Aristotle and the Development of Value Theory

Author(s): Barry J. Gordon

Source: The Quarterly Journal of Economics, Vol. 78, No. 1 (Feb., 1964), pp. 115-128
Published by: Oxford University Press
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 ARISTOTLE AND THE DEVELOPMENT
OF VALUE THEORY
BARRYJ. GORDON

Introduction, 115.- I. Reassessment of Aristotle's theory of value, 116.-

II. The utility principle and the cost principle in Aristotle, 120.- III. The role
of labor skill as a value determinant, 124.- IV. Conclusion, 128.

In remarking on Adam Smith's adherenceto a labor, rather

than a utility theory of value, Emil Kauder has observed that
the father of our economic science wrote that water has a great utility and a
small value. With these few words Adam Smith had made waste and rubbish
out of the thinking of 2,000 years. The chance to start in 1776 instead of 1870
with a more correct knowledge of value principles had been missed.'

This judgment is far too harsh, and minimizes the significance of a

continuing ambivalence in the early writings on value theory to
which Smith was heir. It is, in fact, quite understandable that an
eighteenth century thinker who was directly familiar with the works
of Aristotle, and who was at least indirectly influenced by scholastic
writers, might take a labor-oriented approach. Such an orienta-
tion can be shown to persist in early value theory along with the
utility element, as a secondary, but nevertheless influential, factor.
More specifically, there is a labor element in the value thinking of
Aquinas, and of the later schoolmen. Further, there are a number
of passages in Aristotle's writings which can be interpreted as in-
dicating that he also thought that labor cost was connected with
the process of value determination.
Kauder has adequately demonstrated how the Austrian value
theorists of the nineteenth century were anticipated in part, by
writers in a tradition which stemmed from Aristotle through Saint
Thomas to men like Galiani, Bernoulli and Davanzatti. However,
there is also a labor or cost-of-production tradition which may be
less obvious, but which links Smith, the scholastics and Aristotle.
It is with the articulation of this tradition, and especially Aristotle's
role as the founder of both this and the utility approach, that this
paper is concerned.
The scholastics may be dealt with in a brief fashion, since
the presence of labor-theory elements in their thought has been well
documented. It will suffice to instance three cases where this pres-
1. E. Kauder, "Genesis of the Marginal Utility Theory," Economic Jour-
nal, LXIII (Sept. 1953), 650.

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116 QUARTERLY JOURNAL OF ECONOMICS

ence may be seen. Firstly, there is the espousal of a limited cost-

of-productionapproachto the determinationof the just price, by
the influential Duns Scotus.2 He was, of course, assailed on this
(as on many another) point by the Thomists, but the controversy
itself left its imprint as a legacy for later writers. Secondly,there
is the basic ambivalencein Thomas himself, who, as Dr. W. Stark
has so acutely observed,3held to a labor theory of property while
affirminga utility theory of economicvalue. Accordingto Thom-
istic natural law theory, the title to property is acquired by the
exertionof labor. Aquinashimself did not drawthe relatively easy
inferencethat could link this approachwith value theory; namely,
if propertyis due to labor, then men value their property in terms
of the labor expendedin acquiringthe property. It is significant
that such an inferencewas later made by John Locke.4 However,
with Aquinas' views as they stood, the way was clearly open for
objectionsto a value theory based solely on utility and rarity.
Finally, the researchesof Marjorie Grice-Hutchinsoninto the
wealth of economic analysis to be found in the writings of the
scholastic doctors of the sixteenth and seventeenth centuries,have
indicated a fertile source for divergent views on exchange value.5
This source is the conventionallist of factors which these writers
believed were relevant to price determination. Grice-Hutchinson
goes on to indicate how Adam Smith's emphasis on labor-cost
stems fromthese later schoolmenby way of Grotius,Pufendorf,and
Francis Hutcheson.6 Further, she shows how the stress on utility
and rarity found in Galiani,Turgot and others is anticipatedin the
original scholastic treatises and in the widely read popularizations
of their ideas circulatingon the continent of Europe.

