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diff --git a/38047-h/38047-h.htm b/38047-h/38047-h.htm new file mode 100644 index 0000000..7ba4e15 --- /dev/null +++ b/38047-h/38047-h.htm @@ -0,0 +1,6531 @@ +<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" + "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> + +<html xmlns="http://www.w3.org/1999/xhtml"> + <head> + <meta http-equiv="Content-Type" content="text/html;charset=iso-8859-1" /> + <title> + The Project Gutenberg eBook of Social Value, by B. M. Anderson, Jr., Ph.D. + </title> + <style type="text/css"> + + p { margin-top: .75em; + text-align: justify; + margin-bottom: .75em; + } + h1,h2,h3,h4,h5,h6 { + text-align: center; /* all headings centered */ + clear: both; + } + hr { width: 33%; + margin-top: 2em; + margin-bottom: 2em; + margin-left: auto; + margin-right: auto; + clear: both; + } + + table {margin-left: auto; margin-right: auto;} + + body{margin-left: 10%; + margin-right: 10%; + } + + .pagenum { /* uncomment the next line for invisible page numbers */ + /* visibility: hidden; */ + position: absolute; + left: 92%; + font-size: smaller; + text-align: right; + } /* page numbers */ + + .tocnum {position: absolute; top: auto; right: 5%;} + .blockquot{margin-left: 5%; margin-right: 10%;} + + .center {text-align: center;} + .smcap {font-variant: small-caps;} + .right {text-align: right;} + + .footnotes {border: dashed 1px;} + .footnote {margin-left: 10%; margin-right: 10%; font-size: 0.9em;} + .footnote .label {position: absolute; right: 84%; text-align: right;} + .fnanchor {vertical-align: super; font-size: .8em; text-decoration: none;} + + .poem {margin-left:10%; margin-right:10%; text-align: left;} + .poem br {display: none;} + .poem .stanza {margin: 1em 0em 1em 0em;} + .poem span.i0 {display: block; margin-left: 0em; padding-left: 3em; text-indent: -3em;} + .poem span.i2 {display: block; margin-left: 1em; padding-left: 3em; text-indent: -3em;} + .poem span.i4 {display: block; margin-left: 2em; padding-left: 3em; text-indent: -3em;} + + </style> + </head> +<body> + + +<pre> + +The Project Gutenberg EBook of Social Value, by B. M. Anderson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Social Value + A Study in Economic Theory Critical and Constructive + +Author: B. M. Anderson + +Release Date: November 18, 2011 [EBook #38047] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK SOCIAL VALUE *** + + + + +Produced by Curtis Weyant, Josephine Paolucci and the +Online Distributed Proofreading Team at https://www.pgdp.net. +(This book was produced from scanned images of public +domain material from the Google Print project.) + + + + + + +</pre> + + +<h1>SOCIAL VALUE</h1> + +<h2>A STUDY IN ECONOMIC THEORY CRITICAL AND CONSTRUCTIVE</h2> + +<h3>BY</h3> + +<h2><span class="smcap">B. M. ANDERSON, Jr., Ph.D.</span></h2> + +<h4><i>Instructor in Political Economy Columbia University</i></h4> + +<p class="center"> +BOSTON AND NEW YORK<br /> +HOUGHTON MIFFLIN COMPANY<br /> +The Riverside Press Cambridge<br /> +1911<br /> +<br /> +<br /> +COPYRIGHT, 1911, BY HART, SCHAFFNER & MARX<br /> +<br /> +ALL RIGHTS RESERVED<br /> +<br /> +<i>Published November 1911</i><br /> +<br /> +<br /> +TO MY FATHER<br /> +<br /> +BENJAMIN M. ANDERSON<br /> +<br /> +OF COLUMBIA, MISSOURI<br /> +<br /> +MY FIRST TEACHER OF<br /> +<br /> +POLITICAL ECONOMY<br /> +</p> + + + +<hr style="width: 65%;" /> +<h2><a name="PREFACE" id="PREFACE"></a>PREFACE</h2> + + +<p>This series of books owes its existence to the generosity of Messrs. Hart, +Schaffner, and Marx of Chicago, who have shown a special interest in +directing the attention of American youth to the study of economic and +commercial subjects, and in encouraging the systematic investigation of the +problems which vitally affect the business world of to-day. For this +purpose they have delegated to the undersigned Committee the task of +selecting topics, making all announcements, and awarding prizes annually +for those who wish to compete.</p> + +<p>In the year ending June 1, 1910, the following topics were assigned:—</p> + +<div class="blockquot"><p>1. The effect of labor unions on international trade.</p> + +<p>2. The best means of raising the wages of the +unskilled.</p> + +<p>3. A comparison between the theory and the actual +practice of protectionism in the United States.</p> + +<p>4. A scheme for an ideal monetary system for the United +States.</p> + +<p>5. The true relation of the central government to +trusts.<span class='pagenum'><a name="Page_viii" id="Page_viii">[Pg viii]</a></span></p> + +<p>6. How much of J. S. Mill's economic system survives?</p> + +<p>7. A central bank as a factor in a financial crisis.</p> + +<p>8. Any other topic which has received the approval of +the Committee.</p></div> + +<p>A first prize of six hundred dollars, and a second prize of four hundred +dollars, were offered for the best studies presented by class A, composed +chiefly of graduates of American colleges.</p> + +<p>The present volume was awarded the second prize.</p> + +<p class="right"> +<span class="smcap">Professor J. Laurence Laughlin</span>,<br /> +<i>University of Chicago, Chairman</i>.<br /> +<br /> +<span class="smcap">Professor J. B. Clark</span>,<br /> +<i>Columbia University</i>.<br /> +<br /> +<span class="smcap">Professor Henry C. Adams</span>,<br /> +<i>University of Michigan</i>.<br /> +<br /> +<span class="smcap">Horace White, Esq.</span>,<br /> +New York City.<br /> +<br /> +<span class="smcap">Professor Edwin F. Gay</span>,<br /> +<i>Harvard University</i>.<br /> +</p> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_ix" id="Page_ix">[Pg ix]</a></span></p> +<h2><a name="A_NOTE" id="A_NOTE"></a>A NOTE</h2> + + +<p>The following study is the outgrowth of investigations in the "Quantity +Theory" of money, carried on in the seminar of Professor Jesse E. Pope, at +the University of Missouri, during the term 1904-5. That a satisfactory +general theory of value must underlie any adequate treatment of the problem +of the value of money, and that there is little agreement among monetary +theorists concerning the general theory of value, became very evident in +the course of this investigation; and that the present writer's conception +of value, as expressed in a paper written at that time on the "Quantity +Theory," was not satisfactory, became painfully clear after Professor +Pope's kindly but fundamental criticisms. The problem of value, laid aside +for a time, forced itself upon me in the course of my teaching: my students +seemed to understand the treatment of value in the text-books used quite +clearly, but I could never convince myself that I understood it, and the +conviction grew upon me that the value problem really remained unsolved. +Hence the present book. It was begun in Dean Kinley's seminar, at the +University of Illinois, in the term 1909-10. The first three parts, in +substantially their present form, and an outline sketch of the germ idea of +the fourth part, were submitted, in May of 1910, in the Hart, Schaffner & +Marx<span class='pagenum'><a name="Page_x" id="Page_x">[Pg x]</a></span> Economic Prize Contest of that year. Part <span class="smcap">iv</span> was elaborated in +detail, and minor changes made in the first three parts, during the year +1910-11, at Columbia University. The book is submitted as a doctor's +dissertation to the Faculty of Political Science of that institution.</p> + +<p>My obligations to others in connection with this book are numerous. I +cannot refrain from thanking my old teacher Professor Pope, in this +connection. I owe my interest in economic theory, and the greater part of +my training in economic method, to the three years I spent in his seminar +at Missouri. I am also indebted to him for substantial aid in the critical +revision of the proofsheets. At the University of Illinois, Dean Kinley and +Professors E. L. Bogart and E. C. Hayes were of special service to me, as +was also Mr. F. C. Becker, now of the department of philosophy at the +University of California. Dean Kinley, in particular, criticized several +successive drafts, and made numerous valuable suggestions. My chief +obligations at Columbia University are to Professors Seligman, Seager, John +Dewey, and Giddings. My debt to Professors Seligman and Dewey is, in part, +indicated in the course of the book, so far as points of doctrine are +concerned. Both have been kind enough to read and criticize the provisional +draft, and Professor Seligman has supervised the revision at every stage. +My wife's services, in criticism, in bibliographical work, and in the +mechanical labors which writing a book involves, have been indispensable.</p> + +<p>It is due Professor J. B. Clark, since I discuss<span class='pagenum'><a name="Page_xi" id="Page_xi">[Pg xi]</a></span> his theories here at +length, to mention the fact that, owing to his absence from Columbia +University during the year 1910-11, I have been unable to talk over my +criticisms with him, and so may have misinterpreted him at points. Of +course, there is a similar danger with reference to every other writer +mentioned in the book, but the reader will not be likely to think, in the +case of others, that the interpretations have been passed on by the writers +discussed, in advance of publication. I must also mention here Professor H. +J. Davenport, whose name occurs frequently in the following pages. Chiefly +he has evoked criticism in this discussion, but it goes without saying that +his <i>Value and Distribution</i> is a most significant work in the history of +economic theory, and my indebtedness to it will be manifest.</p> + +<p class="right"> +<span class="smcap">The Author.</span><br /> +<br /> +<span class="smcap">Columbia University</span>,<br /> +May, 1911.<br /> +</p> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_xiii" id="Page_xiii">[Pg xiii]</a></span></p> +<h2>ANALYTICAL TABLE OF CONTENTS</h2> + + + +<h4>PART I. INTRODUCTION</h4> + +<h4>CHAPTER I</h4> + +<h4>PROBLEM AND PLAN OF PROCEDURE</h4> + +<p>Social Value concept recently become important, chiefly in America, +and primarily through the influence of Professor J. B. Clark—Value +and "social marginal utility"—Relation of social-value +theory to Austrian theory: Professor Clark's view; views of Böhm-Bawerk, +Wieser, and Sax—Statement of the author's position: +conceptions of social utility and social cost unsatisfactory, but +social value concept a necessity for the validation of economic theory—Plan +of procedure: study of logical requirements of valid +value concept; failure of current theory to justify such a concept; +cause of this failure in faulty psychology, epistemology, and sociology +presupposed by current economic theory; reconstruction of +these presuppositions; on the basis of the reconstruction, a positive +theory of social value <span class="tocnum"><a href='#Page_3'>3</a></span></p> + + +<h4>PART II. CRITIQUE OF CURRENT VALUE THEORY</h4> + +<h4>CHAPTER II</h4> + +<h4>FORMAL AND LOGICAL ASPECTS OF THE VALUE CONCEPT</h4> + +<p>Value as ideal, and value as market fact—Value as absolute, and +value as relative—Value as quantity—Relation between quantity +and quality—Relative conception of value involves a vicious +circle, if treated as ultimate—Every "relative value" implies +two absolute values—Ratios must have quantitative terms—But +physical quantities cannot serve as these terms—Value +and evaluation: confusion of the two responsible, in part, for doctrine +of relativity—Value in current economic usage: value and +wealth; money as a "measure of values" <span class="tocnum"><a href='#Page_13'>13</a></span></p> + +<h4>CHAPTER III</h4> + +<h4>VALUE AND MARGINAL UTILITY</h4> + +<p>Individualistic method of Jevons and the Austrians—Such a +method, applied to value problem in concrete social life, yields, +not quantities of value, but rather, particular ratios between such +quantities—Value cannot be identified with marginal utility of a<span class='pagenum'><a name="Page_xiv" id="Page_xiv">[Pg xiv]</a></span> +good to a marginal individual, even though we assume the commensurability +and homogeneity of human emotions—Clark's +Law <span class="tocnum"><a href='#Page_28'>28</a></span></p> + +<h4>CHAPTER IV</h4> + +<h4>JEVONS, PARETO AND BÖHM-BAWERK</h4> + +<p>When individualistic methods and assumptions are pushed to the +extreme, the problem of a quantitative value becomes still more +hopeless—Jevons' psychological and epistemological assumptions—No +objective value quantity for Jevons—The same true +of Pareto—Böhm-Bawerk, trying to find law of value in law of +price, reaches results no more satisfactory—Austrian analysis, +even with Professor Clark's correction, is simply an explanation +of the modus operandi of determining particular ratios between +values in the market—It tells us nothing of value itself, and assumes +a whole system of values predetermined <span class="tocnum"><a href='#Page_34'>34</a></span></p> + +<h4>CHAPTER V</h4> + +<h4>DEMAND CURVES AND UTILITY CURVES</h4> + +<p>Constant confusion of demand curves and utility curves in current +economic literature has made necessary much of the foregoing +criticism—Confusions in the writings of Jevons, Böhm-Bawerk, +Wieser, Pierson, Patten, Hadley, Ely, Schaeffle, Flux, Marshall, +and Davenport <span class="tocnum"><a href='#Page_40'>40</a></span></p> + +<h4>CHAPTER VI</h4> + +<h4>THE VICIOUS CIRCLE OF THE AUSTRIANS</h4> + +<p>Extreme abstractness of the Austrian theory—Abstraction legitimate +and necessary, but must not be carried so far that the explanation +phenomena are obliged to include the problem phenomenon—Austrians +explain value in terms of value,—a vicious circle—Circle +explicit in Wieser—Also explicit in Hobson's attempt +to combine Austrian theory with cost theory of English School <span class="tocnum"><a href='#Page_45'>45</a></span></p> + +<h4>CHAPTER VII</h4> + +<h4>PROFESSOR CLARK'S THEORY OF SOCIAL VALUE</h4> + +<p>All attempts to explain value in terms of the highly abstract factors +of individual utility and individual cost, or any combination of +them, must become similarly entangled—Austrians have shown +this of English theory—Professor Clark's value theory, set forth +in the Distribution of Wealth, intended to justify social value concept, +really uses only these abstract individual factors, combined +in arithmetical sums, and similarly falls into a circle—Differences +between Professor Clark's point of view in his <i>Philosophy +of Wealth</i> and that of his later writings—The point of view of +the earlier book, supplemented by later studies in social psychology,<span class='pagenum'><a name="Page_xv" id="Page_xv">[Pg xv]</a></span> +will afford the basis for an organic conception of society, and +a valid doctrine of social value <span class="tocnum"><a href='#Page_49'>49</a></span></p> + + +<h4>PART III. THE PRESUPPOSITIONS OF ECONOMIC THEORY</h4> + +<h4>CHAPTER VIII</h4> + +<h4>THE PHILOSOPHICAL AND PSYCHOLOGICAL PRESUPPOSITIONS</h4> + +<p>Connection between social philosophy and metaphysics and epistemology +always close—Three stages in history of philosophy: dogmatic, +skeptical, critical—Ancient and modern philosophy have +each gone through these three stages—Each philosophic stage +characterized by distinctive social philosophy: individualism and +sociological monadism go with skeptical philosophy, while organic +conception of society goes with critical stage—Economics to-day +based on skeptical philosophy of Hume—Doctrine of sociological +monadism: Marshall, Pareto, Jevons, Veblen, Davenport—Critique +of sociological monadism, from standpoint of epistemology +and psychology <span class="tocnum"><a href='#Page_59'>59</a></span></p> + +<h4>CHAPTER IX</h4> + +<h4>THE SOCIOLOGICAL PRESUPPOSITIONS</h4> + +<p>Conceptions of the social unity: mechanical, biological, +psychological—DeGreef's +criticism of mechanical and biological analogies—Hierarchy +of sciences: Comte and Baldwin—Baldwin's psychical +abstractionism—Cooley's psychological conception of the +nature of society seems most useful for purposes of this study—Cooley's +view—Relation between Cooley and Giddings: the Social +Mind—Summary of sociological doctrine—Critique of +Davenport <span class="tocnum"><a href='#Page_72'>72</a></span></p> + + +<h4>PART IV. A POSITIVE THEORY OF SOCIAL VALUE</h4> + +<h4>CHAPTER X</h4> + +<h4>VALUE AS GENERIC—THE PSYCHOLOGY OF VALUE</h4> + +<p>Economic value a species, coördinate with ethical, legal, æsthetic, +and other values—Psychology of value, as manifested in individual +experience—Values as "tertiary qualities"—When we +reflectively break up the experience, values thrown from object +to subject's emotional life, but this an abstraction from concrete +experience—Feeling and desire in relation to value: hedonism; +Ehrenfels and Davenport; Urban and Meinong—"Presuppositions" +of value—Feeling and desire both <i>phases</i> in value, but +neither is <i>the</i> worth-fundamental, and each may vary in intensity +without affecting amount of value—Value and reality judgment: +Meinong and Tarde; Urban—On <i>structural</i> side, feeling, +desire, and "reality feeling" are all significant phases in value—But +real significance of value lies in its <i>functional</i> aspect: the function +of value is the function of <i>motivation</i>—Essence of value is +<i>power</i> in motivation—For concrete experience, this power a +quality of the object—Positive and negative values—Complementary<span class='pagenum'><a name="Page_xvi" id="Page_xvi">[Pg xvi]</a></span> +values—Rival values: two cases: qualitatively compatible, +and qualitatively incompatible values—In first case, +quantitative marginal compromise often possible: generalization +of Austrian analysis—So-called "absolute values" ("absolute" +here used as in history of ethics)—No sharp lines between different +sorts of values, as ethical, economic, æsthetic—Different +sorts of values do not constitute self-complete, separate +systems—Generalization +of notion of price—Suggestions as to +analogues in the field of the social values <span class="tocnum"><a href='#Page_93'>93</a></span></p> + +<h4>CHAPTER XI</h4> + +<h4>RECAPITULATION—THE SOCIAL VALUES—FUNCTIONS OF +THE VALUE CONCEPT IN ECONOMICS</h4> + +<p>Conclusions reached both in economic analysis and in sociological +analysis point to values which correspond to no individual values, +great social forces of motivation—To individual, economic, legal, +and moral values appear as external forces, over which his control +is limited, and to which he must adapt his individual behavior—Economic +theory, often unconsciously, has assumed objectively +valid, quantitative value, and economic theory valid only on the +basis of such a concept: value the homogeneous element among +the diversities of physical forms of goods, by virtue of which ratios, +sums, and percentages may be obtained among them, and +comparisons made—Process of "imputation" assumes such a +value concept—Value used by economists to explain motivation +of economic activity—Such a value concept essential for the +theory of money—Implied in the term, "purchasing power"—Such +a concept has never been justified, but economists, more +concerned about practical results than logical consistency, have +found it essential, and used it—Impossible to develop a social +quantity by synthesis of abstract individual elements—Correct +procedure the reverse of this <span class="tocnum"><a href='#Page_115'>115</a></span></p> + +<h4>CHAPTER XII</h4> + +<h4>SOCIAL VALUE: THE THEORIES OF URBAN AND TARDE</h4> + +<p>Neither Urban nor Tarde primarily concerned with economic value—Urban's +important contributions—Insists on conscious feeling +as essential for social value—But feeling may vary in intensity +without affecting the power in motivation of the value—Feeling +significant when values are to be compared—Social +weight of those who feel a value a highly significant phase which +Urban ignores—Tarde recognizes this phase, but errs in treating +it as an abstract element, which obeys the laws of simple +arithmetic <span class="tocnum"><a href='#Page_124'>124</a></span></p> + +<h4>CHAPTER XIII</h4> + +<h4>ECONOMIC SOCIAL VALUE</h4> + +<p>How get out of Austrian circle?—Temporal <i>regressus</i> <i>vs.</i> logical +analysis of the concrete whole of the Social Mind—Even in<span class='pagenum'><a name="Page_xvii" id="Page_xvii">[Pg xvii]</a></span> +Wieser's "natural" community, psychic elements other than +"marginal utility" significant for the determination of economic +values, especially legal and moral values concerned with +distribution—Quotation +from Mill—Critique of "pure economic" +theories of distribution—They presuppose as a "framework" a +set of legal and moral values which, in modern times, especially, +are little more stable than "pure economic" forces, and which, in +any case, are of same nature as economic forces,—fluid, psychic +forces—"Pure economic" forces, working in <i>vacuo</i>, would +lead to anarchy; any concrete economic tendency depends on +legal and moral forces quite as much as on "pure economic" +forces—Illustrations <span class="tocnum"><a href='#Page_132'>132</a></span></p> + +<h4>CHAPTER XIV</h4> + +<h4>ECONOMIC SOCIAL VALUE (<i>continued</i>)</h4> + +<p>Abstract elements of the Austrian and English schools, individual +"utilities" and "costs," have their place in the concrete whole of +social intermental life—Social causes largely determine them—But +this not enough for a theory of social value—Intensity of a +man's feelings or desires has no relation whatever to value in market +till we know social rankings of <i>men</i>—Conflicts of values +concerned with these social rankings—Prices express results of +court decisions as well as results of changing individual desires +for economic goods—We break the circle by turning to the concrete +whole of social-mental life—Economics has failed to profit +by example of other social sciences here—No social science can +explain its phenomena by reference to one or two abstract factors <span class="tocnum"><a href='#Page_148'>148</a></span></p> + +<h4>CHAPTER XV</h4> + +<h4>SOME MECHANICAL ANALOGIES</h4> + +<p>Mechanical analogies of limited use in revealing full complexity of +social control, but of use for certain purposes—Our argument +can be put, in part, in terms of mechanical analogies—Transformations +of social forces—Illustrations—Marginal equilibria +among social forces—Illustrations—Social forces of control +take different forms under different conditions—Mechanical +analogies useful enough for economic price-analysis—Our thesis +involves no radical revision of economic methodology—It is +rather concerned with interpretation and validation of economic +methodology <span class="tocnum"><a href='#Page_156'>156</a></span></p> + +<h4>CHAPTER XVI</h4> + +<h4>PROFESSOR SELIGMAN'S PSYCHOLOGICAL DOCTRINE OF THE +RELATIVITY OF VALUES</h4> + +<p>Professor Seligman's contributions to value theory—Points of difference +between his views and those here maintained—His psychological +doctrine of relativity—Different from doctrine of +English School, which is a matter of logical definition—Values +relative because there is fixed sum of values, and increase in one<span class='pagenum'><a name="Page_xviii" id="Page_xviii">[Pg xviii]</a></span> +value can come only through decrease in other values—Criticism: +psychological difficulties; diminution of all values in times +of panics and epidemics; decrease of economic values through increase +of religious and other values—Element of truth in Professor +Seligman's doctrine—Relation between Professor Seligman's +view and that of Professor Clark <span class="tocnum"><a href='#Page_162'>162</a></span></p> + +<h4>CHAPTER XVII</h4> + +<h4>THE THEORY OF VALUE AND THE THEORY OF PRICES</h4> + +<p>Price and <i>Preis</i>—Price broadened to include all relations between +values, whether money be involved or not—History of price-concept +in English economics—Distinction between prices and +values—Generalization of notion of price—Measurement of +beliefs, etc., in terms of money—"Qualitative analysis" and +"quantitative analysis"—Great bulk of economic theory, and +virtually all that is valid and valuable in economic theory, has so +far been in theory of prices, and not in theory of value—Methods +of price analysis—Abstract units of value—Price theory +and practical problems <span class="tocnum"><a href='#Page_175'>175</a></span></p> + +<h4>CHAPTER XVIII</h4> + +<h4>THE THEORY OF VALUE AND THE THEORY OF PRICES (<i>concluded</i>)</h4> + +<p>Great work of Austrians really done in field of price theory—They +have, without logical right, but with excellent results, assumed +and used a quantitative, objective value concept—Distribution +in relation to theory of value and theory of prices—Mill's treatment +primarily from standpoint of fundamental value theory; +later theories, as a rule, chiefly concerned with more superficial, +but also more exact, price analysis of distributive problems—Theory +of value not a substitute for detailed price analysis, but, +rather, a presupposition of it—Prices have <i>meanings</i>, which +only theory of value can explain <span class="tocnum"><a href='#Page_188'>188</a></span></p> + +<h4>CHAPTER XIX</h4> + +<h4>THE THEORY OF VALUE AND THE SOCIAL OUTLOOK—SUMMARY</h4> + +<p>Belief that social optimism and social pessimism are connected with +theory of value—Views of Fetter, Schumpeter, Wieser, and +Davenport—No such implications, either optimistic or +pessimistic, +in theory here maintained—Theory of value does not contain +justification of existing social order—Summary of main +argument of book <span class="tocnum"><a href='#Page_194'>194</a></span></p> + +<p>INDEX OF NAMES <span class="tocnum"><a href='#Page_201'>201</a></span></p> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_1" id="Page_1">[Pg 1]</a></span></p> +<h2>PART I</h2> + +<h3>INTRODUCTION</h3><p><span class='pagenum'><a name="Page_3" id="Page_3">[Pg 3]</a></span></p> + + + +<hr style="width: 65%;" /> +<h2><a name="SOCIAL_VALUE" id="SOCIAL_VALUE"></a>SOCIAL VALUE</h2> + + + +<hr style="width: 65%;" /> +<h2><a name="CHAPTER_I" id="CHAPTER_I"></a>CHAPTER I</h2> + +<h3>PROBLEM AND PLAN OF PROCEDURE</h3> + + +<p>Recent economic literature has had much to say about "social value." The +conception, while not entirely new,<a name="FNanchor_1_1" id="FNanchor_1_1"></a><a href="#Footnote_1_1" class="fnanchor">[1]</a> has become important only of late +years, chiefly through the influence of Professor J. B. Clark, who first +set it forth in his article in <i>The New Englander</i> in 1881 (since +reproduced as the chapter on the theory of value in his <i>Philosophy of +Wealth</i>). The conception has been found attractive by many other American<span class='pagenum'><a name="Page_4" id="Page_4">[Pg 4]</a></span> +writers, however, and has become familiar in many text-books, and in +periodical literature. Among those who have used the conception may be +named: Professors Seligman, Bullock, Kinley, Merriam, Ross, and C. A. +Tuttle.<a name="FNanchor_2_2" id="FNanchor_2_2"></a><a href="#Footnote_2_2" class="fnanchor">[2]</a> Gabriel Tarde, the brilliant French sociologist, has +independently developed a social value doctrine, different in many respects +from that of the Americans named, which we shall later have occasion to +consider.<a name="FNanchor_3_3" id="FNanchor_3_3"></a><a href="#Footnote_3_3" class="fnanchor">[3]</a></p> + +<p>In its most definite form, the theory asserts that the value of an economic +good is determined by, and precisely accords with, the marginal utility of +the good to society, considered as a unitary organism. Professor Clark, as +is well known, makes use of the analysis of diminishing utility in an +individual's consumption of goods in much the same fashion that Jevons +does, but while Jevons makes this simply a step in the analysis of market +ratios of exchanges, Professor Clark treats it as analogical, representing +<span class='pagenum'><a name="Page_5" id="Page_5">[Pg 5]</a></span><i>in parvo</i> what society does, as an organic whole, on a bigger scale.<a name="FNanchor_4_4" id="FNanchor_4_4"></a><a href="#Footnote_4_4" class="fnanchor">[4]</a></p> + +<p>The precise relation of social value to social marginal utility is +variously stated by the writers named: for Professor Clark, value is the +<i>measure</i> of effective, or marginal, utility;<a name="FNanchor_5_5" id="FNanchor_5_5"></a><a href="#Footnote_5_5" class="fnanchor">[5]</a> for Professor Seligman, +social value is the <i>expression</i> of social marginal utility;<a name="FNanchor_6_6" id="FNanchor_6_6"></a><a href="#Footnote_6_6" class="fnanchor">[6]</a> for +Professors Ross, Merriam, and Kinley, value <i>is</i> that social marginal +utility itself.<a name="FNanchor_7_7" id="FNanchor_7_7"></a><a href="#Footnote_7_7" class="fnanchor">[7]</a> These statements are more different in words than in +ideas, though some significance is to be attached to Professor Seligman's +formulation, as will later appear.</p> + +<p>This conception is a bold one. It has, moreover, never been adequately +developed or criticized. Its friends have found it a convenient and useful +working hypothesis, and Professor Clark, especially, has built a great +system upon it, but, with the exception of an article in the <i>Yale Review</i> +of 1892,<a name="FNanchor_8_8" id="FNanchor_8_8"></a><a href="#Footnote_8_8" class="fnanchor">[8]</a> has made no serious efforts, either to make clear its full +meaning, or to vindicate it—except that, of course, his whole system may +be considered such a vindication. Professor Seligman, in an article in the +<i>Quarterly Journal of Economics</i>, vol. <span class="smcap">xv</span>, and also in his <i>Principles of +Economics</i>, has espoused the conception, and has shown how, assuming its +truth, a great many<span class='pagenum'><a name="Page_6" id="Page_6">[Pg 6]</a></span> antagonistic theories may be harmonized; but he, also, +has failed to treat it with that detail which full demonstration requires. +In particular, he has omitted a treatment of the problem of the relation +between the value of a good for the individual and for society, and the +relation between individual and social marginal utility.<a name="FNanchor_9_9" id="FNanchor_9_9"></a><a href="#Footnote_9_9" class="fnanchor">[9]</a> The most +searching investigation of the theory has come from unfriendly critics, +among whom may be especially named Professor H. J. Davenport, and Professor +J. Schumpeter of Vienna.<a name="FNanchor_10_10" id="FNanchor_10_10"></a><a href="#Footnote_10_10" class="fnanchor">[10]</a></p> + +<p>For the purposes of this discussion, Professor Clark will be considered as +the representative of<span class='pagenum'><a name="Page_7" id="Page_7">[Pg 7]</a></span> the Social Value School, for the most part, though +attention will be given to some of the other writers named as well. It is +worth while, consequently, to make clear at this point the relation between +Professor Clark and the Austrian School, with which he is sometimes +associated by economic writers. His extensive use of the marginal +principle, his use of the term, "utility," and his deduction of value from +utility, seem to place him at one with them. Professor Clark has pointed +out, however, in the preface to the second edition of his <i>Philosophy of +Wealth</i>, that his theory is to be distinguished from that of Jevons by "the +analysis of the part played by society as an organic whole in the valuing +processes of the market." And the Austrians, for their part, have rejected +the conception that value and social marginal utility coincide, or that +society, as an organic whole, puts a value on goods. Thus, Böhm-Bawerk:—</p> + +<div class="blockquot"><p>Man pflegt den objektiven Tauschwert im Gegensatz zu +dem auf individuellen Schätzungen beruhenden +subjektiven Wert häufig auch als den +<i>volkswirtschaftlichen Wert</i> der Güter zu bezeichnen. +Ich halte diesen Gebrauch für nicht empfehlenswert. +Zwar wenn man durch ihn nichts anders hervorheben +wollte, als dass diese Gestalt des Wertes nur in der +Gesellschaft und durch die Gesellschaft hervortreten +könne, dass er also das volks- und +sozialwirtschaftliche Wertphänomen <i>per eminentiam</i> +sei, so wäre dagegen nichts zu erinnern. Gewöhnlich +mischt sich aber mit jener Benennung auch die +Vorstellung, dass der Tauschwert der Wert sei, den ein +Gut <i>für</i> die Volkswirtschaft habe. Man deutet ihn als +ein über den subjektiven Urteilen der einzelnen +stehendes Urteil der Gesellschaft, welche Bedeutung ein +Gut für sie im ganzen habe; gewissermassen als<span class='pagenum'><a name="Page_8" id="Page_8">[Pg 8]</a></span> +Werturteil einer objektiven höheren Instanz. Dies ist +irreführend.<a name="FNanchor_11_11" id="FNanchor_11_11"></a><a href="#Footnote_11_11" class="fnanchor">[11]</a></p></div> + +<p>Equally emphatic is Wieser:—</p> + +<div class="blockquot"><p>The ordinary conception, which makes price the social +estimate put upon goods, has to the superficial +judgment the attraction of simplicity. A good A whose +market price is £100 is not only ten times as dear as B +whose market price is £10, but it is also absolutely +and for every one ten times as valuable. In our +conception the matter is much more complicated.... +Price alone forms no basis whatever for an estimate of +the economic importance of the goods. We must go +further and find out their relation to wants. But this +relation to wants can only be realised and measured +individually.... And the question how it is possible to +unite those divergent individual valuations into one +social valuation, is one that cannot be answered quite +so easily as those imagine who are rash enough to +conclude that price represents the social estimate of +value.<a name="FNanchor_12_12" id="FNanchor_12_12"></a><a href="#Footnote_12_12" class="fnanchor">[12]</a></p></div> + +<p>Sax, likewise, expresses his dissent:—</p> + +<div class="blockquot"><p>Da für die exacte Forschung die Psyche einer +fabelhaften Collectiv-Personlichkeit nicht existirt, so +kann der Ausgangspunkt unserer Untersuchung auch wieder +nur der Individualwerth sein.<a name="FNanchor_13_13" id="FNanchor_13_13"></a><a href="#Footnote_13_13" class="fnanchor">[13]</a></p></div> + +<p>Whatever the worth of the conception of social value, it is not the same as +the Austrian theory. It is proper to remark here that these strictures of +the Austrian writers are probably directed, not against Professor Clark, +but rather against the social use-value concept as it had appeared in +Germany, in the writings, say, of Rodbertus, and<span class='pagenum'><a name="Page_9" id="Page_9">[Pg 9]</a></span> of Adolph Wagner, who +accepts Rodbertus' notion.<a name="FNanchor_14_14" id="FNanchor_14_14"></a><a href="#Footnote_14_14" class="fnanchor">[14]</a></p> + +<p>It may be well, at the outset, for the writer to define his own position +briefly. We shall find the notion of social marginal utility, and the +companion notion of social marginal cost (considering the latter as a "real +cost," or pain-abstinence cost, concept), unsatisfactory and +unilluminating. Social marginal utility, as a determinant of value, cannot +be the marginal utility of a good to some particular individual who stands +out as <i>the</i> marginal individual in society, nor can it be an average of +individual marginal utilities, nor a sum of individual marginal utilities, +nor any other possible arithmetical combination of individual marginal +utilities, if our conclusions are true. For the term, social marginal +utility, we can find only a vague, analogical meaning, if any at all, +unless we identify it outright with social value, in which case it is a +superfluous term, which itself not only explains nothing, but rather +presents complications which call for explanation. We shall find no use for +the social utility concept in our analysis. On the other hand, we shall +find the conception of social value a necessity for the validation of +economic analysis, and a conception which present-day psychological and +sociological theory abundantly warrant us in accepting.</p> + +<p>I do not desire, at the outset of a comparatively short book, to anticipate +my arguments in detail, but a statement of the plan of procedure<span class='pagenum'><a name="Page_10" id="Page_10">[Pg 10]</a></span> may aid +the exposition somewhat. I shall first, through an examination of the +logical necessities of economic theory, and of the function of the value +concept in economics, set up certain logical and formal qualifications for +an adequate value concept. Then I shall examine the efforts made by current +theories of value to attain such a value concept, by means of the elements +of individual utilities, individual costs, or combinations of the two, and +show that such procedure gets into invincible logical difficulties. We +shall find the source of these difficulties in the faulty epistemology, +psychology, and sociology which constitute the avowed or implicit +presuppositions of the economic theory of to-day. Criticizing these faulty +presuppositions, we shall endeavor to reconstruct them in the light of +later epistemological, psychological, and sociological doctrine, and then, +on the basis of the new presuppositions, we shall endeavor to develop a +truly organic doctrine of social value, and to link it with what seems +valuable—that is to say, the greater part—in the economic theory of +to-day.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_1_1" id="Footnote_1_1"></a><a href="#FNanchor_1_1"><span class="label">[1]</span></a> The value concept of Marx is not, strictly speaking, a social +value concept. <i>Cf.</i> Pareto, V., <i>Cours d'Économie Politique</i>, vol. I, p. +32. Rodbertus, however, has a doctrine of social use value, based on the +organic conception of society. "Nemlich so: es gibt nur Eine Art Werth und +das ist der Gebrauchswerth.... Aber dieser Eine Gebrauchswerth ist entweder +individueller Gebrauchswerth oder <i>socialer</i> Gebrauchswerth.... Der zweite +ist der Gebrauchswerth, den ein aus vielen individuellen Organismen +bestehender <i>socialer Organismus</i> hat.... Damit glaube ich also bewiesen zu +haben, dass der Tauschwerth nur der historische Um- und Anhang des socialen +Gebrauchswerths aus einer bestimmten Geschichtsperiode ist. Indem man also +dem Gebrauchswerth einen Tauschwerth als logischen Gegensatz gegenüber +stellt, stellt man zu einem logischen Begriff einen historischen Begriff in +logischem Gegensatz, was logisch nicht angeht." From a letter to Adolph +Wagner, published by Wagner in the <i>Zeitschrift für die Gesammte +Staatswissenschaft</i>, 1878, pp. 223-24. Wagner indicates his approval of +this concept, though he makes little use of it, in his <i>Grundlegung der +politischen Oekonomie</i>, Leipzig, 1892, pp. 329-30. Ingram, in his <i>History +of Political Economy</i> (New York, 1888), although he takes no account of +social value theories of other writers, suggests one of his own—which is, +however, a vague one, mixing technological, ethical, and economic +categories. See p. 241.</p></div> + +<div class="footnote"><p><a name="Footnote_2_2" id="Footnote_2_2"></a><a href="#FNanchor_2_2"><span class="label">[2]</span></a> Seligman, E. R. A., <i>Principles of Economics</i>, New York, 1905, +especially pp. 179-82 and 192-93. Bullock, C. J., <i>Introduction to the +Study of Economics</i>, especially pp. 162-64. There is no attempt at a +psychological treatment in this work, and no clear statement of the meaning +of the concept, social. Kinley, David, <i>Money</i>, New York, 1904, pp. 125-26. +The social value conception runs through the book. Merriam, L. S., "The +Theory of Final Utility in its Relation to Money and the Standard of +Deferred Payments," <i>Annals of the American Academy</i>, vol. III; "Money as a +Measure of Value," <i>ibid.</i>, vol. IV; an unfinished study in the same +volume, pp. 969-72, described by Professor J. B. Clark. Ross, E. A., "The +Standard of Deferred Payments," <i>ibid.</i>, vol. III; "The Total Utility +Standard of Deferred Payments," <i>ibid.</i>, vol. IV. These articles by +Professors Ross and Merriam were written in the course of an interesting +controversy between the gentlemen named, Tuttle, C. A., "The Wealth +Concept," ibid., vol. I; "The Fundamental Economic Principle," <i>Quarterly +Journal of Economics</i>, 1901.</p></div> + +<div class="footnote"><p><a name="Footnote_3_3" id="Footnote_3_3"></a><a href="#FNanchor_3_3"><span class="label">[3]</span></a> See chapter XII.</p></div> + +<div class="footnote"><p><a name="Footnote_4_4" id="Footnote_4_4"></a><a href="#FNanchor_4_4"><span class="label">[4]</span></a> See especially Professor Clark's <i>Essentials of Economic +Theory</i>, New York, 1907, pp. 41-42.</p></div> + +<div class="footnote"><p><a name="Footnote_5_5" id="Footnote_5_5"></a><a href="#FNanchor_5_5"><span class="label">[5]</span></a> See especially <i>The Philosophy of Wealth</i>, 1892 ed., pp. +73-74.</p></div> + +<div class="footnote"><p><a name="Footnote_6_6" id="Footnote_6_6"></a><a href="#FNanchor_6_6"><span class="label">[6]</span></a> <i>Principles</i>, pp. 179-82.</p></div> + +<div class="footnote"><p><a name="Footnote_7_7" id="Footnote_7_7"></a><a href="#FNanchor_7_7"><span class="label">[7]</span></a> The general references for Ross and Merriam have been given +<i>supra.</i> <i>Cf.</i> p. 62 of Dean Kinley's <i>Money</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_8_8" id="Footnote_8_8"></a><a href="#FNanchor_8_8"><span class="label">[8]</span></a> "Ultimate Standard of Value." This article is substantially +the same as chap, <span class="smcap">xxiv</span> of <i>The Distribution of Wealth</i>, New York, 1899.</p></div> + +<div class="footnote"><p><a name="Footnote_9_9" id="Footnote_9_9"></a><a href="#FNanchor_9_9"><span class="label">[9]</span></a> In his discussion of social value in the <i>Principles</i>, +Professor Seligman modifies a statement made in his article, "Social +Elements in the Theory of Value" (<i>Quarterly Journal of Economics</i>, vol. +<span class="smcap">xv</span>). The two discussions are parallel in part, the former being based upon +the latter. The passage quoted is from the <i>Q. J. E.</i> article, pp. 323-24. +The same passage is essentially reproduced in the <i>Principles</i> (first +edition, p. 180), with the exception of the passages in italics: "I not +only measure the relative satisfaction that I can get from apples or nuts, +but the quantity of apples I can get for the nuts depends upon the relative +estimate put upon them by the rest of society. <i>Some individuals may prize +a commodity a little more, some a little less; but its real value is the +average estimate, the estimate of what society thinks it is worth.</i> If an +apple is worth twice as much as a nut, it is only because the community, +after comparing <i>and averaging</i> individual preferences," etc. The +conception of social value as an <i>average</i> of individual values is +withdrawn in the second treatment, and no substitute is offered for it.</p></div> + +<div class="footnote"><p><a name="Footnote_10_10" id="Footnote_10_10"></a><a href="#FNanchor_10_10"><span class="label">[10]</span></a> Davenport, "Seligman, 'Social Value,'" <i>Journal of Pol. +Econ.</i>, 1906; <i>Value and Distribution</i>, Chicago, 1908. This last work +reproduces, in abridged form, the article on Professor Seligman, in a +footnote, pp. 444 <i>et seq.</i> Schumpeter, "On the Concept of Social Value," +<i>Q. J. E.</i>, Feb., 1909; "Die neuere Wirtschaftslehre in den Vereinigten +Staaten," <i>Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtechaft im +Deutschen Reich</i>, 1910, pp. 913 <i>et seq.</i> In the last-named article (p. +925, n.) Professor Schumpeter indicates that his objection to the social +value concept relates not so much to the question of fact as to the +question of method. The English article in the <i>Quarterly Journal</i> contains +Schumpeter's fullest treatment of the topic.</p></div> + +<div class="footnote"><p><a name="Footnote_11_11" id="Footnote_11_11"></a><a href="#FNanchor_11_11"><span class="label">[11]</span></a> Böhm-Bawerk, "Grundzüge der Theorie des wirtschaftlichen +Güterwerts," Conrad's <i>Jahrbücher</i>, N. F., Bd. <span class="smcap">xiii</span>, 1886, p. 478.</p></div> + +<div class="footnote"><p><a name="Footnote_12_12" id="Footnote_12_12"></a><a href="#FNanchor_12_12"><span class="label">[12]</span></a> <i>Natural Value</i>, p. 52, n.</p></div> + +<div class="footnote"><p><a name="Footnote_13_13" id="Footnote_13_13"></a><a href="#FNanchor_13_13"><span class="label">[13]</span></a> Sax, Emil, <i>Grundlegung Der Theoretischen Staatswirtschaft</i>, +Vienna, 1887, p. 249.</p></div> + +<div class="footnote"><p><a name="Footnote_14_14" id="Footnote_14_14"></a><a href="#FNanchor_14_14"><span class="label">[14]</span></a> See <i>supra</i>, p. 3, note 1.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_11" id="Page_11">[Pg 11]</a></span></p> +<h2><a name="PART_II" id="PART_II"></a>PART II</h2> + +<h3>CRITIQUE OF CURRENT VALUE THEORY</h3> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_13" id="Page_13">[Pg 13]</a></span></p> +<h2><a name="CHAPTER_II" id="CHAPTER_II"></a>CHAPTER II</h2> + +<h3>FORMAL AND LOGICAL ASPECTS OF THE VALUE CONCEPT</h3> + + +<div class="blockquot"><p>The study of wealth is meaningless, unless there be a +unit for measuring it. The questions to be answered are +quantitative.... Reciprocal comparisons give no +sums.... Ratios of exchange alone afford us no answer +to the economist's chief inquiries.<a name="FNanchor_15_15" id="FNanchor_15_15"></a><a href="#Footnote_15_15" class="fnanchor">[15]</a></p></div> + +<p>This quotation from Professor Clark raises an issue which we must examine +in detail. Professor Clark proceeds, pointing out the need for a +homogeneous element, among the diversities of the physical forms of goods, +capable of absolute measurement, if goods are ever to be added together, or +a sum of wealth obtained. Money, on the surface of things, affords this +common standard, but "the thought of men runs forward to the power that +resides in the coins." This power is effective social utility, the +quantitative measure of which is value. Elsewhere in his writings,<a name="FNanchor_16_16" id="FNanchor_16_16"></a><a href="#Footnote_16_16" class="fnanchor">[16]</a> +Professor Clark insists on the conception of value as a quantity, an +absolute magnitude, and he consistently makes use of this conception. All +of the exponents of the social value concept named, except Professor +Seligman, follow him in this, and it may be considered an essential feature +of the theory. Marginal utility<span class='pagenum'><a name="Page_14" id="Page_14">[Pg 14]</a></span> is a definite quantity, social marginal +utility is a definite quantity, and value, if conceived as identical with +social marginal utility, or as the quantitative measure of it (the +difference is verbal, for present purposes, at least), must be so +considered. A <i>ratio of exchange</i>, then, is a ratio between two quantities +of social marginal utility, or social value, rather than between two +physical objects, and <i>price</i>, in this view, is a particular sort of ratio +of exchange, namely, one where one of the terms of the ratio is the social +marginal utility, or the social value, of the money unit.</p> + +<p>It is important to contrast value as thus conceived, in its formal and +logical aspects, with other historical conceptions of value. In the +classification which follows, the writer has by no means attempted an +exhaustive list. Definitions of value are very numerous, but it is not +necessary to list them all, since many differ, not so much in their logical +or formal aspects, as in the theory of the origin of value which the +definition is made to include. There are two principles of classification +which will be used, however, which, used in a cross-classification, will +enable us to exhibit the contrasts of most importance for present purposes.</p> + +<p>The first line of cleavage is between the conceptions which treat value as +an ethical ideal, often different from the market fact, and those which +accept the value which is expressed in prices in the market as the "real or +true" value for economic science. The medieval conception of the <i>justum +pretium</i> belongs to the first class,<span class='pagenum'><a name="Page_15" id="Page_15">[Pg 15]</a></span> as does also the conception of +President Hadley: "The price of an article or service, in the ordinary +commercial sense, is the amount of money which is paid, asked, or offered +for it. The value of an article or service, is the amount of money which +may properly be paid, asked, or offered for it."<a name="FNanchor_17_17" id="FNanchor_17_17"></a><a href="#Footnote_17_17" class="fnanchor">[17]</a> And the value theory +of Karl Marx, though differing from either of these in points, is yet like +them in this one respect: value and price do not necessarily agree for +Marx. The value of a thing for him depends on the "socially necessary" +labor embodied in it, while some things, as land, command a price in the +market, even though embodying no labor.<a name="FNanchor_18_18" id="FNanchor_18_18"></a><a href="#Footnote_18_18" class="fnanchor">[18]</a> Opposed to this group of +theories are, doubtless, the greater part of present-day writers, who, +while differing among themselves at many points, would insist that value is +a fact, and not an ideal.</p> + +<p>The second line of division is between the conceptions of value as a +quantity and value as a ratio, or, to put the thing more generally and more +accurately, between the value of a thing as a definite magnitude, +independent of exchange relations, and that value as a relative thing, not +only <i>measured</i> by the process of exchanging, but<span class='pagenum'><a name="Page_16" id="Page_16">[Pg 16]</a></span> also caused by it, and +varying with the value of the things with which the article is compared. +Professor Clark and his followers belong in the second group of the first +classification, and in the first group of the second classification. The +social value of which they speak is a fact, and not an ideal (though +Professor Clark has often been interpreted as teaching that the fact +corresponds closely with an ideal), and social value as treated by them +(noting the exception of Professor Seligman, who does not follow Professor +Clark closely), is an absolute magnitude.<a name="FNanchor_19_19" id="FNanchor_19_19"></a><a href="#Footnote_19_19" class="fnanchor">[19]</a> Karl Marx and Henry George +agree with them upon this latter point. Value is a quantity, and not a mere +relation, for both.<a name="FNanchor_20_20" id="FNanchor_20_20"></a><a href="#Footnote_20_20" class="fnanchor">[20]</a> Wieser would concur here.<a name="FNanchor_21_21" id="FNanchor_21_21"></a><a href="#Footnote_21_21" class="fnanchor">[21]</a></p> + +<p>Professor Carver, in a recent article in the <i>Quarterly Journal of +Economics</i>,<a name="FNanchor_22_22" id="FNanchor_22_22"></a><a href="#Footnote_22_22" class="fnanchor">[22]</a> insists on the conception of value as a quantity. Gabriel +Tarde states the matter illuminatingly in a passage in his <i>Psychologie +Économique</i>:<a name="FNanchor_23_23" id="FNanchor_23_23"></a><a href="#Footnote_23_23" class="fnanchor">[23]</a>—</p> +<p><span class='pagenum'><a name="Page_17" id="Page_17">[Pg 17]</a></span></p> +<div class="blockquot"><p>Value is a quality which we attribute to things, like +color, but which, like color, exists only in +ourselves.... This quality is of that peculiar species +of qualities which present numerical degrees, and mount +or descend a scale without essentially changing their +nature, and hence merit the name of quantities.</p></div> + +<p>On the other hand, the doctrine of relativity has characterized the +teachings of the English School, of the Austrians (except Wieser), and of +many of the more eclectic followers of each in this country. It will appear +later that this relative conception follows naturally from their +individualistic method of approaching the subject. The essence of the +relative conception of value, whether defined as "power in exchange," or +"ratio of exchange," or, with Professor Fisher,<a name="FNanchor_24_24" id="FNanchor_24_24"></a><a href="#Footnote_24_24" class="fnanchor">[24]</a> and others, as a +quantity of goods to be got in exchange, comes out in the statement, so +common<span class='pagenum'><a name="Page_18" id="Page_18">[Pg 18]</a></span> in the text-books, that, while there can be a general rise or fall +of <i>prices</i>, there cannot be a general rise or fall of <i>values</i>, since a +rise in the value of one good implies a corresponding fall in the value of +all other goods. The incompatibility of the two opposing conceptions comes +out strikingly here: if value be an absolute magnitude, then there <i>can</i> be +a general rise or fall of values without disturbing exchange ratios at +all—12:6::6:3. All values might be cut in half, or multiplied by any +factor, and, provided all decreased or increased in the same degree, +exchange relations would not change.