Value, Value Theory
Value, Value Theory
A value theory indicates the characteristics common to values of all kinds, classifies them, and clarifies the meaning of value-propositions. The kinds or "realms" of value are always said to include moral and aesthetic values, but other kinds are usually mentioned also. For instance, Paul Taylor (1925–) lists six others: intellectual, religious, economic, political, legal, and customary realms of value. All value theorists claim that even though there are striking or important differences among kinds of value, their similarities are more fundamental. As Ralph Barton Perry (1876–1957) puts it, value theory pulls concerns "dispersed among the several philosophical and social sciences" into a single "comprehensive inquiry" in which these various pursuits are "unified and distinguished," so as "to bring to light the underlying principles common to these sciences, and then to employ this principle for the purpose of arbitrating between them" (p. 9).
Value theory is a nineteenth-century development in Western philosophy. Its initiator is usually said to be the German philosopher Rudolf Hermann Lotze (1817–1881) who sharply distinguished fact and value, arguing that fact was the province of the natural sciences, whereas the humanities concerned themselves with value. Value theorists after Lotze can be grouped into two strands: those who claim that values are discovered or created solely by minds, and those who claim that values are empirical features of things or actions. Contemporary analytic philosophers belong to both strands, differing from their predecessors by limiting their investigations to the language used in asserting or recommending a value. Some metaphysicians reject this limitation and offer grounds for thinking that values are ontologically fundamental.
Strand one: conceptual
Franz Brentano (1838–1917) argues that values are rooted in human emotions, in the contrast between favorable (love) and unfavorable (hate) intentional attitudes toward objects and events. His student Alexius Meinong (1853–1920) elaborates this notion by identifying four aspects of any value experience: a value subject who experiences, a value feeling or emotion, a value object toward which this feeling is directed, and an existence judgment that ascribes the feeling's cause to the object. For example, a person watching a sunset has a positive emotional feeling, which the person claims is because of the sunset. Meinong argues that a value emotion is neither independent of publicly verifiable (scientific) fact, as Lotze claims, nor reducible to fact: It is a subjective feeling that can be judged to be reasonable or not by reference to the relevant facts.
J. N. Findlay (1903–1987) offers a mid-twentieth century version of the Brentano-Meinong view. Consciousness, he argues, has an "intentional" structure: It is always of an object. Belief is unconditional assent to the reality of the object of an intention; action is an endeavor to bring an intended object into existence. For an action to be sustained over the time needed to achieve this goal, the feelings of assent and endeavor that accompany it need to persist. A person's values are those feelings that function as "the relatively fixed points of the compass" by means of which one's "choices are guided" (p. 204). The "firmament" of the values by which a person is guided is "rationalized" by abstracting from the particularities of the several values and framing general integrative guiding principles that are detached from the urgency of particular pragmatic interests. The apotheosis of this generalization process is the formulation of "absolute values," norms governing both individual and collective endeavors.
Religious values, Findlay argues, are absolute values extended beyond those associated with human beliefs and efforts, having to do with intentional structures that are holy—in the sense of strange and numinous—because radically inclusive. They are radically impersonal, however, expressing "the pattern of a detached, suprapersonal, norm-setting mind " (p. 399). The genius of Judaism, Christianity, and Islam is that they recognize the need people have for this impersonal absolute to be embodied in a supreme religious object that has some direct connection with common everyday realities; the absolute value must be incarnate in history, in specific acts or persons.
Strand two: empirical
Feelings or intentions are unobservable mental states. Those who want value theory to be a scientific enterprise therefore turn from feelings to "interests," from intentions to "behaviors," from introspection to "motor-affective responses." C. I. Lewis (1883–1964), for instance, insists that evaluations are a form of empirical knowledge. Their truth or falsity, is determined in exactly the same way as the truth or falsity of nay other kind of empirical knowledge is justified. Directly experienced satisfactions have "intrinsic" value, but no object can have intrinsic value because its value consists not in what it is in itself but rather in the possibility of its leading to some realization of directly experienced value. The object need not in fact lead to such experiences, but only have the potentiality for doing so: A Paleozoic sunset had objective value even if no human being was actually there to enjoy it. Where an intrinsic value experience is afforded by the presentation of an object, that object has inherent extrinsic value. Where one object is a means by which to come into the presence of another object that has inherent value, the first object has "instrumental" and possibly "contributory" extrinsic value.
Ralph Barton Perry makes this notion of intrinsic value central. Any object acquires value by becoming the target of some interest: "that which is an object of an interest is eo ipso invested with value" (p. 115)—"x is valuable = interest is taken in x" (p. 116). Perry distinguishes between a "value preference" (a subject has more interest in x than in y ) from a "judgment of comparative value" (a subject asserts that x is better than y ). The latter involves standards of measurement and so, unlike a value preference, is open to correction. Love is a favorable interest in the satisfaction of a second interest, that of another person. So the highest possible value is that of an all-loving will. Such love could not be the interest of a single person, however. Perry's alternative to Lewis's religious absolute is a "federation," a multiplicity of independent equally valued persons, united by their devotion to the same value ideal, expressed through reciprocal acts of love.
John Dewey (1859–1952) rejects the distinction between value judgments and factual judgments. Valuation takes place whenever a problematic situation exists, whenever an expected enjoyment is blocked. Some inquiry needs to be undertaken in order to resolve the problem, to reshape things in the light of an ideal about how things might be such that the desired enjoyment might be experienced. A value is not an enjoyment but an interest in attaining one, and hence involves a proposal for how to do so. Values can therefore be appraised—critiqued, ranked, and revised—with respect both to how effective they are as guides for attaining the enjoyment sought and to how satisfying that result is. Values are an important aspect of the natural sciences, since hypothesis formation in scientific inquiry is an instance of valuation and its critique. Dewey argues that progress in the improvement of the human condition is impeded by the traditional insistence that actions guided by aesthetic, moral, political, and religious values are timeless absolutes grasped emotionally, matters of tradition or feeling or faith—values isolated from scientific values, and hence from "intelligent" meliorative rational control.
