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Like Steven Horwitz, I'm also puzzled by the recent turn of this discussion.  His own
contribution, separating utility from value, puzzles me.  He claims that, "Utility is just
the economic actor's judgment of an object as having the capacity to help her achieve some
end.  Value is what happens when utility meets the economizing decisions of human actors."
This from the language of Carl Menger.  Why aren't the explanations of Adam Smith and
David Ricardo much clearer and more helpful?
 
Adam Smith says, "The word VALUE ... has two different meanings, and sometimes expresses
the utility [usefulness or worth] of some particular object, and sometimes the power of
purchasing other goods which the possession of that object conveys.  The one may called
'value in use'
[i.e. utility]; the other 'value in exchange' [i.e. price when a good is exchanged for
money]."  Because value in use or utility is subjective and difficult to measure, Smith
goes on to devote his efforts to explaining the determination of value in exchange (or
price) by supply
and demand.  However, in that explanation, utility or value in use is still fundamental;
it underlies the demand.
 
David Ricardo echoes Smith's explanation when he writes: "If a commodity were in no way
useful -- in other words, if it could in no way contribute to our gratification -- it
would be destitute of exchangeable value, however scarce it may be, or whatever quantity
of labour it might be necessary to procure it."  Again, Ricardo points out, "Possessing
utility [usefulness], commodities derive their exchange value [price] from, two sources:
from their scarcity, and from the quantity of labour required to obtain them."
 
Of course, individuals may reveal their own assessments of the utility or worth of objects
by assigning money values to them.  This is what underlies the notion of a demand price,
which is different from a supply price or the market price.
 
I find the Smithian explanation much clearer and helpful than the Austrian (Mengerian)
attempt to distinguish utility from value, as Horwitz suggests.
 
James Ahiakpor 
 
 
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