</p> + +<p>Now this difference is fundamental. Vastly more than terminology and +definition is involved. Is value a quantity or a relation? Is value a thing +which determines causally exchange relations, or is value determined +causally by them? To the writer, the former conception seems a logical +necessity. Value as merely relative is a thing hanging in the air. There is +a vicious circle in reasoning if, when I ask you what the value of wheat +is, you refer me to corn, and then when I ask you the value of corn, you +refer me again to wheat. And if you put in intermediate links, even as many +links as there are different commodities in the market, the circle still +remains: the value of A is its power over, or its ratio with, B; the value +of B its relation to C; the value of C ... its relation to Z; and the value +of Z, the last in the series, must come back to its relation to one of +those named before. This circle is noted and sharply criticized by +Wieser:<a name="FNanchor_25_25" id="FNanchor_25_25"></a><a href="#Footnote_25_25" class="fnanchor">[25]</a>—</p> +<p><span class='pagenum'><a name="Page_19" id="Page_19">[Pg 19]</a></span></p> +<div class="blockquot"><p>Theorists who have confined themselves to the +examination of exchange value, or, what comes to the +same thing, of price, may have succeeded in discovering +certain empirical laws of changes in amounts of value, +but they could never unfold the real nature of value, +and discover its true measure. As regards these +questions, so long as examination was confined to +exchange value, it was impossible to get beyond the +formula that value lies in the relation of +exchange;—that everything is so much more valuable the +more of other things it can be exchanged for.... +Absolutely and by itself, value was not to be +understood. It is significant of this conception to +state that one thing cannot be an object of value in +itself; that a second must be present before the first +can be valued.</p> + +<p>Theory has only very gradually shaken itself free from +this misconception, this circle. Where an absolute +theory was attempted—such as the labour theory, or +that which explained value as usefulness—some logical +leap generally reconnected it with the relative +conception.</p></div> + +<p>Now the validity of this reasoning might be admitted, in so far as it +applies to "Crusoe economics"—though Professor Seligman, with strict +consistency, insists that even there value arises from a comparison in +Crusoe's mind of apples with nuts<a name="FNanchor_26_26" id="FNanchor_26_26"></a><a href="#Footnote_26_26" class="fnanchor">[26]</a>—by those who would object<span class='pagenum'><a name="Page_20" id="Page_20">[Pg 20]</a></span> to its +application to value in society. Value there, it would be insisted, is +determined through exchange, and does not have any meaning except as a +ratio between physical commodities.<a name="FNanchor_27_27" id="FNanchor_27_27"></a><a href="#Footnote_27_27" class="fnanchor">[27]</a> But<span class='pagenum'><a name="Page_21" id="Page_21">[Pg 21]</a></span> even here, it seems to me, the +same reasoning must hold. We really do not find a ratio between physical +commodities at all. Four gallons of milk exchange for one dollar, or 23.22 +grains of gold. The exchange ratio is four to one. But milk is in units of +liquid measure; gold in incommensurable units of Troy weight. The ratio, +4:1, is not on the basis of any physical commensurability. If any physical +basis of comparison be taken, whether weight, or bulk, or length, or more +subtle and less easily measurable physical qualities, the ratio would be +found very different. But 4:1 <i>is</i> the market ratio. Now a quantitative +ratio is between commensurable quantities. Gold and milk must be, then, +commensurable quantities, <i>i.e.</i> must have a common <i>quality</i>, present in +each in definite quantitative degree, before comparison is possible, or a +ratio can emerge. This quality is <i>value</i>. The difficulty, from the +standpoint of logic, is only covered up, and not avoided, if we say with +Professor Davenport,<a name="FNanchor_28_28" id="FNanchor_28_28"></a><a href="#Footnote_28_28" class="fnanchor">[28]</a> "Value is a ratio of exchange between two goods, +<i>quantitatively specified</i>." [Italics mine.] For the quantitative +specification depends on the extent to which the homogeneous quality is +present in each of the goods, or, if we assume that the quantitative +specification is made before the question of exchange ratio is raised, then +the exchange ratio will vary with the extent to which the common quality is +present in each of the<span class='pagenum'><a name="Page_22" id="Page_22">[Pg 22]</a></span> goods. We can have no quantitative ratios between +unlike things. And yet, we must have terms for our ratios. The situation +here is not unlike the situation that arises when we compare two weights. +We have no unit of weight in the abstract. Weight never appears as an +isolated quality, but always along with other qualities, as extension, +color, and the like. And when we compare weights, we really compare two +heavy objects, and make our weight ratio between the object to be weighed +and the physical standard of weight. Nor does value ever appear as an +isolated quality. And we have no unit of abstract value which we can apply +abstractly in a measurement. Instead, we choose some valuable object, as +23.22 grains of gold, and make our ratio between the given quantity of gold +and the object whose value we wish to measure. But we must not forget that +this is merely a symbol, a convenient mode of expression, and that the fact +expressed is something different—that the real terms of our ratios are so +many units of abstract weight, or of abstract value, as the case may be. +Otherwise conceived, the ratio itself is meaningless: it has no terms. We +have four to one up in the air, not four units of something to one unit of +something. The abstract ratio is a thing for pure mathematics, and not a +thing for economics. An economic ratio must have "economic quantities" as +terms.<a name="FNanchor_29_29" id="FNanchor_29_29"></a><a href="#Footnote_29_29" class="fnanchor">[29]</a></p> + +<p><span class='pagenum'><a name="Page_23" id="Page_23">[Pg 23]</a></span></p><p>The difficulty with the doctrine we are maintaining arises from the +difficulty of isolating and defining this quality of value. It is not a +quality "inherent" in the good (whatever "inherent" may mean). It does not +arise from the simple relation between our senses and the object, or even +from an intellectual elaboration thereof. It rather grows out of the +relation between our emotional-volitional life and the object, and the +definition of this relation, and the determination of the quality, have +been so difficult, that some writers, as Professor Davenport,<a name="FNanchor_30_30" id="FNanchor_30_30"></a><a href="#Footnote_30_30" class="fnanchor">[30]</a> have +explicitly given it up as a hopeless task, and have determined to content +themselves with the surface facts of relativity. But there is no logical +resting place in those surface facts. Relativity implies <i>things</i> related, +ratios must have quantitative <i>terms</i>, additions require <i>homogeneous</i> +quantities to make up a sum.</p> + +<p>Some further distinctions are necessary. When we say "absolute magnitude," +we do not mean a magnitude which stands out of all relations to other facts +in the universe. There is no intention of setting up a metaphysical +absolute here. The terms "positive" and "relative" (suggested by Professor +Taylor)<a name="FNanchor_31_31" id="FNanchor_31_31"></a><a href="#Footnote_31_31" class="fnanchor">[31]</a> might serve our purpose better, except for the fact that we +wish to reserve the term "positive value" to contrast with "negative value" +at a later stage of our discussion. Our objection to the relative +conception of value really gives our value more, rather than less<span class='pagenum'><a name="Page_24" id="Page_24">[Pg 24]</a></span> +relations. Instead of allowing its relation to one particular thing, +namely, some other good with which it happens to be compared, to determine +its amount, we insist that that relation is so much a minor matter that it +can generally be ignored, and that the significant relations—a very +numerous set of relations indeed, as we shall later see!—are of another +sort. The contention is that value is absolute only in this sense: its +amount is not determined by the particular exchange ratio in which it +happens to be put, and is not changed <i>eo ipso</i> every time a new comparison +is made.</p> + +<p>Further, it is in the process of exchange, and by the method of comparison, +that the value of goods becomes quantitatively <i>known</i>, as a rule. That is +to say, we find out precisely <i>how much</i> value a good has by comparing it +in exchange with some other good. In this respect, value is again like +other qualities. We measure lengths, weights, cubic contents of objects, +all by comparison, direct or indirect, with other objects. But the amount +of water in a vessel is not changed when we put it into a measure, and +determine how many gallons of it there are. Nor is the amount of value in a +good <i>causally</i> determined by the process of exchange.<a name="FNanchor_32_32" id="FNanchor_32_32"></a><a href="#Footnote_32_32" class="fnanchor">[32]</a> We must +distinguish between two confused meanings of the word "determine." It may +mean "to cause," and it may mean "to find out" or "to measure." We must<span class='pagenum'><a name="Page_25" id="Page_25">[Pg 25]</a></span> +distinguish, in Kantian phrase, between the "<i>ratio essendi</i>" and the +"<i>ratio cognoscendi</i>." <i>Value</i> and <i>evaluation</i> are two distinct things. +Value, to anticipate a later part of the study, is primary, and grows out +of the action of the volitional-emotional side of human-social life; +evaluation is secondary, and is the intellectual process devoted, not to +<i>giving</i> value, but to <i>finding out</i> how much value there is in a good. +This distinction between the existence of a quantity, and our precise +knowledge of its amount, is brought out by several writers, among them, +General F. A. Walker,<a name="FNanchor_33_33" id="FNanchor_33_33"></a><a href="#Footnote_33_33" class="fnanchor">[33]</a> and the keen mathematical economists, Pareto<a name="FNanchor_34_34" id="FNanchor_34_34"></a><a href="#Footnote_34_34" class="fnanchor">[34]</a> +and Edgeworth.<a name="FNanchor_35_35" id="FNanchor_35_35"></a><a href="#Footnote_35_35" class="fnanchor">[35]</a></p> + +<p>There are two further arguments for the propriety of this conception, +considered primarily as a question of terminology, to be drawn from usage +in the treatment of other terms. The first is drawn from a consideration of +the function of the value concept in economic science,<a name="FNanchor_36_36" id="FNanchor_36_36"></a><a href="#Footnote_36_36" class="fnanchor">[36]</a> and of its +relation to the concept of wealth. "The notion of value is to our science +what that of energy is to mechanics," says Jevons.<a name="FNanchor_37_37" id="FNanchor_37_37"></a><a href="#Footnote_37_37" class="fnanchor">[37]</a> It is clear that a +mere abstract ratio, which Jevons two pages later declares value to be, +cannot serve such a purpose. Abstract ratios are subject-matter for +mathematics, not for economics. "Wealth and<span class='pagenum'><a name="Page_26" id="Page_26">[Pg 26]</a></span> value differ as substance and +attribute," (Senior, quoted with approval by F. A. Walker.<a name="FNanchor_38_38" id="FNanchor_38_38"></a><a href="#Footnote_38_38" class="fnanchor">[38]</a>) With this +view, Marx<a name="FNanchor_39_39" id="FNanchor_39_39"></a><a href="#Footnote_39_39" class="fnanchor">[39]</a> would concur. "Wealth is that which has value," Professor +Laughlin states.<a name="FNanchor_40_40" id="FNanchor_40_40"></a><a href="#Footnote_40_40" class="fnanchor">[40]</a> Clearly a qualitative attribute, and not a ratio, must +be indicated here, even though Professor Laughlin elsewhere in the book +defines value as a "ratio between two objective articles."<a name="FNanchor_41_41" id="FNanchor_41_41"></a><a href="#Footnote_41_41" class="fnanchor">[41]</a> And if we +take a definition like that of Professor Seligman, who defines wealth in +terms which entirely ignore the ideas of comparison and exchange as +consisting of those things which are (1) capable of satisfying desire, (2) +external to man, and (3) limited in supply,<a name="FNanchor_42_42" id="FNanchor_42_42"></a><a href="#Footnote_42_42" class="fnanchor">[42]</a> we find no basis for +insisting on relativity, exchange and comparison, as essential to the idea +of value, which is the essential and distinguishing characteristic of +wealth. The science loses in coherency from this diversity of definition. +The second argument is similar. Current economic usage speaks of money as a +"measure" of values. Professor Seligman uses the expression in the chapter +on money in the book referred to. But the point made by General Walker +against this expression, when value is defined as a ratio, is absolutely +valid. He says:—</p> +<p><span class='pagenum'><a name="Page_27" id="Page_27">[Pg 27]</a></span></p> +<div class="blockquot"><p>I apprehend that this notion of money serving as a +common measure of value is wholly fanciful; indeed, the +very phrase seems to represent a misconception. Value +is a relation. Relations may be expressed, but not +measured. You cannot measure the relation of a mile to +a furlong; you express it as 8:1.<a name="FNanchor_43_43" id="FNanchor_43_43"></a><a href="#Footnote_43_43" class="fnanchor">[43]</a></p></div> + +<p>Only on the basis of a definition of value as a quantity is it proper to +speak of a "measure of values."<a name="FNanchor_44_44" id="FNanchor_44_44"></a><a href="#Footnote_44_44" class="fnanchor">[44]</a></p> + +<p>I conclude that the value of a thing is a quantity, and not a ratio. It is +a definite magnitude, and not a mere relation. What sort of a quantity +remains to be seen.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_15_15" id="Footnote_15_15"></a><a href="#FNanchor_15_15"><span class="label">[15]</span></a> Clark, J. B., "Ultimate Standard of Value," <i>Yale Review</i>, +1892. p. 258.</p></div> + +<div class="footnote"><p><a name="Footnote_16_16" id="Footnote_16_16"></a><a href="#FNanchor_16_16"><span class="label">[16]</span></a> <i>E.g.</i>, <i>The Philosophy of Wealth</i>, chap. v.</p></div> + +<div class="footnote"><p><a name="Footnote_17_17" id="Footnote_17_17"></a><a href="#FNanchor_17_17"><span class="label">[17]</span></a> <i>Economics</i>, p. 92. See also the article by President Hadley +on "Value" in Baldwin's <i>Dictionary of Philosophy</i>, etc., and +"Misunderstandings about Economic Terms," <i>Yale Review</i>, vol. <span class="smcap">iv</span>, pp. +156-70. The same ideas are expressed in all.</p></div> + +<div class="footnote"><p><a name="Footnote_18_18" id="Footnote_18_18"></a><a href="#FNanchor_18_18"><span class="label">[18]</span></a> Some of my socialist friends object to the interpretation of +Marx given above. I feel strengthened in my position here by finding the +same view expressed by Conrad in his <i>Grundriss</i>, etc., 4te Aufl, Bd. <span class="smcap">i</span>, +pp. 17-18. Professor O. D. Skelton's admirable <i>Socialism</i> (Hart, Schaffner +& Marx Series, 1911) comes to hand while the proof sheets of the present +volume are being revised. <i>Cf.</i> his interesting chapter on the Marxian +theory of value.</p></div> + +<div class="footnote"><p><a name="Footnote_19_19" id="Footnote_19_19"></a><a href="#FNanchor_19_19"><span class="label">[19]</span></a> Seligman, <i>Principles</i>, pp. 184-85. See also Taylor, W. G. +L., "Values, Positive and Relative," <i>Annals A. A.</i>, vol. <span class="smcap">ix</span>, pp. 70-106. +Taylor, who follows Professor Clark largely, accepts the conception of +social value as a quantity.</p></div> + +<div class="footnote"><p><a name="Footnote_20_20" id="Footnote_20_20"></a><a href="#FNanchor_20_20"><span class="label">[20]</span></a> Marx, <i>Capital and Capitalistic Production</i>, London, 1896, +pp. 2-4. George, <i>Science of Political Economy</i>, New York, 1898, chap. <span class="smcap">xi</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_21_21" id="Footnote_21_21"></a><a href="#FNanchor_21_21"><span class="label">[21]</span></a> <i>Natural Value</i>, p. 53, n.</p></div> + +<div class="footnote"><p><a name="Footnote_22_22" id="Footnote_22_22"></a><a href="#FNanchor_22_22"><span class="label">[22]</span></a> "The Concept of an Economic Quantity," <i>Q. J. E.</i>, May, 1907. +Professor Carver insists on the quantitative nature of value, taking as his +point of departure the point made <i>infra</i>, p. 27, with reference to money +as a measure of values. But it is not clear that he has entirely freed +himself from the conception of relativity, for he continues to speak of +value as "purchasing power" (pp. 438-39), and this term has usually the +relative, rather than the absolute, significance. <i>Cf.</i> his use of the term +"purchasing power" in his <i>Distribution of Wealth</i>, 1904, pp. 51-52, where +the <i>relativity</i> of value is insisted on as a basis for a criticism of +Professor Clark's amendment of the Austrian theory.</p></div> + +<div class="footnote"><p><a name="Footnote_23_23" id="Footnote_23_23"></a><a href="#FNanchor_23_23"><span class="label">[23]</span></a> Paris, 1902, vol. <span class="smcap">i</span>, p. 63.</p></div> + +<div class="footnote"><p><a name="Footnote_24_24" id="Footnote_24_24"></a><a href="#FNanchor_24_24"><span class="label">[24]</span></a> Fisher, Irving, <i>The Nature of Capital and Income</i>, New York, +1906, pp. 13 <i>et seq.</i> Ely, R. T. (and others). <i>Outlines of Economics</i>, +New York, 1908, pp. 156-57. Professor Ely uses the term in a different +sense on pp. 99-100; and on the pages first cited indicates that value, +defined as a quantity of other goods, is to be distinguished from +subjective value. But "subjective" (individual) value would hardly serve as +an equivalent for the value described on pp. 99-100. There are, in fact, +four pretty distinct uses of the term value to be found in Professor Ely's +discussion, inadequately distinguished, and often confused in the +treatment: (1) homogeneous quality among the diversities of the physical +forms of wealth, by virtue of which a sum of wealth may be obtained +(99-100); (2) ratio of exchange (156); (3) quantity of goods obtained in +exchange (157); (4) subjective utility (157 and <i>ante</i>); and a fifth +meaning is indicated for market value on pp. 358-59, where, in explaining +the law of rent for pleasure grounds and residence sites, the "general law +of value" is declared to be that value measures <i>marginal utility</i>. <i>Cf.</i> +the confusions of utility and demand pointed out <i>infra</i>, chapter v. This +loose treatment of the value concept, while doubtless accentuated by the +fact that four men have coöperated in the production of the book, is too +much characteristic of most of the text-books. There is even to-day little +uniformity or agreement as to what value means.</p></div> + +<div class="footnote"><p><a name="Footnote_25_25" id="Footnote_25_25"></a><a href="#FNanchor_25_25"><span class="label">[25]</span></a> <i>Natural Value</i>, p. 53, n.</p></div> + +<div class="footnote"><p><a name="Footnote_26_26" id="Footnote_26_26"></a><a href="#FNanchor_26_26"><span class="label">[26]</span></a> <i>Principles of Economics</i>, p. 183. Professor Seligman in the +<i>Q. J. E.</i> article (<i>supra</i>, p. 6, note <span class="smcap">i</span>) indicates that Pantaleoni +expresses a similar thought (<i>Pure Economics</i>, London, 1898, p. 127). This +idea is elaborated by Professor Georg Simmel, <i>Philosophie des Geldes, +Erster Teil, Kap. 2</i>. (A translation of this chapter, under the title, "A +Chapter in the Philosophy of Value," appears in the <i>American Journal of +Sociology</i>, vol. v, pp. 577-603. The translation was made from the author's +manuscript, before the publication of the book, and does not exactly +correspond with the chapter as published by Simmel.) Simmel's contention is +that, even for an isolated economy, value arises from exchange, and that +exchange is essential to it. Every value is relative to some other value. +But to develop this conception, "exchange" is distorted into a variety of +meanings. In one place, exchange takes place between an isolated man and +his environment. It makes no difference to him whether he is exchanging +with other men or with the order of nature (<i>Phil. des Geldes</i>, p. 34). But +later, exchange is declared to be "a sociological structure <i>sui generis</i>" +(<i>ibid.</i>, p. 56). Again, only in the vaguest sort of sense is exchange used +in this expression, "<i>wo wir Liebe um Liebe tauschen</i>" (<i>ibid.</i>, p. 33). +Yet all these meanings are forced in to fit the exigencies of the argument. +The doctrine of cost is brought in, and the exchange is between individual +cost and individual utility, and an equality between them is insisted upon, +despite the well-known phenomenon of "consumer's surplus." This emphasis on +<i>equality</i> in exchanges is stressed especially on p. 31, and economic +activity is said to derive its peculiar character from a consideration of +these equalities in abstraction. +</p><p> +The gist of Simmel's argument comes out in the following: "The object is +not for us a thing of value so long as it is dissolved in the subjective +process as an immediate stimulator of feelings." Desire must encounter +obstacles before a value can appear. "It is only the postponement of an +object through obstacles, <i>the anxiety lest the object escape</i> [italics +mine], the tension of struggle for it, which brings into existence that +aggregate of desire elements which may be designated as intensity or +passion of volition." Value is conditioned upon a "distance between subject +and object" (<i>A. J. S.</i>, 589-90).—I waive for the moment Simmel's apparent +insistence upon the element of conscious desire as essential to value, +though I shall attack that doctrine in a later chapter on the psychology of +value. It is enough to point out here that this "distance between subject +and object" is adequately present, that there is surely "anxiety lest the +object escape," if only the object be sufficiently limited in supply, +independently of the existence of other objects so limited.—Simmel +undertakes to meet this objection by holding that "scarcity, purely as +such, is only a negative quantity, an existence characterized by a +non-existence. The non-existent, however, cannot be operative" (<i>Phil. des +G.</i>, p. 57).—But the scarcity, I would reply, is not, as he holds, "the +quantitative relation in which the object stands to the aggregate of its +kind" (<i>A. J. S.</i>, p. 592), but is rather a relation between the object and +our wants. A bushel of wheat would be a scarcity, a bushel of diamonds a +superabundance, for a man. There is a positive thing here, not a mere +"non-existence," and that positive thing is the <i>unsatisfied want</i>. <i>Cf.</i> +Pareto, <i>Cours d'Économie Politique</i>, vol. <span class="smcap">i</span>, p. 34. +</p><p> +See further, on the psychology of value, chapter <span class="smcap">x</span>, and on Professor +Seligman's theory of the relativity of value, chapter <span class="smcap">xvi</span>, of the present +volume.</p></div> + +<div class="footnote"><p><a name="Footnote_27_27" id="Footnote_27_27"></a><a href="#FNanchor_27_27"><span class="label">[27]</span></a> Laughlin, J. L., <i>Elements of Political Economy</i>, rev. ed., +copyright 1902, p. 18: "Value ... is a ratio between two objective +articles." See also Professor Laughlin's rejoinder to Clow's "The Quantity +Theory and its Critics," <i>Journal of P. E.</i>, 1902, where Professor Laughlin +insists that exchange value is "something physical." Professor Davenport, +<i>Value and Distribution</i>, Chicago, 1908, p. 569, defines value similarly.</p></div> + +<div class="footnote"><p><a name="Footnote_28_28" id="Footnote_28_28"></a><a href="#FNanchor_28_28"><span class="label">[28]</span></a> <i>Value and Distribution</i>, p. 569.</p></div> + +<div class="footnote"><p><a name="Footnote_29_29" id="Footnote_29_29"></a><a href="#FNanchor_29_29"><span class="label">[29]</span></a> Professor Davenport, caught between two apparently invincible +logical difficulties, accepts this situation frankly, as, seemingly, the +only thing possible. See <i>Value and Distribution</i>, p. 184, n. The ratio has +no terms for him.</p></div> + +<div class="footnote"><p><a name="Footnote_30_30" id="Footnote_30_30"></a><a href="#FNanchor_30_30"><span class="label">[30]</span></a> <i>Value and Distribution</i>, pp. 330-31.</p></div> + +<div class="footnote"><p><a name="Footnote_31_31" id="Footnote_31_31"></a><a href="#FNanchor_31_31"><span class="label">[31]</span></a> "Values, Positive and Relative." <i>Annals</i>, vol. <span class="smcap">ix</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_32_32" id="Footnote_32_32"></a><a href="#FNanchor_32_32"><span class="label">[32]</span></a> It is, of course, recognized that exchange modifies value in +so far as exchange is a <i>productive</i> process. But the essential thing here +is the <i>transfer</i> aspect of exchange, which would hold even in a +communistic society where value relations might be found out by some +process other than exchange.</p></div> + +<div class="footnote"><p><a name="Footnote_33_33" id="Footnote_33_33"></a><a href="#FNanchor_33_33"><span class="label">[33]</span></a> <i>Political Economy</i>, New York, 1888, p. 84.</p></div> + +<div class="footnote"><p><a name="Footnote_34_34" id="Footnote_34_34"></a><a href="#FNanchor_34_34"><span class="label">[34]</span></a> <i>Cours d'Économie Politique</i>, vol. <span class="smcap">i</span>, pp. 8-9.</p></div> + +<div class="footnote"><p><a name="Footnote_35_35" id="Footnote_35_35"></a><a href="#FNanchor_35_35"><span class="label">[35]</span></a> Edgeworth, F. Y., <i>Mathematical Psychics</i>, London, 1881, +chapter on "Unnumerical Mathematics," pp. 83 <i>et seq.</i></p></div> + +<div class="footnote"><p><a name="Footnote_36_36" id="Footnote_36_36"></a><a href="#FNanchor_36_36"><span class="label">[36]</span></a> A fuller discussion of the functions of the value concept is +given in chapter <span class="smcap">xi</span> where this argument is materially strengthened. The +points here made, however, seem adequate.</p></div> + +<div class="footnote"><p><a name="Footnote_37_37" id="Footnote_37_37"></a><a href="#FNanchor_37_37"><span class="label">[37]</span></a> Jevons, <i>Principles of Economics</i>, 1905 (posthumous), p. 50.</p></div> + +<div class="footnote"><p><a name="Footnote_38_38" id="Footnote_38_38"></a><a href="#FNanchor_38_38"><span class="label">[38]</span></a> Walker, <i>op. cit.</i>, p. 5.</p></div> + +<div class="footnote"><p><a name="Footnote_39_39" id="Footnote_39_39"></a><a href="#FNanchor_39_39"><span class="label">[39]</span></a> Marx, <i>op. cit.</i>, vol. <span class="smcap">i</span>, chap. <span class="smcap">i</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_40_40" id="Footnote_40_40"></a><a href="#FNanchor_40_40"><span class="label">[40]</span></a> Laughlin, <i>Elements</i>, p. 77. <i>Cf.</i> also, Ely, <i>op. cit.</i>, +99-100.</p></div> + +<div class="footnote"><p><a name="Footnote_41_41" id="Footnote_41_41"></a><a href="#FNanchor_41_41"><span class="label">[41]</span></a> <i>Ibid.</i>, p. 18. It is interesting to note that Professor +Irving Fisher so defines wealth and value as to divorce the two concepts. +Wealth includes free human beings, who cannot be exchanged, while the idea +of value is derived from that of price, which, in turn, comes from the +ideas of exchange and transfer. (<i>Nature of Capital and Income</i>, chap. <span class="smcap">i</span>.)</p></div> + +<div class="footnote"><p><a name="Footnote_42_42" id="Footnote_42_42"></a><a href="#FNanchor_42_42"><span class="label">[42]</span></a> <i>Principles</i>, pp. 8-11.</p></div> + +<div class="footnote"><p><a name="Footnote_43_43" id="Footnote_43_43"></a><a href="#FNanchor_43_43"><span class="label">[43]</span></a> <i>Money</i>, p. 288.</p></div> + +<div class="footnote"><p><a name="Footnote_44_44" id="Footnote_44_44"></a><a href="#FNanchor_44_44"><span class="label">[44]</span></a> <i>Cf.</i> Kinley, <i>op. cit.</i>, Merriam, <i>loc. cit.</i>, and Carver, +"The Concept of an Economic Quantity," <i>loc. cit.</i> <i>Cf.</i> also, Laughlin, +<i>Money</i>, 1903, pp. 14-16; and Davenport, <i>Value and Distribution</i>, p. 181, +n.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_28" id="Page_28">[Pg 28]</a></span></p> +<h2><a name="CHAPTER_III" id="CHAPTER_III"></a>CHAPTER III</h2> + +<h3>VALUE AND MARGINAL UTILITY</h3> + + +<p>The method of Jevons and the Austrians, and, for that matter, of the great +majority of value theorists, including even the social value school, in +seeking the determinants of value, is to start with individual "utilities" +or psychic "costs" directly connected with the consumption or production of +goods. Such a study, if confined to an isolated individual economy, or if +confined to an ideal communistic economy, like that for which Wieser works +out his laws of "natural value," seems to yield us quantities of "utility," +which may properly be called values, or quantities of sacrifice which may +be properly treated as exactly measuring values.<a name="FNanchor_45_45" id="FNanchor_45_45"></a><a href="#Footnote_45_45" class="fnanchor">[45]</a> But when applied to a +competitive society, or to any society where there are inequalities among +men in their power to attain the gratification of their wants, it yields +us, not quantities of value, but only particular ratios between such +quantities, or prices. An examination of the Austrian procedure will make +this clear.</p> + +<p>If the Austrian analysis be taken as meaning anything more than a method of +determining surface ratios of exchange, difficulties at once arise.<span class='pagenum'><a name="Page_29" id="Page_29">[Pg 29]</a></span> What +quantitative relation is there between the satisfaction which an individual +man gets from a good and the value of that good? What quantitative relation +does the sacrifice, in terms of dissatisfactions endured and satisfactions +foregone, of the individual producer bear to the value of his product? Now +in thus positing the problem, I wish to distinguish it clearly from another +problem, namely: what is the quantitative relation between psychic +satisfaction, subjective individual value, and psychic cost, connected with +the commodity, in the mind of some hypothetical "normal" man, and market +value in a hypothetical market, where only "normal" men are found, and +where there is an equality of wealth among these men? The problem is a +concrete one: how are the actual desires and aversions of living men and +women, no one of them "normal" perhaps, living in a world where +inequalities of wealth are everywhere manifest, <i>quantitatively</i> related to +value in the market?</p> + +<p>Let us consider the inadequacy of the old Austrian analysis for this +quantitative determination. I assume, without trying to prove here, the +homogeneity and commensurability of human desires and aversions. (The +Austrians, be it noted, do not explicitly postulate this, and Jevons, as +will later be noted, rejects it, but it is necessary for Wieser's argument, +and Böhm-Bawerk implies it clearly enough in places.<a name="FNanchor_46_46" id="FNanchor_46_46"></a><a href="#Footnote_46_46" class="fnanchor">[46]</a>)<span class='pagenum'><a name="Page_30" id="Page_30">[Pg 30]</a></span> This does not +mean that any two men have, necessarily, the same desire for any particular +good, or the same aversion from any particular piece of work, but simply +that the desires and aversions of one man are comparable with those of +another, and may be fractions or multiples of them, even though not exactly +equal. My object in this assumption is to justify the use of the concept of +<i>units</i> of desires and aversions, which are not the desires and aversions +of a hypothetical "normal" man, but are some particular concrete desire and +some particular concrete aversion of any man you choose to take. Now let us +assume the market as treated in the usual Austrian analysis (somewhat +simplified): five men have horses to sell, and five buyers appear in the +market also.</p> + +<p> +<span style="margin-left: 11em;">A B C D E</span><br /> +Sellers will take: $20 $30 $40 $50 $60<br /> +Buyers will give: $60 $50 $40 $30 $20<br /> +</p> +<p><span class='pagenum'><a name="Page_31" id="Page_31">[Pg 31]</a></span></p> +<p><i>Price</i> is then fixed at forty dollars. Now if all these men were "normal" +men, and if all had equal wealth, we could say here, <i>marginal utility</i> = +<i>value</i>. But such is not the case in real life. Our marginal buyer and +marginal seller may be as different as you please. Let us assume that the +marginal buyer is a very rich man: forty dollars is to him a bagatelle: +surrendering it means one unit of cost to him: he has, further, many +horses: he has no special use in mind for the horse he is on the margin of +buying: it has one unit of utility to him. The marginal seller, we will +assume, is a poor country boy: the horse is one he has raised himself: he +has a personal affection for it, and it is immensely useful to him: it has +two hundred units of utility to him, and to give it up means two hundred +units of sacrifice: but he needs the forty dollars pressingly: it has two +hundred units of utility to him. Is marginal utility equal to value here? +If so, marginal utility to whom? But this does not exhaust the difficulties +of the analysis—if the analysis be designed to show anything except what a +particular <i>price</i> is, and the utility theorists, when very careful, do not +always claim to do more than that.<a name="FNanchor_47_47" id="FNanchor_47_47"></a><a href="#Footnote_47_47" class="fnanchor">[47]</a> But <i>price</i> is not <i>value</i>.</p> + +<p>We take up now, as an additional point designed to show that marginal +utility to an individual is not the same as value, Professor Clark's +clean-cut analysis amending the Austrian theory<span class='pagenum'><a name="Page_32" id="Page_32">[Pg 32]</a></span> which we shall call +"Clark's Law."<a name="FNanchor_48_48" id="FNanchor_48_48"></a><a href="#Footnote_48_48" class="fnanchor">[48]</a> A detailed statement of this law is not necessary here, +but its main meaning may be outlined, and its demonstration left to +Professor Clark himself. Any good, except the poorest and simplest, is a +complex, giving several distinct services. Thus, an automobile gives the +service of transportation (a cart would do that); of comfort (a +spring-buggy, with top, would do that); of elegance and social distinction +(a carriage would do that); of speed and exhilaration (only an automobile +can do this last, and the others as well). Now each of these services +Professor Clark considers as a distinct economic good, and he constructs a +demand curve for each of them. The service of transportation would be worth +$5000 to the marginal buyer of automobiles, if he could not get it for +less, but then, he is not the marginal user of carts, and he gets the cart +service for what the marginal buyer of it pays, say $10. The comfort +element would be worth $3000 to him, but he is not the marginal buyer +there, and he gets it for what the marginal buyer of buggies pays for a +buggy, less the $10 for the mere transportation-service of the buggy, say +$100 less $10, or $90. For the service of elegance and social distinction, +he would pay $4000, but then he does not have to do so, for he is not the +marginal buyer of carriages, and he gets this additional service for $800, +less the price of the preceding two services, or less $100. For the<span class='pagenum'><a name="Page_33" id="Page_33">[Pg 33]</a></span> +additional service of speed and exhilaration he <i>is</i> the marginal demander, +and his margin fixes the price, say $2000, for that service. Now his +automobile—and he is the marginal buyer, and he buys only one—gives him +satisfaction far in excess of that measured by the price he pays for it. +The automobile, economically considered, is several distinct services +bundled together, worth to him $5000 plus $3000 plus $4000 plus $2000. But +he pays for the automobile only $2800, or less than he would have paid even +for the first service. Now by the Austrian definition the price of anything +is determined by its utility to the marginal user. And marginal utility is +the <i>total</i> utility of the marginal unit consumed. The total utility of +this marginal automobile, to this marginal user, would balance $14,000 in +his mind, and this, by the Austrian analysis, ought to be the price. But +the price is $2800. Marginal utility determines price? Marginal utility to +whom? Not to the marginal buyer! To whom, then? Professor Clark says, to +<i>society</i>, without further defining what he means by that, except in +general terms of social organism, etc. But it seems to me clear that, +except on the basis of some such conception, we shall have to give up the +idea that marginal utility determines price, and say rather that price is +something with which marginal utility has something to do! And the +quantitative relation between the feeling of any individual and <i>value</i> has +become very uncertain indeed.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_45_45" id="Footnote_45_45"></a><a href="#FNanchor_45_45"><span class="label">[45]</span></a> This statement must be qualified, as subsequently appears. +Even in Wieser's "natural" community, there are psychic factors in value +other than mere utility. See chap. <span class="smcap">xiii</span>, <i>infra</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_46_46" id="Footnote_46_46"></a><a href="#FNanchor_46_46"><span class="label">[46]</span></a> For further discussion of this doctrine, see chapters <span class="smcap">iv</span> and +<span class="smcap">viii</span> of this book. Böhm-Bawerk, <i>Positive Theory</i>, p. 149, n., says: "One +gives donations, charities, and the like, when the importance of such, +measured by their marginal utility, is very much higher as regards the +well-being Footnote: of the receiver than as regards that of the giver, and +almost never when the converse is the case." The assumption that emotional +states in different minds can be compared is very clear in this passage. +<i>Cf.</i> Veblen, Thorstein, "Professor Clark's Economics," <i>Q. J. E.</i>, Feb., +1908, p. 170, n.: "Among modern economic hedonists, including Mr. Clark, +there stands over from the better days of the order of nature a +presumption, disavowed, but often decisive, that the sensational response +to the like mechanical impact of the stimulating body is the same in +different individuals. But, while this presumption stands ever in the +background, and helps to many important conclusions,... few modern +hedonists would question the statement in the text" [<i>i.e.</i>, that +comparison of emotional intensity in one man's mind with emotional +intensity in another man's mind is impossible]. In the light of the +psychological doctrine which I shall maintain in the chapter on the +psychology of value, this whole question will seem beside the point, +considered as a psychological question. But my interest here is in making +clear the psychological implications of the Austrian theory, as I wish for +the present to consider their theory on their own ground.</p></div> + +<div class="footnote"><p><a name="Footnote_47_47" id="Footnote_47_47"></a><a href="#FNanchor_47_47"><span class="label">[47]</span></a> Böhm-Bawerk and Wieser are certainly seeking an objective +value, but Jevons and Pareto are concerned simply with the ratio. See +Wieser, <i>Natural Val.</i>, p. 53, n. Jevons, Pareto, and Böhm-Bawerk are +discussed, with reference to this point, in chap. <span class="smcap">iv</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_48_48" id="Footnote_48_48"></a><a href="#FNanchor_48_48"><span class="label">[48]</span></a> This law is first set forth by Professor Clark in an article +in the <i>Q. J. E.</i>, vol. <span class="smcap">viii</span>, "A Universal Law of Economic Variation." See +also, <i>The Distribution of Wealth</i>, pp. 210-45. A brief exposition of the +doctrine is found in Seligman, <i>Principles</i>, 1905, pp. 185-88.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_34" id="Page_34">[Pg 34]</a></span></p> +<h2><a name="CHAPTER_IV" id="CHAPTER_IV"></a>CHAPTER IV</h2> + +<h3>JEVONS, PARETO AND BÖHM-BAWERK</h3> + + +<p>In the foregoing analysis, the assumption of the homogeneity and +communicability of human wants was made. Only on this assumption could +value as a quantity of utility appear even in Wieser's "natural" community. +How hopeless the case becomes when individualistic methods and assumptions +are pushed to the extreme, will appear from a consideration of Jevons and +Pareto, both of whom insist on the entirely subjective and incommunicable +nature of human wants. Thus, Jevons:<a name="FNanchor_49_49" id="FNanchor_49_49"></a><a href="#Footnote_49_49" class="fnanchor">[49]</a>—</p> + +<div class="blockquot"><p>I see no means by which such a comparison [between the +motives of one man and those of another] can be +accomplished. The susceptibility of one mind may, for +what we know, be a thousand times greater than that of +another. But, provided that the susceptibility was +different in a like ratio in all directions, we should +never be able to discover the difference. Every mind is +thus inscrutable to every other mind, and no common +denominator of feelings seems to be possible.... But +the motive in one mind is weighed only against other +motives in the same mind, never against the motives in +other minds. Each person is to other persons a portion +of the outside world—the <i>non-ego</i> as the +metaphysicians call it. Thus the motives in the mind of +A may give rise to phenomena which may be represented +by motives in the mind of B; but between A and B there +is a gulf. Hence the weighing of motives must always be +confined to the bosom of the individual.</p></div> +<p><span class='pagenum'><a name="Page_35" id="Page_35">[Pg 35]</a></span></p> +<p>This question as to the homogeneity and communicability of emotional states +in different men is one fundamental to any value theory which starts with +individual feelings or desires as elements—and, indeed, from a somewhat +different viewpoint, is fundamental to all value theory. Value, as a +concrete quantity of desire or feeling, embodied in a given good at a given +time, regardless of who is purchaser and who is seller, can exist only if +feelings and desires are homogeneous and can interact—even in Wieser's +ideal society, where the complication of differences in wealth does not +obtain. And value must have some very different meaning unless this +assumption be held. In illustration of this, I wish to quote further from +Jevons. Jevons finds for value<a name="FNanchor_50_50" id="FNanchor_50_50"></a><a href="#Footnote_50_50" class="fnanchor">[50]</a> three distinct meanings, for each of +which he employs both a "popular" and a "scientific" name: (1) value in use +("popular" name) = total utility ("scientific" name); (2) esteem, or +urgency of desire ("popular" name) = final degree of utility ("scientific" +name); (3) purchasing power ("popular" name) = ratio of exchange +("scientific" name). Now the first two of these are purely subjective, +individual facts, varying as to their quantities for each individual. The +only one that can have social meaning is the third, and that, as Jevons +explicitly states, is a numerical ratio, an abstract number.<a name="FNanchor_51_51" id="FNanchor_51_51"></a><a href="#Footnote_51_51" class="fnanchor">[51]</a> This is +brought out very clearly when he discusses the question of the concrete +dimensions of these three quantities. Total utility has dimensions,<span class='pagenum'><a name="Page_36" id="Page_36">[Pg 36]</a></span> and so +has final utility, but ratio of exchange, which he considers the precise +scientific equivalent for the popular term, purchasing power, has no +dimension at all. Its dimension is zero. Finding these ambiguities in the +word value, Jevons proposes to abandon it altogether, and to use instead +either of the three expressions discussed, depending on which sense of the +word value is intended.<a name="FNanchor_52_52" id="FNanchor_52_52"></a><a href="#Footnote_52_52" class="fnanchor">[52]</a> He can find no definite meaning for value as an +unqualified term. Now in this I believe he is correct. Economic value is +not total utility to an individual, nor marginal utility to an individual, +nor is it a mere ratio of exchange. If no other meaning of the term can be +found—and no other meaning <i>can</i> be found on Jevons's psychological +assumptions—then the term should be abandoned altogether.</p> + +<p>Pareto's position<a name="FNanchor_53_53" id="FNanchor_53_53"></a><a href="#Footnote_53_53" class="fnanchor">[53]</a> is essentially similar. "Ophelimity" (which he uses +in place of the more ambiguous "utility" to mean what Jevons means by the +latter term) "is an entirely subjective quality." (4.) "On ne doit pas +oublier que le vigneron établit l'égalité des deux ophélimités pour lui, et +que le laboureur fait de même, mais qu'il n'y a aucun rapport entre +l'ophélimité du vin pour le vigneron et pour le laboureur, ni entre +l'ophélimité du blé pour le vigneron et pour le laboureur. Il faut toujours +se rapeller ce caractère subjectif de l'ophélimité." (21.) Now no quantity +of value, irrespective of the particular<span class='pagenum'><a name="Page_37" id="Page_37">[Pg 37]</a></span> holder of the good, emerges for +Pareto. Value is either a "<i>rapport de convenance</i>" between a man and a +good, i.e., ophelimity, or is a "<i>taux d'échange</i>," a ratio between two +goods. (30.) The older term, "<i>puissance d'achat</i>," power in exchange, +which John Stuart Mill makes synonymous with value in exchange, is, at +bottom, nothing but a vague conception of ophelimity. (30.) The two +conceptions, ratio of exchange and ophelimity, are to be sharply +distinguished, power in exchange is ruled out as a vague and confused +conception, and value as an objective quantity does not appear at all.</p> + +<p>Davenport, who recognizes clearly "the rich-man-poor-man complication,"<a name="FNanchor_54_54" id="FNanchor_54_54"></a><a href="#Footnote_54_54" class="fnanchor">[54]</a> +and avoids, for the most part, the confusion into which others have fallen, +of mixing a demand-price curve and a utility curve (a confusion dealt with +in detail in the next chapter), and who accepts the psychological +assumption of subjective isolation unreservedly,<a name="FNanchor_55_55" id="FNanchor_55_55"></a><a href="#Footnote_55_55" class="fnanchor">[55]</a> reaches, as already +indicated, the same conclusion regarding the nature of value. For him there +is no social validity in value except as a ratio of exchange.<a name="FNanchor_56_56" id="FNanchor_56_56"></a><a href="#Footnote_56_56" class="fnanchor">[56]</a></p> + +<p>The same may be said for Böhm-Bawerk, so far as his formal analysis goes. +It is true that he recognizes the existence of an "objective value in +exchange"<a name="FNanchor_57_57" id="FNanchor_57_57"></a><a href="#Footnote_57_57" class="fnanchor">[57]</a> in addition to "subjective value"<span class='pagenum'><a name="Page_38" id="Page_38">[Pg 38]</a></span> and "subjective value in +exchange," and in addition to price,<a name="FNanchor_58_58" id="FNanchor_58_58"></a><a href="#Footnote_58_58" class="fnanchor">[58]</a> but he makes no effort to exhibit +its nature, or to show its origin. His study has to do with individual +subjective ratios, between the marginal utilities of two goods, and the +market ratio, or price, that results from the meeting of these individual +ratios—<i>not utilities</i>—in the market. The nature of his objective +exchange value is expected to become clear, somehow, from this surface +determination of price:—</p> + +<div class="blockquot"><p>Exchange Value is the capacity of a good to obtain in +exchange a quantity of other goods. Price is that other +quantity of goods. But the laws of these two coincide. +So far as the law of price explains that a good +actually obtains such and such a price, and why it +obtains it, it affords at the same time the explanation +that the good is <i>capable</i>, and why it is capable, of +obtaining a definite price. The law of Price, in fact, +contains the law of Exchange Value.<a name="FNanchor_59_59" id="FNanchor_59_59"></a><a href="#Footnote_59_59" class="fnanchor">[59]</a></p></div><p><span class='pagenum'><a name="Page_39" id="Page_39">[Pg 39]</a></span></p> + +<p>But (as will be elaborated more fully in chapter <span class="smcap">vi</span>), Böhm-Bawerk's law of +price does not explain the <i>why</i> any more than do those of Jevons and +Pareto, and the assumption that an "objective value in exchange" exists, in +addition to the ratio of exchange and the subjective values, might just as +logically be added to their systems as to his, with the assumption that the +problem of its nature and causes had been cleared up. The Austrian +analysis, even with Professor Clark's correction, is simply an explanation +of the <i>modus operandi</i> of the determination of <i>particular</i> ratios in the +market. It tells us nothing of quantitative values, and, in fact, assumes a +whole system of values already predetermined, before the question of any +particular price can be approached.<a name="FNanchor_60_60" id="FNanchor_60_60"></a><a href="#Footnote_60_60" class="fnanchor">[60]</a></p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_49_49" id="Footnote_49_49"></a><a href="#FNanchor_49_49"><span class="label">[49]</span></a> <i>Theory of Political Economy</i>, 3d edition, p. 14.</p></div> + +<div class="footnote"><p><a name="Footnote_50_50" id="Footnote_50_50"></a><a href="#FNanchor_50_50"><span class="label">[50]</span></a> <i>Op. cit.</i>, pp. 76-84.</p></div> + +<div class="footnote"><p><a name="Footnote_51_51" id="Footnote_51_51"></a><a href="#FNanchor_51_51"><span class="label">[51]</span></a> <i>Ibid.</i>, p. 83.</p></div> + +<div class="footnote"><p><a name="Footnote_52_52" id="Footnote_52_52"></a><a href="#FNanchor_52_52"><span class="label">[52]</span></a> <i>Op. cit.</i>, p. 81.</p></div> + +<div class="footnote"><p><a name="Footnote_53_53" id="Footnote_53_53"></a><a href="#FNanchor_53_53"><span class="label">[53]</span></a> <i>Cours d'Économie Politique</i>, vol. <span class="smcap">i</span>, pp. 1-40. The numerals +in the text refer to pages in this volume.</p></div> + +<div class="footnote"><p><a name="Footnote_54_54" id="Footnote_54_54"></a><a href="#FNanchor_54_54"><span class="label">[54]</span></a> <i>Value and Distribution</i>, p. 444.</p></div> + +<div class="footnote"><p><a name="Footnote_55_55" id="Footnote_55_55"></a><a href="#FNanchor_55_55"><span class="label">[55]</span></a> Professor Davenport's attitude on this point we shall discuss +more fully in chapter <span class="smcap">viii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_56_56" id="Footnote_56_56"></a><a href="#FNanchor_56_56"><span class="label">[56]</span></a> <i>Ibid.</i>, pp. 184, n., and 330-31.</p></div> + +<div class="footnote"><p><a name="Footnote_57_57" id="Footnote_57_57"></a><a href="#FNanchor_57_57"><span class="label">[57]</span></a> It is not wholly clear whether or not Böhm-Bawerk means his +"objective value in exchange" to be considered as an absolute or as a +relative concept. His formal definition ("Grundzüge der Theorie des +wirtschaft lichen Güterwerts," Conrad's <i>Jahrbücher, N. F.