The language of valuation
Twentieth-century Western philosophy has been dominated by linguistic concerns, and so value theory for many thinkers has been limited to a consideration of value-propositions: What the nature of assertions of value is and whether or how values are justified. These approaches can be grouped into the same two strands as earlier value theories: those primarily conceptual and those primarily empirical.
One kind of mind-centered approach claims that value-propositions make no reference to facts and so are neither true nor false. Charles Stevenson (1908–1979) calls such propositions "emotive." A person who asserts that "this is a beautiful sculpture" says nothing about the sculpture. He only expresses his positive feelings toward it: "this sculpture, wow!" A quite different approach, with G. H. von Wright (1916–) as a key figure, is to explicate a "logic of preference," to assess value-assertions in terms of a logical system governed by syntactic and semantic rules. For instance, "possible worlds" might be ranked by means of an "index of merit." Next a proposition could be assigned a "generic value," understood as the average of the merit rankings of the worlds in which its value is meaningful. Then proposition x would be "rationally preferable" to proposition y if its generic value is higher than y 's. Game theory and decision theory are two related developments of this logicomathematical approach to valuation.
Those analysts of the language of values who stand in an empiricist tradition draw from informal rather than formal logic, with the later writings of Ludwig Wittgenstein (1889–1951) often key. Paul Taylor's work is illustrative. He distinguishes normative discourse from scientific discourse, arguing that they are governed by differing "canons of reasoning." Taylor is particularly concerned with the way in which value judgments, the "first-order" content of normative discourse, can be justified. To "verify" a value judgment is to appeal to established standards or rules of evaluation. If these are questioned, one must "validate" them by appealing to higher-order standards or rules, and ultimately by appealing to those principles that determine a "value system." To take a "point of view" is to commit oneself to following a certain set of rules of relevance in deciding which value system to accept as governing one's value judgments. There are as many points of view as there are kinds of value systems: for instance, a moral point of view and an aesthetic point of view. A "way of life" is the set of value systems expressing all one's points of view, arranged in some integrative hierarchical manner. If a person's value system is questioned, it is "vindicated" by appeal to one's way of life. When a way of life is questioned, the only justifying appeal is to "rational choice": showing that one's value commitment has been arrived at by a deliberative process that is free, enlightened, and impartial.
Metaphysical value theories
Dewey argues that value theory is a response to the expulsion of teleology from nature: the claim of modern science that facts are adequately explicated in terms of efficient causes, without recourse to final causes or purposes. Value theories of almost any sort can be challenged by attacking the metaphysical presuppositions of modern science, arguing that the natural order is in some sense purposive, that ends and ideals are features of all natural processes, and that to exist is to have and to be making value.
A contemporary example of such a value-based metaphysics is found is the work of Frederick Ferré (1933–). He argues that "the process of an entity's coming to be something definite" involves "the generation of intrinsic value for the entity concerned" (1996, p. 357). The basic factual entities of the universe are self-fashioning processes involving the integration of diverse elements into a definite unity, a harmony. To achieve any sort of harmony is to generate beauty, so for Ferré a cosmos composed of beauty-fashioning entities is "inherently kalogenic." Given such a universe, an ethic obviously follows in which not only persons but other organisms, indeed entities of every sort, should be treasured for the value achieved in their existing and for their relevance to possibilities for future value realization.
William Desmond (1951–) takes a different approach, recognizing the diversity of value-creators but insisting that their power to create value and their aspiration to do so depends on recognizing the origin of what-is in a transcendent power. Humans live in the metaxu, between Being and nothing at all—astonished that they exist, affirming that it is good they and others exist, dwelling together. Insofar as humans are "mindful" of these wondrous facts, they will be aware that there is an origin of their existing, that their lives are a gift, a good that need not have been but nonetheless has been freely given them. Desmond calls this overflowing good of the originative power "agapeic"—a good given for the other's good, a freedom that frees others rather than subordinating them, a power that empowers others to express their powers in a giving such that the good of others and the common good are enhanced. Desmond therefore argues that the ideal of human moral development is "agapeic service"—practicing a self-surpassing ethics of generosity in response to God's freely given infinitely valuable gift of life.
See also Aesthetics; Beauty; Value; Value, Religious; Value, Scientific
Brentano, Franz. The Origin of Our Knowledge of Right and Wrong (1889), trans. Roderick M. Chisholm and Elizabeth H. Schneewind. London: Routledge and Kegan Paul, 1968.
Desmond, William. Being and the Between. Albany: State University of New York Press, 1995.
Desmond, William. Ethics and the Between. Albany: State University of New York Press, 2001.
Dewey, John. Theory of Valuation: International Encyclopedia of Unified Sciences. Chicago: University of Chicago Press, 1939. Reprinted in John Dewey: The Later Works, 1925–1953, Vol. 16: John Dewey: The Later Works: 1934–1952, ed. Jo Ann Boydston. Carbondale and Edwardsville: Southern Illinois University Press, 1988.
Ferré, Frederick. Being and Value: Toward a Constructive Postmodern Metaphysics. Albany: State University of New York Press, 1996.
Ferré, Frederick. Knowing and Value: Toward a Constructive Postmodern Epistemology. Albany: State University of New York Press, 1998.
Ferré, Frederick. Living and Value: Toward a Constructive Postmodern Ethics. Albany: State University of New York Press, 2001.
Findlay, J. N. Values and Intentions: A Study in Value-Theory and Philosophy of Mind. New York: Macmillan, 1961.
Lewis, Clarence Irving. An Analysis of Knowledge and Valuation. La Salle, Ill.: Open Court, 1946.
Lotze, Hermann. Microcosmus: An Essay Concerning Man and His Relation to the World (1857–1864), trans. Elizabeth Hamilton and E. E. Constance Jones. Edinburgh, UK: T&T Clark, 1885. Reprinted, Freeport N.Y.: Books for Libraries Press, 1971.
