Aristotle Value Theory: Aristotle's Definition Of Value

Aristotle
Aristotle’s notion of value is subjective, that is to say is based upon the usefulness of the commodity concerned. All the commodities which are exchanged must be comparable through some standard of measure, and the standard of that measure is to be found in the man’s wants. “In the truest and most real sense, the standard lies in wants, which is the basis of all association among men.” An exchange is fair and impartial, when each of the parties gets exactly as much as he gives the other, yet this equality does not mean equal costs but wants. If men want the shoemaker’s product more than the farmer’s, then more grain must be given for the shoes. ( Aristotle Value Theory, November 2012)
He elaborates; let A be the builder

i. Determination of price of a good,ie, determination of relevative price in modern economics language ii. Determination of the general price level. iii. The best measure of welfare.
However, he did not give an ambiguos answer to any of the above. He intermingled his discussion on determination of relative prices with his effort to unleash a measure of welfare dynamics over time.
CRITICS
• Some writers said Smith had threee relative price theories (cost of product, labour command, labour cost) and a theory that explained the general price levels.
• A different group held that he settled on a product cost theory of relative prices; theory measuring welfare dynamics over time and a theory on the general price levels.
• The group denies that Adam Smith had a labour theory on relative prices. They believed that he experimented will these theories (labour command and labour cost) for a traditional society and product ion cost for an adavanced economy; the computation of an index measuring dynamics in welfare and a theory that explained the general level of prices.

RELATIVE PRICE

In the shortrun period, Smith found upward sloping supply curves and downward sloping demand curves for both agriculture and manufacturing. Thus, market prices depend on supply and demand. In the longrun, there are some contradictions pertaining to Smith’s analysis of the complicated “natural price.” The longrun supply curve is sometimes assumed to be horizontal (perefctly elastic) for the manufacturing sector to indicate the constant costs. It is negatively sloped in some parts of the analysis repesenting decreasing costs. When the longrun supply curve is horizontal, price depends wholely on production costs; but when it is negatively sloped, supply and demand determine natural price. But for the agricultural sector, demand and supply determine natural price due to the positively sloped longrun supply curve which indicates increasing