Study Guide to Man, Economy, and State with Power and Market

Chapter Summary
CHAPTER 2
DIRECT EXCHANGE
Direct exchange involves trades where the goods received are
of direct use to the recipient. These “direct uses” can be for production;
i.e., a person can engage in direct exchange of higherorder
goods. However, if a person desires a good with the intention
to trade it away to someone else, then he is engaged in indirect
exchange, the subject of the next chapter.
A voluntary exchange involves a reverse valuation of the
goods: each party values what he is giving up less than what he
is receiving in exchange. This principle underscores the fact
that value is subjective: if goods had an objective, intrinsic value,
then there could be no reverse valuation (except through error).
If this were the case, then traded goods would be equal in value
(and hence there would be no reason to trade them), or one
party would necessarily benefit at the expense of the other. But
since this is not the case—i.e., since individuals value goods differently—then
there are mutual “gains from trade.” Both parties
(expect to) benefit from a voluntary exchange.
With the possibility of trade, goods are valued not only by
their direct use-value but also their exchange-value. An actor will
always value a unit of a good at the higher of these two. (For
example, even a nonsmoker would prefer a box of cigars over
a hot dog, if he thought he could trade the former to a
smoker.) Trade also fosters specialization and the division of
15