histofthought1

404 Economic thought before Adam Smithmoney. During the same period, Galiani took religious orders. At the age of23, he published his remarkable major work, Della Moneta (On Money)(1751) which set forth a utility-scarcity theory of the value of goods andmoney. Unfortunately, Della Moneta has never been fully translated from theItalian.In 1759, the Abbe Galiani became secretary and later head of the Neapolitanembassy in Paris, where he stayed for ten years, and where the erratic,witty, erudite, 4 1 /2 foot tall Galiani became the social lion of the Paris salons.After his return to Italy, though he wrote several minor works in linguisticsand politics, and held several leading positions in the civil service, he consideredhimself an exile from his beloved France.In the late scholastic-French-Italian tradition, Galiani expounded the valueof goods as subjective valuation by consumers. Value is not intrinsic, hepointed out, but 'a sort of relationship between the possession of one goodand that of another in the human mind'. Man always compares the valuationof one good with another, and exchanges one good for another in order toincrease the level of his satisfactions. The quantity demanded of a good isinverse to its price, and the utility of each good is in inverse relation to itssupply. Alert to the law of diminishing utility upon increasing supply, Galiani,like his predecessors, stops just short of the marginal concept, but is at anyrate able to solve the 'value paradox': the view that use-value is severed fromprice- or exchange-value because bread or water, goods highly useful to man,are very cheap on the market whereas fripperies like diamonds are highlyexpensive.Thus Galiani writes, with great subtlety and perception and with his usualflair:It is obvious that air and water, which are very useful for human life, have novalue because they are not scarce. On the other hand, a bag of sand from theshores of Japan would be an extremely rare thing - yet, unless it has a certainutility, it is without value.Galiani then states the alleged value paradox, quoting from the seventeenthcentury Italian writer, Bernardo Davanzati. Davanzati laments that 'A livingcalf is nobler than a golden calf, but how much less is its price!' while 'otherssay: "A pound of bread is more useful than a pound of gold".' Galiani thenbrilliantly demolishes this doctrine:This is a wrong and foolish conclusion. It is based on neglect of the fact that'useful' and 'less useful' are relative concepts, which depend on the specificcircumstances. If somebody is in want of bread and of gold, bread is surely moreuseful for him. This agrees with the facts of life, because nobody would foregobread, take gold, and die from hunger. People who mine gold never forget to eat