Meinong, Alexius. Psychologisch-ethische Untersuchungen zur Werttheorie. Graz, Austria: Leuschner u. Lubensky, 1894.
Perry, Ralph Barton. General Theory of Value: Its Meaning and Basic Principles Construed in Terms of Interest. New York: Longmans Green, 1926. Reprinted, Cambridge, Mass.: Harvard University Press, 1950.
Rescher, Nicholas. Introduction to Value Theory. Englewood Cliffs, N.J.: Prentice-Hall, 1969.
Taylor, Paul W. Normative Discourse. Englewood Cliffs, N.J.: Prentice-Hall, 1961.
von Wright, G. H. The Logic of Preference: An Essay. Edinburgh, UK: Edinburgh University Press, 1963.
Wittgenstein, Ludwig. Philosophical Investigations. New York: Macmillan, 1953.
Value analysis, also known as value engineering, was developed by Lawrence D. Miles at General Electric during World War II. The technique simultaneously pursues two complimentary objectives: maximizing the utility provided by the product or service and minimizing or eliminating waste. Toward this end, the value content of the product or process realized by the consumer is defined. Using the user's definition of value as a filter, the product's components or the steps in the production or service-delivery process are classified as either value-added or non-value-added. The analyst's goal is to eliminate as much many of the non-value-added elements as possible by reengineering the design of the product or process. Equally important, the analyst also considers the possibility of substituting functionally equivalent elements for the value-added elements of the product or process design. In the latter case, a substitution is justified when the functionality of the element is maintained or enhanced at a reduced cost to the producer.
Value analysis may be applied to the design and redesign of products, services, and processes. All that is required is that the item under analysis be capable of being divided into mutually exclusive and collectively exhaustive elements. In the case of a product design, the product's bill of materials provides the necessary list of components. In the case of a service delivery or production process, a list of the individual tasks performed to achieve the ultimate objective are sufficient. The function of each product or process element is then identified and classified. Then the analyst must operationally define value within the context established by the product or process under review. Using this definition, each function is analyzed to determine whether or not and how it adds value, and how. Finally, design changes may be proposed to eliminate, reduce, or replace elements that fail to add sufficient value to the overall product or process.
The first task facing the value analyst is to operationally define value within the context of a particular product or process. In doing so it is important to acknowledge that value is subjective. Just as beauty lies in the eyes of the beholder, value is highly dependent upon perspective. Therefore, it is useful to recall that all products and processes have multiple stakeholders. Indeed, in operationally defining value, the analyst might consider the perspectives of end consumers, individuals making the purchasing decision, suppliers, employees, managers, creditors, investors, regulators, and even the local community. While not all of these potential stakeholders will be concerned with every product or process, an initial consideration of which perspectives to consider is helpful in identifying a robust definition of value to drive the extended analysis. Frequently, the analyst will discover that the different perspectives will lead to conflicting definitions of value. While this complicates the task at hand, honing in on an acceptable definition of value often requires balancing competing demands.
The value-definition phase begins with the gathering of information. The value analyst should have a clear idea of the scope of the review expected. Then each stakeholder's perspective should be explored to determine what they consider to be valuable. What are the utilities expected to be provided by the product or the objectives to be achieved by the process? Are there specific operational goals that should be considered? For example, is there an expectation that all telephone orders will be delivered within twenty-four hours? At this initial stage, each stake holder's experience with the product or process should be broadly considered in order to facilitate the consideration of integrating complimentary elements in the product or process design. Information regarding stake holder requirements may be revealed through direct observation, focus groups, interviews, surveys or other methods.
IDENTIFYING THE CURRENT STATE
The next step is to identify the as-is state of the product or process under review. In the case of a product design, this may be as simple as developing a bill of materials detailing the relevant components. In the case of a service delivery or production process, a flowchart is commonly used to graphically illustrate the tasks performed to achieve the current output. One of the primary purposes of creating an as-is representation is to ensure that existing problems are not duplicated in a new design. Information about component failures, warranty claims, and customer complaints can be quite valuable at this stage. A physical walk-through to observe the flow of a process or dismantling of a product may also provide useful information. Any deviations between the as-is documentation and what the analyst sees should be recorded. It is also useful to note any differences between how different employees perform the same task or any variation of the same component provided by different suppliers.
The next step of the analysis is to determine the function of each element (each product component or each process task) identified in the as-is documentation. The convention is to use a verb-noun pair to describe the intended result or
objective for each element—essentially what contribution the element makes. The verb answers the question “What is to be done?” The verb sets the action to be taken. The noun answers the question “What is it being done to?” The noun signifies what is acted upon. The activity of generating these pairs is more complicated than it appears to be. In practice, it is common to generate several verb-noun pairs that describe the objective or intended result of that element. For example, the function of a light bulb filament might be alternatively described as “to generate light” or “to convert energy.” Each function is then classified as either primary or secondary. The primary functions are the basic reasons that the product or process exists. Secondary functions are those that serve to support or make possible the primary functions. These secondary functions are generally a consequence of the specific design chosen to achieve the product or process' primary function. Therefore, the design elements that provide only secondary functions are prime candidates for elimination or improvement. They also provide a framework for evaluating the elements that provide the associated prime function. The analyst can examine the element providing the primary function to determine whether it can be replaced or redesigned in such a way that the need for the secondary support function is eliminated.
Distinguishing primary and secondary functions is sometimes difficult in practice. To address this concern, Charles Bytheway developed the Function Analysis System Technique (FAST) at Univac in 1964. FAST builds on the VA verb-noun pair analysis by linking those verb-noun pairs to describe complex systems. Bytheway's technique relied on a series of standardized fill-in-the-blank questions. By inserting the verb-noun functions identified through value analysis into the standardized questions, FAST seeks to identify the cause-and-consequence relationships among the various product or process elements. These relationships can then be graphed as a network diagram, with the verb-noun pairs representing the product or process elements as the nodes and the causal relationships represented as the arcs. FAST then identifies those elements that are essential to providing the product or process basic function as the critical path. Everything that falls outside this critical path is then considered as a prime candidate for elimination or improvement.