</i>, <span class="smcap">xiii</span>, 1886, p. +5) is as follows: "Hierunter ist zu verstehen die objective Geltung der +Güter im Tausch, oder mit anderen Worten, die Möglichkeit für sie im +Austausch eine Quantität anderer wirtschaftlicher Güter zu erlangen, diese +Möglichkeit als eine Kraft oder Eigenschaft der ersteren Güter gedacht." +The concluding phrase would seem to point to an absolute conception, as +would also his criticism of the expressions, "ratio of exchange," +"<i>Austauschverhältnis</i>," and "<i>Tauschfuss</i>" (<i>Ibid.</i>, p. 478, n.): "Diese +Ausdrücke haben nämlich eine Nüance an sich, die es unmöglich macht, sie +sprachlich den Gütern als Eigenschaft beizulegen, oder von einer grösseren +oder geringeren Höhe derselben zu sprechen." But, on the other hand, his +identification of the concept, "objective value in exchange," with the term +"power in exchange" of the English economists (in both the passages +referred to) would seem to make the relative implication in the concept +unavoidable, and perhaps there is no point to raising the question. His +criticism of Hermann in the <i>Capital and Interest</i> (p. 203) is based on the +relative conception of value. <i>Cf.</i> our discussion of the practical usage +of the Austrians in chapters <span class="smcap">xi</span> and <span class="smcap">xviii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_58_58" id="Footnote_58_58"></a><a href="#FNanchor_58_58"><span class="label">[58]</span></a> Whether price be defined as a quantity of goods given for a +good, or as the ratio between the two quantities of goods exchanged, is for +present purposes immaterial.</p></div> + +<div class="footnote"><p><a name="Footnote_59_59" id="Footnote_59_59"></a><a href="#FNanchor_59_59"><span class="label">[59]</span></a> <i>Positive Theory</i>, p. 132.</p></div> + +<div class="footnote"><p><a name="Footnote_60_60" id="Footnote_60_60"></a><a href="#FNanchor_60_60"><span class="label">[60]</span></a> See chapter <span class="smcap">vi</span>, <i>infra</i>.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_40" id="Page_40">[Pg 40]</a></span></p> +<h2><a name="CHAPTER_V" id="CHAPTER_V"></a>CHAPTER V</h2> + +<h3>DEMAND CURVES AND UTILITY CURVES</h3> + + +<p>Much of the foregoing would be needless were it not for the fact that there +has been, and is, in the writings of the Austrians and those who have +followed them, a confusion of two very different things: on the one hand, +the curve of utility for a single individual of a given good, measured in +terms of money, on the assumption that the marginal utility of money +remains constant to him; and, on the other hand, the demand-price curve of +that commodity for a whole community or a "trading body,"<a name="FNanchor_61_61" id="FNanchor_61_61"></a><a href="#Footnote_61_61" class="fnanchor">[61]</a> made up of +many individuals, differing in wealth and in tastes.<a name="FNanchor_62_62" id="FNanchor_62_62"></a><a href="#Footnote_62_62" class="fnanchor">[62]</a> The former curve +does express a diminishing scale of absolute feeling-magnitudes,<a name="FNanchor_63_63" id="FNanchor_63_63"></a><a href="#Footnote_63_63" class="fnanchor">[63]</a> +concerned with the consumption of the good. The latter does not. The latter +is not necessarily a diminishing utility curve at all, for the poor man +whose price offer is lowest may easily desire the good more intensely than +does the rich man whose demand price is highest. These confusions, in the +writings of Böhm-Bawerk and Wieser, especially, have been adequately +commented on by Professor<span class='pagenum'><a name="Page_41" id="Page_41">[Pg 41]</a></span> Davenport,<a name="FNanchor_64_64" id="FNanchor_64_64"></a><a href="#Footnote_64_64" class="fnanchor">[64]</a> who adheres pretty carefully +throughout to the distinction drawn above, and to the strictly +individualistic, subjectivistic conception of price determination, with its +correlate of relativity. Jevons's confusion on this point has been noted by +Marshall.<a name="FNanchor_65_65" id="FNanchor_65_65"></a><a href="#Footnote_65_65" class="fnanchor">[65]</a> It is amazing, really, when one sets about to find them, how +numerous are the occasions on which leading economists have been guilty of +this confusion—a confusion that utterly vitiates very many of the +conclusions based upon it. In truth, Professor Davenport is not far wrong +when he asserts that "the general understanding of Austrian theory has come +to be that it explains market value by marginal utility, and resolves +market value into marginal utility."<a name="FNanchor_66_66" id="FNanchor_66_66"></a><a href="#Footnote_66_66" class="fnanchor">[66]</a></p> + +<p>To go through the roll of the economists in pointing out this confusion is +a needless task here, but a few representative names must be called, in +addition to those mentioned above. Thus, Pierson:<a name="FNanchor_67_67" id="FNanchor_67_67"></a><a href="#Footnote_67_67" class="fnanchor">[67]</a>—</p> + +<div class="blockquot"><p>There is nothing to prevent our treating a group of +persons as a unit, and examining the position which +commodities occupy in relation to that unit. If we do +this, we shall see that the above diagram [the regular +diminishing utility diagram of Jevons], depicting the +position which they occupy in many cases in relation to +the individual, must depict the position which they +occupy in a still larger number of cases in relation to +the group. And the truth of this statement is greater +in proportion to the size of the group.</p></div><p><span class='pagenum'><a name="Page_42" id="Page_42">[Pg 42]</a></span></p> + +<p>Similar confusions appear in Professor Patten's <i>Theory of Prosperity</i>, in +a number of places.<a name="FNanchor_68_68" id="FNanchor_68_68"></a><a href="#Footnote_68_68" class="fnanchor">[68]</a> President Hadley's discussion of "Speculation" +falls into this confusion, also.<a name="FNanchor_69_69" id="FNanchor_69_69"></a><a href="#Footnote_69_69" class="fnanchor">[69]</a> Professor Ely's confusion on this +point is instanced in his <i>Outlines of Economics</i>, 1908 edition, pp. +358-59.<a name="FNanchor_70_70" id="FNanchor_70_70"></a><a href="#Footnote_70_70" class="fnanchor">[70]</a> Schaeffle, in his <i>Quintessence of Socialism</i>,<a name="FNanchor_71_71" id="FNanchor_71_71"></a><a href="#Footnote_71_71" class="fnanchor">[71]</a> treats +utility as if it were demand. With Professor Flux it seems more a +deliberate identification than an unconscious confusion, as he recognizes +very clearly the complication which differences in wealth bring in, and yet +none the less declares, "The measure of the exchange value is, then, the +utility which is on the margin of not being realized, or the marginal +utility," and "The series of marginal-demand-prices, corresponding to all +the varied possible scales of supply, register, in fact, the utility of the +marginal supply for each such scale."<a name="FNanchor_72_72" id="FNanchor_72_72"></a><a href="#Footnote_72_72" class="fnanchor">[72]</a> It is somewhat disheartening, +however, to find Professor Marshall, who has pointed out the confusion on +the part of Jevons, allowing his marginal notes to speak of "utility and +cost" when the body of the text, to which they refer, is discussing demand +and supply.<a name="FNanchor_73_73" id="FNanchor_73_73"></a><a href="#Footnote_73_73" class="fnanchor">[73]</a> And still more disheartening to find Professor Davenport, +at the<span class='pagenum'><a name="Page_43" id="Page_43">[Pg 43]</a></span> end of his cautiously written volume, marked throughout by the +greatest clearness of thought, and by especially painstaking care in the +criticism of this confusion in the writings of others, saying:—</p> + +<div class="blockquot"><p>Limitation upon the supply of goods relatively to the +need gives value. Thus value in producible goods is +ultimately explained by human desires over against a +limitation of supply due either to the shortage of +instrumental goods or to the irksomeness of effort, or +to both.</p> + +<p>With great esteem for good singing, and with the rarity +of good singers, the high gains of prima donnas find +sufficient explanation.</p></div> + +<p>This, as a separate, unqualified proposition in the "Summary of +Doctrine,"<a name="FNanchor_74_74" id="FNanchor_74_74"></a><a href="#Footnote_74_74" class="fnanchor">[74]</a> is hardly to be counted anything but a <i>lapsus</i>, even though +recognition is later accorded to the necessity of backing up "utility" with +"purchasing power."</p> + +<p>But it cannot be too strongly insisted, in the first place, that only +particular ratios, market relations, can come out of the individualistic +analysis of satisfactions of consumption and dissatisfactions of +production, and that, in the second place, these ratios, and this +relativity, are but surface explanations, that point to, and are based +upon, something underlying and definite—without which they would be +hanging in the air.<a name="FNanchor_75_75" id="FNanchor_75_75"></a><a href="#Footnote_75_75" class="fnanchor">[75]</a></p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_61_61" id="Footnote_61_61"></a><a href="#FNanchor_61_61"><span class="label">[61]</span></a> See Jevons, <i>Theory of Pol. Econ.</i>, 3d ed., pp. 88-90; +95-96.</p></div> + +<div class="footnote"><p><a name="Footnote_62_62" id="Footnote_62_62"></a><a href="#FNanchor_62_62"><span class="label">[62]</span></a> See, especially, Pareto, <i>op. cit.</i>, vol. <span class="smcap">i</span>, pp. 36-37.</p></div> + +<div class="footnote"><p><a name="Footnote_63_63" id="Footnote_63_63"></a><a href="#FNanchor_63_63"><span class="label">[63]</span></a> Our question here is primarily a <i>logical</i>, and not a +<i>psychological</i>, one, else I should choose a different term from +"feeling-magnitude." For the present, I am accepting the Austrian +psychology, and attacking the Austrian logic. <i>Cf.</i> the chapter in this +work on the psychology of value.</p></div> + +<div class="footnote"><p><a name="Footnote_64_64" id="Footnote_64_64"></a><a href="#FNanchor_64_64"><span class="label">[64]</span></a> <i>Op. cit.</i>, pp. 300, 312, 313 <i>et seq.</i>, 320, 325, n., 327, +328 n., 329, and chap. <span class="smcap">xvii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_65_65" id="Footnote_65_65"></a><a href="#FNanchor_65_65"><span class="label">[65]</span></a> <i>Principles</i>, 1898 ed., p. 176.</p></div> + +<div class="footnote"><p><a name="Footnote_66_66" id="Footnote_66_66"></a><a href="#FNanchor_66_66"><span class="label">[66]</span></a> <i>Op. cit.</i>, p. 300.</p></div> + +<div class="footnote"><p><a name="Footnote_67_67" id="Footnote_67_67"></a><a href="#FNanchor_67_67"><span class="label">[67]</span></a> <i>Principles of Economics</i>, London, 1902, p. 57.</p></div> + +<div class="footnote"><p><a name="Footnote_68_68" id="Footnote_68_68"></a><a href="#FNanchor_68_68"><span class="label">[68]</span></a> Page 18, "The consumption of all the individuals in a +community or nation can also be represented by this diagram if their +feelings, sentiments, and habits are nearly enough alike to create a normal +type."—A statement which is defensible only if "habits" be stretched to +include incomes! See, also, pp. 28 (diagram) and 82.</p></div> + +<div class="footnote"><p><a name="Footnote_69_69" id="Footnote_69_69"></a><a href="#FNanchor_69_69"><span class="label">[69]</span></a> <i>Economics</i>, 1904 ed., pp. 101-104.</p></div> + +<div class="footnote"><p><a name="Footnote_70_70" id="Footnote_70_70"></a><a href="#FNanchor_70_70"><span class="label">[70]</span></a> See <i>supra</i>, p. 17, n.</p></div> + +<div class="footnote"><p><a name="Footnote_71_71" id="Footnote_71_71"></a><a href="#FNanchor_71_71"><span class="label">[71]</span></a> English edition, London, 1889, pp. 90-91</p></div> + +<div class="footnote"><p><a name="Footnote_72_72" id="Footnote_72_72"></a><a href="#FNanchor_72_72"><span class="label">[72]</span></a> Flux, A. W., <i>Economic Principles</i>, London, 1904. Compare pp. +4, 29, and 27.</p></div> + +<div class="footnote"><p><a name="Footnote_73_73" id="Footnote_73_73"></a><a href="#FNanchor_73_73"><span class="label">[73]</span></a> <i>Principles</i>, 1907 ed., pp. 348-50.</p></div> + +<div class="footnote"><p><a name="Footnote_74_74" id="Footnote_74_74"></a><a href="#FNanchor_74_74"><span class="label">[74]</span></a> <i>Op. cit.</i>, p. 569.</p></div> + +<div class="footnote"><p><a name="Footnote_75_75" id="Footnote_75_75"></a><a href="#FNanchor_75_75"><span class="label">[75]</span></a> As shown in chapter <span class="smcap">ii</span>. An interesting illustration of this +general conclusion as to the significance of the results based on the +individualistic analysis is found in the reformulation of the law of +marginal utility by Professor Irving Fisher in his "Mathematical +Investigations in the Theory of Value and Prices," <i>Trans. of the +Connecticut Academy of Arts and Sciences</i>, vol. <span class="smcap">ix</span>, p. 37. The theory of +marginal utility in relation to prices "is not, as sometimes stated: 'the +marginal utilities to the same individual of all articles are equal,' much +less is it: 'the marginal utilities of the same article to all consumers +are equal;' but <i>the marginal utilities of all articles</i> CONSUMED [capitals +mine] <i>by a given individual are proportional to the marginal utilities of +the same series of articles for each other consumer, and this uniform +continuous ratio is the scale of prices for those articles</i>." This +conception of Professor Fisher's is clear as far as it goes, but it by no +means explains the action of individual desires upon prices. It rather +explains how an already established set of prices controls individual +<i>expenditure</i> and <i>consumption</i>. Compare, however, Böhm-Bawerk's view, +"Grundzüge," Conrad's <i>Jahrbücher, N. F.</i>, <span class="smcap">xiii</span>, 1886, pp. 516 <i>et seq.</i></p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_45" id="Page_45">[Pg 45]</a></span></p> +<h2><a name="CHAPTER_VI" id="CHAPTER_VI"></a>CHAPTER VI</h2> + +<h3>THE VICIOUS CIRCLE OF THE AUSTRIANS</h3> + + +<p>The great and permanent service of the Austrian analysis is in the fact +that it looks for the explanation of value—a psychical fact—in human +minds. Its essential defect is that it takes only a small part of the human +mind for that explanation. It makes two abstractions, neither of which is +allowable: first, it abstracts the "individual mind" from its vital and +organic union with the social <i>milieu</i>; and second, it abstracts from the +"individual mind" thus abstracted, only those desires and thoughts which +are immediately concerned with the consumption and production of economic +goods—really, in the narrower analysis of "market price," only those +concerned with the consumption of economic goods. Now it is at once +conceded that a science, in explaining its phenomena, must ignore some of +the relations which those phenomena bear to other phenomena. No science is +called upon to link its facts with all the other facts in the universe. +Some abstraction,<a name="FNanchor_76_76" id="FNanchor_76_76"></a><a href="#Footnote_76_76" class="fnanchor">[76]</a> much abstraction, is legitimate and necessary. Where +to draw the line is often a perplexing question,<span class='pagenum'><a name="Page_46" id="Page_46">[Pg 46]</a></span> and I do not intend to +lay down a general rule here. But there is one familiar canon which the +Austrians have violated in drawing the line so narrowly as they have done: +we must include enough in our <i>explanation</i> phenomena to enable us to +explain our <i>problem</i> phenomenon in terms other than itself. Concretely, in +explaining value, we have not solved the problem if the explanation assumes +value. Rather, we are reasoning in a circle. Now have the Austrians done +this? Wieser explicitly rejects the older circle in the <i>definition</i> of +value,<a name="FNanchor_77_77" id="FNanchor_77_77"></a><a href="#Footnote_77_77" class="fnanchor">[77]</a> which made the value of A equal to what it would exchange for, +B, the value of B being in turn equal to what it would exchange for, +namely, A, and does point out that the value of a good must be treated as +an absolute thing, independent of the particular exchange that happens to +be made. He even works out an explanation of value in purely psychical +terms,<a name="FNanchor_78_78" id="FNanchor_78_78"></a><a href="#Footnote_78_78" class="fnanchor">[78]</a> as it would exist in a hypothetical individual economy, or in a +hypothetical "natural" communistic society, where all men's wants are +equally regarded. But when the Austrians come to the explanation of value +as it exists in society as actually organized, the attempt to explain value +in terms of individual desires for economic goods (or individual aversions +in connection with their production) fails, and a circle again emerges: Why +has the good, A, value? Because men desire it? No, that is not enough: the +men who<span class='pagenum'><a name="Page_47" id="Page_47">[Pg 47]</a></span> desire it must have other economic goods, i.e., wealth, with which +to buy it. And why will these other goods buy it? Because they have +<i>value</i>! For the power is proportioned, not to the quantity of their wealth +in pounds or yards or other physical units, but simply to its amount in +<i>value</i>.—The explanation of the value of these goods then becomes another +problem, for which the Austrian analysis can offer only the same solution, +with the same circle in reasoning, and the same problem of value at the +end. This circle is made explicit in Wieser's treatment:—</p> + +<div class="blockquot"><p>The relation of natural value to exchange value is +clear. Natural value is one element in the formation of +exchange value. It does not, however, enter simply and +thoroughly into exchange value. On the one side, it is +disturbed by human imperfection, by error, fraud, +force, chance; and on the other, by the present order +of society, by the existence of private property, and +by the differences between rich and poor,—as a +consequence of which latter a second element mingles +itself in the formation of exchange value, namely, +<i>purchasing power</i>.<a name="FNanchor_79_79" id="FNanchor_79_79"></a><a href="#Footnote_79_79" class="fnanchor">[79]</a> [Italics mine.]</p></div> + +<p>This <i>purchasing power</i> can only be either the inaccurate name of the +English School for value itself, or else a consequence of the possession of +goods which have value in the sense in which Wieser uses the term value, in +the note on page 53 of his <i>Natural Value</i> already quoted.<a name="FNanchor_80_80" id="FNanchor_80_80"></a><a href="#Footnote_80_80" class="fnanchor">[80]</a> The circle +becomes still more explicit in Hobson.<a name="FNanchor_81_81" id="FNanchor_81_81"></a><a href="#Footnote_81_81" class="fnanchor">[81]</a> Hobson attempts to coördinate +the Austrian theory with the older cost theory, and in this connection +gives a table analyzing the forces that lie<span class='pagenum'><a name="Page_48" id="Page_48">[Pg 48]</a></span> back of value, or +"importance," from the supply side, and from the demand side. And there, +apparently oblivious of the obvious circle, he places "purchasing power" as +one of the ultimate factors on the demand side! If the Austrian analysis +attempt nothing more than the determination of particular prices, one at a +time, on the assumption that the transactions are, in each particular case, +so small as not to disturb the marginal utility of money for each buyer and +seller, and on the assumption that the values and prices of all the goods +owned by buyers and sellers are already determined and known, except that +of the good immediately in question, it is clear that it but plays over the +surface of things. If it attempt more it is involved in a circle.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_76_76" id="Footnote_76_76"></a><a href="#FNanchor_76_76"><span class="label">[76]</span></a> The extreme abstraction of the utility school is made very +clear by Pareto, <i>op. cit.</i>, introductory chapter. He is concerned only +with "the science of ophelimity" (p. 6), and ophelimity is a "wholly +subjective quality" (p. 4).</p></div> + +<div class="footnote"><p><a name="Footnote_77_77" id="Footnote_77_77"></a><a href="#FNanchor_77_77"><span class="label">[77]</span></a> See <i>supra</i>, chap. <span class="smcap">ii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_78_78" id="Footnote_78_78"></a><a href="#FNanchor_78_78"><span class="label">[78]</span></a> But as later indicated (<i>infra</i>, chap. <span class="smcap">xiii</span>), the apparent +simplicity of his analysis simply covers up, and does not eliminate, the +complexity of the situation.</p></div> + +<div class="footnote"><p><a name="Footnote_79_79" id="Footnote_79_79"></a><a href="#FNanchor_79_79"><span class="label">[79]</span></a> <i>Op. cit.</i>, pp. 61-62.</p></div> + +<div class="footnote"><p><a name="Footnote_80_80" id="Footnote_80_80"></a><a href="#FNanchor_80_80"><span class="label">[80]</span></a> See <i>supra</i>, chap. <span class="smcap">ii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_81_81" id="Footnote_81_81"></a><a href="#FNanchor_81_81"><span class="label">[81]</span></a> <i>Economics of Distribution</i>, p. 81.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_49" id="Page_49">[Pg 49]</a></span></p> +<h2><a name="CHAPTER_VII" id="CHAPTER_VII"></a>CHAPTER VII</h2> + +<h3>PROFESSOR CLARK'S THEORY OF SOCIAL VALUE</h3> + + +<p>And all attempts to explain value in terms of these abstract factors must +become similarly entangled. The Austrians themselves have pointed out that +the explanation of value from the standpoint of individual costs involves a +circle, that costs resolve themselves into value-complexes, and that the +cost theorists are really explaining value by value.<a name="FNanchor_82_82" id="FNanchor_82_82"></a><a href="#Footnote_82_82" class="fnanchor">[82]</a> I have shown that +the same is true of the Austrian attempt to reduce values to terms of +individual utilities. It is also true of Hobson's attempt to combine the +two explanations, as shown, and the same could be shown of at least the +earlier writings of Professor Marshall.<a name="FNanchor_83_83" id="FNanchor_83_83"></a><a href="#Footnote_83_83" class="fnanchor">[83]</a> There is another attempt to +work out the explanation of value, still in terms of sacrifices in +production and satisfactions in consumption, but no longer from the same +standpoint, which deserves special attention here. Professor Clark, in the +<i>Yale Review</i> for 1892, in the article above referred to, "The Ultimate +Standard of Value" (since reproduced as chapter <span class="smcap">xxiv</span> of the <i>Distribution +of Wealth</i>), has attempted so to add up individual units of cost and +individual units of<span class='pagenum'><a name="Page_50" id="Page_50">[Pg 50]</a></span> utility, as to get absolute social units of utility +and cost either of which might serve as the ultimate standard of value. It +will be remembered that I have already quoted from this article with +reference to the quantitative nature of value, and that Professor Clark +stands as the leading exponent of the conception that value is a social +fact, "is social and subjective," the value put on goods by the social +organism. In this article, he is seeking the unit of social value, the +measure of the importance of a good to society. Either the unit of social +utility or the unit of social detriment would serve, but it happens, he +holds, that the unit of detriment is the more available for purposes of +measurement, and so the final unit<a name="FNanchor_84_84" id="FNanchor_84_84"></a><a href="#Footnote_84_84" class="fnanchor">[84]</a> of value is the sacrifice entailed +by a quantity of distinctively social labor (p. 261). Professor Clark +avoids the complication that labor and capital work together, by isolating +labor at the margin, in the manner made familiar in his <i>Distribution of +Wealth</i>. Assume capital constant, introduce or subtract a small quantity of +labor, and whatever of product is added or subtracted is due to that labor +only (p. 263).</p> + +<div class="blockquot"><p>This virtually unaided labor is the only kind that can +measure values. Attempts to use the labor standard have +come short of success, because of their failure to +isolate from capital the labor to which products are +due.</p></div> + +<p>Work, however, is miscellaneous and heterogeneous. There is needed "a +pervasive element<span class='pagenum'><a name="Page_51" id="Page_51">[Pg 51]</a></span> in the actions, and one that can be measured." This is +"personal sacrifice," which is "common to all varieties of labor." An +isolated worker, making and using his own products, readily finds an +equilibrium point, where utility and sacrifice are equal, and where he +stops his day's work (pp. 364-65). If the product of any hour's labor be +destroyed (p. 366) he will not suffer the loss of anything more important +than the product of the last hour's labor, for he will forego that, and +re-create the good with the higher utility. The utility of the last hour's +product and the pain of the last hour's labor are equal. Either is his +<i>unit of value</i>.</p> + +<p>Of society regarded as a unit the same is true.</p> + +<div class="blockquot"><p>Take away the articles that the society gains by the +labor of a morning hour,—the necessary food, clothing +and shelter that it absolutely must have,—and it will +divert to making good the loss the work performed at +the approach of evening, which would otherwise have +produced the final luxuries on its list of goods.</p></div> + +<p>(It might be questioned parenthetically here whether <i>all</i> are fed before +<i>any</i> begin to enjoy luxuries, or, if not, just what is considered the +"socially necessary" amount of food, and whom does social necessity require +that we feed before we devote an hour to making luxuries?) Professor Clark +finds the final hour of social labor-pain to be a compound, the sum of the +final hour's dissatisfactions of all the laborers. This sum is the +<i>ultimate standard of value</i>. It is in equilibrium with the sum of the +utilities of the final hour's products to all the laborers considered as +consumers. This<span class='pagenum'><a name="Page_52" id="Page_52">[Pg 52]</a></span> is illustrated by a diagram on page 271. But the problem +still remains as to the value of particular goods. Granted that the sum of +the satisfactions got from the total amount—a vast amount—of the final +hour's product is equal to the sum of the pains incurred in producing this +giant composite, and granted that the pain incurred by each man in making +his part of the composite is equal to the satisfaction gained by him in +consuming his part of the composite—<i>not the same part</i>!—the problem +still remains as to the connection of the marginal utility and the value of +the <i>particular</i> goods that make up the composite, with social labor. +Professor Clark concedes at once that there is no necessary connection +between the utility of the good to him who enjoys it, and the pain of +making it to him who makes it. What connection is there than, between the +value of the good and social labour? It is at this point, I venture to +suggest, that Professor Clark's argument fails. I shall not follow his +argument in detail, but shall quote a couple of paragraphs which seem to +exhibit the failure (pp. 272-73):—</p> + +<div class="blockquot"><p>The burden of labor entailed on the man who makes an +article stands in no relation to its market value. The +product of one hour's labor of an eminent lawyer, an +artist, a business manager, etc., may sell for as much +as that of a month's work of an engine stoker, a +seamstress or a stonebreaker. Here and there are +"prisoners of poverty," putting life itself into +products of which a wagon load can literally be bought +for a prima donna's song. Wherever there is varying +personal power, or different position, giving to some +the advantage of a monopoly, there is a divergence of +cost and value, if by these terms we mean the cost to +the<span class='pagenum'><a name="Page_53" id="Page_53">[Pg 53]</a></span> producer, and the value in the market. Compare the +labor involved in maintaining telephones with the rates +demanded for the use of them. Yet of monopolized +products as of others our rule holds good; they sell +according to the disutility of the terminal social +labor expended in order to acquire them.</p></div> + +<p>But suppose they are <i>bought</i> with monopolized products, and suppose that a +monopoly element enters, at some stage or other, into <i>every</i> product of +the market, and in varying degrees in each, either in the form of control +of raw material, or special native mental or physical aptitude, or patent +right, or any other of the innumerable forms that monopoly takes? Can these +monopoly products then call forth a definite amount of social labor? Or can +they merely call out a definite amount of value?<a name="FNanchor_85_85" id="FNanchor_85_85"></a><a href="#Footnote_85_85" class="fnanchor">[85]</a> "<i>Differences in +wealth between different producers cause the cost of products to vary from +their value.</i>" (Italics mine.) But surely this is our old circle again. If +differences in wealth, which is the embodiment of value, are to modify the +working of the "pervasive element" of "personal sacrifice" (p. 263), it is +difficult to see<span class='pagenum'><a name="Page_54" id="Page_54">[Pg 54]</a></span> how that pervasive element can in any way be an ultimate +explanation or measure of value.</p> + +<div class="blockquot"><p>The rich worker stops producing early, while the +sacrifice entailed is still small; but his product +sells as well as if it were costly.</p> + +<p>If we say that the prices of things correspond with the +amount and <i>efficiency</i> of the labor that creates them, +we say what is equivalent to the above proposition. The +efficiency that figures in the case is power and +willingness to produce a certain effect. The +willingness is as essential as the power.... Moreover, +the effect that gauges the efficiency of a worker is +the value of what he creates; and this value is +measured by the formula that we have attained.</p></div> + +<p>But surely the circle is very clear here: the price (the expression of the +value) of the good depends on the efficiency of the labor that produces it; +and the efficiency of the labor depends on the value (of which price is the +expression) of the good produced. Our "pervasive element" is complicated, +as a determinant of social value, with several factors, among them <i>the +value of the wealth of the different producers</i>, and the efficiency, which +can be defined only in terms of <i>value product</i>, of the workers. Value is +an ultimate in the explanation of value, and the effort to make individual +costs and utilities an ultimate explanation of value has failed—as it must +needs fail—even in the hands of Professor Clark.</p> + +<p>The validity of this criticism, assuming it valid, in no way invalidates +Professor Clark's contention that value is, after all, the work of the +social organism, and that the value of a good, at a given time, measures +its importance to the social organism at that time. The difficulty with +the<span class='pagenum'><a name="Page_55" id="Page_55">[Pg 55]</a></span> analysis just criticized is that it has not been an analysis of an +organic process, but rather, a mathematical study of sums. The individuals +have been treated, not as interacting in their mental processes, but as +isolated atoms, each of whom has a definite individual <i>quantum</i> of pain or +pleasure, and the social unit of pain or pleasure has been treated as +simply a sum of these. But it is characteristic of an organism that the +simple rules of arithmetic do not hold precisely in its activity. The whole +is more than the sum of its parts, and something different from that sum. +Professor Clark elsewhere says:—</p> + +<div class="blockquot"><p>But the owner is a part of the social body, and is the +organic whole indifferent to his suffering? If so, +society is an imperfect and nerveless organism. It +ought to feel, as a whole, the sufferings of every +member, and what makes or mars the happiness of every +slightest molecule, should make or mar the happiness of +all.</p> + +<p>A sympathetic connection between members of society +exists, etc.<a name="FNanchor_86_86" id="FNanchor_86_86"></a><a href="#Footnote_86_86" class="fnanchor">[86]</a></p></div> + +<p>True: and indicative of the true line of study for the conception of value +as a product of an organic society. But in the foregoing analysis we have +no hint of "nerves" or social sympathy or other manifestation of a +collective mental activity. The "social psychology" promised on page 261 of +the article just reviewed, turns out not a social psychology at all, but +simply a summation of the results of many individual psychologies. But the +line along which the true nature of value is to be found is clearly +indicated in the<span class='pagenum'><a name="Page_56" id="Page_56">[Pg 56]</a></span> general conception of the psychical organic unity of +society, and it remains for the present writer to make use of the studies +in social psychology of Tarde, Cooley, Baldwin, and others,<a name="FNanchor_87_87" id="FNanchor_87_87"></a><a href="#Footnote_87_87" class="fnanchor">[87]</a> not +available, for the most part, when Professor Clark's article was written, +in an effort to get nearer the heart of the problem.</p> + +<p>The doubly abstract conceptions of individual costs and individual +satisfactions, connected with economic goods,—abstracted first from the +social <i>milieu</i>, and second, from the rest of the individual's interests +and desires,—lead us around in a circle, from value to value, but never to +anything else. It is the belief of the writer that we get out of the circle +only by broadening our explanation phenomena, by giving up these +abstractions, and getting back to the concrete reality of the total +intermental life of men in society.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_82_82" id="Footnote_82_82"></a><a href="#FNanchor_82_82"><span class="label">[82]</span></a> See <i>inter alia</i> Böhm-Bawerk, "Ultimate Standard of Value," +<i>Annals of the American Academy</i>, vol. <span class="smcap">v</span>; also his "Grundzüge," p. 516, n.; +Wieser, <i>op. cit.</i>, bk. <span class="smcap">v</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_83_83" id="Footnote_83_83"></a><a href="#FNanchor_83_83"><span class="label">[83]</span></a> See Laughlin, J. L., "Marshall's Theory of Value and +Distribution," <i>Q. J. E.</i> vol. <span class="smcap">i</span>, pp. 227-32. See also Marshall's reply in +the same volume.</p></div> + +<div class="footnote"><p><a name="Footnote_84_84" id="Footnote_84_84"></a><a href="#FNanchor_84_84"><span class="label">[84]</span></a> There is a needless complication here. For Professor Clark's +purposes it is not necessary to seek a <i>unit</i> of value; what is needed is +simply a vindication of the quantitative social value concept. The unit may +then be arbitrarily chosen—<i>e.g.</i>, the amount of value in 23.22 grains of +gold. <i>Cf.</i> the discussion of abstract units of value, <i>infra</i>, chap. <span class="smcap">xvii</span>, +pp. 183-84.</p></div> + +<div class="footnote"><p><a name="Footnote_85_85" id="Footnote_85_85"></a><a href="#FNanchor_85_85"><span class="label">[85]</span></a> The issue appears to be shifted here. If an ultimate <i>cause</i> +of value is being sought, it is certain that labor does not supply it for +the monopolized goods; and if it be simply a <i>measure</i> of the amount of +value embodied in the monopolized goods that is looked for, then it is +clear that goods produced entirely by competitive labor (assuming that such +goods exist, which I deny) can fulfill this function only by virtue of +being themselves <i>valuable</i>—and that they serve this purpose no better +than other goods into which a monopoly element enters. The doctrine here +criticized goes back to Ricardo: "If the state charges a seignorage for +coinage, the coined piece of money will generally exceed the value of the +uncoined piece of metal by the whole seignorage charged, <i>because it will +require a greater quantity of labour, or, which is the same thing, the +value of the produce of a greater quantity of labour, to procure it</i>." +(Italics mine.) Ricardo, <i>Works</i>, McCulloch edition, 1852, p. 213.</p></div> + +<div class="footnote"><p><a name="Footnote_86_86" id="Footnote_86_86"></a><a href="#FNanchor_86_86"><span class="label">[86]</span></a> <i>Philosophy of Wealth</i>, 1892 ed., p. 83.</p></div> + +<div class="footnote"><p><a name="Footnote_87_87" id="Footnote_87_87"></a><a href="#FNanchor_87_87"><span class="label">[87]</span></a> Tarde, <i>The Laws of Imitation</i>, <i>Psychologie Économique</i>, 2 +vols., Paris, 1902. Cooley, C. H., <i>Human Nature and the Social Order</i>, +<i>Social Organisation</i>. Baldwin, Mark, <i>Social and Ethical Interpretations</i>. +Elwood, C. A., <i>Some Prolegomena to Social Psychology</i>, Chicago, 1901; "The +Psychological View of Society," <i>American Journal of Sociology</i>, March, +1910. Hayden, Edwin Andrew, <i>The Social Will</i>, 1909. No attempt is made at +an exhaustive list here, nor are the writers mentioned to be held +accountable for the views maintained in the text, though their point of +view is in general that which I shall maintain.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_57" id="Page_57">[Pg 57]</a></span></p> +<h2><a name="PART_III" id="PART_III"></a>PART III</h2> + +<h3>THE PRESUPPOSITIONS OF ECONOMIC THEORY</h3> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_59" id="Page_59">[Pg 59]</a></span></p> +<h2><a name="CHAPTER_VIII" id="CHAPTER_VIII"></a>CHAPTER VIII</h2> + +<h3>THE PHILOSOPHICAL AND PSYCHOLOGICAL PRESUPPOSITIONS</h3> + + +<p>The connection between social philosophy, on the one hand, and metaphysics +and epistemology on the other hand, has always been a close one,—a fact +not always adequately recognized by writers in the field of social science, +in economics, especially. Scientists often "ignore" philosophy, holding +that their concern is simply with the world of phenomenal "facts," and that +the injection of philosophic considerations is illicit and unscientific. +And this is often well enough in the field of the physical, chemical, and +biological sciences, where the procedure is primarily inductive, and the +data are got from sense observation. But in the social sciences, where the +procedure is so largely deductive, and where the data are often principles +of mind, whose truth is assumed as a starting point for investigation, and +especially in economic theory, such an attitude cannot be justified. For +philosophical assumptions <i>will</i> creep in, and the scientist has no option +about it. The only thing he can do is to be critical, and know definitely +<i>what</i> philosophical assumptions he is making,—and most of our treatises +on economic theory do not bear evidence that this critical work has been +done.<span class='pagenum'><a name="Page_60" id="Page_60">[Pg 60]</a></span></p> + +<p>There may be traced in the history of philosophy, in the ancient world, and +also in the modern era, three main stages in philosophic thought, each +accompanied by a distinctive set of ideas concerning the nature of society. +In distinguishing these three stages, in showing the relation of each to +social philosophy, and especially in tracing a parallel between the +philosophy of the ancients and that of modern times, I recognize the grave +dangers of giving a superficial treatment, and of distorting facts to make +them fit a schematism. I recognize, further, that a host of details and a +multitude of differences must be ignored in tracing the parallel I propose. +Considerations of space, moreover, prevent such a detailed justification of +the views here presented as would be required were this more than a minor +phase of my subject. The need for this is lessened, however, by the fact +that much of what follows is part of the commonplaces of the history of +philosophy,—albeit a repetition of it seems needed in a criticism of +economic theory. The three stages are: the dogmatic stage; the skeptical +stage; and the critical stage. In Greek philosophy, the first stage is +represented by the cosmological philosophers, as Thales, Anaximenes, and +Anaximander, who, with perfect confidence in the power of their minds to +solve the riddles of the universe, or rather, without questioning that +point at all, proceeded to spin out poetical accounts of the origin and +nature of things. The second stage is represented by the Sophists, who, +struck by the manifold divergences<span class='pagenum'><a name="Page_61" id="Page_61">[Pg 61]</a></span> in the philosophies of the earlier +schools, and by the lack of harmony between the god-given laws and rules of +morality which earlier tradition had handed down, and the needs of the +social conditions among which they lived, found themselves unable to find +truth readily, and reached the conclusion that each man is the measure of +truth, that there are no universal criteria, or valid standards. The third +stage begins with Socrates, who sought for a common principle of truth and +justice in the midst of divergences, and this critical movement, continued +by Plato and Aristotle, led to conceptions of unity once more.</p> + +<p>Now the social philosophy which goes with the first stage is relatively +undefined. It is for the most part content with the existing order, +recognizes a supernatural basis for it, and raises few questions. The +social philosophy of the second period is intensely individualistic. In the +third stage, the emphasis upon social solidarity and upon a unified, +organic conception of society, a society which is paramount to individual +interests and rights, comes to the fore again. The extreme poles of thought +are, on the one hand, an individualism which leaves scant room for any very +significant social relations whatsoever, and, on the other hand, a +socialism—like that of the <i>Republic</i>—which swallows up the individual. +The compromise view, expressed in the Aristotelian doctrine of the relation +between "form" and "matter," applied to the social problem, finds the +individual<span class='pagenum'><a name="Page_62" id="Page_62">[Pg 62]</a></span> very real, to be sure, but still real only in his social +relationships. Individual activities are facts, but social activity is more +than a mere sum of individual activities. Society and the individual are +alike abstractions, if viewed separately.</p> + +<p>The mediæval conflict over realism and nominalism really derives its +interest from the practical social issues involved, for the reality of the +Church, as more than a mere aggregate of its members, and the validity of +Christian doctrine, as more than the sum of individual beliefs, are at +stake.</p> + +<p>The cycle began again in modern times. As representatives of the dogmatic +period in modern philosophy, DesCartes and Spinoza may be chosen. They were +not, of course, naïvely dogmatic, for philosophy had learned much from its +many disappointments, and DesCartes, especially, starts out with +reflections which would seem to make him very much a skeptic. And yet each +believed in the power of the mind to draw absolute truth from itself, and +each proceeded in a highly rationalistic way to build up his system. The +very title of Spinoza's great work indicates this attitude of mind: +"<i>Ethica more geometrico demonstrata</i>." The conception of society which +characterizes this period is, again, not naïve, but still has a +supernatural, or at least a superhuman, basis, for it is in a Law of Nature +(capitalized and personified) that social institutions find their origin +and justification. Critical reflections, starting with Locke, and passing +through Berkeley to the absolute skepticism of Hume, bring in<span class='pagenum'><a name="Page_63" id="Page_63">[Pg 63]</a></span> the second, +or skeptical, period, in which the rationalistic-dogmatic certitude of +Spinoza and DesCartes is banished. And going with this movement in +philosophic thought comes the extreme individualism of Rousseau in +politics, and Adam Smith in economics. The movement away from skepticism, +beginning with Kant, puts the world, and especially society, back into +organic connections again, and we have, in Hegel, especially, society to +the fore, and the individual real only as a part of society. The organic +conception, revived by Hegel, and vitalized by the positivistic studies +which applied the Darwinian doctrine to social phenomena, has characterized +the greater part of the social philosophy of the last half hundred +years—of course, not without protest and highly necessary criticism.</p> + +<p>Now all of this is, of course, commonplace. And yet a failure to recognize +it has vitiated very much thinking in the field of economic theory. +Economic thought is to-day very largely based on the philosophic +conceptions which characterize the period in which economics began to be a +differentiated science,—the skeptical doctrines of David Hume, the close +friend of Adam Smith.<a name="FNanchor_88_88" id="FNanchor_88_88"></a><a href="#Footnote_88_88" class="fnanchor">[88]</a> The individual is all-important; his world of +thought and feeling is shut off from that of every other man; social +relationships are largely mechanical, and grow out of calculating +self-interest on the part of the individual; social<span class='pagenum'><a name="Page_64" id="Page_64">[Pg 64]</a></span> laws are conceived +after the analogy of physical laws. Ethics and politics, however, have been +far more influenced by later thinking, and the organic conception of +society has largely dominated these sciences of late, while the new +science, sociology, free to base itself more largely upon present-day +epistemological, philosophical, and psychological notions, has gone further +than any other in accepting the doctrine of the unity and pervasiveness of +social relations, organically conceived. I think there are few things more +strikingly in contrast than the conception of society which the student +meets in most works on economic theory, and that which he meets in studying +the other social sciences. That this is so is due precisely to the fact +that the economists have too largely neglected philosophy and psychology, +and have accepted uncritically the assumptions of the founders of the +science. Doctrines accepted then have become <i>crystallized</i>, and still form +part of the current stock in trade of economic science, even though +rejected by philosophy itself.</p> + +<p>To one of these faulty doctrines from the earlier time, attention has +already been called. It is that the intensities of wants and aversions in +the mind of one man stand in no relation to the same phenomena in the mind +of another man, and that there can be no comparison instituted between +them. The individual is an isolated monad,<a name="FNanchor_89_89" id="FNanchor_89_89"></a><a href="#Footnote_89_89" class="fnanchor">[89]</a> mechanically connected with +his fellows,<span class='pagenum'><a name="Page_65" id="Page_65">[Pg 65]</a></span> who are to him "a part of the <i>non-ego</i>,"<a name="FNanchor_90_90" id="FNanchor_90_90"></a><a href="#Footnote_90_90" class="fnanchor">[90]</a> but spiritually +self-sufficient and inaccessible. The doctrine appears in Marshall's +statement:<a name="FNanchor_91_91" id="FNanchor_91_91"></a><a href="#Footnote_91_91" class="fnanchor">[91]</a> "No one can compare and measure accurately against one +another even his own mental states at different times, and no one can +measure the mental states of another at all, except indirectly and +conjecturally, by their effects." Pareto I have quoted, as also Jevons, in +chapter <span class="smcap">iv</span>. The doctrine appears in Professor Veblen's recent article in +criticism of Professor Clark:<a name="FNanchor_92_92" id="FNanchor_92_92"></a><a href="#Footnote_92_92" class="fnanchor">[92]</a>—</p> + +<div class="blockquot"><p>It is evident, and admitted, that there can be no +balance, and no commensurability, between the laborer's +disutility (pain) in producing the goods and the +consumer's utility (pleasure) in consuming them, +inasmuch as these two hedonistic phenomena lie each +within the consciousness of a distinct person. There +is, in fact, <span class='pagenum'><a name="Page_66" id="Page_66">[Pg 66]</a></span><i>no continuity of nervous tissue</i> +[italics mine] over the interval between consumer and +producer, and a direct comparison, equilibrium, +equality, or discrepancy in respect of pleasure and +pain can, of course, not be sought except within each +self-balanced individual complex of nervous tissue.</p></div> + +<p>In the recent elaborate study, <i>Value and Distribution</i>, by Professor H. J. +Davenport, the theories based on the conception of the individual as an +isolated monad, a self-complete whole, with purely mechanical relationships +with other men, find their fullest and most self-conscious expression, and +the philosophical presuppositions are explicitly premised. The following +quotation from Thackeray's <i>Pendennis</i> is given as a footnote,<a name="FNanchor_93_93" id="FNanchor_93_93"></a><a href="#Footnote_93_93" class="fnanchor">[93]</a> in which +Professor Davenport's own conception is expressed:—</p> + +<div class="blockquot"><p>Ah, sir, a distinct universe walks about under your hat +and under mine—all things in nature are different to +each—the woman we look at has not the same features, +the dish we eat has not the same taste, to the one and +to the other; you and I are but a pair of infinite +isolations, with some fellow islands a little more or +less near us.</p></div> + +<p>This is, of course, manifestly the theme of the old subjectivistic +analysis, by which all things are reduced to thoughts, sensations, and +desires within the individual soul, and in accordance with which we have +none save conjectural knowledge<span class='pagenum'><a name="Page_67" id="Page_67">[Pg 67]</a></span> of anything outside of our own souls. Now +a general answer might be given that this is an epistemological principle +which holds true only for what Kant calls the "<i>Ding an sich</i>,"—if such a +thing there be—and that there is no more reason why it should apply to +human emotions, considered purely as phenomena, than to any other of the +phenomena with which science busies itself. If this principle be adhered +to, its effect will be simply to cast doubt on the conclusions of all +sciences, physical as well as psychical. Certainly psychology would be +impossible on this assumption, except in so far as the psychologist claims +only to be working out a science of his individual soul, which, so far as +he knows, is not true of any other individual. But it is precisely <i>not</i> +this that psychology attempts. It is concerned with the laws and behavior +of minds in general, with the "<i>typisch und allgemeingültig</i>" and not with +the mental idiosyncrasies of the particular individual.</p> + +<p>But the doctrine can be met from the standpoint of epistemology itself. The +writers who are responsible for this subjective analysis, have held that +<i>mind</i> is more nearly capable of being known by mind than is anything else, +since we can interpret things only in terms of our own experiences. The +real nature of a purely physical thing is far more deeply hidden from our +view than is the real nature of a mental fact, even though it be in the +mind of another. And especially would they grant a degree, at least, of +objective currency to clearly phrased conceptual<span class='pagenum'><a name="Page_68" id="Page_68">[Pg 68]</a></span> thought. Now I base +myself upon the present day pragmatic philosophy,<a name="FNanchor_94_94" id="FNanchor_94_94"></a><a href="#Footnote_94_94" class="fnanchor">[94]</a> which is, +essentially, concerned with the problem of knowledge. Its principle is that +we believe things to be true, not because of any knowledge we have of some +mystical, absolute truth, but because of our experiences of utilitarian +sort. That is true which works. That is true which we find will satisfy our +desires and needs. In a word, desire, volition, <i>values</i>, lie at the basis +of intellect.