fective effort, there are only two basic factors to be considered, namely conducement and inducement. “Use value” most fitly describes the former, and “exchange value” the latter.
If X = exchange value, or inducement; and Y = use value, or conductivity; then X × Y = total value.
Only at this stage can we correctly employ the term “relative value”—the relation of a part to a rationally expressed whole which comprehends all factors.
An accountant knows that he cannot interpret a balance sheet if he disregards liabilities: an engineer knows that it is impossible to value a bridge unless he can accurately calculate the distribution of stress and strain; and no electrician, if he is figuring electric value, overlooks his unit of resistance—the ohm. In applied political-economy we leave the farmer to wrestle with the bulk of our economic ohms, and permit the balance, under cover of thoughtless legislation, to be used as a sandbag, which is employed cheerfully by the tax-collector to lay out indiscriminately not only the already exhausted farmer, but also the unwary manufacturer, carrier and banker who in turn take one last spasmodic kick at the poor farmer. “Relative value,” as a term, is used by the economists just as burglars would use it, who weigh silver against plate, or forks against spoons. There are other items in the final reckoning.
What is sometimes called relative value may be measured, as many economists assert, by the ratio of exchange of two commodities, but a scientist would have to point out firmly that this is comparative value, and does not apply further than the two commodities considered. Another qualification must also be made, namely that the available quantity of each of these commodities should be fully disclosed to make such an exchange even a measure of comparative value; otherwise it is an exercise of wits, like a horse trade—which notoriously has no bearing on measurable economic value.
Dynamic value, that is value arising from effort or motion, can only be measured precisely by the rate of flow between two definite points. It is what the electrician knows as “difference of potential” and is what political-economists appear to realize when they discuss production and consumption, or