Bytheway's set of original questions for FAST includes the following:
- What subject or problem would you like to address?
- What are you really trying to do when you __?
- What higher level function has caused __ to come into being?
- Why is it necessary to __?
- How is __ actually accomplished or how is it proposed to be accomplished?
- Does the method selected to __ cause any supporting functions to come into being?
- If you did not have to perform __, would you still have to perform the other supporting functions?
- When you __, do apparent dependent functions come into existence as a result of the current design?
- What or who actually __?
The function of each design element is then reviewed against the operational definition of value to determine whether and how it contributes to the worth of the product or process. Although each situation is unique, several functions are commonly considered to be non-value-added. The following list is a small sample of highly suspect verbs:
- Administration: allocates, assigns, records, requests, or selects.
- Waiting or delay: files, sets up, stages, updates, or awaits.
- Motion or transportation: collates, collects, copies, delivers, distributes, issues, loads, moves, or receives.
- Oversight or control: approves, expedites, identifies, inspects, labels, maintains, measures, monitors, reviews, or verifies.
- Rework or repair: adjusts, changes, reconciles, repairs, returns, revises, or cancels.
However, identifying non-value-added design elements is only one aspect of the value assessment. The value-added elements should also be appraised. For example, assume that our evaluation has determined that the function of a bolt is to “attach component.” Our initial analysis reveals that this is a secondary function that supports the overall operation of our product and is therefore value-added. However, during the information-gathering phase of our analysis we discovered that several warranty claims can be traced to the failure of this bolt. Based upon this information, we should then consider whether a substitute component might provide a higher level of value. In this situation we might consider a bigger, stronger bolt. If the revised design leads to fewer failures, our customers might experience fewer field failures. In addition, even though the new component presumably costs more than the original, we may find the overall product profitability improved if the reduced warranty claims offset the higher production costs. We might also choose to extend our analysis to consider other functionally equivalent components to the original bolt. Returning to our example, the function of the bolt was to “attach component.” Several other design elements might perform the same fastening
function at either a reduced cost or improved performance level. A more complete analysis might consider substituting a screw, a rivet, adhesive, or even a weld for the troublesome bolt. Each potential substitution has its own implications for production costs and stakeholder satisfaction.
COMPARING ALTERNATIVE DESIGNS
A useful device for communicating the relative improvement of one design over another is to measure the value-added content of each product or process design. When evaluating alternative process designs, a common unit of measurement is elapsed time. This is generally accomplished by calculating the percentage of time allocated to performing value-added tasks relative to the total process throughput time. In general, the process with the higher percentage of value-added activity will also have the shortest total throughput time. If this is not true, it probably indicates that the process output is significantly improved in the longer, but more value-added, process. In these cases, the absolute values for value-added and non-value-added activity may be more relevant. Another common unit of measure is manufacturing costs. In general, the accounting techniques of activity-based costing are used to allocate the costs to specific design elements. Again, either percentage or absolute measures may be appropriate for evaluating alternative designs. A third common objective, particularly for comparing product designs, is weight. The underlying rationale is that a lower weight generally indicates less material used-hence lower manufacturing costs. In addition, handling, transportation, and operating costs are also commonly reduced in proportion to product weight. Ultimately, the appropriateness of any unit of measure is dependent upon the product or process under review and the intentions of the value analyst.
Value analysis has been an important management tool for organizations of all types since its development during World War II. The U.S. Navy adopted value analysis in 1945, and it has since been used by a wide variety of government agencies. A 1996 federal law, still in effect, mandates that “Each executive agency shall establish and maintain cost-effective value engineering procedures and processes.” Value analysis is also an important tool in the private sector. Its use is advocated by management and production manuals such as Value Analysis Tear-Down: A New Process for Product Development and Innovation (2004) and Value Driven Product Planning and Systems Engineering (2007).
SEE ALSO Competitive Advantage; New Product Development; Value Creation
Akiyama, Kaneo. Function Analysis: Systematic Improvement of Quality and Performance. Cambridge, MA: Productivity Press, 1991.
Cook, H.E., and L.A. Wissmann. Value Driven Product Planning and Systems Engineering. London: Springer, 2007.
Fleisher, Craig S., and Babette Bensoussan. Business and Competitive Analysis: Effective Application of New and Classic Methods. Upper Saddle River, NJ: FT Press, 2007.
Kaufman, Jerry, and Yoshihiko Sato. Value Analysis Tear-Down: A New Process for Product Development and Innovation. New York: Industrial Press, 2004.
Shillito, M. Larry, and David J. De Marle. Value: Its Measurement, Design and Management. New York: Wiley-Interscience, 1992.
ten Have, Steven. Key Management Models. Englewood Cliffs, NJ: Prentice-Hall, 2002.
Trischler, William E. Understanding and Applying Value-Added Assessment: Eliminating Business Process Waste. Milwaukee, WI: ASQC Quality Press, 1996.
In the work of Karl Marx the term value is defined as the labor embodied in the production of commodities, where commodities are goods produced for sale on the market. The concept of value applies only to commodity-producing economies, and the value of any particular commodity is the amount of labor required for its production according to the prevailing technological standards, assuming that the total output level is appropriate to market demand for the good. The embodied labor that defines the values of commodities includes that required to produce the intermediate goods needed in the production of these commodities as well as the direct labor inputs involved. Thus machines are regarded as passing on the labor embodied in them during their own production to what they themselves help produce. Different forms of direct labor are reduced to a common standard by applying a similar principle in calculating the amount of labor required to produce the various skills of different types of labor. More highly skilled labor therefore contributes more value to the production of commodities than does less skilled labor.
