EXCHANGE VALUE

In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market. The other three aspects are use value, value and price. Strictly speaking, the exchange value of a commodity is for Marx not identical to its price, but represents rather what (quantity of) other commodities it will exchange for, if traded.

Exchange-value does not need to be expressed in money-prices necessarily (for example, in countertrade where x amount of goods p are worth y amounts of goods q). Karl Marx makes this abundantly clear in his dialectical derivation of the forms of value in the first chapters of Das Kapital.

Actually, the word "price" came into use in Western Europe only in the 13th century AD, the Latin root meaning being "pretium" meaning "reward, prize, value, worth," referring back to the notion of "recompense", or what was given in return, the expense, wager or cost incurred when a good changed hands (nowadays called "opportunity cost"). The verb meaning "to set the price of" was used only from the 14th century onwards.

The evolving linguistic meanings reflect the early history of the growing cash economy, and the evolution of commercial trade. Nowadays what "price" means is obvious and self-evident, and it is assumed that prices are all one of a kind. That is because money has become universally used. But in fact there are many different kinds of prices, some of which are actually charged, and some of which are only 'notional prices.' Even although a particular price may not refer to any real transaction, it can nevertheless influence economic behavior, because people have become so used to valuing and calculating exchange-value in terms of prices, using money. In the first chapters of Das Kapital, Marx traces out a brief logical summary of the development of the forms of trade, beginning with barter and simple exchange, and ending with a capitalistically produced commodity. This sketch of the process of "marketisation" shows that the commodity form is not fixed once and for all, but in fact undergoes a development as trade becomes more sophisticated, with the end result being that a commodity's exchange-value can be expressed simply in a (notional) quantity of money (a money price).