“The word Value, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. 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 goods may frequently be had in exchange for it.”[1] [1] The division is as old as Aristotle. “Of everything which we possess there are two uses both belonging to the thing as such, but not in the same manner; for one is the proper and the other the improper or secondary use of it. For example, the shoe is used for wear, and it is used for exchange; both are uses of the shoe.”—_Politics_ (Jowett), § 9. This passage, like much else in Adam Smith, does not bear all that has been read into it by subsequent economists. It does not say that Use Value and Exchange Value are two great branches of one universal conception of Value. Nor does it say that they are entirely different conceptions. It merely says that the word has two different meanings. What concerns us, however, is the use that economists have generally made of this passage. They have quoted it with approval; shown that the two kinds of value do not by any means coincide; and have then gone on to discuss the latter as “economic value,” or “what we mean by value in political economy.” The best thing we can do, meantime, is to try to forget this old classification, and begin anew. It scarcely requires proving that Value, in whichever of its various senses the word is used, does not express any inherent property of things. Very often, indeed, we can scarcely help thinking of Value as a quality of a material object,—particularly when the object is one of universal desire, such as gold coin. But Walker’s monetary formula, “Money is that money does,” may remind us that the value even of gold coin is given it by the service it renders in a highly organised community, and that, if to any substitute can be given the confidence that gold commands, the same value will attach to it—“attach” but not “inhere.” Sometimes, again, value is so strongly a personal experience that we are tempted to think of it as purely a subjective matter, and this is particularly the case among people who understand Ruskin’s famous words, “There is no Wealth but Life.” The different value set upon any work of art by different individuals, classes, or nations, is sufficient proof of this.