Natural Value (1889)

by Friedrich von Wieser (1851-1926)


Edited with a Preface and Analysis by

William Smart (1853-1915)


The Translation By

Christian A. Malloch


[Editor’s Preface – William Smart]

[Author’s Preface]


Chapter I. The Origin of Value. The popular impression is that value originates in utility, but certain well-known phenomena seem to contradict this. The duty of the value theorist is not to ignore either side, but to interpret the actual valuations of men in economic life: and the test of the theory is that his value is their value.

Chapter II. The Value of Satisfactions of Want. The use of goods being the satisfaction they give, the theory of value begins with the value of wants. The ranking of satisfactions.

Chapter III. Gossen’s Law of the Satiation of Want. Its statement – that desire diminishes at every successive draught of satisfaction. Apparent exceptions.

Chapter IV. The Scales of Satiation. Each satisfaction of want describes a course graduated down to zero, while each has its own higher point and graduation. This suggests the difference between Usefulness and Use.

Chapter V. Marginal Utility. As no man’s wealth is sufficient to satisfy all his desires, there is, in each branch of satisfaction, a marginal point. Thus each man draws a waving marginal line through all branches of his expenditure.

Chapter VI. The Value of Future Satisfactions of Want. The marginal line must take account of future as well as present satisfactions. The former are scarcely less important than the latter – if we are to judge by the anxiety paid to their provision.

Chapter VII. The Value of Goods. Our real concern being with satisfactions, goods get their value from satisfactions dependent on having them. This explains how no value attaches to superfluity.

Chapter VIII. The Valuation of a Single Commodity. In the rare case that we value goods in isolation, we ascribe to them the full utility obtained from them.

Chapter IX. The Valuation of Goods in Stocks. The Law of Marginal Utility the General Law of Value. We usually value goods as similar items in a supply. Here the value of each equals the least utility which depends on it in the circumstances – the marginal utility; and the value of the supply equals the items multiplied thereby. Thus value, though based on utility, does not reflect it all.

Chapter X. The Paradox of Value. If a man increases his holding of similar goods, at each increment the marginal utility falls, and with it the value of the single good, while the total value describes an “up grade” till a certain point is reached and then begins a “down grade” till zero is reached with superfluity. The explanation is that value is a union of positive and negative – of advantage gained and dependence lost – and is therefore a residual amount.

Chapter XI. The Antinomy of Value and the Service of Value. Utility and not value being the highest principle of economic life, the imagined social antinomy disappears. The real service of value lies in its being the calculation form of utility.


Chapter I. Price. Its connection with subjective use value. Taking its normal formation, we find buyers coming to market with a maximum price in their minds to which sellers try to drive them. Under perfect competition price is determined all over by the maximum of the current marginal buyer. But this maximum is determined not only by want but also purchasing power.

Chapter II. Exchange Value in the Subjective Sense. The value of money – always an exchange value – is the anticipated use value of the things it purchases, and so is subjective, varying from owner to owner. Similarly with goods made or held for sale, and also with goods replaceable by purchase; they have a subjective exchange value. But for the personal equation exchange would be unmeaning.

Chapter III. Exchange Value in the Objective Sense. Subjective valuation, while necessary, cannot go beyond the individual. Goods pass simply to those who pay the price: are ranked according to their prices; and prices determine the amounts expended on production. But price does not denote the estimate put upon goods by society.

Chapter IV. The Antinomy of Exchange Value. Proudhon is right in his affirmation of this, but the evil does not call for a socialist reconstruction.

Chapter V. The Service of Exchange Value in General Economy. Its function is the control not only of production but of distribution, inasmuch as price depends not only on utility but on purchasing power. But beggar and millionaire pay the same marginal price for necessaries, and the wealth of the rich, thus spared, goes to direct production of class luxuries.

Chapter VI. Natural Value. The plan of the present work: to find what, among our forms of value, would continue in a perfect or communist state, and so to find the permanent basis of all economic life.

Chapter VII. The Socialist Theory of Value. The theory that labour is the sole source of value, if applied, would involve the greatest revolution ever known, because, a economic, it would affect everybody in his most vital interests. But socialism took its basis from the economics then current.



Chapter I. Return Value. Production goods also, as affording prospective utility and as scarce, have value, deriving it from their return. As the dividend to the stock, so is the return to the productive instrument.

Chapter II. The Problem of Imputation. We must find a principle which will divide up the return and impute it to its factors – not its physical factors, which is impossible, but those economically responsible for it. An analogy from jurisprudence.

Chapter III. The Socialist Reading of the Problem. The Claim of the Labourer to the Entire Return. Socialism says that labour alone is creative, and land and capital only its instruments. But would a communism impute all the return to the labour of its members, however it distributed that return?