<a name="FNanchor_95_95" id="FNanchor_95_95"></a><a href="#Footnote_95_95" class="fnanchor">[95]</a> Whence it follows, that if our minds are so constituted +that we understand each other on the intellectual side, then there must be +a still deeper and more underlying similarity on the desire, feeling, +volitional side.<a name="FNanchor_96_96" id="FNanchor_96_96"></a><a href="#Footnote_96_96" class="fnanchor">[96]</a> Consequently, if there be anything at all, outside of +our own mind, which we <i>can</i> understand, it must be the feelings and +emotions of other men.</p> + +<p>Considerations of a practical nature give us the strongest possible grounds +for a belief that human desires, feelings, etc., are homogeneous and +communicable. The fact is that we all have back of us many millions of +years of evolutionary history in the same general environment. In the past, +with relatively minor variations, the same influences have played upon our +ancestors from<span class='pagenum'><a name="Page_69" id="Page_69">[Pg 69]</a></span> the beginnings of life on our planet. And then, we are born +into the same society, and it has given us, not, to be sure, the power of +reaction, but certainly all of our most important stimuli.<a name="FNanchor_97_97" id="FNanchor_97_97"></a><a href="#Footnote_97_97" class="fnanchor">[97]</a> Further, we +do get along in society. We laugh together, we play together, we share each +other's sorrows, we love and hate each other, in a way that would be wholly +impossible if we did not in practice assume the correctness of our +"inferences" about one another's motives and desires. And the fact that +these "inferences" are in the main correct is the one thing that makes +social life possible. We can, and do, understand one another's motives, +desires, wants, emotions. We can, and do, constantly communicate our +feelings to one another.</p> + +<p>It is only on the basis, further, of an intellectualistic psychology that +such a subjectivistic conception is possible. If the voluntaristic +psychology and the doctrine of "the unconscious" be accepted—and certainly +the psychological facts on which the latter is based must be accepted, +whether the metaphysical conclusions are or not<a name="FNanchor_98_98" id="FNanchor_98_98"></a><a href="#Footnote_98_98" class="fnanchor">[98]</a>—we have no basis +whatever for this doctrine that clearness holds within the mind, but that +without all is uncertain. Really, only a little part of our mental life is +in consciousness at any given moment. The "stream of consciousness" is but +a narrow thing, and the unity of the individual<span class='pagenum'><a name="Page_70" id="Page_70">[Pg 70]</a></span> mind is a unity, not of +consciousness, but of <i>function</i>. As Goethe somewhere says, we know +ourselves never by reflection, but by action. And often does it happen that +a sympathetic friend, or even an observant enemy, may interpret more +accurately our actions than we ourselves can do, and may measure more +accurately the strength of a given motive for us than we can ourselves. In +a certain sense, our knowledge of other minds is inference. We see other +men's actions, or hear their voices, or watch the muscles of their faces, +and so, indirectly, get at their thoughts and feelings. But, in much the +same sense, our knowledge of their actions, or of their voices, is +inference too. For we must interpret the image on the retina, or the sense +excitation in the ear. But practically, neither is inference, if by +inference be meant a consciously made judgment from premises of which we +are conscious. In a casual walk with a friend, where conversation flows +smoothly on easy topics, one is as <i>immediately</i> conscious of his friend's +thoughts and feelings, expressed in the conversation, as he is of the +scenes that present themselves by the way, or even of the thoughts that +arise within himself.<a name="FNanchor_99_99" id="FNanchor_99_99"></a><a href="#Footnote_99_99" class="fnanchor">[99]</a></p> + +<p>The significance of this conclusion is not quite the same as that which +might be expected from the context from which I have taken the doctrine +under criticism. The feelings of men with reference to economic goods are +facts of definite,<span class='pagenum'><a name="Page_71" id="Page_71">[Pg 71]</a></span> tangible nature, and subject-matter of social +knowledge. But we have not yet reached a standard or source of social +value. No homogeneous "labor jelly," or "pain jelly," or "utility +jelly,"<a name="FNanchor_100_100" id="FNanchor_100_100"></a><a href="#Footnote_100_100" class="fnanchor">[100]</a> made up by averaging arithmetically, or adding arithmetically, +individual efforts or pains or pleasures, will solve our problem for us—as +indeed I have been at pains to show in what has gone before. The purpose of +the foregoing criticism is primarily to clear the ground for a conception +of social organization which is more than mechanical, and in which the +individual is both less and more than a self-sufficient monad.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_88_88" id="Footnote_88_88"></a><a href="#FNanchor_88_88"><span class="label">[88]</span></a> This criticism applies to the teachings of James Mill, J. S. +Mill, and other sensationalist followers of Hume, even more than to Adam +Smith. But see Professor Albion W. Small's <i>Adam Smith and Modern +Sociology</i>, Chicago, 1907, esp. p. 51.</p></div> + +<div class="footnote"><p><a name="Footnote_89_89" id="Footnote_89_89"></a><a href="#FNanchor_89_89"><span class="label">[89]</span></a> It is easy for "analysis" to separate society into +"individual" monads, and impossible for "synthesis"—once the validity of +the analytic process is accepted—to put society together again. In fact, +once the analytic process is begun, and once its results are accepted as +anything more than matters of logical convenience, all unity and all +organic connections, whether in the social or in other fields, seem to +vanish like a dissolving show. There is a psychological doctrine of +monadism, quite as logical as the sociological monadology here criticized, +which finds it impossible to link together even the elements in a single +individual's mind. (See William James, <i>Principles of Psychology</i>, 1905 +ed., vol. <span class="smcap">i</span>, pp. 179-80.) Into what inextricable difficulties one falls, in +pursuing the monadistic logic, is more dramatically illustrated than by +anything else I know by Bradley's <i>Appearance and Reality</i>, esp. chaps. <span class="smcap">ii</span> +and <span class="smcap">iii</span>. The most useful viewpoint seems to be as follows: unity is as much +an object of immediate knowledge as is plurality,—both being, in fact, the +products of reflective thought. And unity is no more called upon to justify +itself, before we recognize its existence, than is plurality. <i>Cf.</i> William +James, <i>The Meaning of Truth</i>, New York, 1909, p. xiii; and also his +<i>Psychology</i>, vol. <span class="smcap">i</span>, pp. 224-25. <i>Cf.</i> also the writings of Professor John +Dewey.</p></div> + +<div class="footnote"><p><a name="Footnote_90_90" id="Footnote_90_90"></a><a href="#FNanchor_90_90"><span class="label">[90]</span></a> Jevons, <i>Theory of Pol. Econ.</i>, 3d ed., p. 14.</p></div> + +<div class="footnote"><p><a name="Footnote_91_91" id="Footnote_91_91"></a><a href="#FNanchor_91_91"><span class="label">[91]</span></a> <i>Principles</i>, 1907, p. 15 (1898 ed., p. 76). See also +Marshall's criticism of Cairnes' conception of supply and demand, in the +1898 edition of the <i>Principles</i>, p. 172.</p></div> + +<div class="footnote"><p><a name="Footnote_92_92" id="Footnote_92_92"></a><a href="#FNanchor_92_92"><span class="label">[92]</span></a> "Professor Clark's Economics," <i>Q. J. E.</i>, 1908, p. 170.</p></div> + +<div class="footnote"><p><a name="Footnote_93_93" id="Footnote_93_93"></a><a href="#FNanchor_93_93"><span class="label">[93]</span></a> Davenport, <i>op. cit.</i>, p. 300, n. It may seem somewhat unfair +to hold a man responsible for the view of another writer which he throws +into a footnote of his own book. One who has read Professor Davenport's +book, however, will recognize, I think, that this quotation does express +Professor Davenport's view. His discussion in the text on pages 300-301 +affirms virtually this same doctrine, as a proposition of psychology. See +also his discussions in small type on pages 336-37. His whole system is +based upon this doctrine.</p></div> + +<div class="footnote"><p><a name="Footnote_94_94" id="Footnote_94_94"></a><a href="#FNanchor_94_94"><span class="label">[94]</span></a> See, especially, William James, <i>Pragmatism</i>, and <i>The +Meaning of Truth</i>; John Dewey, <i>Essays in Logical Theory</i>; and F. C. S. +Schiller, <i>Humanism</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_95_95" id="Footnote_95_95"></a><a href="#FNanchor_95_95"><span class="label">[95]</span></a> The utter impossibility of adequately summing up a +philosophic doctrine in two or three sentences will excuse this statement +to those pragmatists who would prefer a somewhat different formulation.</p></div> + +<div class="footnote"><p><a name="Footnote_96_96" id="Footnote_96_96"></a><a href="#FNanchor_96_96"><span class="label">[96]</span></a> I am indebted for suggestions here to Professor H. W. +Stuart's article on "Valuation as a Logical Process," in Dewey's <i>Studies +in Logical Theory</i>, pp. 322-23.</p></div> + +<div class="footnote"><p><a name="Footnote_97_97" id="Footnote_97_97"></a><a href="#FNanchor_97_97"><span class="label">[97]</span></a> <i>Cf.</i> Baldwin, <i>Social and Ethical Interpretations</i>, +<i>passim</i>, and Cooley, <i>Human Nature and the Social Order</i>, <i>passim</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_98_98" id="Footnote_98_98"></a><a href="#FNanchor_98_98"><span class="label">[98]</span></a> The most interesting discussion of these topics I know is +that of Friedrich Paulsen, in his <i>Introduction to Philosophy</i> (translated +by Professor Frank Thilly).</p></div> + +<div class="footnote"><p><a name="Footnote_99_99" id="Footnote_99_99"></a><a href="#FNanchor_99_99"><span class="label">[99]</span></a> <i>Cf.</i> Perry, R. B., "The Hiddenness of the Mind," <i>Jour. of +Phil., Psy., and Sci. Meth.</i>, Jan. 21, 1909; "The Mind Within and the Mind +Without," <i>Ibid.</i>, April 1, 1909; "The Mind's Familiarity with Itself," +<i>Ibid.</i>, March 4, 1909. Urban, W. M., <i>Valuation</i>, p. 243.</p></div> + +<div class="footnote"><p><a name="Footnote_100_100" id="Footnote_100_100"></a><a href="#FNanchor_100_100"><span class="label">[100]</span></a> Davenport, <i>op. cit.</i>, p. 331.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_72" id="Page_72">[Pg 72]</a></span></p> +<h2><a name="CHAPTER_IX" id="CHAPTER_IX"></a>CHAPTER IX</h2> + +<h3>THE SOCIOLOGICAL PRESUPPOSITIONS</h3> + + +<p>Conceptions of the social unity fall, in the main, into three classes: the +mechanical, the biological, and the psychological. Each of these +conceptions recognizes, of course, that the individual has a mind, but the +first thinks of that mind as so shut in that the only connections between +men must be of an external sort; the second sees modes of collective action +<i>analogous</i> to the modes of individual action, and reaches the conception +of a social mind by analogy; while the third treats the social mind as an +empirical fact, the phenomena of which can be studied as concrete things in +detail. And there are gradations here, and combinations.</p> + +<p>The following extract, freely translated and substantially abridged, is +taken from chapter <span class="smcap">i</span> of DeGreef's <i>Introduction à la Sociologie</i>:—</p> + +<div class="blockquot"><p>It is in vain that Spencer protests against the +accusation that he has assimilated the laws of biology +with those of sociology. The confusion is everywhere +complete. He has not indicated a single law, nor a +single phenomenon, which has not its correspondent, if +not its equivalent, in the antecedent sciences. Draper, +in his <i>History of the Intellectual Development of +Europe</i>, adopts precisely the doctrine that the laws of +biology apply equally to sociology. Man is the +archetype of society. Nations pass through their +periods of infancy, adolescence, maturity, age, death. +This<span class='pagenum'><a name="Page_73" id="Page_73">[Pg 73]</a></span> sort of thing makes sociology wholly unnecessary. +The attempt of Stanley Jevons to explain economic +crises by sun-spots, so far from being an effort of +genius, is simply a <i>jeu d'esprit</i>. It is simply a +recognition of the common fact that climate is one of +the factors that influence man in society. According to +Hesiod, physical forces first engender each other, then +in turn the gods and man. Since then, social science +has in turn been founded on the laws of astronomy, +chemistry and biology. To-day it is the last, vitiated, +further, by false psychological notions about the power +and unlimited liberty of the reason, and the +consciousness of human individuals, and applied by +analogy to the collective reason.</p> + +<p>The error consists in looking for the explanation of +social phenomena in the most general laws. This is +natural within certain limits, but has been pushed to +extreme, but logical consequences, by the American, +Carey (<i>Social Science</i>). He looks, in effect, to one +of the oldest sciences, and one, consequently, relating +to the most highly general phenomena, those of +astronomy, for the universal laws of society. Geometry, +he holds, gives us principles equally valid for the +chemist, the sociologist, and for him who measures the +earth. A system assuming to explain complex phenomena +solely by the laws of phenomena more simple, may be +compared to the effort to give an account of a book, +not by reading it line by line, but by examining the +cover and the title-page.</p></div> + +<p>As DeGreef elsewhere puts it, there is a hierarchy in science, proceeding +from the more general to the less general, depending on the nature of the +phenomena studied. This hierarchy has been variously stated. Comte puts it +thus: mathematics, astronomy, physics, chemistry, physiology, social +physics (sociology). Baldwin,<a name="FNanchor_101_101" id="FNanchor_101_101"></a><a href="#Footnote_101_101" class="fnanchor">[101]</a> writing much later, of course, puts it +thus:—</p> +<p><span class='pagenum'><a name="Page_74" id="Page_74">[Pg 74]</a></span></p> +<div class="blockquot"><p>So here, as elsewhere, there is a gradation, a +hierarchy, in science: chemistry necessary to life, but +not itself of life; forces in the environment necessary +to evolution, but not themselves vital; life-processes +necessary to consciousness, but not themselves mental; +consciousness necessary to society, but not all +consciousness social; social consciousness necessary to +social organization, but not all social consciousness +actually in a social organization.</p></div> + +<p>Now the point with DeGreef is that the special laws of each successively +narrower group of phenomena are to be explained only by concrete study, and +that it is wholly vain to think that the application of principles drawn +from other, more general groups of phenomena give us these laws. Thus the +economists talk of "equilibria" between various economic forces, just as if +they were physical forces;<a name="FNanchor_102_102" id="FNanchor_102_102"></a><a href="#Footnote_102_102" class="fnanchor">[102]</a> and a whole school of mathematical +economists has arisen, who find economic life a thing that will fit into +equations. This work is valuable, but it is not final. Analogies are +helpful, but are not ultimate. Similarly, the biological conception, which +likens society to a man, has its contributions. The biological analogy has +been pushed very far: thus Novikow calls the social intellectual <i>élite</i> +the social <i>sensorium</i>; Lilienfeld likens the action of a mob to female +hysterics; Simiand calls the idle rich the adipose tissue of society, the +priests also represent fat, while the police are the social phagocytes +which eat up wandering criminal cells.<a name="FNanchor_103_103" id="FNanchor_103_103"></a><a href="#Footnote_103_103" class="fnanchor">[103]</a> But this, though suggestive, is +not an ultimate social philosophy or even an approach<span class='pagenum'><a name="Page_75" id="Page_75">[Pg 75]</a></span> to it. Even DeGreef, +as I shall indicate a little later, errs by trying to trace a too rigid +parallel between individual structure and social structure. We must +introduce a careful study of the peculiarly social phenomena, those +phenomena which are to be found only in society, before we are privileged +to talk of a social organism or a social mind.<a name="FNanchor_104_104" id="FNanchor_104_104"></a><a href="#Footnote_104_104" class="fnanchor">[104]</a></p> + +<p>On the other hand, it seems to me that Baldwin has erred in the opposite +direction. The laws of chemistry do not cease to be operative in the human +body, even though more complex biological laws operate there. And the laws +of biology are not suspended just because an animal organism develops a +mind. The greatest defect of the older psychology, against which the +experimental psychology is a reaction, was its failure to take proper +account of physical processes connected with consciousness. Now society, +according to Baldwin, is best described as analogous to a psychological +organization, and such an organization as is found in the individual in +<i>ideal thinking</i>.<a name="FNanchor_105_105" id="FNanchor_105_105"></a><a href="#Footnote_105_105" class="fnanchor">[105]</a> But surely this is an abstraction, and not a fact. +Society does not cease to be physical, chemical, biological, subconscious, +merely because it has also attained in part a higher form of psychical +activity (to which Professor Baldwin would object on the basis of his +distinction between the "social" and the "socionomic").</p> + +<p>DeGreef's conception seems to me better, on this logical point,—though of +course Baldwin's<span class='pagenum'><a name="Page_76" id="Page_76">[Pg 76]</a></span> analysis of facts represents a great advance—but it is +not satisfactory:<a name="FNanchor_106_106" id="FNanchor_106_106"></a><a href="#Footnote_106_106" class="fnanchor">[106]</a>—</p> + +<div class="blockquot"><p>Since unconsciousness, instinct, and reflex action +characterize the psychic life of inferior beings, and +even the greater part of the intellectual activity of +those most highly developed, man included, we ought not +to be astonished, <i>a priori</i>, that the collective force +which constitutes the social superorganism presents the +same characteristics.</p> + +<p>Consciousness is aroused in the individual, and new +activities result, which soon, however, lose their +conscious character, and become reflex and automatic. +So with society.</p></div> + +<p>Then follows an elaborate analogy between the individual brain and nervous +system and their functions, and the social structure and its functions, +which we need not reproduce here. This analogy seems forced to me. There is +little point to trying to find such exact correspondences. It is enough if +we have our general organic principle as a method of study, and then +proceed to the study of social facts. I shall myself, however, make use of +some analogies in what follows, but shall not insist too strongly upon +them. I may here express the opinion that society is an organism less +highly developed than a man's body or a man's mind, and that its unity is +primarily a unity of <i>function</i> rather than of <i>structure</i>,<a name="FNanchor_107_107" id="FNanchor_107_107"></a><a href="#Footnote_107_107" class="fnanchor">[107]</a> though +there is some structural unity.</p> + +<p>The conception of the social unity which seems most useful for the purpose +of our study—and the writer would insist that no social theory is<span class='pagenum'><a name="Page_77" id="Page_77">[Pg 77]</a></span> valid +for all purposes, and that many social theories have value for some +particular purposes—is that of Professor C. H. Cooley, as set forth, +particularly, in the opening chapters of his <i>Social Organization</i>. As this +book, however, presupposes certain doctrines set forth in Professor +Cooley's earlier book, <i>Human Nature and the Social Order</i>, a brief account +of certain points in that study must also be given. It may be noted, at the +outset, that Professor Cooley neglects the study of the material aspects of +society, and centres his attention upon the mental side. His purpose in +this is not to deny the significance of the material factors, as he +explains in the preface to <i>Social Organization</i>, but simply to narrow the +scope of his labors. The writer wishes here to make a similar statement +regarding his own viewpoint. In the following pages, attention will be +centred almost exclusively upon the psychical forces involved, upon what we +shall call the "social mind." In this, however, it is explicitly recognized +that the physical environment and the biological individuals are essential +factors, and that the forces which are manifested in them must be +recognized as coefficients with the psychical forces which we shall study, +in the determination of any concrete social situation. I have no intention +whatever of giving an independent, ontological character to this psychical +abstraction. For the purposes of this study we shall regard the physical +factors as constant,—an assumption justified for purposes of study, +provided we subsequently, in handling concrete<span class='pagenum'><a name="Page_78" id="Page_78">[Pg 78]</a></span> problems, make allowance +for the extent to which it is untrue.</p> + +<p>In his earlier book,<a name="FNanchor_108_108" id="FNanchor_108_108"></a><a href="#Footnote_108_108" class="fnanchor">[108]</a> Professor Cooley objects to the customary +antithesis between "individual" and "social." They are simply two aspects +of the same thing. He discriminates three meanings of the word, social, +none of which, he says, is properly to be contrasted with "individual": (1) +that pertaining to the collective aspect of humanity, in its widest and +vaguest meaning; (2) that pertaining to immediate intercourse; (3) +conducive to collective welfare, and so nearly equivalent to moral. But +none of these meanings has "individual" as its natural or logical +antithesis.</p> + +<p>There are several forms of individualistic views: (1) <i>Mere</i> Individualism. +The distributive phase of human life is almost exclusively regarded. Each +person is thought of as a separate agent; all social phenomena originate in +the action of such agents. This view is much discredited by evolutionary +science and philosophy, but is by no means abandoned even in theory, and +practically it enters as a premise into most common thought of the day. (2) +Double Causation,—a partition of power between society and the individual, +both thought of as separate causes. This is ordinarily the view met with in +social and ethical discussions. There is here the same premise of the +individual as a separate, unrelated agent; but over against him is set a +vaguely conceived collective interest or force. People are so accustomed to +think of themselves as uncaused causes, special<span class='pagenum'><a name="Page_79" id="Page_79">[Pg 79]</a></span> creators on a small scale, +that when general phenomena are forced on their notice, they think of them +as something additional, and more or less antithetical. The correction of +this error will leave the contest between individualism and socialism, +considered as philosophical notions, rather than as names for social +programs, among the forgotten <i>débris</i> of speculation. (3) The third view +he calls Primitive Individualism. The individual is prior in time to +society. This view is a variety of the preceding, perhaps formed by +mingling individualistic preconceptions with a rather crude evolutionary +philosophy. Individuality is lower in rank as well as prior in time. The +social is the good, moral, and the individual is the anti-social and bad. +Professor Cooley's view is that individuality is neither prior in time, nor +inferior in rank, to sociality. If social be applied only to the higher +forms of mental life, it should be opposed, not to individual, but to +animal or sensual, or the like. Our remote ancestors were just as inferior +when viewed separately as when viewed collectively. (4) The fourth form of +individualism he calls the Social Faculty view. The social includes only a +part, and often a rather definite part, of the individual. Individual and +social are two different parts of human nature. Love is social; fear and +anger are unsocial and individualistic. Some writers have treated +intelligence as an individualistic faculty, and have founded sociality on +some form of sentiment. This is well enough if we use social in the second +sense of pertaining to immediate conversation,<span class='pagenum'><a name="Page_80" id="Page_80">[Pg 80]</a></span> or fellow feeling. But that +these sociable emotions are essentially higher, or pertain peculiarly to +collective life, is very doubtful. Cooley holds that no such division of +human nature is possible. Social or moral progress consists less in the +aggrandizement of certain faculties and suppression of others, than in the +discipline of all with reference to a progressive organization of life.</p> + +<p>The rest of the book is devoted to a study of society in its distributive +aspect, or as we should say ordinarily, using the terms which Professor +Cooley objects to, the study of the social nature of individuals. It is +based in large measure upon a study of the development of children. +Personality is an essentially social thing. The "I" feeling is a thing +which only social influences can develop.<a name="FNanchor_109_109" id="FNanchor_109_109"></a><a href="#Footnote_109_109" class="fnanchor">[109]</a> The thought process within +the "individual mind" is a social process,—we think in words, and, indeed, +in conversations.<a name="FNanchor_110_110" id="FNanchor_110_110"></a><a href="#Footnote_110_110" class="fnanchor">[110]</a> I shall not develop these notions at length. They +are of similar nature to those in Professor Baldwin's <i>Social and Ethical +Interpretations</i>, when he discusses the "dialectic of personal growth." +They are interesting and pertinent as showing in a concrete way the +tremendous and comprehensive sweep of social factors in the creation of the +individual mind.</p> + +<p><i>Social Organization</i>, which appeared in 1909, takes up the collective +aspect of human-mental life.</p> + +<div class="blockquot"><p>Mind is an organic whole, made up of coöperating +individualities, in somewhat the same way that the +music of an<span class='pagenum'><a name="Page_81" id="Page_81">[Pg 81]</a></span> orchestra is made up of divergent but +related sounds.<a name="FNanchor_111_111" id="FNanchor_111_111"></a><a href="#Footnote_111_111" class="fnanchor">[111]</a> No one would think it necessary or +reasonable to divide the music into two kinds, that +made by the whole, and that of the particular +instruments, and no more are there two kinds of mind, +the social mind and the individual mind. The view that +all mind acts together in a vital whole from which that +of the individual is never really separate, flows +naturally from our growing knowledge of heredity and +suggestion, which makes it increasingly clear that +every thought we have is linked with the thought of our +ancestors and associates, and through them with that of +society at large. It is also the only view consistent +with the general standpoint of modern science, which +admits nothing isolate in nature.</p> + +<p>The unity of the social mind consists not in agreement +but in organization, in the fact of reciprocal +influence or causation among its parts, by virtue of +which everything that takes place in it is connected +with everything else, and so is an outcome of the +whole. Whether, like the orchestra, it gives forth +harmony may be a matter of dispute, but that its sound, +pleasing or otherwise, is the expression of a vital +coöperation, cannot well be denied.<a name="FNanchor_112_112" id="FNanchor_112_112"></a><a href="#Footnote_112_112" class="fnanchor">[112]</a></p></div> + +<p>Professor Cooley stresses the unconscious character of many of these social +relations. "Although the growth of social consciousness is perhaps the +greatest fact of history, it has still but a narrow and fallible grasp of +human life." Cooley objects to the Cartesian postulate, which makes +"<i>cogito</i>," "I think," the fundamental and most absolutely certain fact in +the world. He holds that it grows out of the idiosyncrasy of a highly +specialized, introspective philosopher's mind, and that, for the normal +mind, "<i>cogitamus</i>," "we<span class='pagenum'><a name="Page_82" id="Page_82">[Pg 82]</a></span> think," is just as obvious.<a name="FNanchor_113_113" id="FNanchor_113_113"></a><a href="#Footnote_113_113" class="fnanchor">[113]</a> The "I" feeling, +and the "we" feeling are differentiated together out of the inchoate +experience of the child. And "I" and "we" are alike social in their nature. +The self, for Professor Cooley, is not a scholastic "soul-substance" or +transcendental ego, but simply a relatively differentiated portion of the +social mind. "'Social organism' using the term in no abstruse sense, but +merely to mean a vital unity in human life, is a fact as obvious to +enlightened common sense as individuality."<a name="FNanchor_114_114" id="FNanchor_114_114"></a><a href="#Footnote_114_114" class="fnanchor">[114]</a></p> + +<p>I pause here to contrast this view of the "social mind" with that of some +other writers, of whom I may take Professor Giddings as representative. I +quote from page 134 of the 1905 edition of Professor Giddings' <i>Principles +of Sociology</i>:—</p> + +<div class="blockquot"><p>The social mind is the phenomenon of many individual +minds in interaction, so playing upon one another that +they simultaneously feel the same sensation or emotion, +arrive at one judgment and perhaps act in concert. It +is, in short, the mental unity of many individuals, or +of a crowd.</p></div> + +<p>The social mind for Professor Giddings is thus made to depend upon an +<i>identity of content</i> in many individual minds. For Professor Cooley, it is +an organization and integration of many differentiated and divergent minds, +in a complementary activity. Professor Cooley's conception, thus, takes in +all minds, while that of Professor Giddings would exclude the dissenters. +Further, Professor Giddings emphasizes the element<span class='pagenum'><a name="Page_83" id="Page_83">[Pg 83]</a></span> of consciousness; +unconscious processes are included by Professor Cooley, whose conception +really finds a place for the total psychosis of every individual in +society. It may be noted, however, that Professor Giddings, in the more +detailed exposition of the classroom, does not stress either the agreement +or the consciousness in the absolute fashion that the brief passage quoted +would indicate, and readily concedes that for theoretical purposes the more +inclusive conception of Professor Cooley's is a very useful one. The +difference between his viewpoint, as set forth in the classroom, and that +of Professor Cooley, is primarily a matter of emphasis.<a name="FNanchor_115_115" id="FNanchor_115_115"></a><a href="#Footnote_115_115" class="fnanchor">[115]</a></p> + +<hr style='width: 45%;' /> + +<p>The following propositions are submitted, partly by way of summary, and +partly by way of addition, as embodying the points essential for present +purposes as to the nature of society:—</p> + +<p>(1) Society is an organism. Organism as here used is a generic term, with +the following connotation: (<i>a</i>) an organism has different parts, with +different functions; (<i>b</i>) these parts are interdependent; (<i>c</i>) an +organism is alive, in the sense in which Spencer defined life, that is, an +organism has the power of making appropriate inner adjustments to the +external environment; (<i>d</i>) an organism has a central theme, not externally +imposed, to the working-out of which the different parts contribute; but +the organism—or the<span class='pagenum'><a name="Page_84" id="Page_84">[Pg 84]</a></span> parts—is not necessarily conscious of this central +theme; (<i>e</i>) an organism is constantly changing its "matter" without +essential change in "form." (In a biological organism the process of +metabolism goes on constantly. In a society, men are constantly passing out +of society through death, or through lapsing into idiocy, etc., and new +elements are constantly entering, not through the biological process of +birth, but through the process of becoming "socialized," in the manner +described by Baldwin as the "dialectic of personal growth," or by Cooley, +in his <i>Human Nature and the Social Order</i>.) (<i>f</i>) An organism grows, by +progressive differentiations and integrations.</p> + +<p>(2) There is a mind of society, a psychical organism. The minds of +different individuals—themselves differentiated into systems of thoughts +and feelings that are often lacking in harmonious adjustment to each +other—are in such intimate interrelation that they may be said to +constitute one greater mind. The physiological basis of this greater +mind—if it be thought necessary to locate it—is the brains and nervous +systems of individual men, <i>plus</i> that set of physical symbols (e.g., +language, literature, gestures, art, music, etc.) which are set in motion +by the nerve activity of one man, and then stimulate nerve activity on the +part of another. This unity is primarily a unity of <i>function</i>, +however.<a name="FNanchor_116_116" id="FNanchor_116_116"></a><a href="#Footnote_116_116" class="fnanchor">[116]</a></p> +<p><span class='pagenum'><a name="Page_85" id="Page_85">[Pg 85]</a></span></p> +<p>(3) The fact of individual differences among the minds of men, does not +vitiate the conception of a mind of society. It rather proves the <i>organic</i> +character of the social mind, by introducing the fact of <i>differentiation</i>. +The integrating element is found in the points which individual minds have +in common.</p> + +<p>(4) The mind of society, like the mind of a man, is primarily volitional, +and not intellectual. (Volition is here used in the wider sense, as +including all motor and affective activities in mind.) Like the individual +mind, the greater part of it is vaguely conscious or subconscious.</p> + +<p>(5) Less highly organized than the individual mind, the mind of society is +less rational, and less highly conscious, than most, if not all, +individual<span class='pagenum'><a name="Page_86" id="Page_86">[Pg 86]</a></span> minds. "Social self-consciousness" is a rare, if not +non-existent phenomenon.</p> + +<p>(6) The mind of society, in its entirety, is of necessity not a matter of +perception for any individual. Each individual sees only that part which is +in his own mind—not all of that!—and in the minds of other individuals +with whom he is in communication.</p> + +<p>(7) But the minds of other men may be, and normally are, in part objects of +perception for any social individual. There may be an "inferential" element +in our perception of mental processes in the minds of other men, but it is +not inference.</p> + +<p>(8) The individual monad is a myth. His machinery of thought—language and +logic—is socially given him, his ideals and interests, his tastes even in +matters of food and drink, are socially given,—apart from social +intercourse his human-mental life would be mere potentiality.</p> + +<p>(9) The worth of this conception of social reality, like the worth of other +scientific hypotheses, is to be determined by a pragmatic test: does it +relate phenomena the connection between which was previously obscure, +without introducing greater difficulties of its own? I believe that, for +the problem of value theory at least, it will find such a pragmatic +justification.</p> + +<hr style='width: 45%;' /> + +<p>This lengthy excursion into a field not commonly counted as part of the +economist's territory is to be justified on the ground that the economist +has not only failed to take account<span class='pagenum'><a name="Page_87" id="Page_87">[Pg 87]</a></span> of the conclusions reached there, but +has also, too often, been making and using assumptions which contradict +them. It is further necessary, because the conception of "social value," +which forms the subject of this book, assumes a "social organism" which can +give value to goods, without making it clear what sort of an organism +society is conceived to be. The excursion has at least revealed some of the +many meanings that lie behind that term. And it is especially necessary in +view of the fact that the conception of "social value" has been attacked on +the ground that the organic conception has been abandoned by the +sociologists themselves.<a name="FNanchor_117_117" id="FNanchor_117_117"></a><a href="#Footnote_117_117" class="fnanchor">[117]</a> That this is true of the biological analogy, +which made society an animal, and drew social laws from biological laws, +rather than from the study of social phenomena, is readily granted. But +that sociologists have abandoned the generalized conception which gives us +primarily a highly convenient schematism on which to group the social facts +that we actually find, is by no means conceded. And the question is really +one as to those facts themselves rather than as to the mode of grouping and +conceiving them. If social activity be nothing more than a <i>sum</i> of +<i>similar</i> individual activities, as Professor Davenport seems to think in +the article criticizing Professor Seligman,<a name="FNanchor_118_118" id="FNanchor_118_118"></a><a href="#Footnote_118_118" class="fnanchor">[118]</a> and if the individual<span class='pagenum'><a name="Page_88" id="Page_88">[Pg 88]</a></span> be +an isolated monad, then Professor Davenport's criticisms will hold. But if +the individual<span class='pagenum'><a name="Page_89" id="Page_89">[Pg 89]</a></span> is in vital psychic relation with other individuals, so +much so that he is impossible apart from those relations, and if social +activity is, not a <i>sum</i> of <i>similar</i> individual activities, but an +<i>integration</i> and <i>organization</i> of <i>differentiated</i> and <i>complementary</i> +individual activities, spiritual as well as physical, then Professor +Davenport's criticisms are not valid. And it is on this point that I would +strongly insist. The argument of the following chapters may be put—though +not so conveniently—in terms of the mechanical analogy, and the psychical +processes treated, not as the action of a unitary, though differentiated, +mind, but as a balancing and transformation of forces, and practically the +same results for value theory will follow.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_101_101" id="Footnote_101_101"></a><a href="#FNanchor_101_101"><span class="label">[101]</span></a> Baldwin, Mark, <i>Social and Ethical Interpretations</i>, 1906 +ed., pp. 8-9.</p></div> + +<div class="footnote"><p><a name="Footnote_102_102" id="Footnote_102_102"></a><a href="#FNanchor_102_102"><span class="label">[102]</span></a> <i>Cf.</i> John Stuart Mill's <i>Logic</i>, book <span class="smcap">vi</span>, on the nature of +social laws.</p></div> + +<div class="footnote"><p><a name="Footnote_103_103" id="Footnote_103_103"></a><a href="#FNanchor_103_103"><span class="label">[103]</span></a> Cited by Baldwin, <i>op. cit.</i>, p. 495, n.</p></div> + +<div class="footnote"><p><a name="Footnote_104_104" id="Footnote_104_104"></a><a href="#FNanchor_104_104"><span class="label">[104]</span></a> See Giddings, <i>Principles of Sociology</i>, 1905 ed., p. 194.</p></div> + +<div class="footnote"><p><a name="Footnote_105_105" id="Footnote_105_105"></a><a href="#FNanchor_105_105"><span class="label">[105]</span></a> <i>Op. cit.</i>, p. 571.</p></div> + +<div class="footnote"><p><a name="Footnote_106_106" id="Footnote_106_106"></a><a href="#FNanchor_106_106"><span class="label">[106]</span></a> <i>Op. cit.</i>, chap. <span class="smcap">xiii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_107_107" id="Footnote_107_107"></a><a href="#FNanchor_107_107"><span class="label">[107]</span></a> <i>Cf.</i> Elwood, C. A., <i>Some Prolegomena to Social +Psychology</i>, Chicago, 1901. <i>Cf. infra</i> in this chapter the note on +Professor Elwood's view.</p></div> + +<div class="footnote"><p><a name="Footnote_108_108" id="Footnote_108_108"></a><a href="#FNanchor_108_108"><span class="label">[108]</span></a> <i>Human Nature, etc.</i>, chap. <span class="smcap">i</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_109_109" id="Footnote_109_109"></a><a href="#FNanchor_109_109"><span class="label">[109]</span></a> <i>Op. cit.</i>, chaps. <span class="smcap">v</span> and <span class="smcap">vi</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_110_110" id="Footnote_110_110"></a><a href="#FNanchor_110_110"><span class="label">[110]</span></a> <i>Ibid.</i>, pp. 52 <i>et seq.</i></p></div> + +<div class="footnote"><p><a name="Footnote_111_111" id="Footnote_111_111"></a><a href="#FNanchor_111_111"><span class="label">[111]</span></a> This analogy is unhappy, if pushed very far—like most +analogies between physics and psychics. It serves as a useful figure of +speech, however,—which is all Professor Cooley designs it for.</p></div> + +<div class="footnote"><p><a name="Footnote_112_112" id="Footnote_112_112"></a><a href="#FNanchor_112_112"><span class="label">[112]</span></a> <i>Social Organization</i>, pp. 3-4.</p></div> + +<div class="footnote"><p><a name="Footnote_113_113" id="Footnote_113_113"></a><a href="#FNanchor_113_113"><span class="label">[113]</span></a> <i>Social Organization</i>, pp. 6-9.</p></div> + +<div class="footnote"><p><a name="Footnote_114_114" id="Footnote_114_114"></a><a href="#FNanchor_114_114"><span class="label">[114]</span></a> <i>Ibid.</i>, p. 9.</p></div> + +<div class="footnote"><p><a name="Footnote_115_115" id="Footnote_115_115"></a><a href="#FNanchor_115_115"><span class="label">[115]</span></a> Compare Professor Giddings' more detailed and concrete +treatment of the subject in his <i>Readings in Descriptive and Historical +Sociology</i>, New York, 1906, pp. 124-428.</p></div> + +<div class="footnote"><p><a name="Footnote_116_116" id="Footnote_116_116"></a><a href="#FNanchor_116_116"><span class="label">[116]</span></a> Professor C. A. Elwood, in the essay mentioned <i>supra</i>, +<i>Some Prolegomena to Social Psychology</i>, is the first, so far as I know, to +apply Professor Dewey's psychological viewpoint to the study of the social +mind. Chap. <span class="smcap">ii</span> of his book contains a very excellent brief discussion of +this point. Without going into the matter at length, it must suffice to say +here that the new viewpoint stresses the significance of mental processes +for <i>activity</i>, for the adjustment of the organism to its environment, +rather than the <i>structure</i> or <i>content</i> of the mental process. It stresses +impulse, instinct, habit, etc., and refuses to undertake a synthetic +process, which strives to get some sort of mechanical unity by combining +abstract, structural elements. The unifying principle in mind is +<i>activity</i>, <i>function</i>. Professor Elwood holds that, while the individual +mind has unity both of structure and of function, the social mind has a +unity of function only. I think the contrast is not so sharp as that. There +is <i>some</i> structural unity in the social mind, there are points of identity +among individual minds, common ideals, and a common—even though +small—body of knowledge, especially in very elementary matters. And the +unity of the individual mind is primarily a unity of <i>function</i>. +Certainly—and there is no issue with Professor Elwood here!—there is no +unifying "soul-substance" lying back of the psychic activities organized in +the single individual mind. And the analogy between the mind of an +individual and the mind of society is not intended to read into the social +mind any of the hypothetical character which an absolutistic, +preëvolutionary metaphysics ascribed to the individual mind, but rather—in +so far as the issue is raised at all—to divest the individual mind of just +that hypothetical character. <i>Cf.</i> Friedrich Paulsen's <i>Introduction to +Philosophy</i>, on "soul-substance," and Wundt's <i>Völker-Psychologie</i>, vol. <span class="smcap">i</span>, +chap. <span class="smcap">i</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_117_117" id="Footnote_117_117"></a><a href="#FNanchor_117_117"><span class="label">[117]</span></a> Davenport, <i>op. cit.</i>, pp. 467-68.</p></div> + +<div class="footnote"><p><a name="Footnote_118_118" id="Footnote_118_118"></a><a href="#FNanchor_118_118"><span class="label">[118]</span></a> <i>Op. cit.</i>, pp. 445-46. (The reference is given to Professor +Davenport's book for the convenience of the reader. The original article +appears in the <i>Journal of Political Economy</i> for March, 1906.) "Some +linguistic uses connected with collective nouns will offer a point of +departure. When thought of merely as indicating an aggregate, a unit, the +collective noun takes a singular verb; if regarded as a collection of +units, it takes the plural verb.... +</p><p> +"Now, in many cases, though the act or the situation asserted is really one +of each individual by himself, there is no occasion for insisting upon +this; no ambiguity or inaccuracy or misapprehension is involved in saying +that 'the battalion is eating its dinner'; it is a shorthand fashion of +speech, but it is perfectly intelligible; it is common enough to think of a +battalion as a unit, and the act of dining is a simple one in which all +join, and in which all comport themselves in pretty much the same way; from +the point of view adopted, the interest proceeded upon, the purpose in +hand, no importance attaches to the fundamental separateness of the +activities, and to their entire lack either of psychical unity or of +purposive coöperation; they are simply similar—roughly simultaneous—and +are thought of in block. True, one man eats rapidly and another slowly, +some little and others much, and a few sick ones not at all; but the +expression serves, and implies its own limitations of accuracy.... But when +it comes to asserting that the army is brushing its teeth, or has stubbed +its toe, or has a stomach ache, there is obvious difficulty. These things +are not done jointly, coöperatively, by aggregates, and will not bear +thinking over into this form. +</p><p> +"And so we may speak of public opinion, the preference, or habit, or +custom, or convention, of society; and no harm need come of it, despite the +fact that some men neither think nor choose in the manner implied, but have +their own peculiar judgments or choices or wishes, and yet are members of +society, entitled to be included in any exact formulation; every one knows +that the thought really runs upon majorities of ''most everybodies'; that +is, no harm need come of it, if only there were not people to take the +notion of a 'social mind' seriously, and to import into cases calling for +accurate analysis, and to accept as sober fact, a mere figure of speech, or +at best a loose analogy drawn from biological science. For to the biologist +and the sociologist it is to be charged—or credited—that the +society-as-an-organism formula has found its way into economic thought. And +thus hereby a doctrine long since abandoned in economic reasonings is in +the way of reappearing; for have we not need of normals and averages? Else +our doctrine in getting accurate and actual will get difficult also. And +so, by the aid of the sociologist, through the magic of the +society-as-an-organism incantation, a resurrection miracle has lately been +worked; we salute the average man." +</p><p> +Whether any serious advocate of the organic conception of society will +recognize in this caricature the doctrine which he maintains may well be +doubted. Certainly it would never occur to us to construct an organism by +averaging its organs! Nor do we try to get a social mind by adding a sum of +similar physical activities, or even similar mental activities. An organism +is a functional unity of <i>different</i> and <i>complementary parts</i>.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_91" id="Page_91">[Pg 91]</a></span></p> +<h2><a name="PART_IV" id="PART_IV"></a>PART IV</h2> + +<h3>A POSITIVE THEORY OF SOCIAL VALUE</h3> + + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_93" id="Page_93">[Pg 93]</a></span></p> +<h2><a name="CHAPTER_X" id="CHAPTER_X"></a>CHAPTER X</h2> + +<h3>VALUE AS GENERIC. THE PSYCHOLOGY OF VALUE</h3> + + +<p>We return, then, to the problem of the nature of value. Value is more than +the total utility of a good, or the marginal utility of a good, to an +individual, and it is more than a ratio of exchange. Economic value is a +species of the <i>genus</i> value, which runs through other social sciences, as +ethics, æsthetics, jurisprudence, etc. Sometimes these various values are +so intermingled that it is impossible to tell them apart: thus, what kind +of value did a human life have in early Germanic jurisprudence, when a +<i>wergeld</i> was accepted as compensation for killing a man?</p> + +<p>Ethical and legal values we recognize as something very different from the +feelings of single individuals, and also as something very different from +abstract ratios. In fact, the idea of quantitative ratios in connection +with moral values is somewhat startling—though we do apply the "times +judgment" pretty far, and say, "he's twice the man the other fellow is," or +"this isn't half as bad as that." But we do not go into refinements, +ordinarily, and try to make the ratios more exact, as by saying that the +value of this noble deed is three and three eighths times as great as that. +The quantitative measure of legal value is a more familiar idea. Thus, a +man gets<span class='pagenum'><a name="Page_94" id="Page_94">[Pg 94]</a></span> five dollars fine for a plain drunk, and twenty-five dollars for +getting drunk and "cussin' around" (a scale of "prices" recently +established in the court of a Missouri Justice of the Peace), or three +years in the penitentiary for one crime, and ten years for another. Here we +have quantitative measurements of values, but still it is rather strange to +our thought to speak of a ratio of exchange between them. We have no +occasion to exchange them ordinarily, even though it may happen that a +criminal, in contemplating the chances of success in two alternative +depredations, will weigh the penalties to which he would be liable in the +two cases against each other; and, indeed, the law of supply and demand +holds here also (though inversely applied, for we are dealing with negative +values). If a particular crime (as "Black-Handing") increases rapidly, we +increase the penalty on it to bring it to a stop. But this generalization +of the idea of value ought to make clear one thing: exchange, at least in +its ordinary meaning,<a name="FNanchor_119_119" id="FNanchor_119_119"></a><a href="#Footnote_119_119" class="fnanchor">[119]</a> is not the essence of value. Exchange is a +factor in estimating value only in economic life. And even there, values +are often estimated without actual exchange, and the art of accountancy has +arisen for that purpose.