I
Because Aristotle's economic analysis provided the initial,
authoritative springboardfor the speculations of the scholastics
and of some later writers, it has long been recognizedthat a com-
prehensiveunderstandingof the evolution of value theory requires
2. For a discussion of Scotus' views on value, see J. T. Noonan, The Scho-
lastic Analysis of Usury (Cambridge: Harvard University Press, 1957), pp.
82-87.
3. W. Stark, The Contained Economy, Aquinas Society Paper No. 26
(London: Blackfriars,1956).
4. This view, it will be seen later, is also expressedby Aristotle.
5. M. Grice-Hutchinson, The School of Salamanca (Oxford: Clarendon
Press, 1952).
6. Op. cit., Chap. 4.

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 THE DEVELOPMENT OF VALUE THEORY 117

us to be quite sure as to Aristotle'sown position and the interpreta-

tions given his writings by subsequentthinkers.7 However, despite
this recognition and despite general agreementamong scholars on
the presence of certain influential insights in Aristotle's analysis,
doubt persists. There is scope then, for a reassessmentof his posi-
tion.
The main line of the Philosopher'sthinking on value may be
expressedin a sequence of four related propositions.
1. The use value of an article or a service derives from its
being productiveof the individual person'sgood. Aristotle writes:
Thus (e.g.) the relation of the pleasant to pleasure is like that of the useful
to the good: for in each case the one produces the other. If therefore pleasure
be a kind of "good," then also the pleasant will be a kind of "useful": for
clearly it may be taken to be productive of good, seeing that pleasure is good.8

Associated with this first propositionare three other observa-

tions:
(a) Use value has a purely subjective meaning and can
vary for the same article as between individuals. Hence in Ethica
he states that, ". . . the useful is not permanent but is always
changing,"and goes on to provide some examples of swift changes
in humandesiresand motives.9
(b) The use value of any one article will at some point
begin to decline as the quantity of the article possessed increases.
In the Politica he observes:
... external goods have a limit, like any other instrument, and all things
useful are of such a nature that where there is too much of them, they must
either do harm, or at any rate be of no use, to their possessors . . .

(c) The use value of any one article will be increased if

that article can be consumedconspicuously. Aristotle writes:
Again, those things which we are seen to possess are better than those which
we are not seen to possess, since the former have the air of reality. Hence
7. Recent discussions in English-language journals include: E. Kauder,
op. cit.; J. J. Spengler, "Aristotle on Economic Imputation and Related Mat-
ters," The Southern Economic Journal, XXI (Apr. 1955), 371-89; J. Soudek,
"Aristotle's Theory of Exchange," Proceedings of the American Philosophical
Society, Vol. 96 (1952), pp. 45-75. Earlier discussions may be found in: A. A.
Trever, A History of Greek Economic Thought (University of Chicago Press,
1916); Van Johnson, "Aristotle'sTheory of Value," American Journal of Philol-
ogy, LX (Oct. 1939), 445-51.
8. W. D. Ross (ed.), The Works of Aristotle, Vol. 1 (London: Oxford
University Press, Geoffrey Cumberlege, 1950), Topica, 124a, 16-20. All sub-
sequent, quoted passages have been taken from translations included in the
series edited by W. D. Ross.
9. Ethica, 1156a,23.
1. Politica, 1323b, 7-10.

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118 QUARTERLY JOURNAL OF ECONOMICS

wealth may be regarded as a greater good if its existence is known to others.2

2. The demandfor an article or service is a function of its use

value, and will vary as the range of use of the article is extensive
or limited. Thus, in the Topica, Book III, where the question of
"desirability"is discussed,Aristotle states:
Moreover, you should distinguish in how many senses "desirable"is used, and
with a view to what ends, e.g. expediency or honour or pleasure. For what
is useful for all or most of them may be taken to be more desirable than what
is not useful in like manner.

