Money, Price, Value, and Exchange

John STEPAN

Abstract

This paper discusses the interplay between money, price, value and exchange by analysing relationships between the concepts and looking more deeply at value and price specifically. The focus on value is because perceived value from both the seller and the buyer perspectives is the concept that enables a specific exchange transaction to take place firstly by being quantified (e.g. in money terms) and then by a value alignment process between the parties (e.g. price agreement). The discussion on value presents some aspects of value generation based on an economics and a marketing perspectives. The first part of the discussion on price is a presentation of a theoretical model of the value alignment process. This then leads on to a discussion, based on micro-economic pricing theory, of the supply and demand balancing process which is the foundation of price discovery (which in turn can be seen as a quantification in money of the value alignment process discussed earlier). The paper concludes with a discussion of a ‘more nuanced’ aspect of value being the distinction between ‘needs’ and ‘wants’ and thus, between objective needs and those which are subjective and, following on from this, on the ‘fine line’ boundaries between freedom of choice and manipulation which can arise in this value perception process.