</p> + +<p>An exhaustive study of this generic aspect of value lies, of course, +outside the scope of this book. Ehrenfels, Meinong, and others,<a name="FNanchor_120_120" id="FNanchor_120_120"></a><a href="#Footnote_120_120" class="fnanchor">[120]</a> have<span class='pagenum'><a name="Page_95" id="Page_95">[Pg 95]</a></span> +made fruitful investigations in the psychology of value, with primary +reference to the problems of ethical value, while Gabriel Tarde, +approaching the subject with a sociological, rather than psychological or +ethical interest, has also made some illuminating suggestions. The most +comprehensive work in English, from the psychological point of view, is by +Professor W. M. Urban, whose <i>Valuation</i> appeared in 1909. His interest is +also chiefly in ethical, rather than economic, value. Reference has been +made in an earlier footnote<a name="FNanchor_121_121" id="FNanchor_121_121"></a><a href="#Footnote_121_121" class="fnanchor">[121]</a> to Simmel's views. There is, in fact, a +rich literature on the subject. The theory of economic value to be +developed in this volume, however, is relatively independent of many of the +theories treated in this literature, since, as will appear later, the +question I wish to raise is, not so much as to the fundamental nature of +value, in its psychological aspects, but rather, as to <i>what</i> individual +values (and in what <i>relations</i>) are significant for the explanation of the +particular sort of value with which the economist is concerned. The +exposition which follows will be clearer, however, if a psychological +theory of value be premised, and the discussion of social economic value +will gain from a consideration of ethical and other forms of value, in +their sociological aspects, as treated by some of the writers named. The +rest of this chapter will be concerned with the problem of value as it +presents itself in individual psychology, and later chapters will treat the +problem of social value.</p> + +<p><span class='pagenum'><a name="Page_96" id="Page_96">[Pg 96]</a></span></p><p><i>For</i> the experience, and at the time of the experience, a value is a +<i>quality</i> of the object valued.<a name="FNanchor_122_122" id="FNanchor_122_122"></a><a href="#Footnote_122_122" class="fnanchor">[122]</a> Values are "tertiary qualities" (to +borrow an expression from Professor Santayana's <i>Life of Reason</i><a name="FNanchor_123_123" id="FNanchor_123_123"></a><a href="#Footnote_123_123" class="fnanchor">[123]</a>), +just as real and objective as the "primary" and "secondary" qualities. We +speak of a gloomy day, or a fearful sight, and the gloom is a quality of +the day, and the fearfulness is really in the object—for the experience. +When we have sufficiently reflected upon the situation to be able to +separate subject and object, and to divest the object of the quality, and +put the fear in ourselves, or the gloom in our own emotional life, then the +experience is already past, and the value, as the value of that object, has +ceased to be. We are already over our fear when we can separate it from<span class='pagenum'><a name="Page_97" id="Page_97">[Pg 97]</a></span> +the object. These qualities are intensive qualities, may be greater or less +in degree, i.e., are quantities.<a name="FNanchor_124_124" id="FNanchor_124_124"></a><a href="#Footnote_124_124" class="fnanchor">[124]</a> And they must first <i>exist</i>, as such +quantities, before any reflective process of evaluation and comparison can +put them in a scale, and make clear their <i>relative</i> values.<a name="FNanchor_125_125" id="FNanchor_125_125"></a><a href="#Footnote_125_125" class="fnanchor">[125]</a></p> + +<p>So much for the experience as an immediate fact. If we break up the +experience analytically, however, we of course first distinguish subject +and object, and we throw the "tertiary quality," of value, over to the side +of the subject. It is a phase of the subject's emotional life. In this +analytical process we necessarily make abstractions,—the elements with +which we finally come out, put together in a synthesis, will not give us +our concrete experienced value again. But, recognizing this, we may still +distinguish what seem to be the more important aspects of the value +experience, on its psychological side, and set forth the criteria by which +a value is to be recognized. First of all, then, value has its roots in the +emotional-volitional side of mind. A pure intellect, if we may imagine it, +would understand logical necessity, would contemplate the "world of +description," but could know nothing of the "world of appreciation," or of +values.<a name="FNanchor_126_126" id="FNanchor_126_126"></a><a href="#Footnote_126_126" class="fnanchor">[126]</a> (It is precisely because intellect is never "pure," because it +always has its emotional accompaniment and presuppositions, that we can +objectively communicate our values, as urged in chapter <span class="smcap">viii</span>.) But<span class='pagenum'><a name="Page_98" id="Page_98">[Pg 98]</a></span> what +phases of the emotional-volitional side of mind are most significant? For +hedonism, an abstract element, a <i>feeling</i>, a pleasure or a pain, is the +essence of the value,—in fact, <i>is</i> the value. Critics of hedonism, as +Ehrenfels<a name="FNanchor_127_127" id="FNanchor_127_127"></a><a href="#Footnote_127_127" class="fnanchor">[127]</a> and Professor Davenport,<a name="FNanchor_128_128" id="FNanchor_128_128"></a><a href="#Footnote_128_128" class="fnanchor">[128]</a> have made <i>desire</i>, rather +than feeling, the worth-fundamental. The psychology lying back of this +conception represents a great advance over the passive, associationalistic, +element psychology of the hedonists, and is especially significant as +emphasizing the impulsive, dynamic nature of value, but it is still too +abstract,—indeed, it abstracts from a very fundamental aspect of the value +as <i>experienced</i>, namely, the feeling itself. Moreover, in many cases, +value may be great with desire at a minimum, else we must say that value +ceases when an object is <i>possessed</i>, and desire is satisfied. I may value +my friend greatly, may be vividly conscious of that value, and yet, because +he <i>is</i> my friend, because I already possess him, may find the element of +desire a minor phase in his value, even if it be present at all.<a name="FNanchor_129_129" id="FNanchor_129_129"></a><a href="#Footnote_129_129" class="fnanchor">[129]</a> +Hedonism abstracts a prominent and important phase of the value experience, +and while it errs in making that phase the whole of the experience, and +while it has sadly misinterpreted that phase (for feelings of value cannot +be reduced to pleasure and pain feelings), still we cannot afford to +disregard it. Just because the hedonistic analysis is crude, it has to +seize on something obvious. If we must choose between<span class='pagenum'><a name="Page_99" id="Page_99">[Pg 99]</a></span> feeling and desire +as <i>the</i> value-fundamental, we must, I think, with Meinong and Urban,<a name="FNanchor_130_130" id="FNanchor_130_130"></a><a href="#Footnote_130_130" class="fnanchor">[130]</a> +settle on feeling rather than desire. Our point will be, however, to +protest against the identification of value with either of these, and to +distinguish both of them as <i>moments</i>, or phases, in value, and value +itself as a moment or phase in the total psychosis. Value is not to be +understood apart from what Urban calls its "presuppositions."<a name="FNanchor_131_131" id="FNanchor_131_131"></a><a href="#Footnote_131_131" class="fnanchor">[131]</a> Every +value presupposes a going on of activity, and is intimately linked with the +total psychosis,—a moving focal point of clear consciousness, with a +surrounding area of vaguer processes, gradually shading off into the +subconscious and unconscious at the borders. Every value is linked with the +whole body of ideas, emotions, habits, instincts, impulses, which, in their +organic totality, we call the personality. Back of the value stands a long +history, which persists into the present in the form of dispositions and +activities, of which we are unconscious so long as they are unimpeded, but +which spring into consciousness at once if arrested. If the object be one +that appeals to simple biological impulses, we may, as a rule, safely +abstract from most of these "presuppositions," and centre attention upon +the biological impulse and its accompanying feelings and ideas. But as we +rise to objects that appeal to wider and higher interests, the essential +presuppositions include more and more till, in vital ethical values, +virtually the whole personality is essentially involved.<span class='pagenum'><a name="Page_100" id="Page_100">[Pg 100]</a></span> Of these +presuppositions, or "funded meaning," we need not be conscious in any +detail. The value, which is the emotional-volitional aspect of this funded +meaning, is, of course, sufficient, so long as it is unchallenged by an +opposing value, for the motivation of our activity—which is the essential +function of values. The presuppositions tend to become explicit when the +value is challenged by another value, though they never come entirely into +light, in the case of the higher values, and to make them even +approximately clear is the work of long conflict in an introspective mind. +A frequent result of conflicts among values is a sort of mechanical "haul +and strain," producing "more heat than light." The question of the +relations among values is a separate topic, which will be discussed for its +own sake later. We are here interested in it as making clearer the nature +of the "presuppositions" of value.</p> + +<p>Now in the value, as has been said, we may distinguish both desire and +feeling. The feelings, in Professor Dewey's phrase, are "absolutely +pluralistic" and cannot be reduced to any one type, or two types, as +pleasure and pain. The desires may be either intense or slight, without +reference to the amount of the value, depending on circumstances. As +stated, if we <i>have</i> the object we value, the element of desire must be +reduced to an <i>attitude</i>, to a disposition to desire, in the event the +object should be lost. It remains a vague background of concern, of +"anxiety lest the object escape," capable, of course, of springing into +full<span class='pagenum'><a name="Page_101" id="Page_101">[Pg 101]</a></span> intensity if need be. In æsthetic values, and in the values of +mystical repose, we have cases where desire is,<a name="FNanchor_132_132" id="FNanchor_132_132"></a><a href="#Footnote_132_132" class="fnanchor">[132]</a> thus, at a minimum. +Strictly speaking, desire, as a conscious fact, has in it always a negative +aspect, a privative aspect,—we desire when we are incomplete, when we +lack. It is this negative aspect of desire which the Greek philosophers, as +Aristotle, stressed, and which has led absolute idealism to eliminate +desire from its conception of the Absolute Spirit. But desire has also a +positive or active aspect, and in this aspect it remains in all values. +Where the activity is perfectly unified,—a situation which we sometimes +approximate,—we may not be conscious of desire, even though intense +activity is going on. Since, however, the human mind is rarely in this +state, and never completely in it, we may hold that desire, in its +privative aspect, is always to some degree present, if only as a vague +uneasiness. And as a disposition to activity, if the value should be +threatened, desire is always present.</p> + +<p>Conversely, desire may be at a maximum, and feeling at a minimum. If we do +<i>not</i> possess the object, if we are striving for it, while there may be and +doubtless is feeling in connection with the desire, it cannot, obviously, +be the <i>same</i> feeling that we would experience if the object were present +and quenching the desire. Indeed, it may be held that much of the +feeling-accompaniment of intense desire is extraneous to the value-moment: +that it is, in fact, kinæsthetic feeling,<span class='pagenum'><a name="Page_102" id="Page_102">[Pg 102]</a></span> due to the stress of opposing +muscular reactions, etc. The disposition to feel is there, and, if the +object of desire be one that is familiar, the mere anticipation of it may +call up traces of the feeling that its presence has in the past produced +and will produce again. But the feeling element in such a situation is a +minor phase.</p> + +<p>Finally, unless we mean to insist that all the objects which one values, +and whose values motivate one's conduct, are present in consciousness all +the time, we must recognize that neither desire nor feeling need be actual, +present, conscious facts, for the value to be effective. It may happen that +the object of value is one reserved for later use, and that it is not +threatened. In such a case we may accord its value intellectual +recognition, with desire and feeling both at a minimum, and that +recognition may serve as a term in a logical process which may lead to a +practical conclusion of significance for action. Or, a value may form part +of the unconscious "presupposition" of another value, which is consciously +felt at the moment. Mind is economical. Consciousness is not wasted, when +there is no function to be served by it. The essential thing about value is +that it motivate our conduct. If a satisfactory set of habits be built up +about a value, it may serve this purpose perfectly, without coming into +consciousness very often. But both desire and feeling must be potentially +there.</p> + +<p>A further element is necessary. Meinong insists upon an existential +judgment, a judgment that the object valued is real, as essential to<span class='pagenum'><a name="Page_103" id="Page_103">[Pg 103]</a></span> +value.<a name="FNanchor_133_133" id="FNanchor_133_133"></a><a href="#Footnote_133_133" class="fnanchor">[133]</a> Gabriel Tarde<a name="FNanchor_134_134" id="FNanchor_134_134"></a><a href="#Footnote_134_134" class="fnanchor">[134]</a> makes a similar contention, holding that +belief, as well as desire, is involved in value, and that a diminution of +either means a lessening of the value. Urban's opinion, which seems to me +the correct one, is that we need not and cannot go so far as this.<a name="FNanchor_135_135" id="FNanchor_135_135"></a><a href="#Footnote_135_135" class="fnanchor">[135]</a> In +many cases such judgments are explicit and the value could not exist if the +object were explicitly judged unreal. But the mere unconscious assumption +or presumption of the reality of the object, the mere "reality-feeling," is +sufficient,—as is obvious enough from the fact that we value the objects +of our imagination. We shall often find, especially in the field of the +social values to which we shall shortly turn, that Tarde's contention is +highly significant, particularly with reference to economic values, and +there, particularly in the matter of credit phenomena.<a name="FNanchor_136_136" id="FNanchor_136_136"></a><a href="#Footnote_136_136" class="fnanchor">[136]</a> But explicit +affirmation, even there, is not necessary, provided the question of reality +is not raised at all. A "reality-feeling," however, is essential. It should +be noticed, too, that this "reality-feeling" is an essentially emotional, +rather than intellectual, fact. It is the emotional "tang" which +distinguishes <i>belief</i> from mere ideation, and, if it be present, the +ideation and explicit judgment may be dispensed with.</p> + +<p>In the value experience, as a conscious experience, and from the structural +side, we may distinguish<span class='pagenum'><a name="Page_104" id="Page_104">[Pg 104]</a></span> these phases: feeling, desire, and the +reality-feeling, each present at least to a minimal degree. And yet it +seems to me that we have in none of these, considered as phases <i>in +consciousness</i>, the most essential aspect of value. For our purposes the +structural aspect is not the most significant. The <i>functional</i> aspect is +of more importance. And the function of values is the function of +<i>motivation</i>. That value is greatest which counts for most in motivating +activity. A well-established and unquestioned value, which in a concrete +situation has the <i>pas</i> over all the others concerned, has little need to +awaken the emotional intensity that other, less certain, values, whose +position in the scale is as yet undetermined, may require. A girl is +arranging a dinner-party. Whom shall she invite? Well, her chum of course +must be there. No question arises. There is no need for conscious emotion. +One or two others are settled upon almost as readily, and with as little +emotional intensity. But now comes the problem <i>at the margin</i>! For eight +or ten others are almost equally desirable, and there are only six places. +The lower values, compared with each other, must show themselves for what +they are, must come vividly into consciousness, must be felt and desired +<i>in order that</i> they may be <i>compared</i>,—not in order that they may be! +From the functional side, then, the test of a value is its influence upon +activity. The "common denominator," or, better, the abstract essence, of +values, is, not feeling, nor desire, but power in motivation, and the +expression of this is of course the<span class='pagenum'><a name="Page_105" id="Page_105">[Pg 105]</a></span> activity itself. The <i>functional</i> +significance of the consciously realized desire and feeling aspects of +values comes in when values are to be compared and weighed against one +another, and—a phase that was stressed in a preceding section, and will +again be adverted to shortly—when values are to be <i>shared</i> consciously by +different individuals, when they are to be communicated and +discussed,—that is to say, are to become objects of a group consciousness.</p> + +<p>The significant thing about value, then, from this functional point of view +is its dynamic quality. Value is a <i>force</i>, a motivating force. But now we +must revert to our original point of view,—the total situation. We have, +by an analytical process, sundered subject and object, and then, within the +subject, have discriminated phases which psychological analysis reveals. +But in the course of activity, these elements are not discriminated. The +value is, not in the subject, but in the <i>object</i>. The object is an +embodiment of the force. It has power over us, over our actions. If the +object be a person, we are under his control—to the extent of the value. +If the object be a thing controlled by another person, we are subject to +his control—to the extent of the value. I do not wish to be understood as +picking out this abstract phase of value as the whole of the story, or +thinking that it is possible for value to exist in this abstract form. +Qualities are never separate. But I do contend that this is the essential +and universal element in values, and that for an individual engaged in the +active conduct of life, this<span class='pagenum'><a name="Page_106" id="Page_106">[Pg 106]</a></span> aspect is so significant that it may often be +the sole feature to engage his attention—because it is the sole feature +that <i>need</i> engage his attention for the activity to go on in harmony with +his values. Here, then, is value "stripped for racing": <i>a quantity of +motivating force, power over the actions of a man, embodied in an object</i>. +All the other phases, in the course of the active experience itself, may be +relegated to the sphere of the implicit.</p> + +<p>A necessary limitation has been definitely indicated in what has gone +before, but, to avoid misunderstanding, it may be well to indicate it more +explicitly. Not every form of impulse is to be counted a value. Every state +of consciousness is motor, and tends to pass into action, even vague, +undefined feelings, and half-conscious fancies. A value must have its +organic presuppositions, as indicated before, and must be embodied in an +<i>object</i>. The objects of value may be infinitely various: they may be +economic goods, they may be persons, they may be activities, they may be +other values, they may be ideal objects, the creatures of our imaginations, +they may be social utopias or the Kingdom of Heaven. But there must be an +object, and the value is a quality of the object. But, functionally, the +essential thing about this value is its dynamic character.</p> + +<p>Values are positive and negative.<a name="FNanchor_137_137" id="FNanchor_137_137"></a><a href="#Footnote_137_137" class="fnanchor">[137]</a> A "fearful sight" repels us, has a +negative value, tends,<span class='pagenum'><a name="Page_107" id="Page_107">[Pg 107]</a></span> to the extent of its strength, to make us withdraw. +A bad act, an ugly woman, a cruel man,—here we have negative values. +Little need be said further with reference to this point. They alike are +motivating forces, the positive values attracting us, the negative values +repelling us.</p> + +<p>The question of the relations among values we shall discuss rather briefly, +not that it is unimportant, but that much of it is familiar. Values may be +complementary—as when several objects are all essential to one another if +any of them are to be of use. Values may depend on other values, as the +value of the means depends on the value of the end, which is its essential +"presupposition." Values may antagonize each other, and here two cases are +to be distinguished, which differ so much in degree that the difference may +be regarded as qualitative. Values may be in their nature quite compatible, +so that nothing in their character prevents the realization of both, but +there may not be <i>room</i> enough for both, owing to the limitation of our +resources,—as when the young lady of our illustration had only six seats +at her dinner, and so was obliged to exclude some of her friends. But the +values may be qualitatively incompatible. We may be unable to realize them +both because the one involves a different sort of <i>self</i> from the self that +could realize the other. This is the typical case in ethical values, where +the presuppositions, especially in ethical crises, involve the whole +personality. In case of such conflicts, say between the value of Sabbath +observance and the allurement of Sunday baseball<span class='pagenum'><a name="Page_108" id="Page_108">[Pg 108]</a></span> in the case of an +orthodox "fan," we may have, as before indicated, a mere mechanical haul +and stress, in which one or the other wins by sheer force, to the very +considerable discomfort of the uneasy victim. But the conflict may lead to +a reëxamination of the presuppositions of each value, to a process of +bringing each into more organic relation to the whole system of values. In +this process, other values may be called into play, may reënforce one or +the other of the two alternative values. And, after such a process, both +values may be different from what they were. There may emerge some higher +value which comprehends them both, or one may be reduced to a minor place, +and the other may prevail. Values are no more permanent than any other +phase of the mental life. Constant transformations, even though not always +fundamental transformations, take place.</p> + +<p>There is another case which is so familiar to economists that it need +merely be adverted to. Where objects of value are indivisible, we must take +one <i>or</i> the other, if there be a conflict. But, in the case of +qualitatively compatible objects, a different situation is the rule. We may +have <i>part</i> of one, <i>and</i> part of the other, and the question arises as to +<i>how much</i> of each. Here the Austrian analysis gives us an answer, which, +when we generalize it, despite its antiquated psychology, may be accepted +with little modification.<a name="FNanchor_138_138" id="FNanchor_138_138"></a><a href="#Footnote_138_138" class="fnanchor">[138]</a> The law of "diminishing utility" as we +increase the increments<span class='pagenum'><a name="Page_109" id="Page_109">[Pg 109]</a></span> of each object, holds, and the problem is that of +a marginal equilibrium. The young lady of our illustration would certainly +have her chum if she have only one dinner, but if she have a number of +dinners, the "marginal utility" of her chum's presence may sink so low that +she may find the presence of some one hitherto excluded more valuable at +the sixth or seventh dinner. And, indeed, our conception of qualitatively +incompatible values must not be made too absolute. Human nature is +accommodating and practical, and a little wickedness may be tolerated by a +good man for the sake of a value which would not induce him to tolerate +more. He may find the "final increment" of his Sabbath observance lower +than the "initial increment" of his Sunday baseball.</p> + +<p>Two antagonistic values may cohere in the same object. Our <i>fearful</i> sight +may also be an <i>interesting</i> sight. And the initial increment of the +interest may outweigh the initial increment of the fear. But, as the +interest is partially satisfied, the fear may grow, until it finally +overcomes the interest, and we flee. Indeed, it may be laid down as the law +of negative values that as the "supply" increases (<i>cæteris paribus</i>) the +negative value rises—the obverse of the law of "diminishing (positive) +utility"—a doctrine recognized, in one of its aspects, in the economic +doctrine of "increasing (psychic) costs."</p> + +<p>A further point is to be noted in the case (especially though not +exclusively) of these qualitatively incompatible values, where a +quantitative<span class='pagenum'><a name="Page_110" id="Page_110">[Pg 110]</a></span> compromise of the sort described is worked out between them. +The personality itself may change, through a growing familiarity with the +negative value. It may cease to be a negative value, and may become +positive. And if, as may happen, this change takes place quickly, in the +course of a moral crisis, our process would be, first, a gradually +increasing negative value, as the "supply" of the objects of negative value +is increased; next, a sudden shift from a high negative to a high positive +value, as the personality changes, and we come to love what we have hated; +then a gradual sinking of the new positive value as the supply is still +further increased.<a name="FNanchor_139_139" id="FNanchor_139_139"></a><a href="#Footnote_139_139" class="fnanchor">[139]</a></p> + +<p>The case of the conflict between qualitatively incompatible values is the +typical case of the conflict between "duty and pleasure," between +"obligation and inclination," etc. Certain values present themselves as +"categorical imperatives," as "absolute universals," and refuse, or tend to +refuse, any compromise. Our analysis would tend to cast doubt on the +"absolute absoluteness" of these values (taking absolute in the sense in +which it has been used in the history of ethics, as distinguished from the +sense in which I have earlier used it in this book<a name="FNanchor_140_140" id="FNanchor_140_140"></a><a href="#Footnote_140_140" class="fnanchor">[140]</a>). The most<span class='pagenum'><a name="Page_111" id="Page_111">[Pg 111]</a></span> +significant thing about these "absolute" values from the standpoint of our +present inquiry, seems to be the resistance which they offer to the +"marginal process." They seem to insist that their objects be taken <i>in +toto</i> or not at all. They tend to universalize themselves, attaching to the +remotest possible increment of the "supply" quite as strongly as to the +initial increments. They refuse to place their objects in a scale of +"diminishing utility." Such values are those which have been so fortified +by habit and education that they are vital parts of the personality, and +that any compromise where they are involved seems treason to the inmost +self. If we wish to make precise analogies between our social and our +individual values, we shall find here the nearest approach in the +individual field to those fundamental legal values which determine the +inmost character of the state, and which present themselves as "practical +absolutes" in the legal value system, e.g., democracy, or personal +liberty—or fundamental sociological values, like the "color line."</p> + +<p>It will be noted, further, that our analysis draws no hard and fast lines +between the different sorts of value, ethical, economic, esthetic, +religious, personal, etc., in the sphere of the individual's psychology. +Such lines do not exist. There are shadings, gradations, quantitative +differences which become distinct enough to justify a<span class='pagenum'><a name="Page_112" id="Page_112">[Pg 112]</a></span> classification of +values. But values never become, on the functional side, so fundamentally +different in character that there can be no reduction of them to the +"common denominator" of power in motivation. And especially is that a false +abstraction which would separate the different sorts of value, ethical, +economic, etc., into separate, water-tight systems, and let each system +have its own equilibrium and its own interactions, uninfluenced by the +other systems. The fact is, simply, that ethical and esthetic values may +constantly reinforce economic values, economic values reinforce ethical +values, or economic and ethical or other values may oppose each other, and +marginal equilibria are constantly worked out between them. Or, better, +<i>among</i> them, for, while in the consciousness of the moment we may have +only <i>two</i> opposing values in mind, and may have our equilibrium apparently +between just two, yet in fact the whole system of values is constantly +tending toward equilibrium, ethical, religious, economic, esthetic, all +asserting themselves, and finding their place in the scale, and getting +their "margins" fixed,—extensive margins and intensive margins. But this +is so obviously merely a generalization of well-known economic laws, that +further detail is needless. One point may be mentioned, however. <i>Price</i> is +to be generalized in the same way as value. Since this equilibrium among +values holds, then any object of value may be used to <i>measure</i> the value +of any other. If the presence of her chum at the fifth dinner is in +equilibrium with<span class='pagenum'><a name="Page_113" id="Page_113">[Pg 113]</a></span> the presence of some hitherto excluded friend, for our +young lady, then the one is the <i>price</i> of the other, and measures her +value. A material good which one takes in return for an immoral act is the +price of that act. And if, in a moment of fundamental ethical crisis, a man +surrenders a cherished purpose about which his whole life has been built, +to the allurement of some dazzling temptation, it is much more than a +metaphor to speak of "the price of a soul."<a name="FNanchor_141_141" id="FNanchor_141_141"></a><a href="#Footnote_141_141" class="fnanchor">[141]</a></p> + +<p>The Austrian analysis was essentially faulty, then, not so much in its +hedonistic psychology—for it can be freed from that<a name="FNanchor_142_142" id="FNanchor_142_142"></a><a href="#Footnote_142_142" class="fnanchor">[142]</a>—as in its +abstraction of the economic from other aspects of the individual's value +system. Equilibria among economic values will not explain even the +individual's economic behavior—do not by any means constitute a +self-complete system. This abstraction has been noted before.<a name="FNanchor_143_143" id="FNanchor_143_143"></a><a href="#Footnote_143_143" class="fnanchor">[143]</a> The +other abstraction of the Austrians, the abstraction of the individual from +his vital, organic connection with the social whole, we shall treat more +fully later.</p> + +<p>So far, we have kept pretty strictly within the field of "individual +psychology" and "individual values." But we shall find, when we come to the +field of the social values, that essentially the same laws hold. On the +<i>functional</i> side, the<span class='pagenum'><a name="Page_114" id="Page_114">[Pg 114]</a></span> analogy between the individual mind and the social +mind is a very close one, and the correspondences on the <i>structural</i> side +are numerous also. While we shall not try to find analogies in the social +field for all these laws of individual value, it is not because of any +difficulty that the problem presents, but rather, because it is unnecessary +for the vindication of our thesis to do so.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_119_119" id="Footnote_119_119"></a><a href="#FNanchor_119_119"><span class="label">[119]</span></a> See the discussion of Simmel's contention, <i>supra</i>, p. 19, +n.</p></div> + +<div class="footnote"><p><a name="Footnote_120_120" id="Footnote_120_120"></a><a href="#FNanchor_120_120"><span class="label">[120]</span></a> Ehrenfels, C., <i>System der Werttheorie</i>, Leipzig, 1897; +Kreibig, J. C., <i>Psychologische Grundlegung eines Systems der Werttheorie</i>, +Vienna, 1902; Kallen, H. M., "Dr. Montague and the Pragmatic Notion of +Value," <i>Jour. of Philosophy</i>, etc., Sept., 1909; Montague, W. P., "The +True, the Good and the Beautiful, from a Pragmatic Standpoint," <i>Ibid.</i>, +April 29, 1909; Meinong, A., <i>Psychologisch-ethische Untersuchungen zur +Werttheorie</i>, Graz, 1894; Paulsen, Friedrich, <i>Introduction to Philosophy</i>, +and <i>System of Ethics</i>; Stuart, H. W., "The Hedonistic Interpretation of +Subjective Value," <i>Jour. of Pol. Econ.</i>, vol. <span class="smcap">iv</span>, "Valuation as a Logical +Process," in Dewey's <i>Studies in Logical Theory</i>, Chicago, 1903; Shaw, C. +C., "The Theory of Value, and its Place in the History of Ethics," +<i>International Jour. of Ethics</i>, vol. <span class="smcap">xi</span>; Slater, T., "Value in Moral +Theology and Political Economy," <i>Irish Eccles. Rec.</i>, ser. 4, vol. <span class="smcap">x</span>, +Dublin, 1901; Tufts, J. H., "Ethical Value," <i>Jour. of Philosophy</i>, etc., +vol. <span class="smcap">xix</span>; Baldwin's <i>Dictionary of Philosophy</i>, etc., <i>s. v.</i> "Worth" +(article by W. M. Urban); Simmel, G., <i>Philosophie des Geldes</i>, Leipzig, +1900, "A Chapter in the Philosophy of Value," <i>Amer. Jour. of Sociology</i>, +vol. <span class="smcap">v</span>; Urban, W. M., <i>Valuation</i>, London, 1909. These titles are +representative of an extensive literature on the subject.</p></div> + +<div class="footnote"><p><a name="Footnote_121_121" id="Footnote_121_121"></a><a href="#FNanchor_121_121"><span class="label">[121]</span></a> <i>Supra</i>, p. 19, n.</p></div> + +<div class="footnote"><p><a name="Footnote_122_122" id="Footnote_122_122"></a><a href="#FNanchor_122_122"><span class="label">[122]</span></a> I am indebted to Professor John Dewey for many valuable +suggestions and criticisms in connection with this part of my study. My +more general obligations to him will be manifest to any one who is familiar +with his epoch-marking point of view. Economic, sociological and political +philosophy have, in my judgment, more to learn from him than from any other +contemporary philosopher.</p></div> + +<div class="footnote"><p><a name="Footnote_123_123" id="Footnote_123_123"></a><a href="#FNanchor_123_123"><span class="label">[123]</span></a> Pp. 141-42.</p></div> + +<div class="footnote"><p><a name="Footnote_124_124" id="Footnote_124_124"></a><a href="#FNanchor_124_124"><span class="label">[124]</span></a> <i>Cf.</i> Gabriel Tarde, <i>Psychologie Économique</i>, vol. <span class="smcap">i</span>, p. +63, and Urban, <i>Valuation</i>, p. 78.</p></div> + +<div class="footnote"><p><a name="Footnote_125_125" id="Footnote_125_125"></a><a href="#FNanchor_125_125"><span class="label">[125]</span></a> Urban, <i>op. cit.</i>, p. 32.</p></div> + +<div class="footnote"><p><a name="Footnote_126_126" id="Footnote_126_126"></a><a href="#FNanchor_126_126"><span class="label">[126]</span></a> Paulsen, Friedrich, <i>Ethics</i>, <i>passim</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_127_127" id="Footnote_127_127"></a><a href="#FNanchor_127_127"><span class="label">[127]</span></a> <i>System der Werttheorie</i>, vol. <span class="smcap">i</span>, chap. <span class="smcap">i</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_128_128" id="Footnote_128_128"></a><a href="#FNanchor_128_128"><span class="label">[128]</span></a> <i>Op. cit.</i>, p. 311.</p></div> + +<div class="footnote"><p><a name="Footnote_129_129" id="Footnote_129_129"></a><a href="#FNanchor_129_129"><span class="label">[129]</span></a> <i>Cf.</i> Urban, <i>op. cit.</i>, p. 36; Meinong, <i>op. cit.</i>, pp. +15-16.</p></div> + +<div class="footnote"><p><a name="Footnote_130_130" id="Footnote_130_130"></a><a href="#FNanchor_130_130"><span class="label">[130]</span></a> Meinong, <i>op. cit.</i>, pt. <span class="smcap">i</span>, chap. <span class="smcap">i</span>; Urban, <i>op. cit.</i>, pp. +38-39.</p></div> + +<div class="footnote"><p><a name="Footnote_131_131" id="Footnote_131_131"></a><a href="#FNanchor_131_131"><span class="label">[131]</span></a> <i>Op. cit.</i>, pp. 14-16, and following chapter.</p></div> + +<div class="footnote"><p><a name="Footnote_132_132" id="Footnote_132_132"></a><a href="#FNanchor_132_132"><span class="label">[132]</span></a> Urban, <i>op. cit.</i>, p. 39.</p></div> + +<div class="footnote"><p><a name="Footnote_133_133" id="Footnote_133_133"></a><a href="#FNanchor_133_133"><span class="label">[133]</span></a> <i>Psychologisch-ethische Untersuchungen zur Werttheorie</i>, +Graz, 1894, pt. <span class="smcap">i</span>, chap. <span class="smcap">i</span>, esp. p. 21.</p></div> + +<div class="footnote"><p><a name="Footnote_134_134" id="Footnote_134_134"></a><a href="#FNanchor_134_134"><span class="label">[134]</span></a> "La psychologie en économie politique," <i>Revue +Philosophique</i>, vol. <span class="smcap">xii</span>, pp. 337-38.</p></div> + +<div class="footnote"><p><a name="Footnote_135_135" id="Footnote_135_135"></a><a href="#FNanchor_135_135"><span class="label">[135]</span></a> <i>Op. cit.</i>, pp. 41 <i>et seq.</i></p></div> + +<div class="footnote"><p><a name="Footnote_136_136" id="Footnote_136_136"></a><a href="#FNanchor_136_136"><span class="label">[136]</span></a> See chapter <span class="smcap">xvi</span>, <i>infra</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_137_137" id="Footnote_137_137"></a><a href="#FNanchor_137_137"><span class="label">[137]</span></a> The German, with its facility in compounding, offers a +convenient nomenclature here: <i>Wert</i> and <i>Unwert</i>. <i>Cf.</i> Ehrenfels, <i>op. +cit.</i>, for a brief discussion of negative values (pp. 53-54).</p></div> + +<div class="footnote"><p><a name="Footnote_138_138" id="Footnote_138_138"></a><a href="#FNanchor_138_138"><span class="label">[138]</span></a> For this generalization, see Urban, <i>op. cit.</i>, chap. <span class="smcap">vi</span>; +Ehrenfels, <i>op. cit.</i>, vol. <span class="smcap">ii</span>, chap. <span class="smcap">iii</span>, esp. p. 86.</p></div> + +<div class="footnote"><p><a name="Footnote_139_139" id="Footnote_139_139"></a><a href="#FNanchor_139_139"><span class="label">[139]</span></a> An analogue in the field of social values is readily +suggested. A new heresy starts, opposed by the dominant element in the +social will, <i>i.e.</i>, having a negative value for the majority. As the +heresy increases, the negative value rises till, in a crucial point, the +tide turns, and the heretics become the dominant element in the society. +Then—since their position is far from certain—new recruits to the heresy +have a high positive value, but, as the heresy still further spreads, +additional recruits count for less and less.</p></div> + +<div class="footnote"><p><a name="Footnote_140_140" id="Footnote_140_140"></a><a href="#FNanchor_140_140"><span class="label">[140]</span></a> <i>Cf.</i> Urban, <i>op. cit.</i>, <i>passim</i>; Ehrenfels, <i>op. cit.</i>, +vol. <span class="smcap">i</span>, pp. 43 <i>et seq.</i>; Mackenzie, criticism of Ehrenfels and Meinong in +<i>Mind</i>, Oct., 1899. <i>Cf.</i> also, Wicksteed, <i>The Common Sense of Political +Economy</i>, London, 1910, pp. 402 <i>et seq.</i></p></div> + +<div class="footnote"><p><a name="Footnote_141_141" id="Footnote_141_141"></a><a href="#FNanchor_141_141"><span class="label">[141]</span></a> The generalization of the idea of price, while not original +with Wicksteed, is interestingly developed by him in chaps. <span class="smcap">i</span> and <span class="smcap">ii</span> of his +<i>Common Sense of Political Economy</i>, London, 1910.</p></div> + +<div class="footnote"><p><a name="Footnote_142_142" id="Footnote_142_142"></a><a href="#FNanchor_142_142"><span class="label">[142]</span></a> Davenport, <i>op. cit.</i>, pp. 303-11, gives a good summary of +economic discussions of hedonism. His own view is that the Austrians are +not essentially bound up with hedonism.</p></div> + +<div class="footnote"><p><a name="Footnote_143_143" id="Footnote_143_143"></a><a href="#FNanchor_143_143"><span class="label">[143]</span></a> <i>Supra</i>, chaps. <span class="smcap">vi</span> and <span class="smcap">vii</span>.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_115" id="Page_115">[Pg 115]</a></span></p> +<h2><a name="CHAPTER_XI" id="CHAPTER_XI"></a>CHAPTER XI</h2> + +<h3>RECAPITULATION. THE SOCIAL VALUES. FUNCTIONS OF THE VALUE CONCEPT IN +ECONOMICS</h3> + + +<p>Our conclusions reached in previous chapters, from the standpoint of +economic theory, and from the standpoint of sociological theory, alike +forbid us to stop with the results so far obtained as to the nature of +value. From the standpoint of social theory, we are unable to consider the +individual values discussed in the last chapter as completely accounted for +on the psychical side by what goes on in the individual mind: every +individual mind is a part of a larger whole; every thing in the individual +mind has been influenced by processes in the minds of others; every process +in the individual mind influences, directly or indirectly, processes in the +minds of others. There is a social mind. And the values in the mind of an +individual constitute no self-complete and independent system, either in +their origin, in their interactions, or in their consequences for action. +In our psychological phrase, their "presuppositions" include elements in +the minds of other men, and they themselves constitute part of the +"presuppositions" of the values in the minds of other men. Finally, there +are values which correspond to the values of no individual mind, great +social values, whose presuppositions are tremendously<span class='pagenum'><a name="Page_116" id="Page_116">[Pg 116]</a></span> complex, including +individual values in the minds of many men, as well as other factors which +we shall have to analyze in considerable detail, great social values whose +motivating power directs the activities of nations, of great industries, of +literary and artistic "schools," of churches and other social +organizations, as well as the daily lives of every man and woman—impelling +them in paths which no individual man foresaw or purposed. In Urban's +phrase,—</p> + +<div class="blockquot"><p>between the subjectively desired and the objectively +desirable in ethics, between subjective utility and +sacrifice and objective value and price in economic +reckoning, between the subjectively effective and the +objectively beautiful in art, there is a difference for +feeling so potent that in naïve and unreflective +experience the feelings with such objectivity of +reference are spoken of as predicates of the objects +themselves.<a name="FNanchor_144_144" id="FNanchor_144_144"></a><a href="#Footnote_144_144" class="fnanchor">[144]</a></p></div> + +<p>And our theory carries us even further than Professor Urban cares to go +here. Naïve and unreflecting experience is perfectly justified in treating +these objective values as qualities of the objects themselves. To the +individual man, an objective value, say the value of an economic good, <i>is</i> +as a rule, a quality almost wholly independent of his personal subjective +feelings or point of view. The average man, "by taking thought," can no +more affect the value of wheat or corn or other big staple than he can "add +a cubit to his stature." For the great mass of men, and the great mass of +commodities, this holds true. The individual finds the world of<span class='pagenum'><a name="Page_117" id="Page_117">[Pg 117]</a></span> economic +values a part of the brute universe, like the force of gravity, or the +weather, or the law against murder—less invariable than the force of +gravity, and less variable, as a rule, than the weather—to which he must +adapt his individual economy. He is not wholly impotent to change this +world of economic values, nor is he wholly without influence on the balance +of cosmic forces. And, if possessed of enough social <i>power</i> (which we +shall find to constitute the essence of these social values) he may +substantially modify the action of the law against murder, or the values of +those commodities about which the rich may be capricious; or even, if +intelligent in the use of his power, he may undertake a successful "bull" +campaign, and force up the value of wheat or cotton. But even in such +cases, he deals with objective facts,—which often, in the midst of a bull +campaign, behave in a most surprising and disconcerting manner!<a name="FNanchor_145_145" id="FNanchor_145_145"></a><a href="#Footnote_145_145" class="fnanchor">[145]</a> The +existence of external constraining and directive forces are matters of +every day experience. Laws, moral values, social constraints of a thousand +subtle and obvious kinds, are facts so well known that education has made +it its central task to teach the individual how to adjust himself to them. +They have been described and elaborated in innumerable books.<a name="FNanchor_146_146" id="FNanchor_146_146"></a><a href="#Footnote_146_146" class="fnanchor">[146]</a> <i>That</i><span class='pagenum'><a name="Page_118" id="Page_118">[Pg 118]</a></span> +they exist is certain. Their origin, nature and function we shall study in +what is to follow.</p> + +<p>We were led to a similar conclusion by the analysis of the necessities of +economic theory. Economic value as a quality, present in a good in +definite, quantitative degree, regardless of the idiosyncrasy of the +particular holder of the good, we found a necessity of economic thought. +The argument may be briefly recapitulated, and a few points added. If goods +are to be added together and a sum of wealth obtained, there must be a +homogeneous element in them by virtue of which the addition can be made. We +do not add a crop of wheat and a lead-pencil,<a name="FNanchor_147_147" id="FNanchor_147_147"></a><a href="#Footnote_147_147" class="fnanchor">[147]</a> and a gold watch, and +twenty dollars and a theatre ticket, on the basis of length or weight or +other physical quality. Only by picking out the homogeneous quality, value, +can we add them. We cannot compare two economic goods, and put them into a +ratio, except on the basis of such a homogeneous quality. We have no terms +for our ratios apart from quantities of value, and yet our ratios must have +terms. We find economists speaking of value as the essential characteristic +or quality of wealth. We find theorists speaking of money as a "measure of +values"—a conception only possible if value be a quality of the sort of +which we speak, present both in the money measure and in the thing measured +in definite quantitative degrees. A point or two may be added. We find +economists, notably the<span class='pagenum'><a name="Page_119" id="Page_119">[Pg 119]</a></span> Austrians, undertaking the problem of +"Imputation," breaking up the value of a consumption good into different +parts, one part being assigned to the labor immediately concerned in its +production, and other parts of that value to goods of the next +"rank"—owned by people different from those who consume the good—and this +value further subdivided among goods of remoter ranks,—the whole process +possible only if the original value be an objective quantity of the sort +described. We find a differential portion of a crop of wheat compared with +the land which produced it, and spoken of as a percentage of the land, +which is true only if the <i>value</i> of each be considered—and indeed is +meaningless, else. Or, we find merchants reckoning their gains in the form +of money at the end of the year, as a certain percentage of their +capital—which has consisted throughout the year of goods of various sorts. +Everywhere in the economic analysis this conception of value has been +essential for the validity of the analysis, and this is especially true +when we come to the ultimate problems of monetary theory. We may ignore, +sometimes, the element of value when dealing with non-monetary problems, in +terms of quantities of money, simply because it is not necessary to refer +to fundamental principles explicitly all the time. But when we come to the +problem of money itself, we must make use of the value concept, and the +value concept is implicit in the whole procedure.</p> + +<p>Further, the value concept has been called<span class='pagenum'><a name="Page_120" id="Page_120">[Pg 120]</a></span> upon to explain the motivation +of the economic activity of society, and value has been conceived of as a +motivating force.<a name="FNanchor_148_148" id="FNanchor_148_148"></a><a href="#Footnote_148_148" class="fnanchor">[148]</a> Schaeffle, especially, has stressed this phase of +the matter in his criticism of the socialistic theories of value. "Utility +value," he holds, does direct industry into proper channels, but a value +based on labor-time would get supply and needs into a hopeless +discrepancy.<a name="FNanchor_149_149" id="FNanchor_149_149"></a><a href="#Footnote_149_149" class="fnanchor">[149]</a></p> + +<p>No ratio "between objective articles" will serve these functions which the +economists have put upon the value concept. Value as a purely individual +phenomenon, varying from man to man, will in no way<a name="FNanchor_150_150" id="FNanchor_150_150"></a><a href="#Footnote_150_150" class="fnanchor">[150]</a> serve these +purposes of the economists. Value as a mere brute quantity of physical +objects given in exchange for other physical objects, could in no way serve +these purposes. Value must be an objective quality, a <i>power</i>, embodied in +the object, independent of the individual judgment or desire. A strong +feeling that this is so is manifested in the term which the<span class='pagenum'><a name="Page_121" id="Page_121">[Pg 121]</a></span> English School +so often uses as the equivalent of value, namely, "purchasing +power"<a name="FNanchor_151_151" id="FNanchor_151_151"></a><a href="#Footnote_151_151" class="fnanchor">[151]</a>—a term which Böhm-Bawerk approves.<a name="FNanchor_152_152" id="FNanchor_152_152"></a><a href="#Footnote_152_152" class="fnanchor">[152]</a> The notion of +relativity which has, historically, been bound up with this term, we have +criticized in chapter II, and it is not necessary to repeat the argument +here. But the other aspect of it, its recognition of the dynamic character +of value, and of the quantitative character of value, even though often +confusedly and vaguely, seems very much to strengthen the case for the +thesis I am maintaining.<a name="FNanchor_153_153" id="FNanchor_153_153"></a><a href="#Footnote_153_153" class="fnanchor">[153]</a></p> + +<p>The effort of the Austrians, and of other schools of economic theory, to +explain and justify this notion of value as an objective quantity, has +already been considered, and our conclusion has been that, through a too +narrow delimitation<span class='pagenum'><a name="Page_122" id="Page_122">[Pg 122]</a></span> of their determinants, they have been led into +circular reasoning. A further criticism is now possible, in the light of +our sociological and psychological conclusions: the picking out of <i>any</i> +abstract elements, however numerous, with the effort, by a synthesis, to +combine them into a concrete social quantity, must fail. In the process of +abstraction we leave out vital elements of the concrete social situation; +how shall we expect these vital elements left out to reappear when we put +the abstract elements into a synthesis? They cannot, if the synthesis be +logically made. And it is precisely because Professor Davenport is so +accurate in his logic that he fails to get a social quantity out of the +abstract elements of subjective utility, etc. But the majority of +economists, less careful in their formal logic, but more impressed by the +facts of social life and by the exigencies of getting a working set of +concepts, have assumed and used the quantitative concept, with satisfactory +results so far as practical problems are concerned, but without fundamental +theoretical consistency. The elements which the abstract theories suppress +persist, under the guise of economic value itself, in the facts of life, +and take their vengeance on the theory by forcing it into a circle. Our +problem, then, is not to find out certain elements out of which to +construct social value by a synthesis. The proper procedure will be the +reverse of that: to take social value as we find it—i.e., as it +<i>functions</i> in economic life,—and then to analyze it, picking out certain +prominent and significant<span class='pagenum'><a name="Page_123" id="Page_123">[Pg 123]</a></span> phases, or moments, in it, which, taken +abstractly, are not the whole story, but which furnish the criteria of +social value, and control over which is significant for the purpose of +controlling social values.