Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book V: The Natural Cost Value of Products

Chapter V
The Determining Amount of Costs

NV-V-5.1 The circumstance, as such, that a good has involved costs, and that it has involved a certain amount of costs, does not determine its value. Not only must the conditions under which the law of costs obtains be fulfilled, but the justifiable amount of costs must be observed.
NV-V-5.2 It is only the “socially necessary” costs, the smallest amount of costs required, that determines value, whether the determination is “indirect” or “direct.” In cases of “indirect” determination, cost value requires the sanction of use value. Whatever is expended uselessly receives no value, and whatever is superfluously expended, – expended in excess of what is necessary to obtain the utility, – receives no value. In cases of “direct” determination of value, the important thing from the first is the outlay requisite for reproduction.
NV-V-5.3 The value of products which are economically produced with the smallest cost, must consequently alter should there be, later on, any change in the determining amount of costs. And, in particular, if the amount of costs should become less, the value of commodities produced at the old dearer rate must fall, from the moment when the new and cheap goods are capable of meeting the demand, or even sooner than this, so far as the old stocks are large and dare not be held back in view of the increasing production.
NV-V-5.4 It may be that all the products in demand cannot be produced at the one cheapest rate of cost. Then, of necessity, the amount of costs must rise. The value of goods produced at different costs is determined throughout by the highest cost necessary; the portion which has been produced at the greatest expense must be valued correspondingly high, if it is permissible to produce it at all at so great an expense; and the other portion, which has been produced more cheaply, must be valued equally high, because all products of equal quality must have equal value.
NV-V-5.5 All these propositions are well known both theoretically and practically, so far as regards exchange value. It is of interest for us to know that they also obtain as regards natural value.

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