A paragraph from the Nicomachaean Ethics, though it does not treat the problem directly, is also an evidence of Aristotle’s insight into the elements of economic value.529
It has been strangely slighted by most historians of economic thought, though its significance has been recognized by editors of the Ethics.530
It grows out of his discussion of fair exchange, which is a part of the larger subject of justice. He observes that a proportional equality (κατὰ τὴν ἀναλογίαν ἴσον) between diverse products must exist before exchange can take place,531 since the labor involved in their production is not equal.532 This equality he obtains through a proportion, in which the objects of exchange stand in inverse ratio to the producers.533 The equalization of the commodities is thus based, according to Aristotle, upon an estimate of the labor or cost of production in each case.534
Again, he points out that the standard by which all products are measured is need or demand (χρεία) for reciprocal services,535 thereby making demand a social fact dependent upon organized society. It is, in his thought, the “common denominator of value” which finally determines the actual basis on which all goods are exchanged or services rendered.
Elsewhere Aristotle’s conception of value is more individualistic, like that of Xenophon and Plato, but Haney536 overlooks this passage in asserting that his notion of value is “purely subjective.” It is not merely “equal wants” that are considered, as he states, but equal costs as well.537 This demand, or common measure of value, is expressed in terms of money (νόμισμα).538
It is clear then, from this passage in the Ethics, that Aristotle understood that economic value is determined by demand, as measured in money, and by labor invested or cost of production.539 This