</p> + +<p>In subsequent chapters, we shall, carrying out this plan, try to put +concrete meaning into our abstract formulation of the problem.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_144_144" id="Footnote_144_144"></a><a href="#FNanchor_144_144"><span class="label">[144]</span></a> <i>Op. cit.</i>, p. 17.</p></div> + +<div class="footnote"><p><a name="Footnote_145_145" id="Footnote_145_145"></a><a href="#FNanchor_145_145"><span class="label">[145]</span></a> <i>Cf.</i> Royce, J., <i>The World and the Individual</i>, New York, +1901, vol. <span class="smcap">i</span>, pp. 209-10, and 225.</p></div> + +<div class="footnote"><p><a name="Footnote_146_146" id="Footnote_146_146"></a><a href="#FNanchor_146_146"><span class="label">[146]</span></a> I may refer here particularly to Durkheim, <i>De la division +du travail social</i>, Paris, 1893. In giving this reference, of course, I do +not commit myself to the "mediæval realism" of which Durkheim has been, +perhaps justly, accused. <i>Cf.</i>, also, Professor Ross's admirable <i>Social +Control</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_147_147" id="Footnote_147_147"></a><a href="#FNanchor_147_147"><span class="label">[147]</span></a> <i>Cf.</i> Ely, <i>Outlines of Economics</i>, 1908 ed., pp. 99-100, +and Tarde, <i>Psychologie Économique</i>, vol. <span class="smcap">i</span>, p. 85, n. See <i>supra</i>, chap. +<span class="smcap">ii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_148_148" id="Footnote_148_148"></a><a href="#FNanchor_148_148"><span class="label">[148]</span></a> <i>Cf.</i> Wieser, <i>Natural Value</i>, pp. 65, 162-63, 210-12, and +36; Flux, <i>Economic Principles</i>, chap. <span class="smcap">ii</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_149_149" id="Footnote_149_149"></a><a href="#FNanchor_149_149"><span class="label">[149]</span></a> <i>Quintessence of Socialism</i>, London, 1898, pp. 55-59, 91 <i>et +seq.</i>, 123-24.</p></div> + +<div class="footnote"><p><a name="Footnote_150_150" id="Footnote_150_150"></a><a href="#FNanchor_150_150"><span class="label">[150]</span></a> I take pleasure in availing myself of the privilege which +Professor W. A. Scott, of the University of Wisconsin, accords me, of +quoting him to the effect that "such a conception of value [a value concept +which makes the value of a commodity a quantity, socially valid, regardless +of the individual holder of the coin or the commodity, and regardless of +the particular exchange ratio into which the value quantity enters as a +term] is absolutely essential to the working-out of economic problems." +Professor Scott has been driven to this conclusion in the course of his +studies in the theory of money. Dean Kinley expresses a somewhat similar +view in his <i>Money</i>, p. 62. It is, of course, in the theory of money that +the need for such a concept makes itself most acutely felt. But the same +view is expressed by Professor T. S. Adams, from the standpoint of the +statistician. See his article, "Index Numbers and the Standard of Value," +<i>Jour. of Pol. Econ.</i>, vol. <span class="smcap">x</span>, 1901-02, pp. 11 and 18-19.</p></div> + +<div class="footnote"><p><a name="Footnote_151_151" id="Footnote_151_151"></a><a href="#FNanchor_151_151"><span class="label">[151]</span></a> Even Professor H. J. Davenport finds a quantitative value +concept necessary in places. For example, on page 573 of his <i>Value and +Distribution</i>, he speaks of capital, considered as a cost concept, as +standing "for the total invested fund of value, inclusive of all +instrumental values, and of all the general purchasing power devoted to the +gain-seeking enterprise." It might be unkind to remind him of his +definition of value on page 569, and ask him what a "fund" of "ratio of +exchange" might mean! And the notion of value as a quantity, instead of a +ratio, is involved, as indicated in the text, in the term, "purchasing +power," which he also uses in the passage quoted. This term, "purchasing +power," as apparently a substitute for value, Professor Davenport uses in +several instances, where the ratio notion clearly will not work: on page +561, "distribution of purchasing power," page 562, "redistribution of +purchasing power," and page 571. I say "apparently," for I do not think +Professor Davenport anywhere in the volume gives a formal definition of +"purchasing power."</p></div> + +<div class="footnote"><p><a name="Footnote_152_152" id="Footnote_152_152"></a><a href="#FNanchor_152_152"><span class="label">[152]</span></a> "Grundzüge," etc., Conrad's <i>Jahrbücher</i>, 1886, pp. 5 and +478, n.</p></div> + +<div class="footnote"><p><a name="Footnote_153_153" id="Footnote_153_153"></a><a href="#FNanchor_153_153"><span class="label">[153]</span></a> This line of argument, drawn from the usage of the +economists in the treatment of other terms, and in the handling of +problems, might be almost indefinitely expanded. Almost everybody has a +quantitative value concept in mind when he is reasoning about practical +problems. The trouble comes only when a value theory has to be constructed! +<i>Cf.</i> the discussion of production as the "creation of utilities," <i>infra</i> +chap. <span class="smcap">xviii</span>.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_124" id="Page_124">[Pg 124]</a></span></p> +<h2><a name="CHAPTER_XII" id="CHAPTER_XII"></a>CHAPTER XII</h2> + +<h3>SOCIAL VALUE: THE THEORIES OF URBAN AND TARDE</h3> + + +<p>Our point of view will be more adequately defined if we consider briefly +the theories of social value, set forth from the angle of a general (as +opposed to a specifically economic) conception of value, by Professor W. M. +Urban and Gabriel Tarde. These theories contain some elements which we +shall need, and our criticism of them will bring into clearer light the +need for the distinctive point of view of this book.</p> + +<p>Professor Urban's conception as to the nature of value, in its individual +manifestation, has been already indicated, in part, in chapter <span class="smcap">x</span>. Stressing +the organic nature of the relations of a value to other phases of the +mental life, insisting on a recognition of the "presuppositions" of value, +and recognizing that both feeling and desire (or desire-disposition) are +involved in value—our cursory account cannot begin to do justice to the +subtlety and exhaustiveness of his masterly analysis—he still insists on +finding the fundamental nature of value in a phase of its <i>structure</i> +(rather than in its function), namely, in the <i>feeling</i>. From this part of +his doctrine we have found it necessary to differ. When he comes to the +problem of social value, he carries over the same conception of value, and +he finds that social<span class='pagenum'><a name="Page_125" id="Page_125">[Pg 125]</a></span> values appear when many individuals, through +"sympathetic participation," <i>feel</i> the same value. With our conclusion +(chapter <span class="smcap">viii</span>) that we can share each other's emotional life he is in +thorough accord. His argument in this connection is admirable.<a name="FNanchor_154_154" id="FNanchor_154_154"></a><a href="#Footnote_154_154" class="fnanchor">[154]</a> His +interest is primarily in moral social values, and he attempts no detailed +treatment of economic social values, seeming to hold that the Austrian +treatment of objective value is adequate.<a name="FNanchor_155_155" id="FNanchor_155_155"></a><a href="#Footnote_155_155" class="fnanchor">[155]</a> Both moral and economic +values are "objective and social."<a name="FNanchor_156_156" id="FNanchor_156_156"></a><a href="#Footnote_156_156" class="fnanchor">[156]</a></p> + +<div class="blockquot"><p>Collective desire and feeling, when it has acquired +this "common meaning," when the object of desire and +feeling is consciously held in common, we may describe +as Social Synergy; and the objective, over-individual +values may be described as the resultants of social +synergies. The introduction of this term has for its +purpose the clearest possible distinction between +social forces as conscious and as subconscious. It is +with the former that we are here concerned.<a name="FNanchor_157_157" id="FNanchor_157_157"></a><a href="#Footnote_157_157" class="fnanchor">[157]</a></p></div> + +<p>Conscious collective feeling is thus insisted upon as an essential in +social values, and Professor Urban insists<a name="FNanchor_158_158" id="FNanchor_158_158"></a><a href="#Footnote_158_158" class="fnanchor">[158]</a> that the value ceases to be +a value as this conscious feeling wanes—even though conceding<a name="FNanchor_159_159" id="FNanchor_159_159"></a><a href="#Footnote_159_159" class="fnanchor">[159]</a> that it +retains the power of influencing the <i>felt</i> values, after it has passed +into the realm of "things taken for granted."</p> + +<p>But this stressing of the conscious element of feeling—which as I have +previously shown is a variable element even within the individual +psychology, and has no necessary quantitative relation to the functional +significance, the amount<span class='pagenum'><a name="Page_126" id="Page_126">[Pg 126]</a></span> of <i>motivating power</i>, of the value—makes it +really impossible for him to resolve the question of how the <i>strength</i> of +a social value is to be determined. He does, indeed, undertake something of +the sort<a name="FNanchor_160_160" id="FNanchor_160_160"></a><a href="#Footnote_160_160" class="fnanchor">[160]</a> (he is speaking of ethical values), making the quantity of +value depend on "supply and demand," the supply depending on the number of +people willing to supply a given moral act, and the intensity of their +willingness to do it—extension and intention both being recognized. And +demand is similarly determined. The thing seems to be nothing more than an +arithmetical sum of intensities of individual feelings, or, most justly, +individual values. But this leaves us no wiser than before as to the social +<i>weight</i>, the social <i>validity</i>, of these social values. An infinite deal +would depend, both in the case of supply and demand, on <i>who</i> the +individuals are. A demand for a given act from a poor group of fanatics, +however intense, might count for little, while such a demand coming from a +group with great prestige, with great social <i>power</i>, might have a very +great significance. If we are trying to get an objective quantity of social +value, which shall have a definite weight in determining social action—the +function of social values—we are as poorly off as we were with the +Austrian analysis which, in order to get an objective quantity of economic +value out of individual "marginal utilities," has to assume value in the +background as the validating force behind these individual elements. The +error here,<span class='pagenum'><a name="Page_127" id="Page_127">[Pg 127]</a></span> as there, comes from an abstraction, from centring attention +upon the conspicuous conscious elements. And it comes in stressing the +structure, the content, of social values, to the exclusion of their +functional <i>power</i>. Here is our real problem, if we would determine the +social validity of values. This lurking element of social power remains an +unexplained residuum.</p> + +<p>This residuum of <i>power</i>, backing up the conscious psychological factors, +gets explicit recognition, even though no real explanation, at the hands of +Gabriel Tarde,<a name="FNanchor_161_161" id="FNanchor_161_161"></a><a href="#Footnote_161_161" class="fnanchor">[161]</a> to whose theory of social value we now turn. I quote +chiefly from his <i>Psychologie Économique</i>, and the numerals which follow +refer to pages in volume <span class="smcap">i</span>. (63-64) Value understood in its largest sense, +takes in the whole of social science. It is a quality which we attribute to +things, like color,<a name="FNanchor_162_162" id="FNanchor_162_162"></a><a href="#Footnote_162_162" class="fnanchor">[162]</a> but which, like color, exists only in +ourselves.... It consists in the accord of the collective judgments ... as +to the capacity of objects to be more or less, and by a greater or less +number of persons, believed, desired, or admired. This quality is thus of +that peculiar species of qualities which present numerical degrees, and +mount or descend a scale without essentially changing their nature, and +hence merit the name of quantities.</p> + +<p><span class='pagenum'><a name="Page_128" id="Page_128">[Pg 128]</a></span></p><p>There are three great categories of value: "<i>valeur-vérité</i>," +"<i>valeur-utilité</i>," and "<i>valeur-beauté</i>." To ideas, to goods (in a generic +sense of the term), and to things considered as sources "<i>de voluptés +collectives</i>," we attribute a truth, a utility, a beauty, greater or less. +Quite as much as utility, beauty and truth are children of the opinion of +the mass, in accord, or at war, with the reason of an <i>élite</i> which +influences it.</p> + +<p>(It may be noted in passing that Tarde's "trinitarian" conception of value +is not as artificial as it seems. It is simply a method of classification, +and there are many subdivisions under each head. Economic value, e.g., is a +subspecies within the group of utility values—"goods" include +"<i>pouvoirs</i>," "<i>droits</i>," "<i>mérites</i>," and "<i>richesses</i>" (66). Our own +conception is, of course, that values are thoroughly "pluralistic" as to +their structure, and are "monistic" in their function.)</p> + +<p>(64) The greater or less truth of a thing signifies three things diversely +combined: the greater or smaller number, the greater or less social +importance ("<i>poids</i>," "<i>considération</i>," "<i>compétence</i>," "<i>reconnue</i>") of +the people who believe it, and the greater or less intensity of their +belief in it. The greater or less utility of an object expresses the +greater or less number of people who desire it in a given society at a +given time, the greater or less social "<i>poids</i>" ("<i>ici poids veut dire +pouvoir et droit</i>") of the persons who desire it, and the greater or less +intensity of their desire for it. And so with beauty.<span class='pagenum'><a name="Page_129" id="Page_129">[Pg 129]</a></span></p> + +<p>Here is, then, an explicit recognition of the element of the social +<i>weight</i> of those who create a social value, as a factor coördinate with +their number and the intensity of their desires, etc. Toward resolving it, +however, Tarde makes no real contribution. If enough be read into the +parenthetical expressions given above, following the word "<i>poids</i>" in each +case, they would be found to harmonize with the theory of the writer, +shortly to be set forth. As it happens, however, Tarde attempts to resolve +this factor of the social weight of a participant in a social value, in an +analogous case, and gives us a different sort of explanation. He is seeking +a "<i>glorio mètre</i>," or measure of glory—for glory is a social value too. +He finds that to determine a man's glory we must take account of two +things: one his notoriety, and the other, the admiration in which he is +held (71-72). The first is simple: we will count the number who watch him +and talk about what he does. The second is harder, for we must not merely +count the number who admire him, but also determine the importance of each +as an admirer. But how get at this? Tarde suggests that the study of the +cephalic index will throw light upon the problem—no satisfactory solution, +I think!—but says that anyhow the problem is practically solved every day +in university and administrative examinations.</p> + +<p>Apart from the fact that conscious desire (or conscious belief, etc.), +rather than functional power, is made the basis of Tarde's social value, +and apart from the failure to give any real account<span class='pagenum'><a name="Page_130" id="Page_130">[Pg 130]</a></span> of the origin of this +"social weight," of the individuals in the group which creates the social +value, there is a further defect in Tarde's analysis which cannot be +strongly objected to. It is his effort to treat organic processes as if +they were an arithmetical sum of elements. A sum of abstractions will not +give you a concrete reality. A man's social weight is not a thing +independent of relations, a thing which can be thrown now here and now +there with the same results in each case. And two men, each with a definite +social weight, do not have precisely twice that social weight when they +combine with each other. Two great leaders of opposing, evenly balanced +political parties, combining their influence, may secure wonderful results, +leading both parties to agree on a programme, and carrying it through. Two +equally great leaders, but both within the same party, may be unable to +accomplish anything by combining their efforts. And it may happen that two +men, each with great weight in his own sphere, would be so incongruous if +they tried to coöperate, that their joint weight would be less than the +weight of either alone. It is not a matter of arithmetical addition. Social +power can be used in certain ways, and in certain organic connections. If +we care to use a mechanical phrase, the effort to use it out of organic +connections is apt to result in so much "friction" that much of the power +is lost.</p> + +<p>The objection to the insistence on the amount of conscious desire or +feeling as a criterion of the amount of value holds for social values +quite<span class='pagenum'><a name="Page_131" id="Page_131">[Pg 131]</a></span> as much as for individual values. The social value of the gold +standard, judging by the amount of desire and feeling involved, by the +degree to which it was a factor in consciousness, was vastly greater during +the campaign of 1896, while its validity was still in question, than it was +after it had been validated, and made a really effective fact. Social value +depends, not on conscious intensity, but on motivating power. The social +consciousness, as the individual consciousness, is economical. And the need +for conscious feeling, for conscious desire, in connection with social, as +with individual, values, arises when values must be compared, when they are +in question, when they must show themselves for what they are, that they +may be brought into equilibrium with antagonistic values. And the amount of +consciousness will not be greater than the need for it—and, alas, is +rarely as great as the need! When a value becomes accepted, when its place +is secure, when the equilibrium is established, conscious feeling and +desire with reference to it tend to pass away, and peace comes.</p> + +<p>Tarde seems to recognize this, indeed, when he says (72, n.):—</p> + +<div class="blockquot"><p>Of nobility, as of glory, it is proper to remark that +it is a force, a means of action, for him who possesses +it, but that it is a faith, a peace, for the people who +accept it, and who, in believing in it, create it.</p></div> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_154_154" id="Footnote_154_154"></a><a href="#FNanchor_154_154"><span class="label">[154]</span></a> <i>Op. cit.</i>, chap. <span class="smcap">viii</span>, esp. p. 243.</p></div> + +<div class="footnote"><p><a name="Footnote_155_155" id="Footnote_155_155"></a><a href="#FNanchor_155_155"><span class="label">[155]</span></a> <i>Ibid.</i>, p. 319.</p></div> + +<div class="footnote"><p><a name="Footnote_156_156" id="Footnote_156_156"></a><a href="#FNanchor_156_156"><span class="label">[156]</span></a> <i>Ibid.</i>, p. 312.</p></div> + +<div class="footnote"><p><a name="Footnote_157_157" id="Footnote_157_157"></a><a href="#FNanchor_157_157"><span class="label">[157]</span></a> <i>Ibid.</i>, p. 318.</p></div> + +<div class="footnote"><p><a name="Footnote_158_158" id="Footnote_158_158"></a><a href="#FNanchor_158_158"><span class="label">[158]</span></a> <i>Ibid.</i>, pp. 333-36.</p></div> + +<div class="footnote"><p><a name="Footnote_159_159" id="Footnote_159_159"></a><a href="#FNanchor_159_159"><span class="label">[159]</span></a> <i>Ibid.</i>, p. 335.</p></div> + +<div class="footnote"><p><a name="Footnote_160_160" id="Footnote_160_160"></a><a href="#FNanchor_160_160"><span class="label">[160]</span></a> <i>Op. cit.</i>, pp. 329-30.</p></div> + +<div class="footnote"><p><a name="Footnote_161_161" id="Footnote_161_161"></a><a href="#FNanchor_161_161"><span class="label">[161]</span></a> "La croyance et le désir: possibilité de leur mésure," <i>Rev. +philosophique</i>, vol. <span class="smcap">x</span> (1880), pp. 150, 264. "La psychologie en économie +politique," <i>Ibid.</i>, vol. <span class="smcap">xii</span> (1881), pp. 232, 401. "Les deux sens de la +valeur," <i>Rev. d'économie politique</i>, 1888, pp. 526, 561. "L'idée de +valeur," <i>Rev. politique et littéraire (Rev. Bleue)</i>, vol. <span class="smcap">xvi</span>, 1901. +<i>Psychologie Économique</i>, Paris, 1902.</p></div> + +<div class="footnote"><p><a name="Footnote_162_162" id="Footnote_162_162"></a><a href="#FNanchor_162_162"><span class="label">[162]</span></a> <i>Cf.</i> Conrad, <i>Grundriss zum Studium der politischen +Oekonomie</i>, Jena, 1902, Erster Teil, p. 10.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_132" id="Page_132">[Pg 132]</a></span></p> +<h2><a name="CHAPTER_XIII" id="CHAPTER_XIII"></a>CHAPTER XIII</h2> + +<h3>ECONOMIC SOCIAL VALUE</h3> + + +<p>How are we to get out of our circle:<a name="FNanchor_163_163" id="FNanchor_163_163"></a><a href="#Footnote_163_163" class="fnanchor">[163]</a> The value of a good, A, depends, +in part, upon the value embodied in the goods, B, C, and D, possessed by +the persons for whom good A has "utility," and whose "effective demand" is +a <i>sine qua non</i> of A's value? The most convenient point of departure seems +to be the simple situation which Wieser has assumed in his <i>Natural +Value</i>.<a name="FNanchor_164_164" id="FNanchor_164_164"></a><a href="#Footnote_164_164" class="fnanchor">[164]</a> Here the "artificial" complications due to private property +and to the difference between rich and poor are gone, and only "marginal +utility" is left as a regulator of values. But what about value in a +situation where there are differences in "purchasing power"? How assimilate +the one situation to the other?</p> + +<p>A temporal <i>regressus</i>, back to the first piece of wealth, which, we might +assume, depended for its value solely upon the facts of utility and +scarcity, and the existence of which furnished the first "purchasing power" +that upset the order of "natural value," might be interesting, but +certainly would not be convincing. In the first place, there is no unbroken +sequence of uninterrupted economic causation from that far away +hypothetical<span class='pagenum'><a name="Page_133" id="Page_133">[Pg 133]</a></span> day to the present, in the course of which that original +quantity of value has exerted its influence. The present situation does not +differ from Wieser's situation simply in the fact that some, more provident +than others, have saved where others have consumed, have been industrious +where others have been idle, and so have accumulated a surplus of value, +which, used to back their desires, makes the wants of the industrious and +provident count for more than the wants of others. And even if these were +the only differences, it is to be noted that private property has somehow +crept in in the interval, for Wieser's was a communistic society. And +further, an emotion felt ten thousand years ago could scarcely have any +very direct or certain quantitative connection with value in the market +to-day. Even if there had been no "disturbing factors" of a non-economic +sort, the process of "economic causation" could not have carried a value so +far. It is the living emotion that counts! Values depend every moment upon +the force of live minds, and need to be constantly renewed. And there would +have been, of course, many "non-economic" disturbances, wars and robberies, +frauds and benevolences, political and religious changes—a host of +historical occurrences affecting the weight of different elements in +society in a way that, by historical methods, it is impossible to treat +quantitatively.<a name="FNanchor_165_165" id="FNanchor_165_165"></a><a href="#Footnote_165_165" class="fnanchor">[165]</a></p> +<p><span class='pagenum'><a name="Page_134" id="Page_134">[Pg 134]</a></span></p> +<p>What is called for is, not a <i>temporal regressus</i>, which, starting with an +hypothesis, picks up abstractions by the way, and tries to synthesize them +into a concrete reality of to-day, but rather a <i>logical analysis</i> of +existing psychic forces, which shall abstract from the concrete social +situation the phases that are most significant. This method will not give +us the whole story either. Value will not be completely explained by the +phases we pick out. But then, we shall be aware of the fact and we shall +know that the other phases are there, ready to be picked out as they are +needed, for further refinement of the theory, as new problems call for +further refinement. And, indeed, we shall include them in our theory, under +a lump name, namely, the rest of the "presuppositions" of value.<span class='pagenum'><a name="Page_135" id="Page_135">[Pg 135]</a></span></p> + +<p>Our reason for choosing a logical analysis of existing psychic forces +instead of a temporal <i>regressus</i>—instead, even, of an accurate historical +study of the past—is a twofold one: first, we wish to coördinate the new +factors we are to emphasize with factors already recognized, and to emerge +with a value concept which shall serve the economists in the accustomed +way—it is illogical to mix a logical analysis with a temporal <i>regressus</i>. +But, more fundamental than this logical point, is this: the forces which +have historically <i>begot</i> a social situation are not, necessarily, the +forces which <i>sustain</i> it. The rule doubtless is that new institutions have +to win their way against an opposition which grows simply out of the fact +that we are, through mental inertia, wedded to what is old and familiar. We +resist the new <i>as</i> the new. Even those who are most disposed to innovate +are still conservative, with reference to propaganda that they themselves +are not concerned with. The great mass of activities of all men, even the +most progressive, are rooted in habit, and resist change. When, however, a +new value has won its way, has become familiar and established, the very +forces which once opposed it become its surest support. Or, waiving this +unreflecting inertia of society, as things become actualized they are seen +in new relations. What, prior to experiment, we thought might harm us, we +find beneficial after it has been tried, and so support it—or the reverse +may be true. The psychic forces maintaining and controlling a social +situation, therefore,<span class='pagenum'><a name="Page_136" id="Page_136">[Pg 136]</a></span> are not necessarily the ones which historically +brought it into being.<a name="FNanchor_166_166" id="FNanchor_166_166"></a><a href="#Footnote_166_166" class="fnanchor">[166]</a></p> + +<p>We turn, therefore, to a logical analysis of existing social psychic forces +for our explanation of social economic value, and for the explanation of +the motivation of the economic activity of society. It will still pay us, +however, to halt for a moment in Wieser's hypothetical "natural" community, +for we shall find there that many of the concrete complexities which he +sought to eliminate have really persisted in slight disguise. Really there +is no such simplicity as Wieser supposes. The "natural" society has, +indeed, no private property, or differences between rich and poor, but it +has, none the less, <i>legal</i> and <i>ethical</i> standards of <i>distribution</i>, +which are just as efficient in the determination of economic values as are +the results of our present system of distribution. The term, "natural," has +misled Wieser, when it leads him to say that marginal utility alone will +rule. For "natural" here means, not "simple," but "ethically ideal." The +word has—as Wieser and others who have used it often fail to see—a +positive connotation of its own: a definite set of legal and ethical values +are bound up in it in this case. That such a society should exist, and that +in it "marginal utility" should be the only <i>variable</i> affecting value +(apart from the limitations of physical nature), implies the legal rule of +equality in distribution, and such a set of moral values actually ruling +the behavior<span class='pagenum'><a name="Page_137" id="Page_137">[Pg 137]</a></span> of the people as to make this legal rule effective,—or else +the most extraordinary activity on the part of the government to maintain +the rule. Wieser himself fails to see this, for he concedes that the +"moral" principle of distribution in such a society would recognize the +superior merits of the leaders who furnish ideas and direction, as +entitling them to a higher reward than the merely mechanical laborers.<a name="FNanchor_167_167" id="FNanchor_167_167"></a><a href="#Footnote_167_167" class="fnanchor">[167]</a> +But this, it is evident, would give them an excess of that same vexatious +"purchasing power"<a name="FNanchor_168_168" id="FNanchor_168_168"></a><a href="#Footnote_168_168" class="fnanchor">[168]</a>—whether embodied in gold or commodities or +labor-checks matters little—and so would destroy the efficiency of the +principle of "marginal utility" as the ruler of values.</p> + +<p>As phases in the "presuppositions" of economic value, then, coördinate with +"marginal utility," our theory puts the legal and ethical values concerned +with distribution, which rule in a community at a given time. Reinforcing +and validating the values of <i>goods</i> are the social values of <i>men</i>. +President F. A. Walker<a name="FNanchor_169_169" id="FNanchor_169_169"></a><a href="#Footnote_169_169" class="fnanchor">[169]</a> defines value as "the power an article confers +upon its possessor <i>irrespective of legal authority or personal +sentiments</i>, of commanding, in exchange for itself, the labor, or the +products of the labor, of others." [Italics are mine.] In our view, this +definition is precisely wrong. A change in laws or in morals respecting the +social ranking of men, respecting property rights, will at once affect +economic values. Earlier economists often wrote as if<span class='pagenum'><a name="Page_138" id="Page_138">[Pg 138]</a></span> distribution were +primarily a physically determined matter, and so we got from them an "Iron +Law of Wages," etc. But it is pertinent to quote from one who, though in +many ways allied to the older school, and in value theory avowedly their +follower, still stands as a bridge between the theories I am criticizing +and my own. John Stuart Mill<a name="FNanchor_170_170" id="FNanchor_170_170"></a><a href="#Footnote_170_170" class="fnanchor">[170]</a> says:—</p> + +<div class="blockquot"><p>The laws and conditions of the production of wealth, +partake of the character of physical truths. There is +nothing optional or arbitrary in them.... It is not so +with the Distribution of Wealth. That is a matter of +human institution solely. The things once there, +mankind, individually or collectively, can do with them +as they like. They can place them at the disposal of +whomsoever they please, and on whatever terms. Further, +in the social state, in every state except total +solitude, any disposal whatever of them can only take +place by the consent of society, or rather of those who +dispose of its active force. Even what a person has +produced by his individual toil, unaided by any one, he +cannot keep, unless by the permission of society. Not +only can society take it from him, but individuals +could and would take it from him, if society only +remained passive; if it did not either interfere <i>en +masse</i>, or employ and pay people for the purpose of +preventing him from being disturbed in the possession. +The distribution of wealth, therefore, depends on the +laws and customs of society. The rules by which it is +determined, are what the opinions and feelings of the +ruling portion of the community make them, and are very +different in different ages and countries; and might be +still more different, if mankind so chose.</p></div> + +<p>The distribution of wealth, then, depends on social psychic forces. And +among these are the social, ethical and legal values of men and of social<span class='pagenum'><a name="Page_139" id="Page_139">[Pg 139]</a></span> +classes. Economists of an earlier school took these factors for granted, +when they thought of them at all, and assumed that they are constant, +relatively unchangeable things, a sort of fixed framework within which the +forces of a Malthusian biology, or the forces of "self-interest" might +work. Commonly, indeed, they thought of them not at all, and wrote as if +the factors which they allowed to vary told the whole story. Such is, +indeed, still the procedure, in our present day "pure economic" theories of +distribution, which either exclude the non-economic factors,<a name="FNanchor_171_171" id="FNanchor_171_171"></a><a href="#Footnote_171_171" class="fnanchor">[171]</a> or else +relegate them to the "pound<span class='pagenum'><a name="Page_140" id="Page_140">[Pg 140]</a></span> of '<i>cæteris paribus</i>.'"<a name="FNanchor_172_172" id="FNanchor_172_172"></a><a href="#Footnote_172_172" class="fnanchor">[172]</a> If ours were a +stagnant civilization, this procedure might be safe, but in a highly +"dynamic" society, where laws, morals, class relations, the very +fundamentals of organization, are being made the subjects of scrutiny, +agitation, class struggle, etc., are being subjected to "transvaluations," +and are continually changing them with the principles, machinery and +results of distribution, and so one of the biggest factors lying back of +economic values, no study of value can afford to ignore them.</p> + +<p><span class='pagenum'><a name="Page_141" id="Page_141">[Pg 141]</a></span></p><p>It is of course recognized that a purely ethical and legal theory of +distribution would be as much an abstraction as the "<i>reinwirtschaftlich</i>" +theory of distribution—and probably a much less useful abstraction. Either +abstraction is legitimate, if it do not seek to abolish the other factors. +We may safely enough define a set of legal and moral values, concerned with +the organization of society and industry, and, assuming them constant, a +sort of frozen framework, let man's values with reference to the immediate +consumption and production of economic goods ("utilities and costs" in +current phrase) vary, and see what the consequences, both on the ranking of +men, and the ranking of goods, will be. Or, assuming "utilities and costs" +constant, we may let the legal and moral values vary, and see what +consequences would follow. Or, assuming all other factors constant, we may +vary the size of the population, or vary the proportions between labor and +productive instruments, or between land and population, or pick out any +other factor of the concrete situation we happen to be interested in, as +the "standard of living,"<span class='pagenum'><a name="Page_142" id="Page_142">[Pg 142]</a></span> and let it change, and see what consequences +flow therefrom. But, in doing this, we must not forget that the other +factors remain essential, equally potent in the general situation with the +one on which we have centred our attention. And we must not forget that +changes in one factor, while we may in thought allow it to occur alone, +cannot occur without bringing in changes in the others as well. An increase +in the number of laborers, e.g., may also mean an increase of <i>voters</i> of a +given political tendency, and may mean a change in the political power of +classes, and a change in the laws. And it may be tremendously significant +whether the increased number of laborers consists of Irish Catholics, or of +Russian Jews, or of native Americans, or of negroes,—significant from the +standpoint of distribution, of the values of economic goods, and the +direction of economic activity.<a name="FNanchor_173_173" id="FNanchor_173_173"></a><a href="#Footnote_173_173" class="fnanchor">[173]</a> Reduce your labor force to "efficiency +units," so that from the standpoint of productive power of the additions no +difference is made whether they be of the one class or the other, and still +it is a matter of<span class='pagenum'><a name="Page_143" id="Page_143">[Pg 143]</a></span> consequence, from the standpoint of distribution, and +ultimately of the values of goods, whether they belong to one class or the +other. One sort of laborer may be capable of efficient labor-union +organization, with the result that a large share of the product goes to +labor. Another sort of laborer may be incapable of much organization, may +work at cross-purposes with the rest of the labor force, and may be an easy +victim of exploitation. "Other things equal," we may concede that +productive efficiency, or "standard of living," or other abstract +principle, determines the share that goes to labor—but many indeed are +"the other things." The distribution of wealth is not an "arbitrary" +matter—if by that it be meant that no scientific laws can be worked out to +describe it. Mill himself would be first to protest against any +metaphysical "freedom of the will" here. But it is a matter into which law +and morals and personal friendship and monopoly privilege and charity and +benevolence and statesmanlike purpose and selfish struggle—in a word, the +whole intermental life of men in society—are involved. And any principle +of distribution that we may select is only true, not only if other things +are "equal," but also if other things are in a particular set of relations. +We have seen the assumptions of a non-economic sort that are implicit in +Wieser's conception of a "natural society." It may be interesting to note +what is involved in the situation which Professor Clark treats in his +<i>Distribution of Wealth</i>. That his system should hold,<span class='pagenum'><a name="Page_144" id="Page_144">[Pg 144]</a></span> we must have, of +course, private property, and personal freedom. We must have perfectly free +competition. We must have absolutely no monopoly privilege of any sort. We +must have such rapid and free communication of ideas that no monopoly of +knowledge should exist. But imagine the moral values that must rule in a +society where such a situation holds! How are men to be prevented from +getting monopolies? How prevent laws in the interests of the alert and +influential? How prevent the monopoly of ideas? A very different moral +situation must obtain in such a society from that we know. And a very +different system of laws. In saying this, of course, I say nothing that was +not obvious enough to Professor Clark when he constructed his system on the +basis of "heroic abstraction," but still it cannot be neglected. Not every +one who has undertaken to interpret Professor Clark, and to make practical +application of his theories, has seen these limitations.</p> + +<p>Or, again, what does the system of competition mean? Why do we have such +varied estimates from different writers? Why do some see in it a benevolent +influence, while for others it is a ghastly nightmare? The answer is, I +think, that competition is an abstraction, which each makes in his own way. +If we look on competition as a system where each is free to follow his +"pure economic" tendencies in the shortest and simplest manner, I think +there can be no question but that we must condemn it. The "pure economic +impulse," namely, the impulse<span class='pagenum'><a name="Page_145" id="Page_145">[Pg 145]</a></span> to get the maximum of wealth with the +minimum of effort, left unchecked and unguided by any other social forces, +would lead, by the shortest and simplest path, to theft, robbery, and +murder. They are easier than work! And more sensible than work, if one be +"<i>reinwirtschaftlich</i>," and live in a society where there is little chance +that he who creates wealth will enjoy it. Or, partly checked by social +constraints (thinking of these as "external" matters solely), the "economic +tendency" may lead—as it has led—to the dynamiting of rival plants, to +the securing of preferential rates from common carriers, to the corrupting +of legislatures and judges, to the spreading of false rumors, etc. On the +other hand, if the "rules of the game" are high, if competition be limited +to doing things which result in a better commodity with a decreased outlay +of human effort and physical resources, and with kindly feeling among +competitors (or even without this last), we may see in it a great source of +justice and progress. It all depends on what Professor Seligman calls the +"level of competition."<a name="FNanchor_174_174" id="FNanchor_174_174"></a><a href="#Footnote_174_174" class="fnanchor">[174]</a> That is to say, it depends on the extent to +which the system includes factors of moral, legal and social nature, other +than the "pure economic"—a thing "that never was on land or sea."</p> + +<p>And what shall we say of "inevitable economic tendencies"? A good many of +them—leading in diverse directions—have appeared in the literature of +economics. On the one hand, inevitable<span class='pagenum'><a name="Page_146" id="Page_146">[Pg 146]</a></span> tendencies towards a divine +"economic harmony." On the other hand, inevitable tendencies toward +monopoly; toward ever more numerous panics; toward greater concentration of +wealth; toward proletarian misery of an ever more hopeless sort—all +bringing us finally to a socialistic state. I see no inevitable economic +tendencies anywhere. The "economic motive," as already indicated, if left +free to work in vacuo, would lead us to anarchy. But it doesn't work <i>in +vacuo</i>. And the question as to where the infinite complex of social forces +may lead us is not one that can be settled "<i>reinwirtschaftlich</i>." We can +only say that economic values, at a given moment, are the focal points at +which the laws and moral values and loves and hates, and "utilities" and +"costs" directly connected with economic goods, and the multitudinous other +values of concrete social life exert their motivating influence on the +economic activities of society. Then, given these economic values, and +assuming that they alone are of significance for the activity of society, +we may see where they would lead us. But we should still be in a world of +abstractions if we did so. For the economic social values do not exhaust +the social forces of motivation. Very much of social activity is +non-economic in character. And the force of a given moral value—say that +of elevating the condition of a degraded class—may be divided, tending +indirectly by raising the value of a certain sort of economic good, to +encourage its production, and tending directly to prevent its production.<span class='pagenum'><a name="Page_147" id="Page_147">[Pg 147]</a></span> +Let us assume, for example, that this moral value leads to an increase in +the income of the degraded class, and so tends to increase the demand for +liquor; but assume, further, that this same moral value is the force +leading to a prohibition law, that forbids the production and sale of +liquor. Ethical, religious, legal, esthetic, and other values may +indirectly motivate the economic activity of men through entering into +economic values, or they may directly, in their own form, antagonize these +economic values, by constraining those who do not "participate" in them, +and by impelling those who do feel them to activities in lines other than +those where the greatest surplus of economic value is to be gained. Even, +then, though we have a theory of economic value which includes these other +social forces, we have no right to speak of "inevitable economic +tendencies." Social life is one organic whole. There is no phase of social +activity which is wholly directed by one set of values, and there is no one +set of values that exclusively depends on one sort of motive. And when we +give exclusive attention, in our study, to one set of values, as it is +often necessary to do, we must recognize that we are handling an +abstraction, that the other forces remain, and must be dealt with before +our conclusions have any validity for practice.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_163_163" id="Footnote_163_163"></a><a href="#FNanchor_163_163"><span class="label">[163]</span></a> See chaps. <span class="smcap">vi</span> and <span class="smcap">vii</span>, <i>supra</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_164_164" id="Footnote_164_164"></a><a href="#FNanchor_164_164"><span class="label">[164]</span></a> Bk. <span class="smcap">ii</span>, chap. <span class="smcap">vi</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_165_165" id="Footnote_165_165"></a><a href="#FNanchor_165_165"><span class="label">[165]</span></a> <i>Cf.</i> Davenport, <i>op. cit.</i>, p. 560. "For, in truth, not +merely the distribution of the landed and other instrumental, +income-commanding wealth in society, but also the distribution of general +purchasing power ... are, at any moment in society, to be explained only by +appeal to a <i>long and complex history</i> [italics mine], a distribution +resting, no doubt, in part upon technological value productivity, past or +present, but in part also tracing back to bad institutions of property +rights and inheritance, to bad taxation, to class privileges, to +stock-exchange manipulation ... and, as well, to every sort of vested right +in iniquity.... <i>But there being no apparent method of bringing this class +of facts within the orderly sequences of economic law, we +shall—perhaps—do well to dismiss them from our discussion....</i>" [Italics +are mine.] It may be questioned if the "orderly sequence" is worth very +much if it ignore facts so decisive as these. It is precisely this sort of +abstractionism which has vitiated so much of value theory. Most economists +slur over the omissions; Professor Davenport, seeing clearly and speaking +frankly, makes the extent of the abstraction clear. I venture to suggest +that the reason he can find no place for facts like these within the +orderly sequence of his economic theory is that he lacks an adequate +sociological theory at the basis of his economic theory. A historical +<i>regressus</i> will not, of course, fit in in any logical manner with a +synthetic theory which tries to construct an existing situation out of +existing elements. Our plan of a <i>logical</i> analysis of existing psychic +forces makes it possible to treat these facts which have come to us from +the past, not as facts of different nature from the "utilities" with which +the value theorists have dealt, but rather as fluid psychic forces, of the +same nature, and in the same system, as those "utilities."</p></div> + +<div class="footnote"><p><a name="Footnote_166_166" id="Footnote_166_166"></a><a href="#FNanchor_166_166"><span class="label">[166]</span></a> I do not, of course, mean to question the immense light +which history throws upon the nature of existing social forces.</p></div> + +<div class="footnote"><p><a name="Footnote_167_167" id="Footnote_167_167"></a><a href="#FNanchor_167_167"><span class="label">[167]</span></a> Wieser, <i>op. cit.</i>, pp. 79-80.</p></div> + +<div class="footnote"><p><a name="Footnote_168_168" id="Footnote_168_168"></a><a href="#FNanchor_168_168"><span class="label">[168]</span></a> <i>Ibid.</i>, p. 62.</p></div> + +<div class="footnote"><p><a name="Footnote_169_169" id="Footnote_169_169"></a><a href="#FNanchor_169_169"><span class="label">[169]</span></a> <i>Pol. Econ.</i>, 1888 edition, p. 5.</p></div> + +<div class="footnote"><p><a name="Footnote_170_170" id="Footnote_170_170"></a><a href="#FNanchor_170_170"><span class="label">[170]</span></a> <i>Principles</i>, bk. II, chap. I.</p></div> + +<div class="footnote"><p><a name="Footnote_171_171" id="Footnote_171_171"></a><a href="#FNanchor_171_171"><span class="label">[171]</span></a> Professor Clark seems to desire to exclude all phases of +social life except the "pure economic," from his static conception, as +indicated by the footnote which follows, taken from page 76 of his +<i>Distribution of Wealth</i>: "The statement made in the foregoing chapters +that a static state excludes true entrepreneurs' profits does not deny that +a legal monopoly might secure to an entrepreneur a profit that would be as +permanent as the law that should create it—and that, too, in a social +condition which, at first glance, might appear to be static. The agents, +labor and capital, would be prevented from moving into the favored +industry, though economic forces, if they had been left unhindered, would +have caused them to move to it. This condition, however, is not a true +static state, as it has here been defined. Such a genuine static state has +been likened to that of a body of tranquil water, which is held motionless +solely by an equilibrium of forces. It is not frozen into fixity; but as +each particle is impelled in all directions by the same amounts of force, +it retains a fixed position. There is a <i>perfect fluidity, but no flow</i>; +and in like manner the industrial groups are in a truly static state when +the industrial agents, labor and capital, show <i>a perfect mobility, but no +motion</i>. A legal monopoly destroys at a certain point this mobility [so +would a law forbidding the manufacture of, say, opium or liquor, or any law +or moral force that prevents the individual's using his labor and capital +in the manner most advantageous to himself regardless of public +consequences], and is to be treated as an element of obstruction or of +friction that is so powerful as not merely to retard a movement that an +economic force, if unhindered, would cause, but to prevent the movement +altogether." This would seem to leave economic forces working <i>in vacuo</i> in +Professor Clark's static state—if "unhindered" is to be taken literally. +It is probably a juster interpretation, however, to hold that Professor +Clark has in mind a constant legal situation, in which absolutely free +competition is assured by law. But even in his scheme for an economic +dynamics, there is no place for legal or ethical changes. There are five +general sets of dynamic changes which Professor Clark mentions, whose +operation is to constitute the subject matter of economic dynamics. They +are (<i>Essentials</i>, p. 131, and <i>Distribution</i>, pp. 56 <i>et seq.