A Treatise on Political Economy - The Production, Distribution, and Consumption of Wealth

price peculiar to itself. If the productive agency original: "productive agency"; the combined services of labor, capital, and land exerted in the production of 15 kilograms original: "kilogr." of wheat can obtain for itself only 1/15th of its own product, it will be entitled to no more than 1/15th of the value of any other product obtainable by exchange for that quantity of wheat. For instance, it would be entitled to 1/15th of 4 francs original: "fr.", and so on for other products.

Thus it is obvious that the current market value of productive exertion is based upon the value of an infinity of products compared with one another.* The value of products is not based upon the value of the productive agency, as some authors have erroneously claimed.† Instead, since the desire for an object (and consequently its value) originates in its utility, it is the ability to create that utility which gives value to productive agency. This value is proportionate to how important that agency's cooperation is in the business of production. For each product individually, this constitutes what is called the "cost of its production." Say is arguing for a utility-based theory of value, contradicting the "Labor Theory of Value" popular with English economists like Ricardo.

The utility of a product is not confined to one human being, but applies to at least a whole class of society—as in the case of particular articles of clothing—or to a whole community, as in

* It must not be inferred from this passage that I mean to say that the productive agency exerted in raising a product is worth only 3 francs if its production costs amounted to 4 francs but it sells for only 3 francs. My position merely implies that this amount of productive service has, in such a case, produced a value of only 3 francs, even though it might have produced a value of 4 francs if used elsewhere.

† David Ricardo, Principles of Political Economy and Taxation.