It follows that the value of any commodity can be divided into two parts: the dead labor inherent in the intermediate goods employed in production, and the living labor arising from the use of workers of various levels of skill. Marx also subdivides the value contributed by direct labor into a magnitude equal to the value of the commodities contained in the wages received by workers, and a residual magnitude called surplus value which, he believed, constituted the basis of nonwage incomes in capitalism: profits, interest, and rents.
Marx’s concept of value is distinct from any notion of use-value, or utility. He knew that commodities are useful in production or consumption, but he believed that their usefulness has nothing to do with their value, which is determined solely by their conditions of production. Value as Marx defined it is also distinct from exchange value, or price. However, Marx used his value categories to provide a theory of prices in competitive capitalism. He made no claim that values directly determine prices, in the sense of being equal to, or even proportionate to, the prices of the commodities in question. The determination is more complex, and the prices Marx was concerned to explain are only long-period equilibrium prices. These are the prices that prevail in a situation where supplies are fully adjusted to demands in all lines of production, and the rate of payment of all inputs of the same type is equal in all lines of production. He conceived of long-period equilibria as centers of gravitation to which market prices tend, and in doing so Marx placed himself in a long tradition of economic thought that took labor costs to be the key to a proper understanding of such prices, including Adam Smith in the late eighteenth century and David Ricardo in the early nineteenth. This history is examined in great detail and with considerable lucidity by Ronald Meek in his Studies in the Labor Theory of Value (1976). However, Marx also argued that the concept of value and derivative concepts, like surplus value, provided the basis for the correct understanding of much more than equilibrium prices.
In the three volumes of Capital, written in the 1860s, he also made the following three claims. First, surplus value represents exploited (unpaid) labor and all forms of property income in capitalism derived from this. Second, capitalism is therefore an economic system based upon the extraction of unpaid labor from producers by nonproducing classes and, thus, is analogous to systems of production based on slavery and serfdom. Third, as a result, the conflict between workers and property-owners has a structural foundation comparable to the class conflicts of earlier modes of production that had helped to destroy them. Marx argued for these three propositions at considerable length and with great sophistication. But the basic message is straightforward: While capitalism appears to be very different from other types of economy in being grounded in free contract rather than coerced labor, the reality is less dissimilar. Capitalism, too, has an exploitative character and generates conflicts that will contribute to its transcendence.
Like Smith and Ricardo before him, Marx was well aware that values could not account for prices in any simple way. Outside of special circumstances, all three theorists recognized that equilibrium prices would not be equal to values. Smith believed that when property incomes (profits, interest, and rents) existed, values could not provide any explanation of prices whatsoever; they were relevant for understanding prices only in so-called “early and rude” societies where property had not been privatized. However, Smith continued to believe (in some unspecified sense) that labor was the only “true” cost of production, and he sometimes measured prices by the labor they could command in exchange. He was followed here by Thomas Malthus. David Ricardo proved more insightful, refuting Smith’s claim that the very existence of property incomes undermined the capacity of values to explain equilibrium prices. But outside of special circumstances he, too, recognized that values would not be equal to, or proportional to, prices. Some commodity prices would exceed their values and some would fall short of their values, since in equilibrium an equal rate of profit on capital is paid in all lines of activity and the equilibrium price has to be sufficient to allow payment of this rate of profit whatever the capital-intensity of production. It followed from this that the surplus value generated in any line of production would not typically correspond to the property incomes derived from that line of production. Marx sought to resolve this problem by showing that, for capitalism as a whole, prices are transformed values and property incomes are transformed surplus values. Values and surplus values are reallocated between lines of production according to the requirements of long-period equilibrium. So, he maintained, for the capitalist system as a whole, values and surplus values really do determine prices and property incomes. This was the basis for his social and historical claims concerning the exploitative and conflictual nature of capitalism.
Marx’s arguments for the illuminating power of value theory have not proved to be robust, although the central analytical difficulties came to light only in the 1960s, and most earlier criticisms have turned out to be rather weak in comparison. Marx himself was unable to specify rigorously the exact relationship between value magnitudes and price and income magnitudes. His critics, beginning with Ladislaus von Bortkiewicz in 1907, were much more successful. On the basis of reasonable assumptions about technology (as judged by the standards then prevailing in economics), Bortkiewicz and others proved that Marx’s claims with regard to the transformed nature of prices and incomes can be justified. In their The Political Economy of Marx (1988) authors Michael C. Howard and John E. King have outlined the technicalities of the proofs; and they have explained the proofs’ historical development in their two-volume A History of Marxian Economics (1989 and 1992). Despite this, Marx’s claims are true only under restrictive assumptions. Most particularly, when technologies involve joint production, in which more than one type of output results from a production process, or when there are alternative techniques for producing any particular commodity, there may be no sensible way in which commodity values can be computed. Furthermore Ian Steedman, in his work Marx After Sraffa (1977), showed that even when commodity values can be determined, they may not be able to provide a coherent theory of exploitation in terms of surplus value, so that property incomes and class conflicts cannot be explained in the way Marx believed.
It might reasonably be expected that the flaws in a theory as grand as Marx’s value theory would only succumb to something equally grand, not to the mundane fact commodities can be produced jointly in a single process, or that there are alternative processes in which they can be produced. But Marx was not alone in this. Many of the propositions in Smith’s economics, and even more in that of Ricardo, are also undermined. Similarly, Austrian capital theory and aggregate versions of neoclassical economics do not survive unscathed, as is proved with great economy and elegance in Production of Commodities by Means of Commodities (1960) by Piero Sraffa. Scholars of all schools made the huge mistake of believing that the complexities inherent in joint production and alternative production processes would not undermine results deduced from analyzing simpler and less realistic technologies. An element of irony is also present. Von Bortkiewicz and others who attempted to show rigorously that prices were transformed values, and property incomes were transformed surplus values, were not supporters of the political project of Marxism, while those who elucidated the destructive consequences of joint production technologies and alternative techniques of production were much more sympathetic to socialist politics.