Chapter IV. Previous attempts at Solution. Menger finds the value of production goods, as of consumption goods, by loss. But when heterogeneous elements, which affect each other’s working, co-operate, the injury by loss is greater than the gain by co-operation.

Chapter V. The Principle of Solution. The Productive Contribution. It is because the productive elements enter into innumerable combinations, each with different values, that we get, by a method of equations, the contributions imputed to each – the “productive contribution.”

Chapter VI. The Principle of Solution (continued). Contribution and Co-operation. The difference between Menger’s share and ours. The living horse adds less than the dead horse deducts.

Chapter VII. The Principle of Solution (continued). The Economic Service of Imputation. The share thus imputed makes value the controlling power of production, as it leads us to demand from each factor a service equivalent. The limits of individual imputation.

Chapter VIII. The Principle of Solution (continued). Imputation and the Marginal Law. Where production goods are in stocks imputation must follow the marginal law: although used to produce different values of product, the value of all similar productive items must be similar, and can only be that derived from the least valuable product.

Chapter IX. The Individual Factors of Imputation. I. – Supply. The larger the supply of any factor the less important the products made, the smaller the marginal utility, and thus the smaller the contribution imputed to each item.

Chapter X. The Individual Factors of Imputation (continued). II. – Demand and Complementary Goods. Demand here comes not only from wants but from supply of complementary goods. In either case the productive contribution imputed rises and falls with it.

Chapter XI. The Individual Factors of Imputation (continued). III. – Technique. Technical improvements which increase quality or quantity increase value of products, and so allow an absolutely greater contribution to each factor. But they may also diminish the need for certain factors, throw them on other employments, and so diminish the imputable contribution.

Chapter XII. The Individual Factors of Imputation (continued). IV. – The Imputation to Cost Goods and to Monopoly Goods. Certain production goods are favoured in the imputation above others. Definition of Monopoly and Cost goods. The double advantage of monopoly goods, – a marginal utility naturally high, and a steadily-increasing demand for them from increasing cost goods.

Chapter XIII. The Individual Factors of Imputation (continued). V. – The Imputation to Productive Factors of Preferable Quality. Some production goods, again, co-operating with others, give a better return, and are accordingly used in preference. Application of this to land, labour, and capital.


Chapter XIV. Ricardo’s Differential Rent: The First Part. Rent is the contribution imputable to some lands, afyer the shares of capital and labour are deducted, in proportion to their preferable quality. Ricardo’s statement.

Chapter XV. Ricardo’s Differential Rent: The Second Part. Statement of the Intensity rent, or rent from differential powers of land.

Chapter XVI. Criticism of Ricardo’s Theory. Monopoly alone will not account for differential rent. It requires superfluity of the last cultivated land and also limitation of capital and labour. His theory, moreover, has no explanation of a universal rent.


Chapter XVII. The Productivity of Capital. The problem is: Does capital yield a net physical return? But if land, capital, and labour, co-operating, replace the capital consumed, and give a net return, how can capital be denied a share in it? When machinery replaces labour, does it not take over its net return also?

Chapter XVIII. The Calculation of Return to Capital in Primitive and in Developed Economies. Thünen, arguing from primitive economies, ascribes too much to capital, but proves its net return.

Chapter XIX. The Imputation of Gross Return and of Net Return. But inasmuch as the return to capital and labour is always a return in foreign things, we never see capital physically reproducing itself with a surplus.


Chapter I. Introduction. To return to the value of the separate factors, and, first, of capital. The problem: – how capital value is always less than that of the foreign things into which it is transformed. Böhm-Bawerk’s criticism.

Chapter II. The Value of Capital and the Interest on Capital. I. – Discounting. The value of capital cannot be more than its gross return. But it must be less, as this gross return contains a (physical) surplus. Therefore to find capital value we have always to discount: i.e. deduct the net return – practically, the rate of interest. The answer to Böhm-Bawerk. Does time, then, make no difference?

Chapter III. The Value of Capital and the Interest on Capital. II (continued). – The Rate of Interest. That the increment to capital becomes generalized into a rate of interest is made possible by the fluidity of capital.

Chapter IV. The Value of Capital and the Interest on Capital. III (continued). – The Law of the Uniform Calculation of the Interest Rate. Even where capital does not flow from employment to employment and interest is not uniform, the differences are shifted on to capital value.

Chapter V. The Value of Capital and the Interest on Capital. IV (continued). – Change in the Rate of Interest. An interest rate will not change unless through extensive changes in some of the factors of imputation. Does increase of capital reduce the rate of interest?

Chapter VI. The Value of Capital and the Interest on Capital. V (continued). – The Valuation of Fixed Capital. In the case of capital giving returns over long periods of time there are obvious advantages in capitalising over discounting.