</i>): (1) +population increases; (2) capital increases; (3) methods of production +change; (4) new modes of organizing industry come into vogue; (5) the wants +of men change and multiply. These five categories are all, primarily, at +least, economic in character. While legal and ethical changes would +doubtless influence them, they certainly cannot comprehend the full +influence of these legal and ethical changes, especially those affecting +the ranking of men, and the distribution of wealth. There seems to be a +marked difference between Professor Clark's point of view in his +<i>Distribution of Wealth</i> and that of his earlier <i>Philosophy of Wealth</i>, +and I must confess my preference for the earlier point of view. In saying +this, of course, I am far from impeaching the masterly economic analysis +which the later book contains—rather, I join heartily in the general +estimate which counts that book as of altogether epoch-marking +significance. My point is, rather, as will be indicated more fully in the +chapters on the relation between value-theory and price-theory, that the +presuppositions and significance of such a study as Professor Clark's need +clarification and interpretation in the light of a theory of value which +takes account of the rich complexity of social life. +</p><p> +Professor Joseph Schumpeter, of Vienna, carries out economic abstractionism +to its logical limits, both in "statics" and in "dynamics." For an estimate +of his statics, <i>vide</i> Professor Alvin S. Johnson's review of Schumpeter's +<i>Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie</i> +(Leipzig, 1908), in the <i>Journal of Political Economy</i>, 1909, pp. 363 et +seq. His dynamics is also to be "<i>reinwirtschaftlich</i>." An essay in +economic dynamics, the introduction to which sets forth his general point +of view, appears in the Austrian <i>Zeitschrift für Volkswirtschaft</i>, etc., +1910, under the title, "Das Wesen der Wirtschaftskrisen." In this Professor +Schumpeter narrows, by a process of exclusion, the conception of what would +constitute a "pure economic" explanation of crises virtually to a +pinpoint—and then fails to carry out his program of giving us a +"<i>reinwirtschaftlich</i>" theory. For, in order to get any <i>periodicity</i> into +his economic movement, he is obliged to bring in, from the field of +sociological theory, the factor of <i>imitation</i>—he does not use the term, +imitation, though he does use the verb, "<i>kopieren</i>." (<i>Vide</i> esp. pp. +298-99.) Professor Schumpeter very explicitly recognizes the existence of +factors other than the "<i>reinwirtschaftlich</i>," but counts them as +"external" factors.</p></div> + +<div class="footnote"><p><a name="Footnote_172_172" id="Footnote_172_172"></a><a href="#FNanchor_172_172"><span class="label">[172]</span></a> Cf. Professor Marshall's discussions in his sections on +economic law and method, and Professor Davenport's classification of the +factors in the economic environment (<i>Value and Distribution</i>, pp. +514-15).</p></div> + +<div class="footnote"><p><a name="Footnote_173_173" id="Footnote_173_173"></a><a href="#FNanchor_173_173"><span class="label">[173]</span></a> The danger of the abstract individualistic study, from the +entrepreneur's viewpoint—a useful enough method within limits—is well +illustrated by Professor Davenport's contention that "men as employees are +passive facts, mere agents under the direction of managing producers, and +are therefore only potentially directing forces. The problem of production +and of marginalship is, accordingly, an entrepreneur problem." (<i>Op. cit.</i>, +p. 279, n.) This is set forth as a limitation on the doctrine, stated in +the paragraph which precedes it, that "man is to be conceived as the +subject and centre of economic science, etc." Surely Professor Davenport's +contention is an impossible abstraction from the rich facts of social +control. The managing entrepreneur knows better, when he deals with union +rules and walking delegates. And the economist, tracing the subtler forces +that underlie values, and so motivate the direction of industry, should +know more, rather than less, than the entrepreneur.</p></div> + +<div class="footnote"><p><a name="Footnote_174_174" id="Footnote_174_174"></a><a href="#FNanchor_174_174"><span class="label">[174]</span></a> <i>Principles</i>, 1905 ed., pp. 147 <i>et seq.</i></p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_148" id="Page_148">[Pg 148]</a></span></p> +<h2><a name="CHAPTER_XIV" id="CHAPTER_XIV"></a>CHAPTER XIV</h2> + +<h3>ECONOMIC SOCIAL VALUE (<i>continued</i>)</h3> + + +<p>Back to the concrete whole, then, of social-mental life. The abstract +elements with which the Austrians and the pain-abstinence cost school +undertook to solve the value problem, have their place in this whole. The +"utility" of goods to individuals, growing out of the nature of their +wants, depends very largely on social causes. Mode,<a name="FNanchor_175_175" id="FNanchor_175_175"></a><a href="#Footnote_175_175" class="fnanchor">[175]</a> fashion, +custom—how powerfully they mould our wants. And individual "cost," +likewise: a university athlete could dig a ditch far more easily, so far as +bodily pain is concerned, than could an aged negro, and yet would suffer +much more in doing it than would the negro. A social standard would bring a +feeling of shame to him which the negro would not share. If we abstract +from the concrete forms which individual wants and "costs" take, and define +them in their lowest physical terms, we might leave out a social reference. +But men do not desire raw meat, and the skins of beasts, and caves in which +to live. Their food they wish to eat in accordance with the conventions of +their class, and of a sort that their fellows eat, their water, of late, +they wish free from germs, their houses<span class='pagenum'><a name="Page_149" id="Page_149">[Pg 149]</a></span> and clothing must be "in +style,"—facts well enough recognized, though not in themselves enough for +a theory of "social value." These individual "utilities" and "costs" have +little meaning till we know the social ranking of the men who feel them, +till we know how much the men who have them count for in the scale of +fundamental <i>human</i> values. And their effect on "supply price" and "demand +price"—the money measures of infinitely complex social forces, to which +the entrepreneur immediately looks for his "cue"—has absolutely no +constant relation to their intensity. The wants of slaves may count for +little. The utterly unattractive and inefficient man may starve. The gilded +parasite of a prerevolutionary French monarch may command untold resources, +while the useful and productive millions may barely exist. On the other +hand, with a changed set of legal and moral values, we may have men of +social influence and power striving constantly to increase the incomes and +relieve the sufferings of the poor and helpless. Our legislatures may be +busy with laws shortening the hours of all labor, laws prohibiting child +labor, laws restricting the labor of women, laws for the protection of +miners, laws relating to the conditions of pay for labor and to +compensation for accidents—which promptly reflect themselves in the values +of the goods produced in the industries affected, and in the increased +values—through increased "demand"—of the goods consumed by these classes.</p> + +<p>The ideal of "no pay without function" may<span class='pagenum'><a name="Page_150" id="Page_150">[Pg 150]</a></span> attain—as I think it is to-day +attaining—a value of increasing power. And it may lead men to strive for +the abolition of monopoly incomes, and the correction of the gross +inequalities in the distribution of wealth. If it do not succeed—and it +does not by any means succeed—it is because opposing values check it. At +any given moment, there is an equilibrium, usually unstable, between the +forces tending to correct, and to perpetuate, these inequalities. And it +need not be an evil force that is the real obstacle to the realization of +greater justice in distribution. The legal value of private property—one +of those social "absolute values" which do not readily lend themselves to +the "marginal process"—checks at an early stage many of our well-meant, +but badly planned, efforts at justice. Glad as most of us would be to +deprive plutocratic pirates of what they have not earned, we still do not +care to upset the fundamentals of our social system in the process. But the +conflict between these values brings them both into clearer light. We see, +and feel, the significance, the "presuppositions," the "funded meanings," +of each. And while, for the present, there is a "mechanical haul and +strain" between them, which, if no more light comes, may ultimately lead to +the triumph of one and the complete defeat of the other, still, we may hope +to get a result like that which often comes in the case of conflicts +between values in the individual psychology—a fuller appreciation of the +significance of both values, which will get us away from the<span class='pagenum'><a name="Page_151" id="Page_151">[Pg 151]</a></span> +"absoluteness" of each, and effect a marginal equilibrium between them, or, +perhaps, get a new value which will comprehend them both. Of course, the +thing is not so simple as this. It is not a conflict simply between two +values, both of which the same man may "participate" in. Our plutocrats are +also parts of the social will. They count! The economic value they control +may bribe lawmakers, may corrupt judges, may seduce writers and preachers +and teachers and others who have to do with the making of public sentiment +and the shaping of social values. And, in subtler ways, through the social +prestige which their mere wealth too often gives, through the ideals which +they themselves honestly feel, and communicate to those about them, do they +create values opposing the values making for a juster distribution of +wealth. Infinitely complex is the situation, many and varied are the +values, which reinforce each other, oppose each other, and come into +equilibrium with each other, in a given moment in the social will.</p> + +<p>Older egoistic theories of political economy, which assumed perfect freedom +of competition, and gloried in the "harmonies" which result therefrom, +whereby the interests of the individuals and of society converge, and the +maximum of social welfare is attained by the individual's attaining his own +interests—these theories have been much attacked of late by those who +accept the premise of egoism, but reject the premise of freedom. To them +economic "friction" means simply an opportunity for the strong to prey +upon<span class='pagenum'><a name="Page_152" id="Page_152">[Pg 152]</a></span> the weak, and the social outlook is gloomy indeed. The harmonies are +shattered and gone. If we reject the other premise also, however, as +necessarily a dominant principle, the outlook is changed or may be changed. +It is true that there are ignorance, helplessness, and passions among men, +and that wolves prey. But it is also true that there are forces of +righteousness alert and militant in the world, not merely in the pulpit and +cloister and missionary field. And the struggle between these contending +forces is pregnant with implications for value theory. An astute +corporation lawyer argues before a court; an honest attorney-general +defends the rights of the people; and the ticker on 'Change records whether +right or wrong has prevailed. Prices are big with the moral tidings they +would speak—shall we read in them only mathematical ratios between +quantities of physical objects?</p> + +<p>It is by turning, then, to the concrete whole of social-mental life, and +especially to the moral and legal values of distribution, that we break the +circle<a name="FNanchor_176_176" id="FNanchor_176_176"></a><a href="#Footnote_176_176" class="fnanchor">[176]</a> of our economic values. Economics<span class='pagenum'><a name="Page_153" id="Page_153">[Pg 153]</a></span> has failed to profit by the +example of the other social sciences here. Ethics has frankly recognized +the tremendous import of economic values for ethical values. Jurisprudence +has frankly accepted the fact that law grows, in large part, out of +economic needs—even though it remains behind the needs of the present +economic situation. But economic theory has sought to make itself too much +a thing apart, to isolate its phenomena from other phases of social life, +and has busied itself exclusively with "utility" and "cost" and "prices," +and the like. And where the economist has consented to consider the +relations between his own field and adjacent fields, he has done so with a +preconception of the priority of his own phenomena, and his results have +been an "economic" interpretation of history, ethics, jurisprudence, etc. +That the economic interpretation of the other fields has much to commend it +is certain, but it is equally certain that law and morality react on +economic values, especially in the higher stages of civilization. This has +been so fully and convincingly stated by Professor Seligman, in his +<i>Economic Interpretation of History</i>, that I forego further elaboration +here. One comment is necessary however: even though we might grant Marx and +Buckle that the physical environment and the progress of<span class='pagenum'><a name="Page_154" id="Page_154">[Pg 154]</a></span> economic +technique are of ultimate ruling significance for the direction of social +progress, it is still a far cry from that doctrine to the doctrine that the +"utilities" and "costs" directly connected with the production and +consumption of economic goods, in the minds of individual men, are an +adequate explanation of anything.</p> + +<p>Were we interested in ethical and political values for their own sake, it +would be easy to show that our conception of the nature of society and of +social values has a similar significance for politics and ethics. There is +no one distinctive emotion, as fear, or the love of domination, that lies +at the basis of the state; there is no one emotion, as sympathy, or the +love of pleasure, which constitutes the essence of the moral values, nor is +there any single type of mental activity, as imitation, or consciousness of +kind, which furnishes the peculiar theme of sociology. Social life is not +in water-tight compartments. It is one whole, of which the different +sciences study different aspects. And the principle of division of labor +among the social sciences is not that one science shall offer one theory of +society and another science another theory, but rather, that each science +shall take as its problem a phase of society, and explain it by reference +to a general set of facts which all have in common. The differentiation +comes not in the <i>explanation</i> phenomena<a name="FNanchor_177_177" id="FNanchor_177_177"></a><a href="#Footnote_177_177" class="fnanchor">[177]</a>—no science has<span class='pagenum'><a name="Page_155" id="Page_155">[Pg 155]</a></span> any monopoly +on any set of forces which may be used for the purpose of explanation—but +in the phenomena to be explained, in the <i>problem</i> phenomena.<a name="FNanchor_178_178" id="FNanchor_178_178"></a><a href="#Footnote_178_178" class="fnanchor">[178]</a></p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_175_175" id="Footnote_175_175"></a><a href="#FNanchor_175_175"><span class="label">[175]</span></a> <i>Vide</i> Ross, <i>Foundations of Sociology</i>, chapter on the +"Sociological Frontier of Economics," and Tarde, <i>Psychologie Économique</i>, +<i>passim</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_176_176" id="Footnote_176_176"></a><a href="#FNanchor_176_176"><span class="label">[176]</span></a> It may be objected that instead of "breaking the circle," we +have simply widened it—that economic values, working through other forms +of value, affect other economic values still. In a sense, of course, this +is true. In any truly <i>organic</i> situation, we have the phenomenon of +<i>reciprocal causation</i>. An organic situation <i>must</i> be circular in this +sense. The parts are <i>inter</i>dependent. And our objection to the theories +criticized is based on the fact that they are essentially efforts to +describe a process in <i>rectilinear causation</i>—in the case of the +Austrians, <i>e.g.</i>, the process is <i>from</i> subjective utility, <i>to</i> objective +value of consumption goods, then <i>to</i> the values of the production goods of +the nearest rank, and then on and on to goods of remoter ranks, etc. +Böhm-Bawerk recognizes very well that the charge of circular reasoning, if +it could be brought home to the Austrians, would vitiate their system. +<i>Vide</i> "Grundzüge," Conrad's <i>Jahrbücher</i>, 1886, p. 516. And Professor +Clark likewise recognizes that value theory of the sort he is treating is +spoiled by circular reasoning, as indicated by his criticism of a certain +form of the labor theory in his <i>Distribution of Wealth</i>, p. 397. Whenever +a small set of abstractions is picked out, as <i>the source</i> and <i>cause</i> of +the rest of a movement, such a process of rectilinear causation is implied. +And a rectilinear process has no right to get into a circle!</p></div> + +<div class="footnote"><p><a name="Footnote_177_177" id="Footnote_177_177"></a><a href="#FNanchor_177_177"><span class="label">[177]</span></a> Pareto, in the introductory chapter of his <i>Cours d'Économie +Politique</i>, defines economics in terms of the narrow abstraction which he +has chosen for the explanation phenomenon, as the "science of ophelimity" +(p. 6), and ophelimity is "an entirely subjective quality" (p. 4). There +are two objections to this procedure: you neither completely explain your +problem phenomena, nor do you exhaust the possibilities of your explanation +phenomena—for the same sort of mental facts have bearing on ethical and +other social problems as well as on economic problems.</p></div> + +<div class="footnote"><p><a name="Footnote_178_178" id="Footnote_178_178"></a><a href="#FNanchor_178_178"><span class="label">[178]</span></a> I am indebted to Professor E. C. Hayes, of the Department of +Sociology of the University of Illinois, for this distinction.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_156" id="Page_156">[Pg 156]</a></span></p> +<h2><a name="CHAPTER_XV" id="CHAPTER_XV"></a>CHAPTER XV</h2> + +<h3>SOME MECHANICAL ANALOGIES</h3> + + +<p>It may help the exposition if we throw the argument, briefly, into terms of +the more familiar mechanical analogies, and speak of the equilibria and +transformations of social forces. Of course, mechanical analogies have been +used from time to time already in our discussion—psychologists themselves +often find it useful to conceive of their phenomena in mechanical terms. +And while, in the exposition, we shall find frequent reason to prefer our +plan of conceiving society as a psychical organism, and the social forces +as phases in an organic process, still certain relations may be clearer for +being put into the other form.</p> + +<p>Social values may be transformed into other forms of social value—as heat +may be transformed into electricity, or into motion, or motion into heat, +etc. Professor Clark, with his distinction between "capital" and "capital +goods," has shown how economic value may undergo constant transformation, +as to its physical embodiment, and yet remain generically the same. But the +possibilities of transformation are not confined to the economic sphere. We +may generalize the notion. A man may use economic value to attain political +power; having the political power, he may use it to get economic value<span class='pagenum'><a name="Page_157" id="Page_157">[Pg 157]</a></span> +back again, by direct barter and sale, if he wishes to take bribes, or by +subtler, but still all too familiar means. Or, the political power may be +transformed into personal prestige, if used in ways that please those whose +good will means prestige. And personal influence—"live human power" (in +Professor Cooley's phrase),<a name="FNanchor_179_179" id="FNanchor_179_179"></a><a href="#Footnote_179_179" class="fnanchor">[179]</a> may be transformed into values of numerous +sorts, into political power, into moral values—if he who has it wishes to +make a propaganda—into prestige for other men, into economic value—for +cannot an inspiring man command the purses of others in behalf of his plans +and purposes? And may not popular confidence in a great statesman or +financier in times of panic cause fears to be allayed, and values to return +to goods that had lost their value? A man who has goods for which no demand +exists, and which have, hence, little value, may, employing those who +possess the art of creating demand to make public opinion for him by +advertising, find his investment, transformed into public belief and +interest, return to him a golden harvest. A religious value may flow into +the economic value of religious books. A moral or religious value may be +transformed into a law. A legal value—as a franchise right<a name="FNanchor_180_180" id="FNanchor_180_180"></a><a href="#Footnote_180_180" class="fnanchor">[180]</a>—has often +a definitely recognized economic value as well. Economic value, spent in an +educational campaign, may<span class='pagenum'><a name="Page_158" id="Page_158">[Pg 158]</a></span> result in the establishment of a new moral or +legal value. And so on indefinitely. Enough has been said to show that +there is some sort of analogy between social and physical forces, in that +both can be transformed into other forms of force. The analogy might be +pushed further. It is often difficult to make the transformation in both +cases—there's lots of "friction" if a man starts out publicly and brazenly +to buy a political office, and a great deal of waste in the process. But +enough has also been said to show the weakness of such an analogy: in +creating personal prestige through the wise use of his political power, an +officer may actually increase, instead of exhausting, his political power. +Or, in the moment of attempting certain transformations, the original power +may be suddenly wiped out—as if a great political leader should undertake +to popularize some form of immorality. There is no law of equivalence, of +conservation of energy, in social forces. Their nature and their relations +are organic, and not mechanical.</p> + +<p>Or, we may speak of equilibria among social forces. Economists have for a +long time been used to this, speaking of equilibria between supply and +demand, between labor and capital, between enterprise and the other factors +of production, between intensive and extensive margins, etc. But we may +also have equilibria between, say, demand and moral values, as when moral +forces oppose the consumption of liquor, or between supply and law, as in +the case where regulation, rather than total suppression, of<span class='pagenum'><a name="Page_159" id="Page_159">[Pg 159]</a></span> certain +vicious businesses is the practice, or where the effort at total +suppression falls short. And equilibria between enterprise and law and +morals are being constantly worked out—entrepreneurs seeking to produce at +the minimum expense, even at the cost of the lives and health of their +employees, and law and morals<a name="FNanchor_181_181" id="FNanchor_181_181"></a><a href="#Footnote_181_181" class="fnanchor">[181]</a> drawing limits beyond which they must +not go, with a struggle between them at the margin—and the money prices of +the products reflect the marginal equilibrium attained. Supply may be in +equilibrium with a protective tariff, or an internal revenue excise—legal +values which the economists have long been accustomed to treat +quantitatively by the laws of incidence, and whose strength they measure in +terms of money prices.<a name="FNanchor_182_182" id="FNanchor_182_182"></a><a href="#Footnote_182_182" class="fnanchor">[182]</a> Not "utility and cost," but an infinite complex +of social forces are in equilibrium in the economic situation.</p> + +<p>And the social forces in equilibrium at focal points are themselves +composites of many forces, coöperating and reinforcing each other, each of<span class='pagenum'><a name="Page_160" id="Page_160">[Pg 160]</a></span> +these forces having its own equilibria with other minor forces—a net +resultant sending the unneutralized energy of both in a common direction, +to form part of a bigger stream of energy. "Demand" is a stream of energy +fed by many springs, among which, no doubt, individual wants for the good +in question are to be found, but which include the legal and moral values +of <i>men</i>, also, and an infinite host of other forces.</p> + +<p>And, just as one form of physical energy may be substituted for another, +under different systems of technique, electricity taking the place of steam +power, steam doing the work formerly done by horse or human power, so, in +particular forms of social organization, one form of social force may do +the work that is better done by some other form of social force under a +different form of social organization. Thus the regulation of the details +of conduct, a matter of iron law (or of custom with the force of law) in +certain stages, we now leave to the control of subtler social forces. At +one stage we depend on religious values, the curse and the benediction of +the church, as a tremendously vital power in social control; now we find +other modes of social energy frequently more efficacious. Now we depend +primarily on economic social values, under a competitive system, to +motivate the economic activities of society, to determine whether this +piece of land shall be planted in wheat, or in some other crop, or +fertilized in this or that manner; in the mediæval English manor, many +questions like these were settled by vote of the manor court.<span class='pagenum'><a name="Page_161" id="Page_161">[Pg 161]</a></span></p> + +<p>But whatever the form in which the social energy of control and motivation +manifests itself, its functional character is the same. It has its origin +in, and receives its vitality from, the social will—or better is a phase +of the social will—as steam power, electric power, and the energy in human +muscles, are species of the same generic force.</p> + +<p>The effort has not been made to put the whole of our argument into these +obviously uncongenial terms. The mechanical analogies, often useful for +particular purposes, fail to bring out the rich complexity, the organic +nature, of the social processes, and, by their very simplicity, often lead +to the ignoring of essential factors. For the purposes of the practical +economist, however, concerned with price analysis in a situation which is +so complex that he can give attention to only one set of forces, or +tendencies, at a time, and where quantitative measurement is essential, it +is often highly necessary to abstract from the organic complexity, to +assume that other forces than those he is measuring are constant, and to +put his argument into mechanical terms. My conception involves no radical +revision of economic methodology in this matter. It is primarily concerned +with the interpretation and validation of this methodology. To this topic I +shall return in the chapters on the relation between the theory of value +and the theory of prices.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_179_179" id="Footnote_179_179"></a><a href="#FNanchor_179_179"><span class="label">[179]</span></a> <i>Social Organization</i>, p. 264.</p></div> + +<div class="footnote"><p><a name="Footnote_180_180" id="Footnote_180_180"></a><a href="#FNanchor_180_180"><span class="label">[180]</span></a> Professor J. R. Commons has made some interesting comments +in a note ("Political Economy and Business Economy," <i>Quar. Jour. Econ.</i>, +Nov., 1907), as to the extent to which intangible objects have come to have +economic value. The legal and psychical nature of such values is, of +course, very manifest.</p></div> + +<div class="footnote"><p><a name="Footnote_181_181" id="Footnote_181_181"></a><a href="#FNanchor_181_181"><span class="label">[181]</span></a> Moral values, like economic values, in the sense in which I +use the term here, are actual facts, and not mere ideals. A moral value +<i>is</i> a value, to the extent that it is an effective <i>power in motivation</i>, +to the extent that the social will backs it up, and punishes with its +disapproval and with the subtle penalties which social disapproval +involves, infractions of the moral standard in question. I am not here +passing judgment on moral values themselves in the light of any ideal +standard, but simply describing the manner in which moral values function.</p></div> + +<div class="footnote"><p><a name="Footnote_182_182" id="Footnote_182_182"></a><a href="#FNanchor_182_182"><span class="label">[182]</span></a> Intrinsically, there is no more reason why the economist +should concern himself with measuring quantitatively the effect of tariff +laws than with a similar treatment of other legal values. Tariffs do not +affect industry any more intimately than hosts of other laws. The obvious +reason why the economic laws of taxation have been worked out and the +others ignored, in our economic analyses, is that the tax laws, being +themselves expressed in money terms, are more easily handled by the +economist.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_162" id="Page_162">[Pg 162]</a></span></p> +<h2><a name="CHAPTER_XVI" id="CHAPTER_XVI"></a>CHAPTER XVI</h2> + +<h3>PROFESSOR SELIGMAN'S PSYCHOLOGICAL DOCTRINE OF THE RELATIVITY OF VALUES</h3> + + +<p>Professor Seligman's discussion of value theory has been extremely fertile +in suggestions for me, and I find the spirit of the positive theory +outlined in this book much closer to the general point of view of his +doctrines than to those of any other economic writer. His recognition of +the generic character of value, of the fact that economic value is but a +species within a genus,<a name="FNanchor_183_183" id="FNanchor_183_183"></a><a href="#Footnote_183_183" class="fnanchor">[183]</a> his contention that, while ethical principles +depend on economic considerations in primitive life, they still, in later +and higher stages, attain a relative independence, and react on economic +life,<a name="FNanchor_184_184" id="FNanchor_184_184"></a><a href="#Footnote_184_184" class="fnanchor">[184]</a> his recognition of the essentially social nature of even the +individual's wants,<a name="FNanchor_185_185" id="FNanchor_185_185"></a><a href="#Footnote_185_185" class="fnanchor">[185]</a> his discussion of the legal and moral "level of +competition,"<a name="FNanchor_186_186" id="FNanchor_186_186"></a><a href="#Footnote_186_186" class="fnanchor">[186]</a> and, in general, his insistence upon a sociological +point of view, especially in the treatment of all practical problems, have +been of marked assistance to me in freeing my mind from the individualistic +bias of the narrow price analyses, and in making clear the gap between +existing theories of value and the function of the value concept in +economic science. At certain<span class='pagenum'><a name="Page_163" id="Page_163">[Pg 163]</a></span> stages, as already indicated in part, his +theories differ pretty radically from that set forth in the preceding +pages. For one thing, I find no place in my scheme for the notions of +social utility and social cost<a name="FNanchor_187_187" id="FNanchor_187_187"></a><a href="#Footnote_187_187" class="fnanchor">[187]</a> which are prominent in his discussions, +as, indeed, in the discussion of most of the adherents of the social value +school. There is one further point of difference, however, to which I wish +especially to call attention, as criticism of Professor Seligman's view +brings to light certain significant points in the theory I am defending. +The following quotation is from his article, "Social Elements in the Theory +of Value," from the <i>Quarterly Journal</i> of May, 1901:<a name="FNanchor_188_188" id="FNanchor_188_188"></a><a href="#Footnote_188_188" class="fnanchor">[188]</a>—</p> + +<div class="blockquot"><p>Progress consists in reducing costs, so that we +gradually approach gratuity. But, in reducing the value +of certain things, we necessarily increase the value of +other things. By diminishing the efforts required to +satisfy one want, we liberate the efforts needed to +satisfy a new want; it is only when we can satisfy this +new want that the means of<span class='pagenum'><a name="Page_164" id="Page_164">[Pg 164]</a></span> satisfaction acquires +value. For the pioneer who with difficulty is able to +clothe and feed himself a piano has no value. It is +only as clothing and food take up less of his +energy—that is, become of less value to him—that he +will appreciate the new want, until finally in +civilized society a piano is worth far more than a suit +of clothes. Since value, as we know, is simply an +expression for marginal utility, we cannot affirm that +value in general ever increases or decreases. As pianos +are worth more, clothing is worth less.</p></div> + +<p>The relativity of value is here made to depend on a ground different from +that which lies at the basis of the English School's doctrine of +relativity. The ground of the latter is <i>logical</i>; the ground for Professor +Seligman's view is <i>psychological</i>. Values considered as mutual relations +between two goods cannot both fall—a fall in one means that it goes lower +<i>than the other</i>, whence inevitably the other must rise, as a matter of +logical definition. For Professor Seligman, on the other hand, value is a +quantity of marginal utility. So far as the logic of the situation is +concerned, an increase in the supply of good diminishes <i>their</i> marginal +utility, and so their value.<a name="FNanchor_189_189" id="FNanchor_189_189"></a><a href="#Footnote_189_189" class="fnanchor">[189]</a> But, as soon as that is done, a new want +springs into existence, a new object receives value therefrom, and the +total quantity of value remains as before. In the article from which the +quotation is taken, the doctrine is merged to some extent with the English +doctrine of logical relativity, as indicated by the discussion<span class='pagenum'><a name="Page_165" id="Page_165">[Pg 165]</a></span> on page +343, and by the footnote on page 344. The English doctrine is also +suggested by the treatment in the <i>Principles of Economics</i> (pp. 184-85), +where it is stated that "prices may rise or fall with reference to this +standard, but we cannot speak of a general rise or fall of values, because +there is no fixed point." It is clear, however, that the argument for +relativity in the passage first quoted, is wholly distinct from, and +independent of, the logical relativity of definition. Professor Seligman, +in conversation with the writer, has so distinguished it, and has indicated +that, rejecting the logical doctrine of relativity, he now holds this +psychological doctrine of relativity, as distinct, both from the absolute +conception of Professor Clark, and the relative conception of the English +School.</p> + +<p>As preliminary to a criticism of Professor Seligman's doctrine, certain +distinctions must be made. Values may be relative in Professor Seligman's +sense without being relative in the sense in which the English School uses +the term: the English School thought only of the relations among, say, a +<i>unit</i> of wheat and a unit of corn, a unit of woolen goods, a unit of wine, +etc.: Professor Seligman is thinking of the <i>total stocks</i> of these various +commodities. Assume, for simplicity, that the stocks of all commodities +were doubled, and that the demand curves for all the commodities have the +same shape, and that form is the rectangular hyperbola,<a name="FNanchor_190_190" id="FNanchor_190_190"></a><a href="#Footnote_190_190" class="fnanchor">[190]</a> so that<span class='pagenum'><a name="Page_166" id="Page_166">[Pg 166]</a></span> the +absolute value of each unit of each commodity would be exactly cut in half. +The English School would say that there had been no change in the values of +the units; Professor Seligman would say that there had been no change in +the value of the <i>stocks</i>, but would concede at once that every unit has +had its value cut in half.<a name="FNanchor_191_191" id="FNanchor_191_191"></a><a href="#Footnote_191_191" class="fnanchor">[191]</a></p> + +<p>Another distinction must be made. There is, to be sure, at any given time, +a pretty definitely limited<a name="FNanchor_192_192" id="FNanchor_192_192"></a><a href="#Footnote_192_192" class="fnanchor">[192]</a> amount of social <i>productive energy</i>. This +energy can be distributed among only a limited number of products. Hence, +there can be only a limited number of objects to receive value from the +mental energies of society. But does it follow from this that what we may +call the social energy of value-giving is a limited thing? Or, granted that +it is limited, does it necessarily follow that the limits are fixed and +rigid? Cannot circumstances arise which will make it vary in amount? If a +new want arises, does it necessarily follow that all the old wants become +less intense in the exact degree that the new want is intense? Must a +quantum of value be withdrawn from the old objects precisely equal to that +which is attached to the new object? This<span class='pagenum'><a name="Page_167" id="Page_167">[Pg 167]</a></span> doctrine is deliberately +affirmed, so far, at least, as the individual is concerned, in the article +on "Worth"<a name="FNanchor_193_193" id="FNanchor_193_193"></a><a href="#Footnote_193_193" class="fnanchor">[193]</a> in Baldwin's <i>Dictionary of Philosophy</i>, etc.:—</p> + +<div class="blockquot"><p>The struggle for existence among dispositions, which +are at once the objects of ethical valuation and the +source of value reactions, springs out of the nervous +conditions of these dispositions. While there dwells in +each the tendency to utmost activity under the given +conditions, yet, since the valuing subject is master of +only a limited energy of valuation, i.e., nervous +energy, the increase of value of any given disposition +must necessarily cause others to decrease. In any case +increase of values is always relative.</p></div> + +<p>Now two lines of criticism suggest themselves. In the first place, the +concluding sentence of the quotation is a <i>non-sequitur</i>. If there be a +definite, absolute quantity of energy, then its distribution among objects +can give absolute quantities of value. Reservoirs connected by pipes may +among them contain a definite quantity of water, and increase in the volume +of water in one may be at the expense of all the others. But still the +amount of water in each is an absolute amount. This criticism, I may note, +Professor Seligman concurs in. Conceding that a definite amount of value +may exist in each object, he holds that there is, none the less, a +relativity about value in the sense that increase in the value of one item +can only come from a decrease in the value of another, and <i>vice versa</i>. +The other line of criticism calls attention to the<span class='pagenum'><a name="Page_168" id="Page_168">[Pg 168]</a></span> identification of +"energy of valuation" with "nervous energy." That the two are identical +would be maintained only by the crudest materialism. The one is a physical +force; the other is a psychical force. While nervous energy and energy of +valuation may be connected, the nature of the connection is surely not so +well known as to justify the assumption that definite limitation in the one +implies a precisely corresponding limitation in the other.<a name="FNanchor_194_194" id="FNanchor_194_194"></a><a href="#Footnote_194_194" class="fnanchor">[194]</a> There is no +justification—at least in the present state of psychological +knowledge—for holding that the law of the "conservation of energy" applies +to psychical energy.<a name="FNanchor_195_195" id="FNanchor_195_195"></a><a href="#Footnote_195_195" class="fnanchor">[195]</a></p> + +<p>Some concrete illustrations will make clearer the difficulties of the +doctrine, as applied to economic life. Assume a group of men on board a +whaling vessel, who suddenly discover that they will be obliged to spend +the winter in the ice-zone, instead of reaching home in the fall as they +had planned. Will not the value of everything in their store of provisions +be increased? Will not their whole stock of wealth have a greater value? +But this, Professor Seligman objects, is because they are in a situation +such that opportunity for reproduction is lacking, and he raises the +question as to whether the same situation is possible in economic life on a +large scale, where wealth is being constantly produced. Well, assume that a +crop failure on a large scale occurs.<span class='pagenum'><a name="Page_169" id="Page_169">[Pg 169]</a></span> Will not the value of the total +existing supply of the articles in which there is a failure be raised? And +will not other competing articles of food have their values increased also? +But, Professor Seligman would retort, these increases would be at the +expense of the values of the half-grown fields of grain, and at the expense +of articles other than food. Granted: but what evidence is there of exact +equivalence? And further, assume that half of every existing stock of +commodities, of every sort, were suddenly wiped out. Would the sum total of +values remain the same? Only on the assumption that the social value curve +for this totality of commodities is a rectangular hyperbola.<a name="FNanchor_196_196" id="FNanchor_196_196"></a><a href="#Footnote_196_196" class="fnanchor">[196]</a> That this +particular shape of the curve holds for any particular commodity would be +difficult to prove. That it does not hold at all for the necessities of +life is one of the commonplaces of economic analysis. Initial items in a +stock of necessities have a very great value, when there are no other items +of the stock, and the curve often descends very abruptly. Gregory King has +undertaken to show, in terms of money, the shape of this curve for wheat in +the England of his day. Other commodities have curves which behave very +differently. While the argument from the part to the whole is not a valid +argument in the presence of specific reasons making the whole obey +different laws from the parts, it still, in the absence of such special +considerations, does raise a strong presumption. And I must confess that I +see no reasons why the<span class='pagenum'><a name="Page_170" id="Page_170">[Pg 170]</a></span> curve for the totality of commodities should take +the particular form of a rectangular hyperbola, instead of some other form. +<i>A priori</i>, the presumption would seem to be that its form would be +irregular.</p> + +<p>There is another point of view which seems to support Professor Seligman's +contention, and that is the money-price viewpoint. At a given moment, each +man has a definite quantity of money—or of bank-credit—which he can use +in purchasing commodities. If he spends it for some commodities, he cannot +spend it for others. As he joins one group, demanding one commodity, he +must—at least to the extent of that amount of money—withdraw from other +groups demanding other commodities. At a given instant, therefore, there is +a definite demand-situation with reference to every item of every stock, +and one can increase its money-price only by drawing upon the demand for +others. But let a panic now come. Let these bank credits become unstable: +let <i>social confidence</i> be wiped out, and what happens to general prices +and values? Does the value that leaves the general range of commodities all +betake itself to the gold supply? That cannot be, for the supply of gold, +as compared with the supply of other commodities, is well-nigh +infinitesimal, and if the whole of the values that left the commodities +went into gold, then every unit of gold would be tremendously increased in +value, and prices in terms of gold would fall, not two-thirds, but a +thousandfold. What has become of the values?<span class='pagenum'><a name="Page_171" id="Page_171">[Pg 171]</a></span> They have simply been wiped +out. A psychical change has taken place, a malady has afflicted the social +mind, its integrity is shattered, doubt has taken the place of confidence, +panic fear has replaced buoyant expectation, demoralization and +disorganization have lessened the social psychic energy—or dissipated it +in inchoate, unorganized individual activities. The sum total of values is +lessened. Of course, the reverse may happen. Let confidence be restored, +let the social psychic organization function normally once more and values +rise again. As we have indicated in our discussion of the psychology of +value, <i>belief</i>, as well as desire and feeling, may often be a very +significant phase in the value situation, and have a motivating power quite +as great as the other phases. <i>Credit</i>, while it exists, is a real addition +to the sum of values—has, that is to say, a real power in motivating +economic activity, calling forth new productive efforts, and directing +labor, capital, and enterprise to new channels. This is not, of course, +asserting the doctrine of John Law. Credit cannot be manufactured out of +whole cloth. Beliefs, at least to some extent, follow rational laws, and, +except in moments of hysteria, there must be something for people to +believe in before strong belief can emerge. Sometimes, of course, an +unstable but momentarily powerful belief, based on nothing rational, may +dominate a situation, and radically upset the existing scale of +values—with a sad reaction following shortly after. And, in the absence of +belief, the most rational justification<span class='pagenum'><a name="Page_172" id="Page_172">[Pg 172]</a></span> for belief is impotent. Witness +the bankruptcies, in times of panic, of men whose assets turn out later +perfectly adequate, but who are unable to liquidate them at the time of the +panic. Note, too, in this connection, the tendency in times of panic to +turn to government for aid in sustaining values—to substitute for the +waning social force of belief the power of a new legal force.</p> + +<p>A case parallel to the panic, as inducing a diminution of the total psychic +energy of control, is presented by widespread epidemics. Gabriel Tarde, +criticizing Mill's contention that all values cannot rise or fall, +instances the general fall in all values which an epidemic occasions, and +the recovery of values after the epidemic.<a name="FNanchor_197_197" id="FNanchor_197_197"></a><a href="#Footnote_197_197" class="fnanchor">[197]</a> This criticism of Tarde's +will not, of course, hold as against Mill's doctrine (indefensible on other +grounds) which bases the relativity of values upon a logical definition, +but it will hold as against the psychological doctrine of relativity under +discussion.</p> + +<p>A further point is to be noted. Even granting that the sum total of social +power of motivation is definitely limited, it still does not follow that +the sum total of economic value is so limited. For not all of this social +psychic energy goes into economic values. Religious, æsthetic, patriotic, +moral values, all call for their share of this energy, and the amount given +to each varies from time to time. This phase of the matter is discussed<span class='pagenum'><a name="Page_173" id="Page_173">[Pg 173]</a></span> in +detail by Professor Ross, in the chapter on "The Social Forces" in his +<i>Foundations of Sociology</i>, and I shall not expand the discussion here.</p> + +<p>The doctrine that there is a definite, unchanging sum of economic values, +therefore, cannot, in my judgment, be maintained. And yet, it must be +conceded, there is a substantial element of truth in Professor Seligman's +contention. At a given time, or through a considerable period, assuming +social conditions to change slowly, there are fairly definite amounts of +social energy, both of production and of control over production +(value-giving energy). The surface fact here is that men have definite +incomes. If this energy is disposed of in one way, it cannot be disposed of +in another. If men elect to have one good, they must dispense with +something else. And in using their control over social forces to increase +the value of one good, they must refrain from using it to increase the +value of another. In the long run, these quantities are subject to change. +At a given moment, a sudden disturbance may radically change them. But, as +a statement of tendency, Professor Seligman's doctrine must be admitted.</p> + +<p>Professor Seligman's view differs from that of Professor Clark simply in +that it adds an element. On its logical side, it conceives value in the +same way. Value is a quality, with degrees, i.e., a quantity. This quantity +in a particular good is an absolute fraction of an absolute quantity. It is +not changed merely in consequence<span class='pagenum'><a name="Page_174" id="Page_174">[Pg 174]</a></span> of being compared with some other +good—it remains the same, regardless of what price-ratio it is put into. +On its formal and logical side, therefore, Professor Seligman's concept is +to be classed with that of Professor Clark—with which, as indicated in +chapter <span class="smcap">ii</span>, I am in hearty accord, in so far as the issues raised in that +chapter are concerned.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_183_183" id="Footnote_183_183"></a><a href="#FNanchor_183_183"><span class="label">[183]</span></a> <i>Principles</i>, 1905, p. 174.</p></div> + +<div class="footnote"><p><a name="Footnote_184_184" id="Footnote_184_184"></a><a href="#FNanchor_184_184"><span class="label">[184]</span></a> <i>Economic Interpretation of History</i>, <i>passim</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_185_185" id="Footnote_185_185"></a><a href="#FNanchor_185_185"><span class="label">[185]</span></a> <i>Principles</i>, p. 175.</p></div> + +<div class="footnote"><p><a name="Footnote_186_186" id="Footnote_186_186"></a><a href="#FNanchor_186_186"><span class="label">[186]</span></a> <i>Ibid.</i>, pp. 147-48.</p></div> + +<div class="footnote"><p><a name="Footnote_187_187" id="Footnote_187_187"></a><a href="#FNanchor_187_187"><span class="label">[187]</span></a> It might be possible to put the argument into terms which +would give an analogical meaning to "social utility" and "social cost." The +diagram representing the intersection of the demand curve and the supply +curve, fixing price, may be taken equally well to represent the balance of +social forces which lies back of the market phenomena in the case of a +given commodity. The demand curve might then be called a "social utility" +curve, and the supply curve a "social cost" curve, if only it be remembered +that cost and utility here have only a vague, analogical meaning, and cover +up a host of factors which, while they fall conveniently into two opposing +groups, like the individual's "cost" and "utility," are yet much more than +the latter. But they are really so very much more than the latter, that it +seems to me misleading to continue the use of the terms, utility and cost, +when the associations of these terms in economic theory are remembered. The +tendency would be to make the student feel that value depends on two +abstract phases of social-mental life, instead of being an outcome of the +organic whole.</p></div> + +<div class="footnote"><p><a name="Footnote_188_188" id="Footnote_188_188"></a><a href="#FNanchor_188_188"><span class="label">[188]</span></a> Pp. 342-43.</p></div> + +<div class="footnote"><p><a name="Footnote_189_189" id="Footnote_189_189"></a><a href="#FNanchor_189_189"><span class="label">[189]</span></a> The reader will understand that I am using accustomed +phraseology and making customary assumptions, not because I approve of +them, but because the point at issue here is not affected by the question +as to the relations between value and utility, etc. The distinction between +a utility curve and a price curve does not affect the argument here.</p></div> + +<div class="footnote"><p><a name="Footnote_190_190" id="Footnote_190_190"></a><a href="#FNanchor_190_190"><span class="label">[190]</span></a> Analytically expressed <i>xy</i> = <i>c</i>. This curve, by +definition, leaves the "value area" (<i>xy</i>) constant.</p></div> + +<div class="footnote"><p><a name="Footnote_191_191" id="Footnote_191_191"></a><a href="#FNanchor_191_191"><span class="label">[191]</span></a> A complication must be noticed here, due to my use of the +term, "demand curve." I am tacitly assuming that the absolute value of the +money unit remains the same in this process, and so must say that the +English School would concede that the value of the money unit has doubled +even though holding that all the other values remain unchanged, except with +reference to the money unit. For Professor Seligman, the value of money +(<i>i.e.</i>, the total stock) has not changed.</p></div> + +<div class="footnote"><p><a name="Footnote_192_192" id="Footnote_192_192"></a><a href="#FNanchor_192_192"><span class="label">[192]</span></a> But the limitation is not absolute. New incentives may call +out substantial increases in productive activity.