However, the weakness of Marx’s value theory does not fatally undermine Marxism as an intellectual force. Some scholars have continued to defend modified impressive versions of Marx’s account of equilibrium prices, exploitation, and conflict, but without utilizing the concepts of value or surplus value. Three versions are Heinz Kurz and Neri Salvadori’s Theory of Production: A Long Period Analysis (1995); John Roemer’s A General Theory of Exploitation and Class (1982); and Gerry Cohen’s Karl Marx’s Theory of History: A Defense (2000). The ideas presented in these books and other works in the same vein are discussed in the second volume of A History of Marxian Economics by Howard and King. Also Marx’s account of capitalist development and crises can be formulated in terms that are entirely independent of his theory of value and is thus unaffected by the difficulties that this theory has encountered.
Howard, Michael C., and John E. King. 1988. The Political Economy of Marx. 2nd ed. New York: New York University Press.
Howard, Michael C., and John E. King. 1989 and 1992. A History of Marxian Economics. 2 vols. Princeton, NJ: Princeton University Press.
Kurz, Heinz D., and Neri Salvadori. 1995. Theory of Production: A Long Period Analysis. Cambridge, U.K.: Cambridge University Press.
Meek, Ronald L. 1976. Studies in the Labor Theory of Value. 2nd ed. New York: Monthly Review Press. (Orig. pub. 1956).
Roemer, John E. 1982. A General Theory of Exploitation and Class. Cambridge, MA: Harvard University Press.
John E. King
The word value commonly refers to the worth of something: an object or event, a person or action, an idea or institution. Its value can be understood as objective, a quality or feature it possesses independently of one's experiencing it. The sunset is beautiful whether it is observed or not; honesty is the best policy even if people do not think so. A thing's value can also be understood as subjective, a positive feeling or idea that it arouses or that is imputed to it. Good art is whatever one happens to like; moral codes are social constructs. In economics, the (subjective) market value of a commodity or service is the price someone is willing to pay for it at a given time; its (objective) normal value is the price it would command in a perfectly functioning open market. By metaphorical extension, the value of a variable in mathematics is its assignable numeric worth: The value of x in 2 × x = 6 is 3.
Value is also a verb. To value something is to esteem it, to take it into account in making a choice, to assert its objective or subjective worth. The American philosopher and educator John Dewey distinguishes between prizing and apprizing: To prize something is to like it, to appreciate it, to enjoy the experience of it. There is no explanation required: People simply like what they like. Dewey calls these de facto values, which he contrasts with de jure values, values that have been judged, with respect to their causes and consequences and by comparison to other alternatives, to be genuinely worthwhile, not only desired but desirable. Just as science has an experimental method for discriminating warranted from unwarranted hypotheses, Dewey argues, so a method of criticism is needed for discriminating among values, helping people select those values most conducive to their self-realization and to the attaining of a common good.
A thing's value can be either intrinsic, itself the source of its value, or extrinsic, the source of its value lying elsewhere: in God's will, a subjective judgment, or another value upon which it is dependent. In a context of means and ends, a thing has final value (sometimes, confusingly, called its intrinsic value) if it is the goal of a purposive effort; it has instrumental value if valued as a means for achieving that goal. Dewey argued that all values are both final and instrumental: Any end one seeks is also a means toward further ends. In the eighteenth century, the philosopher Immanuel Kant argued that rational beings are ends in themselves: They have infinite worth because there is no other value for which their value could legitimately be sacrificed, made merely a means. Note that all instrumental values are extrinsic, but some extrinsic values are not instrumental: Theistic religions claim that persons are valuable not intrinsically but because they are created by God.
Value theory, or axiology, an approach in which value as a general category is made the primary object of philosophical analysis, is a nineteenth and twentieth century development in Western thought. Among the leading value theorists are Bernard Bosanquet, J. N. Findlay, Alexius Meinong, and Max Scheler in Europe; Alejandro Korn in Latin America; and C. I. Lewis, Ralph Barton Perry, John Dewey, and Stephen Pepper in the United States. Their strategy is usually to provide a generic analysis of the nature and conditions of value, then to apply these concepts to the various realms of value their theory either predicts or interprets.
Traditionally, however, thinkers have concerned themselves not with value in general but with specific values: aesthetic (beauty), ethical or religious (goodness), and scientific or philosophical (truth). Sometimes these kinds of value are thought to be distinct, for instance, claiming that the criteria for a thing's being true have nothing to do with its desirability. Others argue for a hierarchy among the kinds, usually in terms of some version of Plato's divided line, beginning with the transient values of immediate perception and imagination, rising through practical and then theoretical concerns, and arriving finally at something ultimate, the source of all lesser values: a contemplation of the Form of the Good or of Beauty, or communion with God or the Absolute. In the early nineteenth century, the philosopher Georg Wilhelm Friedrich Hegel temporalized this hierarchy, so that the ultimate became not an eternal governing ideal but a historical culmination, not a governing rule but an achievable goal.
The notion of a "final value" for individuals to achieve is usually given an ethical slant. Aristotle, for instance, finds this achievement to be the happiness that comes from a life of appropriate actions accomplished with excellence. Confucius recommends combining principled action with energetic striving, melding Heaven and Earth into a moderate way of living. For the Stoic, one's culminating humanity is to be found in tranquility of mind; for the Christian, in selfless love; for Friedrich Nietzsche, in the effective exercise of one's will to power; for Josiah Royce, in loyalty to a cause; for Jean-Paul Sartre, in authenticity.
