Wealth, as the etymology of the word suggests, is what contributes to human welfare; it consists of material objects, or goods, which serve to satisfy some human need. The basic source of all wealth is nature since goods are either found in nature or fashioned from materials that originally came from nature. Nearly all goods come into the latter category of being products of labour, in the sense that human beings have to exercise their mental and physical energies in order to create or produce them.
Producing a good does not involve creating new matter, but changing the form of existing materials. In the process of production human beings employ their own energies. and other natural forces and processes, to change nature-given materials into articles that can be used to satisfy some human need. Materials found in nature are given a new form, new physical characteristics. It is these newly-created characteristics capable of satisfying some human need that constitute goods and wealth. Wealth production is thus essentially a process of transformation of nature to make it useful to human life and happiness. Those goods which are products of labour are parts of nature that have been so transformed.
A good, then, is a part of nature which has, or has been given, particular physical characteristics which can be used to satisfy some human want. These useful characteristics of a good are its use-value. As in the end the good is its useful characteristics — it is these that make it a good for humans — the word use-value can be used as a substitute for good.
An item of wealth is always, by definition. a use-value but under certain circumstances can also acquire another characteristic which has also been called value. But how can an item of wealth have a value for humans other than its use-value? Surely the value of a good can only be its ability to satisfy some particular human need? These common-sense, and basically correct, observations caused the early political economists no end of trouble when they came to study the prices which goods acquired in an exchange economy. For they noticed that the proportions in which goods exchanged for each other bore no relation whatsoever to their relative utilities, or use-values; goods which were very useful, even vital, to human beings had a relatively low price while goods which had a limited use-value, such as gold and precious stones, had a relatively high one. The answer found to this paradox was that prices did not in fact measure use-value but some other kind of value: exchange-value.
A good produced for the purpose of being exchanged has traditionally been called a commodity in English. From an etymological point of view this is unfortunate since "commodity'' ought to be an alternative way of saying "good" or "use-value". but the usage is too long-established to be changed. It still remains true that the German and French equivalents — Ware and Marchandise — are much more expressive since they immediately indicate that what is being talked about are not goods as physical objects but goods as articles of commerce, as "wares and merchandise". But just as we can call goods use-values so we can call commodities exchange-values.
Strictly speaking, exchange-value and value are not the same. The exchange-value of a commodity is the expression in exchange of its underlying "value”, of the economic value which it has in an exchange economy even when it is not being exchanged. The disagreement between Marx and orthodox economics was not so much over what determined value (for Marx, and some others, it was the amount of socially necessary labour incorporated in a commodity in the course of its production from start to finish) as over its nature. For Marx value was not a feature which goods possessed by virtue of being goods but a social relation, a feature goods only acquired in commodity-producing societies; in other societies the only value goods had (or would have) was their use-value.
The other expression of value in an exchange economy is money as a unit of account. Money originated from barter, the simplest form of exchange, as the one commodity in which the exchange-value of all other commodities could be expressed and measured. Money still performs this role today so that exchange-value normally appears as a price expressed in monetary units.
This distinction between use-value and exchange-value, between wealth and value is a key concept for understanding capitalism, which is essentially a system in which wealth is produced as value rather than exclusively as use-value. This is because capitalism is an exchange economy in which most wealth, from ordinary consumer goods to vast industrial plants and other producer goods, takes the form of commodities, items of wealth that have been produced with a view to sale on a market.
Commodity production existed before capitalism but in previous societies was marginal to the predominant form of the production of wealth. In previous societies such as feudalism wealth was principally produced for direct use and not for sale on a market. Wealth was used by those who produced it or else by the privileged classes who lived off the producers and acquired wealth from them by the actual or threatened use of force. In capitalism the roles of production for sale and production for use are reversed; it is now production for use that is marginal, while the great bulk of wealth is produced for sale. In particular, the elements needed for producing wealth (raw materials, machines, and human mental and physical energy) become commodities.
Adam Buick
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