Jevons, The Theory of Political Economy, Chapter IVCHAPTER IVTHEORY OF EXCHANGEImportance of Exchange in Economics. IV. 1. EXCHANGE is so important a process in the maximising of utility and the saving of labour, that some economists have regarded their science as treating of this operation alone. Utility arises from commodities being brought in suitable quantities and at the proper times into the possession of persons needing them; and it is by exchange, more than any other means, that this is effected. Trade is not indeed the only method of economising: a single individual may gain in utility by a proper consumption of the stock in his possession. The best employment of labour and capital by a single person is also a question disconnected from that of exchange, and which must yet be treated in the science. Chapter 102 - Transport Industry and Warehousing GENERAL PROFILE. The transport sector encompasses industries that are involved in the transportation of. In her popular article, How to Help Your Overweight Dog Lose Weight, Dr. Donna Spector, a respected veterinary specialist, shared her secret to predictable weight loss. In the popular use of the word value no less than three distinct though connected meanings seem to be confused together. These may be described as. Parabolic Microphone: Theory, Use, and Performance Background Information. With many years of outdoor recording experience, excellent audio and industrial electronic. Just-in-time (JIT) Introduction. Just-in-time (JIT) is easy to grasp conceptually, everything happens just-in-time. For example consider my journey to work this.
But, with these exceptions, I am perfectly willing to agree with the high importance attributed to exchange. Mill I thoroughly concur: . Adam Smith noticed the extreme difference of meaning between value in use and value in exchange; and it is usual for writers on Economics to caution their readers against the confusion of thought to which they are liable. But I do not believe that either writers or readers can avoid the confusion so long as they use the word. In spite of the most acute feeling of the danger, I often detect myself using the word improperly; nor do I think that the best authors escape the danger. The value of a thing means the quantity of some other thing, or of things in general, which it exchanges for. Value implies, in fact, a relation; but if so, it cannot possibly be some other thing. A student of Economics has no hope of ever being clear and correct in his ideas of the science if he thinks of value as at all a thing or an object, or even as anything which lies in a thing or object. Persons are thus led to speak of such a nonentity as intrinsic value. There are, doubtless, qualities inherent in such a substance as gold or iron which influence its value; but the word Value, so far as it can be correctly used, merely expresses the circumstance of its exchanging in a certain ratio for some other substance. Value expresses Ratio of Exchange. IV. 5. If a ton of pig- iron exchanges in a market for an ounce of standard gold, neither the iron is value nor the gold; nor is there value in the iron nor in the gold. The notion of value is concerned only in the fact or circumstance of one exchanging for the other. Thus it is scientifically incorrect to say that the value of the ton of iron is the ounce of gold: we thus convert value into a concrete thing; and it is, of course, equally incorrect to say that the value of the ounce of gold is the ton of iron. The more correct and safe expression is, that the value of the ton of iron is equal to the value of the ounce of gold, or that their values are as one to one. To speak simply of the value of an ounce of gold is as absurd as to speak of the ratio of the number seventeen. What is the ratio of the number seventeen? The question admits no answer, for there must be another number named in order to make a ratio; and the ratio will differ according to the number suggested. What is the value of iron compared with that of gold?—is an intelligible question. The answer consists in stating the ratio of the quantities exchanged. These may be described as. Value in use; (2) Esteem, or urgency of desire; (3) Ratio of exchange. The one may be called 'value in use; ' the other 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. Water, when it becomes very scarce, as in a dry desert, acquires exceedingly great purchasing power. Thus Smith evidently means by value in use, the total utility of a substance of which the degree of utility has sunk very low, because the want of such substance has been well nigh satisfied. By purchasing power he clearly means the ratio of exchange for other commodities. But here he fails to point out that the quantity of goods received in exchange depends just as much upon the nature of the goods received, as on the nature of those given for them. In exchange for a diamond we can get a great quantity of iron, or corn, or paving stones, or other commodity of which there is abundance; but we can get very few rubies, sapphires, or other precious stones. Silver is of high purchasing power compared with zinc, or lead, or iron, but of small purchasing power compared with gold, platinum, or