3. Exchange value is derived from use value as expressed

through market demand. In the discussion of exchange in the
Ethica he writes:
All goods must therefore be measured by some one thing, as we said before.
Now this unit is in truth demand which holds all things together (for if men
did not need one another's goods at all, or did not need them equally, there
would be either no exchange or not the same exchange) . .

And a little furtheron he states:

That demand holds things together as a single unit is shown by the fact that
when men do not need one another, i.e., when neither needs the other or one
does not need the other, they do not exchange . . !

4. Demand and hence exchange value, is also influenced by

the phenomenonof rarity. In the Topica, Aristotle writes:
Another rule is that the more conspicuous good is more desirable than the less
conspicuous, and the more difficult than the easier: for we appreciate better
the possession of things that cannot be easily acquired!

Again, there is a more extensive statement in the Rhetorica on the

same theme:
Further, what is rare is a greater good than what is plentiful. Thus gold is
a better thing than iron, though less useful: iLisharder..to...get, and...therefore
better worth.4he-getting. Reversely, it may be argued that the plentiful is a
better thing than the rare, because we can make more use of it. For what is
often useful surpasses what is seldom useful, whence the saying, "The best of
things is water." More generally: the hard thing is better than the easy, be-
cause it is rare: and reversely, the easy thing is better than the hard, for it
is as we wish it to be.
2. Rhetorica, 13651, 14-16.
3. Topica, 118b, 26-30.
4. Ethica, 1133a, 26-29.
5. Ethica, 1133b, 6-9.
6. Topica, 117b, 28-30.
7. Rhetorica, 1364a, 24-30.

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 THE DEVELOPMENT OF VALUE THEORY 119

In commentingon these last two passages,ProfessorJ. J. Speng-

ler suggeststhat nowhereis there a reconciliationof these particular
observationson exchangevalue with Aristotle's discussionof value
in use.8 Rarity and utility remain as unrelated determinantsof
exchangevalue. Spengleris correctin that there is no formal syn-
thesis, but we can suggest that there is a type of reconciliation
presentin the Rhetorica.
We have seen how for Aristotle, utility is a highly subjective
property which depends on an article's being productive of good
for the individual. When the individual acquires a rare article,
the very rarity of the article is productiveof good, e.g., social pres-
tige, sense of pride, etc. Thus the article possesses a greater util-
ity. This comes out explicitly in the discussionof "Goodand Util-
ity" which immediatelyprecedesthe above passagein the Rhetoricat:
Good too, are things that are a man's very own, possessed by no one else, ex-
ceptional; for this increases the value put upon them?

Given this connection,it would seem that Aristotle holds that the
very fact of possessionof a rarity confers good, hence utility, hence
additional value in exchange. If this is so, then the above four
propositionsform a coherentwhole, althoughthey do not, of course,
provide a comprehensivetheory of economicvalue. As they stand,
these insights can be recognizedas significantand highly influential
anticipations of dominant elements in Austrian value theory.
Certain historians of economicthought, notably Oskar Kraus,'
have claimed even more for Aristotle as a forerunnerof the Aus-
trians. It is suggestedthat the Philosopheranticipated:
(i) the concept of a diminishingutility schedulewith its rele-
vance to exchangevalue determination,and
(ii) the Austrian theory that the value of productive factors
can be derived by imputation from the market values of final
products. This view has been the subject of an exhaustive treat-
ment by Spengler, whose conclusions substantially minimize the
claims concerned.2
One cannot but agree with Spenglerthat there is only a bare
foreshadowingof the principleof diminishingutility (in the formwe
have noted above) in Aristotle. Further,althoughimputationtech-
8. J. J. Spengler, op. cit., pp. 376-77.
9. Rhetorica, 1363, 27-28.
1. 0. Kraus "Die Aristotelische Werttheorie in ihren Beziehunsen zieden
Lehrender modemnenPsychologenschule," Zeitschrift fur die qesamte Staats-
wissenschaft,Vol. 61 (1905), pp. 573-92.
2. Op. cit.

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120 QUARTERLY JOURNAL OF ECONOMICS

niques are present in his writings, there is no application of these

to economicproblems.
On the generalissue of the value of productiveagents, it is im-
portant to note that Aristotle did distinguish between final goods
("possessions") and productive factors ("instrumentsof produc-
tion"). He writes:
For if every instrument could accomplish its own work . . . the shuttle would
weave and the plectrum touch the lyre without a hand to guide them, chief
workmen would not want servants, nor masters slaves. Here, however, another
distinction must be drawn: the instruments commonly so called are instru-
ments of production, whilst a possession is an instrument of action. The
shuttle, for example, is not only of use; but something else is made by it,
whereas of a garment or of a bed there is only the use. Further, as production
and action are different in kind and both require instruments, the instruments
which they employ must likewise differ in kind.3

Again, it is significant that elsewherein his works, he applies the

generalrule, that the desirability of means to an end will vary with
the desirability of that end. He suggests:
Moreover, whenever two things are very much like one another, and we can-
not see any superiority in the one over the other of them, we should look at
them from the standpoint of their consequences. For the one which is followed
by the greater good is the more desirable: or, if the consequences be evil,
that is more desirable which is followed by the less evil.'

It seems reasonableto infer then, that in the case of economic

quantities, Aristotle is likely to have held that the value of non-
human productiveagents is determinedby the value of their prod-
ucts. Unfortunatelythis must remain merely an inference, as no-
where is the general dictum concerningends and means given a
specifically economic application.

II
We come now to what is perhaps the most important subject
for dispute concerningAristotle'sviews on value, since our answer
to this issue can radically affect our general view of the develop-
ment of value theory. This dispute is concernedwith the conten-
tion that the Philosopher did not consistently follow the utility
principle, but at times hinted at a labor-cost approach to value
determination. In this matter, controversyusually centers around
the section of the Ethica whereAristotle is grapplingwith the prob-
3. Politica, 1253b, 34 -1254a, 7.
A f5nn;netv I 1 Ab %_Q

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 THE DEVELOPMENT OF VALUE THEORY 121

lem of justice in exchange; although it will be seen that certain

other sections of his works are not without relevance here.
In the course of his treatment of exchange-justice,Aristotle
writes:
But in associations for exchange this sort of justice does hold men together -
reciprocity in accordance with a proportion and not on the basis of precisely
equal return. For it is by proportionate requital that the city holds together.5

And then, he continues:

Now proportionate return is secured by cross-conjunction. Let A be a builder,
B a shoemaker, C a house, D a shoe. The builder then must get from the
shoemaker the latter's work, and must himself give him in return, his own.
If then, first there is proportionate equality of goods, and then reciprocal
action takes place, the result we mention will be effected. If not, the bargain
is not equal, and does not hold; for there is nothing to prevent the work of
one being better than that of the other; they must therefore be equated....
For it is not two doctors that associate for exchange, but a doctor and a farmer,
or in general people who are different and unequal; but these must be equated.8

And he concludes:
The number of shoes exchanged for a house must therefore correspondto the
ratio of builder to shoemaker. For if this be not so, there will be no exchange
and no intercourseJ

In consideringthese statements,it is importantthat two issues

be distinguished:
(i) what did Aristotlemean;
(ii) what have his readersbelievedhe meant.
If we take up this second question first, we find that some of his
readers have, in fact, discerned here a labor theory of value.
Whether or not the Philosopherdid hold such a position, it seems
that his writings have helped confirmthe labor tradition, since, as
V. Johnsonhas pointed out, there has been the continuous"attempt
by commentatorsancient and modern to read into his views a
labor theory of value.I Most notable among the earlier com-
mentators who ascribe elements of a labor theory to Aristotle is
Thomas Aquinas who, in his commentaryon the treatment of ex-
change-justicein the Ethica, writes:
Justice will be served if as many shoes be given in exchange for a house or
for food as the builder or the farmer exceeds the cobbler in labour and costs?
5. Ethica, 1132b 31-34.
6. Ethica, 1133a, 5-18.
7. Ethica, 1133a, 22-25.
8. V. Johnson, op. cit, p. 450.
9. See S. Thomae, Opera Omnia: Sancti Thomae Aquinatis in Aristotelis

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122 QUARTERLY JOURNAL OF ECONOMICS

And again:
The arts will be destroyed if the workman who has made some article does
not receive for it another article similar in quantity and quality. One man's
labour must be compared with another's if the exchange is to be just.'

Among the moderncommentatorswho read such a theory into

Aristotle's words is Joseph Schumpeter,who writes:
As the farmer's labor compares with the shoemaker's labor, so the product of
the farmer compares with the product of the shoemaker. At least, I cannot
get any other sense out of this passage. If I am right, then Aristotle was
groping for some labor-cost theory of price which he was unable to state ex-
plicitly.2

Schumpeter'sinterpretationis supportedby that of the distinguished

classical scholar,W. A. Ross, who in his definitive English transla-
tion of the Ethica, explicitly discusses the passage quoted above.
Ross writes:
The working of "proportionate reciprocity" is not very clearly described by
Aristotle, but seems to be as follows. A and B are workers in different trades,
and will normally be of different degrees of 'worth.' Their products, there-
fore, will also have unequal worth, i.e. (though Aristotle does not expressly
reduce the question to one of time), if A = nB,C (what A makes, say, in an
hour) will be worth n times as much as D (what B makes in an hour). A
fair exchange will then take place if A gets nD and B gets 1C; i.e., if A
gives what it takes him an hour to make, in exchange for what it takes Bn
hours to make!
Thus, Ross is suggestingthat Aristotleheld that goodswill exchange
in such a ratio as will equate the labor time expendedplus relative
degree of skill exerted in producingeach.
There is an apparentclash betweenthe interpretationsof Ross
and Schumpeteron the one hand, and the statement made earlier
in this paper that Aristotle derives exchangevalue from use value
as expressedthrough market demand. On the latter view goods
will exchangein such a ratio as will equate not costs, but ratherthe
satisfactions experiencedin the use of those goods by each party
to the exchange. Thus, in the Ethica Aristotle writes:
Let A be a farmer, C food, B a shoemaker, D his product equated to C. If
it had not been possible for reciprocity to be thus effected, there would have
been no association of the parties. That demand holds things together as a
Stagiritae Nunnullos. Libros Commentaria, Volumen Quartum. In X. Libros
Ethicorum ad Nicomachum (Parma: Ficcadori, 1867), Liber Quintus, Lectio
VIII, 171.
1. Op.cit., Lectio VII, 168.
2. J. Schumpeter, History of Economic Analysis, ed. from ms. by Eliza-
beth Boody Schumpeter (New York: Oxford University Press, 1959), pp. 60-61.
3. Ross (ed.), op. cit., IX, footnote to 1133a.

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 THE DEVELOPMENT OF VALUE THEORY 123

single unit is shown by the fact that when men do not need one another, i.e.,
when neither needs the other or one does not need the other, they do not
exchange, as we do when someone wants what one has oneself, e.g., when people
permit the exportation of corn in exchange for wine. This equation therefore
must be established.

Undoubtedly Aristotle recognizes that utility considerations

are significant for price determination,but it is the contention of
this paper that labor cost is also present as a relevant factor in
the Philosopher'sanalysis. There are strong (although debatable)
textual groundsfor this contention. Further,there are even stronger
grounds to be found in a point which has been constantly over-
looked, namely; two value determinantsare necessarily involved
in Aristotle's schema of the typical exchange transaction. Both
"utility" and "real cost" considerationsare seen as active in estab-
lishingthe terms of such a transaction.
In consideringAristotle's exchange schema we can note, with
J. Soudek,that,
... he was preoccupied with the isolated exchange between individuals and
not with the exchange of goods by many sellers and buyers competing with
each other.

But further, and of even greater significanceis the fact that the
typical exchange transaction for Aristotle, is not simply an asso-
ciation between a buyer and a seller. Aristotle anathemizesretail
trading and (unlike Plato) sees no economic justification for the
activity. Exchangeis to take place mainly by direct associationof
varieties of producers. The typical exchange transaction is an
association between two persons who are simultaneously both
buyers and sellers, each exchanges his surplus produce with the
other.6 Justice is done and hence exchange will occur where the
ratio of exchange between the two goods concernedis such as to
equate the two persons both as sellers (hence the cost factor) and
as buyers (hencethe utility element).
Apart from the actual texts on exchange, evidence for Aris-
totle's dual approachis providedby a passage in a later section of
the Ethica. We find an explicit recognition in the discussion of
"associations of persons (friendships) based on utility," of the
existence of two criteria for measurementof value. He writes:
4. Ethica, 1133", 5-10. See also 1133a,26-29.
5. J. Soudek, op. cit., p. 46
6. The introduction of money makes no essential difference to Aristotle's
basic schema. For the Philosopher, money facilitates exchange by making
good "the excess and the defect" when one buyer-seller is offering less or de-
manding more in actual goods-value than another. See Ethica, 113a, 18-21.

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124 QUARTERLY JOURNAL OF ECONOMICS

It is disputable whether we ought to measure a service by its utility to the

receiver and make the return with a view to that, or by the benevolence of
the giver. For those who have received say they have received from their
benefactors what meant little to the latter and what they might have got
from others-minimizing the service; while the givers, on the contrary, say
it was the biggest thing they had, and what could not have been got from
others, and that it was given in times of danger or similar need.7
From this we can infer that in associationsof personsfor exchange
of goods, each must be satisfied that both costs and utilities are
equalized before exchange occurs.
A further point of some significance becomes apparent when
we reflect that if he maintains that exchange ratios between goods
will be such as equalize both costs and utilities, Aristotle is in-
volved in the assumptionthat the two criteria coincide. He must
assume that, that which is the more costly to supply (in terms of
labor expended and skill exerted) will be that which is the more
eagerly desired. It is only then that he can explain the existence
of a set of interconnectedmarket prices which satisfy both criteria.
Such an assumptionappears in explicit form in three different
works - in the Rhetorica, in the Topica, and in the Ethica. We saw
earlierthat in the Rhetoricahe writes:
Thus gold is a better thing than iron; though less useful: it is harder to get,
and therefore better worth the getting.8
Again, in the Topica we read:
Another rule is that the more conspicuous good is more desirable than the
less conspicuous, and the more difficult than the easier: for we appreciate
better the possession of things that cannot be easily acquired.9
Finally in the Ethica, he states:
Again, all men love more what they have won by labour, e.g., those who have
made their money love it more than those who have inherited it; . . *
We can concludethen, that Aristotle'sposition on the determinants
of exchangevalue displays a degree of internal,logical consistency,
despite the duality involved.

III
A closely argued denial of the presence of a labor theory of
value in Aristotle's analysis may be found in Joseph Soudek's ad-
mirabletreatment of the Philosopher'stheory of exchange.Soudek
7. Ethica, 1163a, 10-15.
8. Rhetorica, 1364a, 25-26.
9. Topica, 117b, 28-30.
1. Ethica, 1168a 21-23.

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 THE DEVELOPMENT OF VALUE THEORY 125

allows that there is a labor element present, in the limited sense

of labor skill.2 However, he denies that labor skill is seen as a
determinant of exchange value. Rather, it is a "theory of labor
value" which Aristotle is expressing, i.e., a theory that the values
of skills are given by the goods they command in the market. The
relative values of goods are determined by their relative utilities,
and the relative values of labor skills are given by their respective
abilities to offer "want satisfaction." Thus, Soudek is interpreting
the builder-shoemaker passage in the Ethica as not indicating that
the relative skills of the two persons concerned act as one set of
determinants of the exchange ratio of goods. Rather, relative skills
are measured by the exchange ratio, which ratio is established by
the "want satisfactions" offered by the different products.3
It can be allowed that, as the passages on exchange stand in
themselves, there is room for doubt concerning the manner in which
the labor element fits into Aristotle's schema. Soudek's interpreta-
tion is one, quite legitimate reading of those passages. However,
the validity of such a reading becomes highly questionable when
we look elsewhere in the Philosopher's works. It becomes difficult
to maintain that Aristotle held that the relative values of skills are
given by the degrees of want-satisfaction they produce.
Firstly, the discussion of skills (arts) in the Ethica reveals cer-
tain logical difficulties for Soudek's contention. We have seen earlier
that the Philosopher allows that different means may be evaluated
in terms of the consequences which flow from their employment.
But this dictum cannot be applied in the case of skills and want-
satisfaction since, for Aristotle, pleasure is not derived from art
(which is concerned with the process of bringing things into being),
but from activity (which is not a process but an end). Pleasure is
seen as that which completes activity as a supervenient end.4 The
end of art is not pleasure, so that skills cannot be evaluated by a
subjective and ever-varying property of products like want-satis-
faction, since there is no necessary connection involved.
The two passages relevant here are as follows:
In the variable are included both things made and things done; making
and acting are different (for their nature we treat even the discussions outside
our school as reliable) so that the reasoned state of capacity to act is differ-
ent from the reasoned state of capacity to make. Hence too they are not in-
cluded one in the other; for neither is acting, making, nor is making, acting.
Now since architecture is an art and is essentially a reasoned state of capacity
2. Op. cit., p. 65.
3. Op. cit., p. 60.
4. Ethica, 1174b, 31_3.

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126 QUARTERLY JOURNAL OF ECONOMICS

to make, and there is neither any art that is not such a state nor any such
state that is not an art, art is identical with a state of capacity to make, in-
volving a true course of reasoning. All art is concerned with coming into
being, i.e., with contriving and considering how something may come into
being which is capable of either being or not being, and whose origin is in the
maker and not in the thing made; for art is concerned neither with things that
are or come into being, by necessity, nor with things that do so in accordance
with nature (since these have their origin in themselves). Making and acting
being different, art must be a matter of making, not of acting.!

Further,we read:
The fact that no pleasure is the product of any art arises naturally enough:
there is no art of any other activity either, but only of the corresponding
faculty; . . !

A second objectionto Soudek'scontentionis based on the pas-

sage in the Rhetorica where Aristotle expresses the view that art
is not to be measuredby the degree of practical success achieved.
He writes:
It is clear, then, that rhetoric is not bound up with a single definite class of
subjects, but is as universal as dialectic; it is clear, also, that it is useful. It is
clear, further, that its function is not simply to succeed in persuading, but
rather to discover the means of coming as near such success as the circum-
stances of each particular case allow. In this it resembles all other arts. For
example, it is not the function of medicine simply to make a man quite healthy,
but to put him as far as may be on the road to health; it is possible to give
excellent treatment even to those who can never enjoy sound health.'

Hence, it would seem that the skill exertedin any one circumstance
cannotbe judgedfromthe tangible end-productresulting. Although
the object of medicineis health, the skill of the physician is not to
be evaluatedby the absoluteachievementof this object. The patient
may not obtain the satisfaction of enjoying sound health, but this
lack of satisfaction provides no basis for judgmentof the worth of
the skill exertedby the physician.
A third difficulty facing those who claim that Aristotle held
that the relative values of skills are given by the capacities for
want-satisfactionthey afford,is providedby the rankingsof skilled
occupationsto be found in the Politica. These rankings are given
in terms which have nothing to do with market valuation. Aristotle
states:
Those occupations are most truly arts in which there is the least element of
chance; they are the meanest in which the body is the most deteriorated, the
5. Ethica, 1140a,1-17.
6. Ethica, 1153a, 24-25.
7. Rhetorica, 1355b, 8-14.

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 THE DEVELOPMENT OF VALUE THEORY 127

most servile in which there is the greatest use of the body, and the most illiberal
in which there is the least need of excellence!
It is this kind of ranking that he has in mind in the passages
on exchangein the Ethica, where, as we have seen, he writes:
For it is not two doctors that associate for exchange, but a doctor and a farmer
or in general people who are different and unequal; but these must be equated.9

The relative positions which these two occupy in the order of skill
is a major determinantof the exchange ratio that will be estab-
lished between their "products."That exchangeratio does not de-
terminetheir relative positions.
Further,in the Politica we also find discussionof the question
of who is to evaluate different skills, and here the general answer
is definitely not to the effect that the evaluator is just any con-
sumer of the end product of those skills. Hence, in the matter of
skill in singing he writes:
Clearly there is a considerable difference made in the character by the actual
practice of the art [singing]. It is difficult, if not impossible, for those who do
not perform to be good judges of the performanceof others.'

Again, in another passage, he claims that there are three types of

persons who can evaluate occupational skill. He states:
In the first place, it might be objected that he who can judge of the healing
of a sick man would be one who could himself heal his disease, and make him
whole -that is, in other words, the physician; and so in all professions and
arts. As, then, the physician ought to be called to account by physicians,
so ought men in general to be called to account by their peers. But physi-
cians are of three kinds: there is the ordinary practitioner, and there is the
physician of the higher class, and thirdly the intelligent man who has studied
the art: in all arts there is such a class; and we attribute the power of judg-
ing to them quite as much as to professors of the art.2
The import of the above passages makes it clear that Aristotle
did not hold that the relative values of skills is appropriately
measured by the differing want-satisfactions experienced by the
consumersof the products of those skills.3 The relative worths of
skills are ranked by means of other criteria (which criteria we
might today characterizeas "noneconomic"),and this priorranking
has an autonomousimpact on the formationof market price. Ex-
8. Politica, 1258b, 35-39.
9. Ethica, 1133a, 16-18.
1. Politica, 1340b, 22-25.
2. Politica, 1281b, 40- 1282a, 5.
3. Aristotle allows that in some cases, consumers may be the best judges
of the worths of the products of some arts. But he does not say that they are
the best judges of those arts in themselves. See Politica, 1282a, 17-24.

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128 QUARTERLY JOURNAL OF ECONOMICS

changeratios are determinedby the interactionof two, independent

hierarchiesof worth- the order of utility and the order of labor-
skill. As was affirmedin the previous section of this paper, the
Philosopher'sposition on exchange is essentially dualistic, and the
attribution of a unitary schema turning on utility alone, must be
rejected.

IV
If the foregoingobservationsare accepted, it would seem that
Aristotle stands at the head of both traditions apparent in early
economicthought. Insofar as the inheritanceof ideas was influen-
tial, to Aristotle must be ascribed the bases for the dualism that
persists in scholastic and much subsequent economic thought.
Throughoutthe centurieshe has been interpretedas holding either
utility or labor-cost views. This in itself is significant, apart from
the question of what in fact he did hold.
In turningto this latter problem,we find that there are strong
grounds for suggesting that the Philosopher did in fact contend
that both utility and labor cost (at least in the limited sense of
labor skill) were relevant to the determinationof exchange value.
However,lacking the tools as well as the enthusiasmof Alfred Mar-
shall for economic analysis, he did not effect a very satisfactory
synthesis of the two.
To attribute a labor-cost theory to Aristotle is not to suggest
that he was in any very direct sense an anticipator of Karl Marx.
For the Philosopher,labor skill was a necessarybut not a sufficient
cause of value. Value is not created simply by the expenditureof
labor in a productive process. Rather, the basic requirementfor
the existence of value in exchangeis the presence of that reflex of
individual desires called "utility." As an astute historian of eco-
nomic thought, Marx realized that Aristotle was no forerunnerof
his own value mystique.4 Aristotle is most properly thought of as
a forerunnerof Marshall, and hence in part, an anticipator of the
type of "nonmetaphysical"labor theory associated with Ricardo
and with Adam Smith.

COLLEGE
NEWCASTEUNIVERSITY
4. According to Marx's reading of the passages on exchange in the Ethica,
there is "the absence of any concept of value." Das Capital, Vol. 1 (Moscow:
Foreign Languages Publishing House, 1959), p. 59.

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