A material good is an item that consumers can purchase, sell, or trade for other items. The study of these goods is common in economic theory or philosophy. Many theories exist that determine the value of a material good. For example, classical economists believe goods have a value placed on them by the use an individual receives from owning them. Marxist economic theory states a good’s value comes from the labor it takes to convert raw materials into a valued item.
Classical economic theory describes goods from the value or use a consumer receives from the item. In historical times, a medium was necessary to purchase or trade different goods in an economy. A consumer with a farm could trade corn to a consumer who grew cotton. In this scenario, each material good has a value to the other, as individually, each individual only grows one item. Trading goods allows each individual the ability to improve their livelihoods without growing the item themselves.
Unfortunately, consistently trading one material good for others eventually weakens their value. When everyone in an economy has corn, the good’s value drops precipitously. Therefore, individuals look for a good that has value that provides a medium of exchange, which constantly has value to all individuals at all times. Historically, gold became this medium. This good was valuable to all individuals, allowing the corn grower to trade corn for gold and then trade the gold for cotton or other items, meeting the individual’s needs.
Under this classic economic theory, each individual has the ability to place a value on each material good in the economy. Trades, purchases, or sales only occur when each individual believes the goods in the transaction are of equal value. Hence, a good’s value is only determinable by an individual consumer. A market for goods will eventually arise, with one individual selling goods at a value deemed by most individuals in the economy. Each material good in the economy falls under this theory until a good has no value or use by individuals in the economy.
Contrary theories place a different value on material goods. Marxist theory attempts to value a good by the labor it takes to produce the item. The corn grower, for example, would price his goods based on his work to produce it in society. While many classical economists believe in a labor theory of value, Marxist theory takes it to a level beyond the personal level. The socially acceptable labor needed to produce goods places a price at the societal level in addition to the personal level of labor to produce a material good.