopoly of things for himself, establishes at his own judgment from his prevailing position will not have proceeded from common estimation. Then common estimation is present only in appearance, as corrupted; but it remains to conjecture what the true estimation would have been without those artifices.

⁶ We shall soon consider below the kind of this rule.

b) He who possesses some thing possesses it according to its value, and it makes no difference that he cares little or nothing for the proper use of the thing. Thus, for most persons, the metal from which money is made has no use; nevertheless, whether it is possessed by a goldsmith or by a beggar, it remains of like value.

340. Concerning price. For the facility of transactions, a common sign of the value of all things was invented. That is, all things are compared with the same thing, which thus becomes the common measure of value. For this end, as Zech says (Rigor Moderatus [Moderated Rigor], diss. 3, § 20), “certain more noble metals were selected, not excessively abundant, suited to safekeeping and handling, which at the same time are of a very compact substance and admit of division into very many small particles.” This is money. You should observe, however, that although these metals were deliberately selected as more stable, they are endowed with one value in some common circumstances and with another in others. Therefore, money itself will vary.

The value of a thing measured according to that common measure and expressed in money is called the price. If it agrees with common estimation, it is just and true, whether the matter is then determined by the judgment of the people or of the prince, so that it is called the common price or the legitimate (legal) price.⁷ Indeed, neither will a price be judged unjust which, for the suitable governance of the commonwealth, the prince has determined as greater or less than the common estimation of things bears.

⁷ Concerning the question whether or not it is expedient that a legitimate price be established, it is useful even now to read the ancient controversies. Cf. C. de Lugo, disp. 26, no. 50.

Moreover, the common price is conceived more broadly, so that there is distinguished the highest, beyond which this estimation does not reach; the lowest, below which it does not fall; and the middle, which is almost equally distant from each. The rationale is that, on account of the many circumstances to be weighed, there are several probable opinions; while the prince, by fixing the price according to one of them, is able to define the matter more precisely.⁸ Cf. Lessius, chap. 21, no. 10.

⁸ There are nevertheless some, such as Molina, vol. 2, disp. 347, no. 3, and Rebellus, who judge that the common price extends more broadly because estimations and affections toward things are various.

Therefore, price formally is the signification of value by money.

341. Other opinions. 1. It is a common dictum of the Scholastics that the value of a thing depends proximately upon common estimation. Some, however, assign to this estimation a subjective cause more than others do. Molina, for example, judges the estimation of men to be partly arbitrary.⁹ Nevertheless—and this is the chief point—they affirm that, before the agreement of the parties, there is a natural just price, whose rule and measure is common estimation when the latter has arisen without frauds, monopolies, and so forth (Molina, disp. 348, no. 4). This doctrine also pleases modern theologians.

⁹ “From the fact that they willed to be so affected toward those things and that they willed to esteem them so highly.” Diss. 348, no. 4.

Among economists, some have retained this truth: that before the consent of the parties there is an objective rationale of value.

Yet not a few have indicated a false, or at least inadequate, measure of it: while some, such as Adam Smith, judged value to inhere in labor alone; others, such as J. B. Say, considered nothing but the utility of things, or, like Storch, the judgment concerning that utility; others ascribed value to rarity alone. Thus Senior. And these opinions are sufficiently obsolete.

Others, on the contrary, have denied that there is any norm by which value is defined, so that the consent of the contracting parties, bargaining according to the law of supply and demand (offre et demande), would not only manifest but would first effect value.

Among them, Bastiat¹⁰ attained the greatest celebrity. His thought is approximately this: Whatever nature furnishes or effects is and remains gratuitous, nor does it have weight worthy of any compensation; but formally only services (les services) which, on the occasion of things, persons confer upon one another are compared. Services alone, therefore, have value; and they acquire this value in the exchange or agreement itself from the subjective estimation of the parties. From subjective estimation, I say, since its causes are too various to allow any objective measure to be present. Hence he defines value as the relation of two services which are exchanged: “Value is the relation of two exchanged services.”

¹⁰ He proposed his doctrine in the book Harmonies économiques [Economic Harmonies], in which he attempted to show that things have been arranged so harmoniously by divine Providence that, while each one sought his own private utility, the greatest common good would be obtained almost spontaneously, provided that men enjoyed honorable liberty to labor, exchange, and so forth. Cf., as regards value, from the 1850 edition, pp. 173, 176, 177, 181, 212, 213, 228, 229.

Moreover, K. Marx assumed for himself a second principle, so that with Bastiat he maintained that the work of nature is furnished gratuitously, and with Adam Smith he derived all value from labor alone. Value, he says approximately, since it is something “relative,” posits a comparison of things among themselves.

But only similar things can be compared with one another.¹¹ Therefore, something common to all things must be discovered, so that in it the cause of value may be acknowledged. But the one thing which is found common to all things is this: a certain amount of human labor, for a definite time, had to be expended in preparing them. Labor, therefore, contained in the thing itself and measured by time, is the one source of value. If, therefore, a garment is exchanged for twenty loaves, it is a sign that, to make the garment, it was necessary to labor for the time in which twenty loaves would be prepared. (As regards the consequences for the present-day regime, cf. above, no. 176, δ.)

¹¹ The Philosopher, in Book V of the Ethics, place cited, already touched upon and resolved this difficulty. “He says,” St. Thomas states, lect. 9, “that things so different cannot be commensurated according to truth, that is, according to the properties of the things themselves; but by comparison with human need they can sufficiently be contained under one measure.”

Finally, not a few economists maintain that a norm underlies the law of supply and demand, that there is a natural value, and that, if there is room for competition, it is derived from what the thing ordinarily costs the one producing it, with a certain profit added.¹² Yet, as they themselves think, that norm, rather than being a norm of just value, indicates the value which it is expedient for the common good to prevail, or the value which those who exchange things pursue by their effort and generally obtain.

¹² Thus, for example, Cauwès, no. 194: “Natural value in exchanges with competition is proportioned to the cost of production, and the cost of production is the equivalent of the difficulty spared to the acquirer.”

The distinguished Professor Funk approaches most nearly the opinion by which an objective norm is denied, while he places value in the estimation, not the common estimation of some region, but the singular estimation of the contracting party, by which the latter judges concerning the utility and advantages which he thinks will be his if he procures the thing. Therefore, any price whatsoever is just, provided that it is paid with full knowledge of the thing and with liberty.¹³

¹³ “Value according to its essence is nothing other than the significance of a good in the economic consciousness of the economic subject.... The price is perfectly just ... insofar as it is paid with free will and full knowledge of the object.” Theologische Quartalschrift [Theological Quarterly], Tübingen, 1869, pp. 426, 427.

What, moreover, pleases us is exhibited by the conclusion now to be proposed: