Böhm-Bawerk’s encyclopedic article combines a classification of economic value, a statement of value theory’s tasks, a critical history of competing explanations, and a positive theory of subjective valuation, followed by an extensive bibliography. Its central move is to distinguish usefulness from the dependence of welfare upon particular goods. This distinction grounds marginal utility while allowing production costs—and, under specific conditions, personal sacrifice—to influence value.
Alle Güterschätzung ist nichts als ein Wiederschein einer ursprünglichen Schätzung, die wir den Lebens- und Wohlfahrtszwecken entgegenbringen, zu deren Erreichung die Güter uns dienen.
English translation: All valuation of goods is nothing but a reflection of an original valuation that we accord to the purposes of life and welfare which goods serve us in attaining.
Economic value is instrumental, not an intrinsic property of objects. Böhm-Bawerk distinguishes subjective value, a good’s significance for a particular person’s welfare, from objective value, its capacity to produce an external result. Objective exchange value is purchasing power; its explanation belongs to price theory. This distinction crosses, rather than coincides with, the division between use, productive yield, and exchange. Identical quantities of fuel can possess equal heating power yet radically unequal significance for a poor household and a millionaire. Subjective interests can also be altruistic: valuation does not presuppose selfish purposes.
The historical sections reconstruct the struggle between utility and cost explanations. Classical theory divided the field: usefulness explained use value, costs explained normal exchange value for reproducible goods, and supply and demand covered scarcity goods and fluctuating prices. Böhm-Bawerk finds this settlement insufficiently analytical. His criticism of Marx’s labour theory emphasizes the effects of capital investment’s duration and magnitude, and argues that reducing skilled to simple labour imports differences in value into an explanation ostensibly based on labour quantities. Conversely, early utility theories failed to demonstrate precisely how utility determines value’s magnitude. The advance associated with Gossen, Jevons, Menger, and Walras was to locate the relevant utility at the margin.
The positive exposition begins with water: a litre from an abundant spring is useful but dispensable; the desert traveller’s last litre sustains welfare that its loss would imperil.
Hinzuzufügen ist, daß Gegenstand solcher praktischer Wertschätzungen immer nur bestimmte Güterstücke oder Gütermengen werden, niemals eine Gütergattung in abstracto.
English translation: It must be added that the objects of such practical valuations are always only particular items or quantities of goods, never a kind of good in the abstract.
The proper unit of analysis is therefore a concrete quantity under definite conditions of need and provision. With a fixed stock of grain allocated among subsistence, improved nourishment, livestock, spirits, and luxury animals, losing one measure sacrifices the least important use, not subsistence. That displaced satisfaction determines each interchangeable measure’s marginal value. Abundance lowers value by extending provision to less urgent needs; complete superfluity reduces marginal utility to zero.
Böhm-Bawerk then separates two replacement cases. If replacing Robinson’s arrows requires an additional hour of work that he would otherwise spend resting, their value can be measured by the suffering avoided. This requires both willingness to replace them and genuine freedom to extend labour. If working time is fixed, replacement instead displaces another product: the relevant sacrifice is forgone utility. He regards adjustable working hours as relatively exceptional in an economy organized through legally, contractually, or customarily fixed shifts.
This distinction recasts the cost principle. Reproducible goods draw upon limited productive resources, whose valuation reflects the least valuable output still produced with them.
Der Wert der „beliebig vermehrbaren“ Güter wird in Wahrheit unter dem Zeichen gebildet, daß sie — zusammengenommen — nicht beliebig vermehrbar sind.
English translation: The value of “freely reproducible” goods is in truth formed under the condition that, taken together, they are not freely reproducible.
Reproducibility permits reallocating production, not escaping scarcity. Costs transmit marginal utility through successive productive stages, linking products made from common resources into an extended family of alternatives. Böhm-Bawerk thus preserves the empirical importance of costs without treating them as an independent ultimate explanation in the usual case.
The conclusion connects individual valuation with social prices in both directions. Market prices emerge from subjective valuations, yet individuals normally use established prices as practical guides without reconstructing their origins. The article’s significance lies in making these apparently objective magnitudes intelligible through dispersed assessments of welfare and alternatives forgone. It closes by identifying the attribution of value among complementary productive factors as a further problem central to distribution, while reserving its detailed treatment and price formation for other works.
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