This notion of a value as an achievement, as a quality of something made, has been explored metaphysically by pragmatists and process philosophers. For instance, Robert Cummings Neville, influenced by Charles Sanders Pierce and Alfred North Whitehead, argues that all values are achievements of harmony. A value is an integration of diverse elements. The more they are diverse, the more complex the attained harmony; the more complete or intense their integration, the more simple the harmony. Complexity and simplicity are opposites, however. The challenge is to increase both in a harmonic contrast, making the most value possible in a given circumstance. Neville then works out the implications of this theory for the traditional realms of value, defining truth, beauty, and goodness as kinds of harmonic contrast.
One's personal values are evidenced by the things one finds valuable. Insofar as they are compatible and consistently held, they comprise one's personal value system. Emile Durkheim argues that for people to be organized into communities it is necessary that individual value systems be subordinated to a shared social value system. God, says Durkheim, is that historically fashioned cultural value system projected as an ultimate reality independent of those who hold it. Hence should the societal order break down, its members will feel alienated from God, stripped of their sense of worth: They will suffer a condition of valuelessness, the despair of anomie.
See also Aesthetics; Axiology; Beauty; Value; Value Theory; Value, Religious; Value, Scientific
dewey, john. experience and nature (1929). new york: dover publications. 1958.
durkheim, emile. suicide: a study in sociology, trans. john a. spaulding and george simpson. new york: free press, 1966.
kant, immanuel. grounding for the metaphysics of morals (1785), trans. james w. ellington. indianapolis, ind.: hackett, 1981.
neville, robert cummings. recovery of the measure: interpretation and nature. albany: state university of new york press, 1989.
perry, ralph barton. realms of value: a critique of human civilization. cambridge, mass.: harvard university press, 1954.
scheler, max. formalism in ethics and non-formal ethics of values: a new attempt toward the foundation of an ethical personalism, trans. manfred s. frings and roger l. funk. evanston, ill.: northwestern university press, 1973.
Regarding values as a type of social data, distinctions are often drawn between values, which are strong, semi-permanent, underlying, and sometimes inexplicit dispositions; and attitudes, which are shallow, weakly held, and highly variable views and opinions. Societies can usually tolerate highly diverse attitudes, whereas they require some degree of homogeneity and consistency in the values held by people, providing a common fund of shared values which shape social and political consensus. It is usually held that the sociological theories of normative functionalists (or consensus theorists) in general, and of Talcott Parsons in particular, over-emphasize the importance of shared values in maintaining social order.
More generally, all sociology is concerned with value issues, and many of the classical writers—most notably Émile Durkheim and Max Weber—discussed the role of values in social research at some length. At this more philosophical level, the issues for sociology would seem to be twofold. First, since society itself is partially constituted through values, the study of sociology is in part the study of values. Second, since sociologists are themselves members of a society and presumably hold values (religious, political, and so forth), sociological work may become embroiled in matters of value—or even (as Marxists might put it) matters of ideology. Indeed, some have argued that, for this reason, sociologists may be incapable of the value-neutrality expected of scientists more generally.
These sorts of epistemological debates about the role of values in social science can impinge on sociological work at three stages: first, in the decision to study a particular topic such as religion or homosexuality, where issues of value-relevance are raised; second, in the actual execution of a study, where the issues of bias, value neutrality, and objectivity are raised; and, finally, in the consequences of particular theories or research for society, where the issue of ‘value effects’ is raised. In practice, most sociologists accept that such sharp distinctions cannot readily be made, and the various value issues overlap.
One of the defining characteristics of philosophical positivism is that it takes the sciences (including social sciences) to be value-neutral or value-free—the expectation being that scientists will (or at least should) eliminate all biases and preferences at each stage of their studies. Value-neutrality is therefore indispensable for a scientific sociology. Similarly, sociology is considered to have a purely technical character, reporting findings that carry no logically given implications for policy or the pursuit of particular values. In marked contrast, Marxists argue that every stage of sociological analysis is riddled with political and moral assumptions and consequences, such that sociology is itself irredeemably an ideological enterprise. However, most sociologists hold positions somewhere between these extremes, arguing (for example) that although the choice of research areas must raise matters of value, the execution of a study should be as impartial as possible, and the findings presented neutrally, at which point the way such findings are put to use by others will again raise value (that is policy) issues. A frequently encountered pragmatic solution to the apparently intractable epistemological issues raised by the question of values is the suggestion that sociology is always bound up with ethics, politics, and values, and since it cannot purge itself of them, sociologists should make the underlying debates explicit.
Some of the classic value debates involved such notables as C. Wright Mills, Howard S. Becker, Alvin Gouldner, George Lundberg, Robert Lynd, and Gunnar Myrdal (most of whose works are treated elsewhere in this dictionary). However, the major methodological statement is still to be found in the essays contained in Max Weber's The Methodology of the Social Sciences (1904–18), especially those sections where he discusses the philosophical basis of ‘value-relevance’ as a principle of concept formation. Here, Weber argues (following the epistemology of Heinrich Rickert (see GEISTESWISSENSCHAFTEN AND NATURWISSENSCHAFTEN)) that reality is infinitely complex and conceptually inexhaustible; that the natural and social sciences typically use generalizing and individualizing modes of concept formation; and that the objects of the latter are distinguished by being imbued with meaning and values. Value-relevance, for Weber, governs the selection of facts in the social and historical sciences by clarifying the value inherent in a situation or phenomenon under analysis. Of course, there are always several possible plausible interpretations of the values underlying cultural phenomena, and consequently several different points of view from which one might conceptualize the phenomenon (or ‘historical individual’) to be explained. However, once a historical individual is constructed for a particular inquiry, ‘objectively one-sided’ social scientific knowledge becomes possible through the discovery of causal relationships between the value-relevant description of the object of enquiry and antecedent historical factors, because the formation of these relationships is governed by the established rules of scientific procedure. If the particular value-standpoint according to which the object of enquiry has been conceptualized does not facilitate an explanation of the phenomenon which is both meaningfully and causally adequate, then there may be other values inherent in that phenomenon which permit a more satisfactory explanation to be constructed. This complex argument is described in full in Thomas Burger's Max Weber's Theory of Concept Formation (1976). See also NORMATIVE THEORY.
val·ue / ˈvalyoō/ • n. 1. the regard that something is held to deserve; the importance or preciousness of something: your support is of great value. ∎ the material or monetary worth of something: prints seldom rise in value | equipment is included up to a total value of $500. ∎ the worth of something compared to the price paid or asked for it: at $12.50 the book is a good value. ∎ the usefulness of something considered in respect of a particular purpose: some new drugs are of great value in treating cancer. ∎ the relative rank, importance, or power of a playing card, chess piece, etc., according to the rules of the game. 2. (values) a person's principles or standards of behavior; one's judgment of what is important in life: they internalize their parents' rules and values. 3. the numerical amount denoted by an algebraic term; a magnitude, quantity, or number: the mean value of x an accurate value for the mass of Venus. 4. Mus. the relative duration of the sound signified by a note. 5. Linguistics the meaning of a word or other linguistic unit. ∎ the quality or tone of a spoken sound; the sound represented by a letter. 6. Art the relative degree of lightness or darkness of a particular color: the artist has used adjacent color values as the landscape recedes. • v. (-ues , -ued , -u·ing ) [tr.] 1. (often be valued) estimate the monetary worth of (something): his estate was valued at $45,000. 2. consider (someone or something) to be important or beneficial; have a high opinion of: she had come to value her privacy and independence | [as adj.] (valued) a valued friend.
The estimated or appraised worth of any object or property, calculated in money.
The word value has many meanings and may be used in different senses. Because value is usually a relative term, its true meaning must be determined by the context in which it appears.
Value sometimes expresses the inherent usefulness of an object and sometimes the power of purchasing other goods with it. The first is called value in use, the latter value in exchange. Value in use is the utility of an object in satisfying, directly or indirectly, the needs or desires of human beings. Value in exchange is the amount of commodities, commonly represented by money, for which a thing can be exchanged in an open market. This concept is usually referred to as market value.
Courts have frequently used the word value without any clear indication of whether it referred to value in use or market value. Generally, however, the courts and parties in civil actions are concerned with market value. Though courts may refer to salable value, actual value, fair value, reasonable value, and cash value, these terms are synonymous with market value.
Value is also employed in various phrases in business and commercial usage. The phrase actual cash value is used in insurance to signify the cost of purchasing new replacement property less normal depreciation, though it may also be determined by the current market value of similar property or by the cost of replacing or repairing the property. Cash surrender value is used in life insurance to refer to the amount that the insurer will pay the policyholder if the policy is canceled before the death of the insured.
Book value is the value at which the assets of a business are carried on the company's books. The book value of a fixed asset is arrived at by subtracting accumulated depreciation from the cost of the asset. Book value may also refer to the net worth of a business, which is calculated by subtracting liabilities from assets. Liquidation value is the value of a business or an asset when it is sold other than in the ordinary course of business, as in the liquidation of a business.
In the stock market, par value is the nominal value of stock; it is calculated by dividing the total stated capital stock by the number of shares authorized. Stated value is the value of no par stock established by the corporation as constituting the capital of the corporation.
Value subtraction, or negative value added, occurs when resources and other inputs used in the production process generate output with a lower value than that of the original resources and inputs. The management of Soviet state-owned enterprises, focusing on fulfilling plan targets in order to receive a bonus, tended to fulfill the main plan target, quantity of output, with little regard for cost or efficiency considerations. At the same time, enterprises faced centrally determined prices for both the input used and the output produced. Soviet centrally determined prices were not based upon supply and demand conditions in either the domestic or global market, nor were they adjusted in response to obvious surplus or shortage conditions. Consequently, neither the prices nor the corresponding profits or losses generated in the planning process provided meaningful information to Soviet firms in terms of whether to expand or contract their operations. The primary obligation of each firm was to fulfill annual output plan targets.
Value subtraction characterized the operation and performance of Soviet firms when their inputs and output were valued at world market prices. World market prices were more accurate reflections of the economic cost of producing an item than Soviet centrally determined prices, because they incorporated marginal rather than average costs of production, and because they adjusted to surplus and shortage conditions generated by ever-changing actions of buyers and sellers. Typically, Soviet prices were well below world market prices for the majority of resources and other inputs used in the production process. Consequently, when world market prices were applied by Western researchers and analysts to the actual resources and inputs used in the Soviet production process, the newly calculated costs of production were much higher. These higher costs were not offset by applying world market prices to the produced output, however, because the technological level of Soviet enterprises and abject quality assessments kept Soviet output valuations low in comparison to world standards. The existence of value subtraction, or negative value added, was confirmed by Soviet economists and analysts when glasnost and perestroika in the late 1980s allowed more frank and detailed discussions of actual conditions in the Soviet economy.
See also: hard budget constraints; ratchet effect; virtual economy
Susan J. Linz
value (in economics)
value, in economics, worth of a commodity in terms of other commodities, or in terms of money (see price). Value depends on both desirability and scarcity. The marginal theory of value, pioneered in the late 19th cent. by Leon Walras, Stanley Jevons, and Carl Menger, has been highly influential in economics. It takes account of both scarcity and desirability by holding that the total value of a good depends on the utility rendered by the last unit consumed. It developed in opposition to David Ricardo's earlier labor theory of value, which holds that the value of a good derives from the effort of production, based on supply. Ricardo asserted that the cost of production can be reduced to the cost of labor, either paid in wages or used as capital, the physical means of production. In the marginal theory of value, there is an exchange value, as Ricardo postulated, but there is also a use value, which signifies the utility of a given commodity for satisfying a human desire. This distinction is equally important in Marxian economics. Marginal theory is fundamental to modern economics, because it points out that both supply and demand have an impact on the price of a commodity.
See M. H. Dobb, Theories of Value and Distribution Since Adam Smith (1975); M. Allingham, Value (1983); B. Fine, ed., The Value Dimension (1986).