iridium. Yet we might well say in any case that diamond and silver are things of high value. Thus I am led to think that the word value is often used in reality to mean intensity of desire or esteem for a thing. A silver ornament is a beautiful object apart from all ideas of traffic; it may thus be valued or esteemed simply because it suits the taste and fancy of its owner, and is the only one possessed. Even Robinson Crusoe must have looked upon each of his possessions with varying esteem and desire for more, although he was incapable of exchanging with any other person. Now, in this sense value seems to be identical with the final degree of utility of a commodity, as defined in a previous page (p. No doubt there is a close connection between value in this meaning, and value as ratio of exchange. Nothing can have a high purchasing power unless it be highly esteemed in itself; but it may be highly esteemed apart from all comparison. The only thorough remedy consists in substituting for the dangerous name value that one of three stated meanings which is intended in each case. In this work, therefore, I shall discontinue the use of the word value altogether, and when, as will be most often the case in the remainder of the book, I need to refer to the third meaning, often called by economists exchange or exchangeable value, I shall substitute the wholly unequivocal expression Ratio of exchange, specifying at the same time what are the two articles exchanged. When we speak of the ratio of exchange of pig- iron and gold, there can be no possible doubt that we intend to refer to the ratio of the number of units of the one commodity to the number of units of the other commodity for which it exchanges, the units being arbitrary concrete magnitudes, but the ratio an abstract number. Mill, indeed, in his chapters on Value, speaks once and again of things exchanging for each other . As to Ricardo, Malthus, Adam Smith, and other great English economists, although they usually discourse at some length upon the meanings of the word value, I am not aware that they ever explicitly apply the name ratio to exchange or exchangeable value. Yet ratio is unquestionably the correct scientific term, and the only term which is strictly and entirely correct. Le Trosne carefully defines value in the following terms: . Value will be expressed, like angular magnitude and other ratios in general, by abstract number. Angular magnitude is measured by the ratio of a line to a line, the ratio of the are subtended by the angle to the radius of the circle. So value in this sense is a ratio of the quantity of one commodity to the quantity of some other commodity exchanged for it. If we compare the commodities simply as physical quantities, we have the dimensions M divided by M, or MM- 1, or M0. Exactly the same result would be obtained if, instead of taking the mere physical quantities, we were to compare their utilities, for we should then have MU divided by MU or M0. U0, which, as it really means unity, is identical in meaning with M0. Lastly, the value in use of Adam Smith, or the total utility, is the integral of U d M, and has the dimensions MU. We may thus tabulate our results concerning the ambiguous uses of the word value—. Popular Expression of Meaning. Scientific Expression. Dimensions.(1) Value in use Total Utility MU.(2) Esteem, or Urgency of Desirefor more Final Degree of Utility U.(3) Purchasing Power Ratio of Exchange M0. Definition of Market. IV. 1. 4. Before proceeding to the Theory of Exchange, it will be desirable to place beyond doubt the meanings of two other terms which I shall frequently employ. Originally a market was a public place in a town where provisions and other objects were exposed for sale; but the word has been generalised, so as to mean any body of persons who are in intimate business relations and carry on extensive transactions in any commodity. A great city may contain as many markets as there are important branches of trade, and these markets may or may not be localised. The central point of a market is the public exchange,—mart or auction rooms, where the traders agree to meet and transact business. In London, the Stock Market, the Corn Market, the Coal Market, the Sugar Market, and many others, are distinctly localised; in Manchester, the Cotton Market, the Cotton Waste Market, and others. But this distinction of locality is not necessary. The traders may be spread over a whole town, or region of country, and yet make a market, if they are, by means of fairs, meetings, published price lists, the post office, or otherwise, in close communication with each other. Thus, the common expression Money Market denotes no locality: it is applied to the aggregate of those bankers, capitalists, and other traders who lend or borrow money, and who constantly exchange information concerning the course of business. IV. 1. 6. In Economics we may usefully adopt this term with a clear and well- defined meaning. By a market I shall mean two or more persons dealing in two or more commodities, whose stocks of those commodities and intentions of exchanging are known to all. Health - How To Information.
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