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Date: | Fri Mar 31 17:19:13 2006 |
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==================== HES POSTING ====================
Anthony Brewer wrote:
> I am not aware of any link in Smith between utility/value in use
> and subjective preferences.
Tony may be right about Adam Smith, but such a link can be found in
Turgot's 1769 article (proposal) 'Valeurs et monnaies'. I have no idea
whether this article is translated into English, but since the French
text can be read at Tony's website I guess it is not.
Turgot use of the the word utility (utilite) differs perhaps slightly
from our modern use. He talks about the "utilite des different
besoins" (utility of different needs). But he certainly notes that
the individual ranking of utilities is the basis of choice. It is put
in the following words:
Lorsque ce sentiment, ... , prend un caractere de permanence,
c'est alors que l'homme commence a comparer entre eux besoins,
a proportionner la recherche des objets, non plus uniquement a
l'impulsion rapide du besoin present (as the savages did), mais
a l'ordre de necessite et d'utilite des differents besoins.
In order to describe how market values come about, Turgot introduces
the notion 'valeur estimative' (estimated value). This is perhaps
better translated as 'willingness to pay'. The idea is that
individuals rank their needs according to necessity and utility and
that considering the scarcity (rarete) they attach value to a
commodity.
Turgot mentions two works in which the same truth (cette meme
verite) is told. The first is Galliani's Della Moneta. According to
Turgot, however, Galiani was much to imprecise when he said that "the
common measure of all values is the individual". (La commune mesure
de toutes les valeurs est l'homme.) The second is Jean Graslin's
Essay analytique sur la richesse et sur l'impot (1767), in which,
according to Turgot this truth about value determination is
'confusement entrevue'. I have not read Graslin's work. Schumpeter
notes that it is the best criticism of the physiocrats ever offered
and that it presents a "comprehensive theory of wealth as a theory of
total income", but he does not say anything about utility theory in
that book.
Henk W. Plasmeijer
Faculty of Economics
State University of Groningen
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