Chapter VII. The Value of Capital and the Interest on Capital. VI (continued). – Capitalisation. To capitalise interest is, mathematically, the same as to discount capital: it is easy in proportion as gross return is net return.

Chapter VIII. Interest on the Consumption Loan. House Rent. How the consumption loan differs from the loan to production: under communism it would disappear. But house rent – or its equivalent – must remain, otherwise house-building, as a branch of production, would be exceptionally prejudiced.

Chapter IX. The Value of Land. The determination of land values by capitalising rent assumes the development of capital and an interest rate, and is based thereon.

Chapter X. The Value of Labour. While the labourer has no capital value, his services are valued according to ordinary imputation of return, and affected by supply, demand, etc. Criticism of the socialist contention.

Chapter XI. The Value of Production Goods, with Reference to the Competition between Present and Future Interests. Where production and consumption or short and long processes compete, the marginal employment is found on consideration of the whole field of present and future. But the “sacrifice” of abstinence cannot be the basis of interest. The Abstinence Theory.


Chapter I. The Law of Costs. Its two statements, from the side of production goods and of products.

Chapter II. The Conception of Costs. In production, wealth already in existence in the form of production goods is destroyed. Thus the idea of “costs,” as sacrifice of wealth capable of other uses than that to which it is actually put.

Chapter III. Foundation of the Law of Costs. Value of costs determines value of products (1) indirectly, by regulating supply, as in the cost value is anticipated the greatest return possible; (2) directly, and independently of amount produced, as where the use value is greater than the cost value and the means of reproduction are at hand.

Chapter IV. Conditions under which the Law of Costs obtains. Produced production goods come under this law, and thus the valuation of capital gets two sides. To come under the law, however, products must be considered as products; if, e.g., they cannot be reproduced, the law is suspended.

Chapter V. The Determining Amount of Costs. If they are to determine value costs must not exceed the “socially necessary” costs. If these change, the value of products changes.

Chapter VI. The Law of Costs and the General Law of Value. Between costs and utility there is no fundamental opposition. Utility remains the sole source if value, and the law of costs is the most usual form of the general law of value.

Chapter VII. The so-called Costs of Production of Labour. Statement of the Iron Law. Experience does not confirm it, and the guarding clauses nullify it. The modification which replaces “subsistence” by “standard of comfort” is not more satisfactory. Both are attempts to subsume wage under price of commodities.

Chapter VIII. The Cost Theories. By this is meant theories which derive value from costs, but give the word a different meaning.

Chapter IX. The Cost Theories (continued). Labour as an Element in Cost. Labour is a cost, as labour employed is labour withdrawn. But the cost of labour is usually thought of as its pain. In certain described conditions this sacrifice might determine value, but not where labour and natural resources are limited and desires infinite. Nor is sacrifice a co-determinant with utility, although it may have an indirect effect.

Chapter X. The Cost Theories (continued). Capital as an Element in Cost. As all production costs capital, the labour theorists are driven to reduce capital costs to labour costs by proving (1) that capital replaces labour, or (2) that it is “materialised labour.” But capital, being a product, could be valued as labour only if it could be reproduced by labour.

Chapter XI. The Cost Theories (continued). Interest as an Element in Cost. In calculating cost values undertakers include interest. Proof that this is a phenomenon of natural value.

Chapter XII. The Cost Theories (continued). Land Rent as an Element in Cost. Ricardo notwithstanding, a general rent must enter into costs, and even a differential rent in certain circumstances – as e.g. a secondary rent, or ground rent.

Chapter XIII. The Service of Individual Economic Value in National Economy. In any larger economies also, marginal valuation must obtain, and the employment of goods follow its guidance.


Chapter I. Introduction. Limiting ourselves to the economy of the state, we find that, neither in finance nor administration, has much attention been given to value. Sax was the first to base all imposts on a fixed economic conception.

Chapter II. The Province of a State Economy. A national economy secures to the citizen a common good when (1) the individual is too weak, or (2) a necessary undertaking shows no profit, or (3) an undertaking would put too much power in individual hands. Even under communism this would be a corresponding and distinct sphere.

Chapter III. Value in the Natural Economy of the State. Even under communism, substantially the same distinction must be drawn as now between private and national valuation – practically resolving itself into the distinction between definiteness and vagueness. The aid which the theory gives to politics.

Chapter IV. Value in the Present-Day Economy of the State. Schäffle’s principle of taxation. Sax’s development of it – taxation according to the individual Werthstand. But the appeal to justice cannot be entirely dispensed with.

Chapter V. The Fundamental Law of Collective Valuation. According to this principle, the national valuation in the assessing of taxation agrees with subjective valuation, and the theory of taxation becomes a part of the theory of value.

London: Macmillan and Co.

Printed by R. & R. CLARK, Edinburgh.

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