</p></div> + +<div class="footnote"><p><a name="Footnote_193_193" id="Footnote_193_193"></a><a href="#FNanchor_193_193"><span class="label">[193]</span></a> Written by Professor W. M. Urban, author of <i>Valuation</i>, to +which frequent reference has been made. <i>Vide Valuation</i>, p. 4, n. The +article was, of course, written several years before the book.</p></div> + +<div class="footnote"><p><a name="Footnote_194_194" id="Footnote_194_194"></a><a href="#FNanchor_194_194"><span class="label">[194]</span></a> In this view I am sustained by Professor John Dewey.</p></div> + +<div class="footnote"><p><a name="Footnote_195_195" id="Footnote_195_195"></a><a href="#FNanchor_195_195"><span class="label">[195]</span></a> <i>Cf.</i> Stuart, "Valuation as a Logical Process," in Dewey's +<i>Studies in Logical Theory</i>, pp. 328, n., and 330.</p></div> + +<div class="footnote"><p><a name="Footnote_196_196" id="Footnote_196_196"></a><a href="#FNanchor_196_196"><span class="label">[196]</span></a> See <i>supra</i>, p. 165, n.</p></div> + +<div class="footnote"><p><a name="Footnote_197_197" id="Footnote_197_197"></a><a href="#FNanchor_197_197"><span class="label">[197]</span></a> "La psychologie en économie politique," <i>Rev. +Philosophique</i>, vol. <span class="smcap">xii</span>, p. 238.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_175" id="Page_175">[Pg 175]</a></span></p> +<h2><a name="CHAPTER_XVII" id="CHAPTER_XVII"></a>CHAPTER XVII</h2> + +<h3>THE THEORY OF VALUE AND THE THEORY OF PRICES</h3> + + +<p>In most English treatises on economics, a price means a sum of money given +in exchange for a commodity, or the ratio between the money and the +commodity, or the ratio between the value of the money and the value of the +commodity. In any case, price as a rule involves the idea of money. With +the Germans, on the other hand, <i>Preis</i> means any exchange ratio (or a +quantity of commodities of any sort given in exchange for a good), whether +or not one of the terms of the ratio involves money, and the distinction +between price and value (<i>Preis</i> and <i>Wert</i>) is, commonly, the distinction +between the measure and the thing measured, or between "relative value" and +"absolute value" in Ricardian phrase.<a name="FNanchor_198_198" id="FNanchor_198_198"></a><a href="#Footnote_198_198" class="fnanchor">[198]</a> The conception of price has been +broadened by some later writers in English, however, to correspond with the +German usage, notably by Professor Patten,<a name="FNanchor_199_199" id="FNanchor_199_199"></a><a href="#Footnote_199_199" class="fnanchor">[199]</a> and by Professor +Schumpeter,<a name="FNanchor_200_200" id="FNanchor_200_200"></a><a href="#Footnote_200_200" class="fnanchor">[200]</a> in an English article contributed recently to the +<i>Quarterly Journal</i>. I do not care to argue a merely terminological +question, and I readily concede that there are disadvantages in departing +from<span class='pagenum'><a name="Page_176" id="Page_176">[Pg 176]</a></span> familiar usage. But, on the other hand, since I am convinced that +ratios of exchange in general, and money prices in particular, are +generically the same, while ratios of exchange and values are generically +as unlike as it is easily possible for two things to be, I shall use the +term price in this wider meaning, and confine the word value, in the +exposition of my own theory, to the non-relative meaning.</p> + +<p>The distinction between prices in this sense and absolute values appears in +Adam Smith and in Ricardo. These writers do not adhere very strictly to +either meaning of the term, value, however.<a name="FNanchor_201_201" id="FNanchor_201_201"></a><a href="#Footnote_201_201" class="fnanchor">[201]</a> The conception of absolute +values is<span class='pagenum'><a name="Page_177" id="Page_177">[Pg 177]</a></span> lost by J. S. Mill, and the distinction which he draws in +connection with the problem of the standard of deferred payments (not so +called by Mill) is between values (relative) and <i>cost of production</i>.<a name="FNanchor_202_202" id="FNanchor_202_202"></a><a href="#Footnote_202_202" class="fnanchor">[202]</a> +In Cairnes, the two conceptions are hopelessly confused on a single +page,<a name="FNanchor_203_203" id="FNanchor_203_203"></a><a href="#Footnote_203_203" class="fnanchor">[203]</a> while Marshall's whole treatment runs in terms of price.</p> + +<p>In what follows, I wish to generalize the conception of price, to show the +function of the price concept in economics, to distinguish carefully +between the theory of value and the theory of prices, and to see what light +the theory of value outlined in this book throws upon the problems of the +price analysis.</p> + +<p>In chapter <span class="smcap">ii</span>, the distinction between "absolute and relative values," or, +in our present phrase, between values and prices, was sufficiently +indicated not to need further elaboration here. The relation between them +was made clear—the absolute value must first exist before the price, which +is the expression of the value of a good in terms of some other valuable +object which is chosen as a measure, can be determined. In fact, <i>two</i> +values, the value of the good measured, and the value of the good which is +to serve as the measure, must first exist, as absolute quantities, before a +price-ratio can be made<span class='pagenum'><a name="Page_178" id="Page_178">[Pg 178]</a></span> between them, and their "relative values" shown. +In the chapter on the psychology of value, the notion of price was +generalized, and we spoke of the price measure of values of non-economic +sort. This notion is one of very general application and one of +significance for the whole realm of social and psychical phenomena: not +merely where the question of exchanging economic goods is involved, but +wherever choice among alternative goods, or courses of action, or men, or +institutions, or works of art, or other objects of value, is necessary, we +<i>compare</i> them with each other, we <i>measure</i> them by each other, we <i>price</i> +them in terms of each other. We arrange them in <i>scales</i> of value, or in +series, seeing which is higher and which lower. Where only two goods are +involved, we may call either the measure, depending on the point of view. +But where many goods are to be compared, it is highly convenient to pick +out some one as the common measure of all, so that they may be reduced to +common terms. For measuring economic goods, money is, of course, the +standard, or common measure <i>par excellence</i>, for most purposes. If we are +measuring the value of the political institutions of various countries, we +usually take the institutions of our own country, with which we are most +familiar, as the common measure or standard. Or, in measuring the moral +systems, or the literary masterpieces, of other countries, we again find +those of our own people the most convenient standard. But it is significant +of the correctness of our general point of<span class='pagenum'><a name="Page_179" id="Page_179">[Pg 179]</a></span> view that values of different +species may be measured in terms of each other. <i>Money</i>, in particular, is +a very general measure, which may serve for many values outside the +economic sphere. Thus, I have pointed out how legal values may be measured +in terms of money, as when the fine for one offense is five dollars, and +that for another twenty-five. Gabriel Tarde<a name="FNanchor_204_204" id="FNanchor_204_204"></a><a href="#Footnote_204_204" class="fnanchor">[204]</a> points out that by +comparing the theatre receipts of theatres representing different dramatic +schools we may compare the vogues of each, or that by comparing the income +of the clergy in different periods we may get some index of the variations +of religious sentiments. He suggests that while money as a measure of +economic values usually functions in exchange, it may, as a measure of +beliefs or other social forces, function through gifts, through popular +subscriptions to build this or that statue, for the support of scientific +work or philanthropies, or even through thefts: "Quelquefois même c'est par +des vols où se montre la perversion d'un esprit sectaire, l'aberration et +la profondeur de ses convictions passionées."</p> + +<p>Commonly, indeed, money performs even this function, that of measuring +currents of belief, passion, enthusiasms, etc., through the process of +exchange, and, ordinarily, it is difficult to get any single current +separately. We simply get the resultant of an equilibrium of a complex of +forces in economic values. But sometimes a single factor stands out so +prominently that we can<span class='pagenum'><a name="Page_180" id="Page_180">[Pg 180]</a></span> abstract from the rest, and let money changes +measure changes in it alone. For example, during the three days of the +battle of Gettysburg, the premium on gold, as measured in terms of Federal +paper, fell from forty-five per cent to twenty-three and a fourth per +cent.<a name="FNanchor_205_205" id="FNanchor_205_205"></a><a href="#Footnote_205_205" class="fnanchor">[205]</a> For the market, this means simply a change in the economic value +of Federal paper. But for one who cares to look even superficially behind +the scenes, it means an increased volume of belief in the triumph of the +Federal arms—a belief that at once affected economic values, and was +measured in terms of money. Or, the economist may abstract a single legal +factor, as a tax law, and measure its influence on the assumption that the +rest of the situation is constant, in the well-known laws of shifting and +incidence.</p> + +<p>Such clean-cut instances are not the rule, however. The organic complexity +of the social forces lying back of economic values makes it difficult to +disentangle single elements, and measure their force. For one thing, +variations in one factor usually mean movements in the others. If we may +borrow terms from chemistry, while the economist may give us a +<i>qualitative</i> analysis of these forces, it is hard for him to give us a +<i>quantitative</i> analysis. And the characteristic of pure economic theory has +been its effort to get quantitative, quasi-mathematical laws. The "pure +theorist," therefore, does well to start with a quantitative value concept +(a convenient shorthand or symbol for the infinite<span class='pagenum'><a name="Page_181" id="Page_181">[Pg 181]</a></span> complexity that lies +behind it), a value quantity in which the net outcome of social +interactions does precisely manifest itself, and study the laws which it +manifests. His chief interest is, not in the origin of economic value +itself, but in the changes in quantities in value in different goods and +services as these manifest themselves in the market, and submit themselves +to economic measurement. In a word, his chief interest is, not in value, +but in <i>prices</i>.<a name="FNanchor_206_206" id="FNanchor_206_206"></a><a href="#Footnote_206_206" class="fnanchor">[206]</a> And the great bulk of pure economic theory, and +practically all that is of greatest importance in pure theory, is in the +theory of prices, and not in the theory of value. Lest I be misunderstood, +the qualification must be repeated: prices here mean, not money-prices, but +prices in the generic sense. In this sense of the word price, it is just as +accurate to speak of the price of money in terms of commodities, or of a +composite of commodities, as to speak of prices of commodities in terms of +money.</p> + +<p>That is to say, the economist gives himself little concern, in his +quasi-mathematical study, as to the ultimate nature of the social forces +that manifest themselves in the market. A host of forces lie back of +demand, but the economist puts the phenomena of demand into a curve which +is the function of two variables, one a quantity of money, and the other a +quantity of goods. Lying back of these quantities of goods and money, and +giving meaning to the curve, are the more fundamental quantities, the value +of<span class='pagenum'><a name="Page_182" id="Page_182">[Pg 182]</a></span> the goods and the value of the money. Further than this, for the +purposes of his quasi-mathematical, pure theory, the pure economist has no +real occasion to go—in proof of which it need be remarked simply that the +most divergent theories as to the nature of value, none of them adequate if +the theory set forth in this book be true, have not prevented the +development of a vast, highly organized, and immensely useful body of price +doctrine, shared by economists of many schools. If only the economist have +a quantitative value concept, he can do wonders. And, if the question be +regarding relations between factors where the question of the value of +money may be ignored, he may often safely abstract from the idea of value, +and speak simply of money quantities, and relative changes in these money +quantities. Such is, indeed, Professor Marshall's procedure in a large part +of his great work. Professor Davenport's contention that, from the +standpoint of the entrepreneur, the whole thing may be looked at in +pecuniary terms, is true of many problems. Cost for the entrepreneur is +simply a money matter. And while, for the more fundamental analysis, we of +course must insist that a host of psychic forces determine what those money +costs shall be, our analysis will justify the contention that it is +impossible to treat them in any but price terms, in a precise and +quantitative manner. They are too complex. Certainly labor-pain and +abstinence, looked on as abstract individual feeling-magnitudes, will not +explain the supply-prices<span class='pagenum'><a name="Page_183" id="Page_183">[Pg 183]</a></span> of labor and capital, any more than individual +"utilities" will explain demand-schedules. And we may add that the terms +"social cost" and "social utility" can, in our scheme, get no meaning that +will make them useful. The social value concept seems to us absolutely +essential for the validation of the whole procedure of the price analysis, +and to be implied in every step in it, but the only meaning we can find for +the concept of social marginal utility would be one which would make it +identical with social value; and against that there are two objections: +first, it would be superfluous, and second, it would be misleading. "Social +utility" can get only a vague, analogical meaning in our scheme. Instead of +explaining social value, it would itself present a problem.<a name="FNanchor_207_207" id="FNanchor_207_207"></a><a href="#Footnote_207_207" class="fnanchor">[207]</a> A measure +of social economic value in terms of a feeling-magnitude which an +individual can appreciate is not to be had. Value can be measured and +quantitatively handled only in terms of <i>price</i>.</p> + +<p>In saying this, I do not mean to impeach that more abstract procedure which +speaks of abstract units of value, and uses arithmetical numbers which +designate no particular commodities, or algebraic symbols, or even ordinary +speech, to indicate quantitative relations among different sums of these +abstract units. Such procedure is thoroughly correct, and often highly +convenient, if one be dealing with highly general laws, or if one wish to +avoid any complications from changes in the value of any concrete<span class='pagenum'><a name="Page_184" id="Page_184">[Pg 184]</a></span> +commodity which might be chosen as the standard of value. Only, I would +insist, such procedure is simply an abstraction from the price concept, and +so presupposes it. A unit of value, in the concrete, must be the value of +some particular concrete good, which is chosen as the standard. <i>What</i> good +is chosen is a purely arbitrary matter, determined by convenience. Abstract +value, apart from valuable things, is an utter impossibility—only a +Platonic idealism or mediæval realism could hold the contrary view. And, in +order to show how many units of value there are in a good, we must compare +it with another good, whose value is the unit, unless, indeed, we +arbitrarily choose as our unit the good in question, and say that its value +is one unit, or several units, in case we arbitrarily define the unit as a +fraction of its value. But clearly this latter procedure would tell us +nothing after all as to the amount of the value in the good. It would be a +purely formal process—like renaming a "hocus-pocus" and calling it two +"Abracadabras." Any real measuring—and real measuring is essential for any +quantitative manipulation—implies <i>two</i> things, one of which shall serve +as the measure of the other. The conception of abstract <i>units</i> of value, +therefore, is an abstraction from the price conception, and presupposes +it.<a name="FNanchor_208_208" id="FNanchor_208_208"></a><a href="#Footnote_208_208" class="fnanchor">[208]</a></p> +<p><span class='pagenum'><a name="Page_185" id="Page_185">[Pg 185]</a></span></p> +<p>A valid price procedure, in my view, is essentially this: we take our +quantitative value concept, summing up the multitudinous social forces +which determine values: then we assume a given set of ethical, legal, and +social values of a non-economic sort,<a name="FNanchor_209_209" id="FNanchor_209_209"></a><a href="#Footnote_209_209" class="fnanchor">[209]</a> as a sort of frozen framework +within which our economic values are to operate, and which shall remain +constant during the investigation: then, measuring the economic values in +terms of a common unit, we let them exert their influence on the situation, +and see what results follow. We vary first one and then the other, and see +what readjustments any change involves. Since the situation is so +infinitely complex, we bring about this artificial simplicity in thought, +that we may study the tendencies one by one. But a given economic change +will work out its consequences fully only on the assumption that other +economic changes are not occurring. We can in thought let them vary one by +one, but they do in fact all vary at once. And further—and for this fact +price theory has made no allowance—the "frozen framework" of legal, moral, +and other non-economic social values, is not "frozen." Changes in economic +values lead to readjustments, not only in the other economic values, but +also in the legal, ethical, and other values of the framework. These last +are fluid, psychic forces, just as truly<span class='pagenum'><a name="Page_186" id="Page_186">[Pg 186]</a></span> as are the economic values. They +change because of changes in the economic values; they initiate changes in +the economic values; and they initiate changes which deflect the tendencies +of changes in the economic values. So that, even though we premise a +thoroughly organic theory of social value, in which the influence of the +non-economic social values, working <i>through</i> the economic values, is +carefully provided for, we still have to correct the results of our price +analysis, before applying it to practice, to account for changes in the +non-economic values working to deflect the tendencies which the economic +values would lead to if the other values had remained constant.</p> + +<p>This last, of course, most economists in practice constantly try to do. +Present day discussions of practical economic problems are rich in data of +a non-economic sort. In practice the economist recognizes that his mission +is, not to see how far a few abstract factors will go in the explanation of +economic life, but rather, to <i>explain</i> that economic life by any means in +his power, though he ransack heaven and earth in the process.</p> + +<p>Of course, it is but a commonplace to add that the economist, in practice, +does try to take account of the extent to which his assumptions as to the +legal and social "framework" hold: how far there is real freedom of +competition, how far real "intelligent self-interest," how far mobility of +labor and of capital, how far monopoly privilege, etc. Or, at least, he +usually tries to make<span class='pagenum'><a name="Page_187" id="Page_187">[Pg 187]</a></span> himself think that he has done so. It still remains +lamentably true that a great deal of reasoning even on practical problems +is an effort to apply theories without any adequate understanding of the +extent to which the theories grow out of abstractions made for purposes of +study, or any effort to put back the concrete facts from which the +abstraction was made. The practical business man knows how these various +forces operate on values. He studies them, tries to estimate their force in +quantitative price terms, and adjusts his plans to them. If a religious +wave sweeps over a large section of the country, the wholesaler sends in +larger orders for Bibles, and smaller orders for playing cards. If a +rate-reduction agitation is going on, the manufacturer of steel rails and +railroad supplies plans to cut down his output. If trades-unionism grows +strong, employers of labor recognize that they must readjust their +budgets.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_198_198" id="Footnote_198_198"></a><a href="#FNanchor_198_198"><span class="label">[198]</span></a> <i>Cf.</i> Davenport, <i>op. cit.</i>, pp. 296-97.</p></div> + +<div class="footnote"><p><a name="Footnote_199_199" id="Footnote_199_199"></a><a href="#FNanchor_199_199"><span class="label">[199]</span></a> <i>Theory of Prosperity</i>, New York, 1902, pp. 16-17, 89.</p></div> + +<div class="footnote"><p><a name="Footnote_200_200" id="Footnote_200_200"></a><a href="#FNanchor_200_200"><span class="label">[200]</span></a> "On the Concept of Social Value," <i>Quar. Jour. Econ.</i>, Feb., +1909, pp. 226-27.</p></div> + +<div class="footnote"><p><a name="Footnote_201_201" id="Footnote_201_201"></a><a href="#FNanchor_201_201"><span class="label">[201]</span></a> See <i>Wealth of Nations</i>, introductory part of chap. <span class="smcap">viii</span> of +bk. <span class="smcap">i</span> (pp. 66-67 of the Cannan ed.) For Ricardo, see <i>Works</i>, McCulloch +ed., London, 1852, p. 15. Adam Smith seems occasionally to use value in the +relative sense, as on p. 183 of vol. <span class="smcap">ii</span> of the Cannan ed. Ricardo, though +indicating that he is concerned only with relative values on the page cited +<i>supra</i>, still speaks of values as simultaneously falling, in ch. <span class="smcap">xx</span>, on +"Value and Riches," which, of course, is impossible on the basis of the +relative concept. There is no point to torturing these passages unduly, +however, in the effort to find our distinctions in them. +</p><p> +Professor Seligman calls my attention to a most interesting forty-page +discussion of the theory of value by W. F. Lloyd, <i>A Lecture on the Notion +of Value, as Distinguishable not only from Utility, but also from Value in +Exchange</i>. The lecture was delivered before the University of Oxford, in +Michælmas Term, 1833, and published, in accordance with the rules of the +foundation which provided funds for the lecture, in London, 1834. The +writer insists on the conception of value as absolute, and devotes pp. +30-40 to a defense of the absolute conception. He cites the passage in Adam +Smith referred to <i>supra</i>, in which Smith distinguishes real dearness from +apparent dearness (introductory part of chap. <span class="smcap">viii</span> of bk. <span class="smcap">i</span>). The most +striking thing about this lecture, however, is its anticipation of Jevons's +doctrine of marginal utility, and its emphasis upon the subjective +character of value. The word, margin, is used in virtually the sense in +which Jevons uses it, on p. 16. +</p><p> +The book is very rare,—only three copies, one in Professor Seligman's +library, one in the British Museum, and one in the Goldsmiths' (formerly +Foxwell) Library in London, are known to exist. It seems to have made no +impression upon the economists of the time of its publication. A reprint +to-day would enable the economic world to do belated justice to a very +acute and original thinker. <i>Cf.</i> Professor Seligman's article "On Some +Neglected British Economists" in the <i>Economic Journal</i>, vol. <span class="smcap">xiii</span>, esp. +pp. 357-63.</p></div> + +<div class="footnote"><p><a name="Footnote_202_202" id="Footnote_202_202"></a><a href="#FNanchor_202_202"><span class="label">[202]</span></a> <i>Principles</i>, bk. <span class="smcap">iii</span>, chap. <span class="smcap">xv</span>, par. 2.</p></div> + +<div class="footnote"><p><a name="Footnote_203_203" id="Footnote_203_203"></a><a href="#FNanchor_203_203"><span class="label">[203]</span></a> <i>Leading Principles</i>, editions of 1878 and 1900, pp. 12-13.</p></div> + +<div class="footnote"><p><a name="Footnote_204_204" id="Footnote_204_204"></a><a href="#FNanchor_204_204"><span class="label">[204]</span></a> <i>Psychologie Économique</i>, vol. <span class="smcap">i</span>, pp. 77-78.</p></div> + +<div class="footnote"><p><a name="Footnote_205_205" id="Footnote_205_205"></a><a href="#FNanchor_205_205"><span class="label">[205]</span></a> Scott, <i>Money and Banking</i>, 1903 ed., p. 60.</p></div> + +<div class="footnote"><p><a name="Footnote_206_206" id="Footnote_206_206"></a><a href="#FNanchor_206_206"><span class="label">[206]</span></a> <i>Cf.</i> Schumpeter, <i>Quar. Jour. Econ.</i>, Feb., 1909, pp. +226-27.</p></div> + +<div class="footnote"><p><a name="Footnote_207_207" id="Footnote_207_207"></a><a href="#FNanchor_207_207"><span class="label">[207]</span></a> See <i>supra</i>, p. 163, n.</p></div> + +<div class="footnote"><p><a name="Footnote_208_208" id="Footnote_208_208"></a><a href="#FNanchor_208_208"><span class="label">[208]</span></a> <i>Cf.</i> p. 50, n. It is sufficiently clear, I trust, that this +argument is concerned with the relativity of <i>knowledge</i>, and not with the +relativity of <i>value</i>. We can <i>know</i> things only in terms of our +"apperceptive mass," but that does not mean that things <i>exist</i> only by +virtue of our apperceptive mass. And even knowledge is relative only when +it is "<i>Knowledge-about</i>." <i>Cf.</i> James, <i>Principles of Psychology</i>, vol. <span class="smcap">i</span>, +p. 221, and <i>The Meaning of Truth</i>, p. 4, n.</p></div> + +<div class="footnote"><p><a name="Footnote_209_209" id="Footnote_209_209"></a><a href="#FNanchor_209_209"><span class="label">[209]</span></a> Marshall accords a limited recognition to our doctrine. See +<i>Principles</i>, 1907 ed., p. 35, where he indicates that certain parts of the +theory of value assume the prevailing ethical standards of our Western +civilization, and that prices of various stock exchange securities are +"normally" affected by the patriotic feelings of purchasers, and even +brokers, etc.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_188" id="Page_188">[Pg 188]</a></span></p> +<h2><a name="CHAPTER_XVIII" id="CHAPTER_XVIII"></a>CHAPTER XVIII</h2> + +<h3>THE THEORY OF VALUE AND THE THEORY OF PRICES (<i>concluded</i>)</h3> + + +<p>My strictures upon the Austrian, or "utility" theory of value in what has +gone before seem to call for further qualification here. As a theory of +<i>value</i>, as a theory to explain the nature and origin of value, I am +convinced that the Austrian theory is utterly and hopelessly inadequate. +And yet, for the work of the Austrian economists, taken by and large, I +have the highest admiration. Their treatment of margins, their conception +of the motivating function of value, and their new stress on the demand +side of the price-problem, constitute a marked advance over the point of +view of the earlier English School, even though perhaps too extreme a +reaction. And their detailed work in the price analysis, despite the +utterly inadequate basis which the utility theory of value affords for it, +has been marvelously accurate, sound, and useful. Having no logical warrant +for an objectively valid quantitative value concept, they have none the +less assumed and used one—and used it marvelously well. Sometimes that +objective value is called by the name, "objective value." Sometimes they +call it "marginal utility," and yet it is clearly anything but the feeling +of an individual,<span class='pagenum'><a name="Page_189" id="Page_189">[Pg 189]</a></span> for it is broken up into different parts, and reflected +back and back through different productive goods of remoter and remoter +rank till it has got very far from the individual who may be supposed to +feel it. Production is the production, not of material things, but of +"utilities"—and yet these utilities, as treated in the analysis, are +anything but individual feeling-magnitudes, and the actual reasoning on the +basis of them would not be different if they were called quantities of +value outright. By logical leaps, by confusing "utility" with demand, or by +confusing "marginal utility" with objective value,<a name="FNanchor_210_210" id="FNanchor_210_210"></a><a href="#Footnote_210_210" class="fnanchor">[210]</a> the Austrians have +got what the practical exigencies of price theory demand. A detailed +estimate of the work of the Austrian School is, of course, out of place +here, but I do not wish to be understood as failing to recognize the +immense value of the work of men who have given so great an impetus to +economic thought as has been the case with the Austrian masters.</p> + +<p>There is a further topic in connection with the relation between value +theory and price theory that calls for more explicit attention here, though +frequent reference has been made to it already. What is the relation of the +distributive problem to value theory and to price theory? Is distribution a +price problem or a value problem?</p> + +<p>It may be looked at from either angle, and treated in either way. A +complete theory of distribution involves many of the most fundamental +social values. Indeed, it is through the<span class='pagenum'><a name="Page_190" id="Page_190">[Pg 190]</a></span> machinery of distribution that +the non-economic values most vitally affect economic values. Wages, +interest, competitive profits, are surely legal categories, and are +possible only in a society where there is free labor and private control of +industry. We may agree with Wieser<a name="FNanchor_211_211" id="FNanchor_211_211"></a><a href="#Footnote_211_211" class="fnanchor">[211]</a> that, as categories of economic +causation, interest, rent, and wages will remain even in a communistic +society (and, doubtless, also profit and loss), but that is far from saying +(as Wieser of course recognizes) that they would remain as distributive +shares. Each social system has its own distributive scheme.</p> + +<p>But, in a system like that of Western civilization to-day, where human +services and the uses of land and instrumental goods are offered in the +market like other commodities, we may treat them in terms of the price +analysis with as much propriety as the other commodities. The prices paid +for them measure a complex of social forces, but we cannot always +disentangle these social forces and measure them separately. It is hard to +tell precisely how much influence on the price of labor has been exerted by +a speech from Mr. Gompers, or a Federal injunction, or a law for the +exclusion of certain classes of immigrants. If we wish to handle +distribution quantitatively, we must do it superficially, studying in the +market the effects which the underlying social forces manifest there with +reference to the rewards of the different factors of production. This has +been increasingly the case<span class='pagenum'><a name="Page_191" id="Page_191">[Pg 191]</a></span> with later theories of distribution. If, on the +other hand, we take the discussion which J. S. Mill gives in book <span class="smcap">ii</span> of his +<i>Principles</i>, we shall find that the price analysis plays relatively little +part, and that he considers chiefly the influence of the more fundamental +social values.<a name="FNanchor_212_212" id="FNanchor_212_212"></a><a href="#Footnote_212_212" class="fnanchor">[212]</a></p> + +<p>A failure to recognize the distinction between value theory and price +theory seems to lie behind the complaint which Professor Davenport makes +against the "Social Value School" in his criticism of Professor Seligman: +"As soon as we turn from the value problem to the separate treatment of the +distributive shares, we find ourselves to have descended from the +cloud-land mysteries of transcendental economics to the old and beaten +paths of the traditional analysis."<a name="FNanchor_213_213" id="FNanchor_213_213"></a><a href="#Footnote_213_213" class="fnanchor">[213]</a> To this complaint the obvious +answer is that we have turned from fundamental value theory to abstract, +quantitative price analysis. And the social value theorist has as much +right to do this as has any other economist—in fact, if our theory be +true, only on the basis of a social value doctrine has any economist a +right (logically) to take up price analysis.</p> + +<p><span class='pagenum'><a name="Page_192" id="Page_192">[Pg 192]</a></span></p><p>The theory of value, as I conceive it, is, then, not a substitute for +detailed price analysis, but rather a presupposition of it. The theory of +value is to interpret, validate, and guide the theory of prices. If the +theory here outlined be true, it will have significant consequences for the +theory of prices, in that it will open up new problems for the price +analysis to attack. There are many social forces which can be measured with +substantial accuracy, and many more which can be, for purposes of theory, +disentangled from the complex in which they appear, and treated by the +methods of price analysis already discussed, which economic theory has not +yet thought it worth while to attack. The economist must emulate the +practical business man, in trying to treat in price terms the various +social changes which affect economic values. There is much left for the +theory of prices to do. The theory defended here, with its sharp sundering +of values and prices, will, of course, criticize the mixing of the two. One +chief criticism of the Austrian theory, and also of the theory of the +English School in so far as it attempts to give a "real cost" doctrine, is +that they are attempts to give both a theory of value and a theory of +prices at the same time. Certainly we must object to Böhm-Bawerk's +contention that the solving of the price problem <i>ipso facto</i> solves the +value problem.<a name="FNanchor_214_214" id="FNanchor_214_214"></a><a href="#Footnote_214_214" class="fnanchor">[214]</a> The purpose of this book is, not <i>destructive</i>, but +<i>reconstructive</i>. A detailed criticism of the various economic theories +that have appeared,<span class='pagenum'><a name="Page_193" id="Page_193">[Pg 193]</a></span> as theories of prices, is manifestly too big a task to +be undertaken here. All of them cannot, of course, be accepted <i>in toto</i>, +for there are, doubtless, irreconcilable differences among them at points. +But it is the belief of the writer that the great bulk of what has been +done in the study of the quasi-mathematical laws of prices is of +substantial worth, that a recognition of the distinction between value +theory and price theory, and of the confusions that result from mixing the +two, will remove many seemingly irreconcilable differences between opposing +schools, and that existing price theories are less to be criticized for +what they affirm than for what they ignore and deny.</p> + +<p>Much of the significance of the theory of value for the interpretation of +price theory has been indicated from time to time, in what has gone before. +Prices have <i>meanings</i>. They express <i>values</i>. To understand the meanings +of prices, we must know what the values mean. There is one further point in +this connection which is so important that we shall give a separate chapter +to it.</p> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_210_210" id="Footnote_210_210"></a><a href="#FNanchor_210_210"><span class="label">[210]</span></a> <i>Vide supra</i>, chaps. <span class="smcap">v</span> and <span class="smcap">xi</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_211_211" id="Footnote_211_211"></a><a href="#FNanchor_211_211"><span class="label">[211]</span></a> <i>Natural Value</i>, <i>passim</i>.</p></div> + +<div class="footnote"><p><a name="Footnote_212_212" id="Footnote_212_212"></a><a href="#FNanchor_212_212"><span class="label">[212]</span></a> Mill's self-congratulation on having written two books of +his treatise without taking up the theory of value has been commented on by +many economists. He was able to do this, because value theory meant price +theory for him. Value theory in the sense of the theory of the forces of +social control and motivation does appear in plenty in Mill's first two +books, and also the wealth concept, which he connects with the idea of +value, and a quantitative value concept, not formally defined, but probably +all the more useful on that account. It was a sound instinct that led Mill +to take up the problem of distribution before taking up the problem of +"value." Really, in discussing distribution as he did, he was making a very +real contribution to the ultimate value problem.</p></div> + +<div class="footnote"><p><a name="Footnote_213_213" id="Footnote_213_213"></a><a href="#FNanchor_213_213"><span class="label">[213]</span></a> <i>Value and Distribution</i>, p. 451.</p></div> + +<div class="footnote"><p><a name="Footnote_214_214" id="Footnote_214_214"></a><a href="#FNanchor_214_214"><span class="label">[214]</span></a> <i>Vide supra</i>, chap. <span class="smcap">iv</span>.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_194" id="Page_194">[Pg 194]</a></span></p> +<h2><a name="CHAPTER_XIX" id="CHAPTER_XIX"></a>CHAPTER XIX</h2> + +<h3>THE THEORY OF VALUE AND THE SOCIAL OUTLOOK. SUMMARY</h3> + + +<p>The belief that social optimism and social pessimism are in an essential +way linked with the theory of value is one that finds expression in a good +many writers. The socialist theory of value is supposed to serve as a +condemnation of the existing social <i>régime</i>; Professor Clark's system of +value and distribution is often interpreted as justifying an optimistic +outlook. This view is expressed by Professor Frank Fetter, for one, who +especially stresses this aspect of value theory.<a name="FNanchor_215_215" id="FNanchor_215_215"></a><a href="#Footnote_215_215" class="fnanchor">[215]</a> Professor Joseph +Schumpeter, in his article on social value several times mentioned,<a name="FNanchor_216_216" id="FNanchor_216_216"></a><a href="#Footnote_216_216" class="fnanchor">[216]</a> +indicates that an optimistic social outlook is a necessary corollary of the +theory of social value. Wieser's objection to the doctrine that economic +value signifies social importance<a name="FNanchor_217_217" id="FNanchor_217_217"></a><a href="#Footnote_217_217" class="fnanchor">[217]</a> seems to be based on the belief that +the doctrine means, not merely that society is responsible for the existing +value situation, but also that that situation is consequently a just and +righteous one. And the same notion seems to be, in part<span class='pagenum'><a name="Page_195" id="Page_195">[Pg 195]</a></span> at least, the +inspiration of Professor Davenport's attack in his recent article in the +<i>Quarterly Journal</i>.<a name="FNanchor_218_218" id="FNanchor_218_218"></a><a href="#Footnote_218_218" class="fnanchor">[218]</a></p> + +<p><span class='pagenum'><a name="Page_196" id="Page_196">[Pg 196]</a></span></p><p>It is not necessary to discuss here the question as to whether Professor +Clark means that his theory should be so interpreted.<a name="FNanchor_219_219" id="FNanchor_219_219"></a><a href="#Footnote_219_219" class="fnanchor">[219]</a> What I wish to +insist upon is that no implication, either optimistic or pessimistic, as to +the existing social order, can be drawn from the theory defended in this +book. Whether or not economic values in particular cases correspond with +ethical values, whether or not goods are ranked on the basis of their +import for the ultimate welfare of society, and the extent to which this is +the case, will depend on the extent to which the ethical forces in society +prevail over the anti-ethical forces. The theory as such is neutral. Assume +our existing society, modified in the one particular that competition shall +henceforth be perfectly free, and still the conclusion does not follow. +Idle sons of our multimillionaires may inherit ill-gotten wealth, may +invest it and draw an endless income from it. With this income to back +their desires, they may make the services of panders worth more than the +services of statesmen and inventors. The values of goods depend on the more +fundamental values of men, even though the values of men, under abstract +economic<span class='pagenum'><a name="Page_197" id="Page_197">[Pg 197]</a></span> laws, depend upon the value productivity of their labor or their +possessions. The theory is a theory of economic value, even though the +tremendous influence of ethical and other values be recognized as entering +into economic values. They may be overpowered by opposing forces. The +theory is a general theory, and holds for a decadent as well as for an +improving society; for a society where justice reigns, if such a society +there be, and for a society where corruption is rampant, and wolves prey. +The justification of the existing social order is to be sought +elsewhere—the theory of economic value, as such, does not contain it.</p> + +<hr style='width: 45%;' /> + +<p>The main steps of our argument may be briefly recapitulated here: Value is +a quantity, socially valid; value is not logically dependent upon exchange, +but is logically antecedent to exchange; a circle in reasoning is involved +if the relative conception of value be treated as ultimate; the Austrian +theory, and the cost theory, and combinations of the two, all fail alike to +lead us to an ultimate quantity of value; they fall into another circle, +that of explaining value in terms of value, if they attempt to do so; the +defect is in the highly abstract nature of the determinants of value which +these theories start from; they abstract the individual mind from its +connection with the social whole, and then abstract from the individual +mind only those emotions which are directly concerned with the consumption +and production of economic goods; this abstraction<span class='pagenum'><a name="Page_198" id="Page_198">[Pg 198]</a></span> is necessitated by the +individualistic, subjectivistic conception of society, which, growing out +of the skeptical philosophy of Hume, has dominated economic theory ever +since; present day sociology has rejected this conception of society, and +has reëstablished the organic conception of society in psychological +(rather than biological) terms, which make it possible to treat society as +a whole as the source of the values of goods; this does not obviate the +necessity for close analysis, nor does it, in itself, solve the problem, +but it does give us an adequate point of view; the determinants of value +include not only the highly abstract factors which the value theories here +criticized have undertaken to handle arithmetically, but also all the other +volitional factors in the intermental life of men in society—not an +arithmetical synthesis of elements, but an organic whole; legal and ethical +values are especially to be taken into account in a theory of economic +value, particularly those most immediately concerned with distribution; the +theory of value and the theory of prices are to be sharply distinguished.</p> + +<p>The function of economic values is the motivation of the economic +activities of society. Value as treated by the cost theories, or value as a +sum of money costs, is a blind thing, a product rather than an end, and +fails utterly as a guiding, motivating principle for economic activity. It +is the merit of the Austrian School to have pointed this out. But the +abstract individual factors which the Austrians have substituted<span class='pagenum'><a name="Page_199" id="Page_199">[Pg 199]</a></span> are just +as helpless in explaining the motivation of social activity. Every man's +course is made for him far more by outside forces than by his own +individual motives. Economic activity in society is an intricate, complex +thing, for the motivation of which no individual's motives can suffice. If +motivated at all its guidance comes from something superindividual, and +that something is social value. Ends, aims, purposes, desires, of many men, +mutually interacting and mutually determining each other, modifying, +stimulating, creating each other, take tangible, determinate shape, as +economic values, and the technique of the social economic organization +responds and carries them out.</p> + +<h4>THE END</h4> + +<div class="footnotes"><h3>FOOTNOTES:</h3> + +<div class="footnote"><p><a name="Footnote_215_215" id="Footnote_215_215"></a><a href="#FNanchor_215_215"><span class="label">[215]</span></a> <i>Principles of Economics</i>, New York, 1905, pp. 415 <i>et +seq.</i></p></div> + +<div class="footnote"><p><a name="Footnote_216_216" id="Footnote_216_216"></a><a href="#FNanchor_216_216"><span class="label">[216]</span></a> "On the Concept of Social Value," <i>Quar. Jour. Econ.</i>, 1909, +pp. 222-23.</p></div> + +<div class="footnote"><p><a name="Footnote_217_217" id="Footnote_217_217"></a><a href="#FNanchor_217_217"><span class="label">[217]</span></a> <i>Nat. Val.</i>, p. 52, n. Quoted <i>supra</i>, chap. <span class="smcap">i</span>.</p></div> + +<div class="footnote"><p><a name="Footnote_218_218" id="Footnote_218_218"></a><a href="#FNanchor_218_218"><span class="label">[218]</span></a> "Social Productivity <i>vs.</i> Private Acquisition," <i>Quar. +Jour. Econ.</i>, Nov., 1910, pp. 112-13. "Economic productivity is not a +matter of piety or merit or deserving, but only of commanding a price. +Actors, teachers, preachers, lawyers, prostitutes, all do things that men +are content to pay for. So wages may be earned by inditing libels against a +rival candidate, or by setting fire to a competitor's refinery, or by +sinking spices. The test of economic activity in a competitive society is +the fact of private gain, irrespective of any ethical criteria, and +unconcerned with any social accountancy.... If whiskey is wealth, +distilleries are capital items. If Peruna is wealth, the kettle in which it +is brewed must be accepted as capital. Then so is the house rented as a +dive; and if the house is productive, and is therefore capital, so, also, +must the inmates be producers according to their kind. The test of social +welfare is invalid to stamp as unproductive any form of wealth, or any kind +of labor. If jimmies are capital, being productive for their purpose, so +also is burglary productive; if sandbags, so highway robbery.... Always and +everywhere, in the competitive <i>régime</i>, the test of productivity is +competitive gain." +</p><p> +If only my conception of social value is granted, I may safely enough +concede Professor Davenport all the depravity he can find in society, and +recognize that that depravity has its part in the determination of the +concrete values. Only, I would insist, virtue as well as depravity is a +factor in the social will, and plays its rôle in determining economic +values, and motivating economic activities. Legal values are not "absolute" +values, in the sense that everybody obeys the law, but laws as well as +lawlessness affect economic values. +</p><p> +It may be well at this point for me to make clear my relation to Professor +Davenport. Throughout this book, his theories have been subject to frequent +criticism. The obvious reason is, of course, that he has made himself the +leading critic of the social value concept, and hence, if that concept is +to be defended, his point of view must be met. But, if that were all, he +would have occupied far less of our space than has been the case. The fact +is, in my judgment, that Professor Davenport is one of the commanding +figures in economic theory. I think no economist has even approximated the +clearness and explicitness with which he has set forth the presuppositions +of the view which this book opposes, and that no economist has ever +reasoned more clearly upon the basis of these presuppositions. Professor +Davenport thus presents the very best object of attack, if one is to +justify the social viewpoint in economic theory. My indebtedness to him is +marked, and I have tried to indicate the fact from time to time in notes. +His book has aided me greatly in clarifying my own ideas, and has also +substantially abridged my bibliographical labors. With many of his +criticisms of existing value theory, those criticisms, especially, which +are concerned with the internal logical contradictions of existing value +theory, I am in hearty accord. The chief difference between us at this +point will be, I think, that I try to go further than he has gone. And the +fundamental differences between his view and mine grow out of the different +psychological, philosophical, and sociological presuppositions with which +we start. I feel that the individualistic method of approaching the value +problem is foredoomed, provided it be logically carried out, and I think +Professor Davenport has logically carried it out!</p></div> + +<div class="footnote"><p><a name="Footnote_219_219" id="Footnote_219_219"></a><a href="#FNanchor_219_219"><span class="label">[219]</span></a> I regret exceedingly that Professor Clark's absence from +Columbia University during the academic year, 1910-11, has prevented my +discussing this, and a host of other questions raised in this book, with +him.</p></div> +</div> + + +<hr style="width: 65%;" /><p><span class='pagenum'><a name="Page_201" id="Page_201">[Pg 201]</a></span></p> +<h2>INDEX OF NAMES</h2> + +<p><span class='pagenum'><a name="Page_203" id="Page_203">[Pg 203]</a></span></p> +<p> +Adams, T. S., <a href='#Page_120'>120</a>, n.<br /> +<br /> +Anaximander, <a href='#Page_60'>60</a>.<br /> +<br /> +Anaximenes, <a href='#Page_60'>60</a>.<br /> +<br /> +Aristotle, <a href='#Page_61'>61</a>, <a href='#Page_101'>101</a>.<br /> +<br /> +Austrian School, <a href='#Page_7'>7</a>, <a href='#Page_8'>8</a>, <a href='#Page_16'>16</a>, n., <a href='#Page_17'>17</a>, <a href='#Page_28'>28</a>, <a href='#Page_29'>29</a>, <a href='#Page_30'>30</a>, <a href='#Page_31'>31</a>, <a href='#Page_38'>38</a>, n., <a href='#Page_39'>39</a>, <a href='#Page_40'>40</a>, <a href='#Page_41'>41</a>, chap. +<span class="smcap"><a href="#CHAPTER_VI">vi</a></span>, <a href='#Page_49'>49</a>, <a href='#Page_108'>108</a>, <a href='#Page_113'>113</a>, <a href='#Page_119'>119</a>, <a href='#Page_121'>121</a>, <a href='#Page_125'>125</a>, <a href='#Page_126'>126</a>, <a href='#Page_152'>152</a>, n., <a href='#Page_188'>188</a>-89, <a href='#Page_192'>192</a>, <a href='#Page_197'>197</a>, <a href='#Page_198'>198</a>.<br /> +<br /> +<br /> +Baldwin, M., <a href='#Page_15'>15</a>, n., <a href='#Page_56'>56</a>, <a href='#Page_69'>69</a>, n., <a href='#Page_73'>73</a>, <a href='#Page_74'>74</a>, n., <a href='#Page_75'>75</a>, <a href='#Page_80'>80</a>, <a href='#Page_84'>84</a>, <a href='#Page_95'>95</a>, n., <a href='#Page_167'>167</a>.<br /> +<br /> +Berkeley, G., <a href='#Page_62'>62</a>.<br /> +<br /> +Böhm-Bawerk, E. von, <a href='#Page_7'>7</a>, <a href='#Page_29'>29</a>, <a href='#Page_31'>31</a>, n., <a href='#Page_37'>37</a>-39, <a href='#Page_40'>40</a>, <a href='#Page_43'>44</a>, n., <a href='#Page_49'>49</a>, n., <a href='#Page_121'>121</a>, <a href='#Page_152'>152</a>, n.,<br /> +<a href="#Page_192">192</a>.<br /> +<br /> +Bradley, F. H., <a href='#Page_65'>65</a>, n.<br /> +<br /> +Buckle, H. T., <a href='#Page_153'>153</a>.<br /> +<br /> +Bullock, C. J., <a href='#Page_4'>4</a>.<br /> +<br /> +<br /> +Cairnes, J. E., <a href='#Page_65'>65</a>, n., <a href='#Page_177'>177</a>.<br /> +<br /> +Carey, H. C., <a href='#Page_73'>73</a>.<br /> +<br /> +Carver, T. N., <a href='#Page_16'>16</a>, <a href='#Page_27'>27</a>, n.<br /> +<br /> +Clark, J. B., <a href='#Page_3'>3</a>, <a href='#Page_4'>4</a>, <a href='#Page_5'>5</a>, <a href='#Page_6'>6</a>, <a href='#Page_7'>7</a>, <a href='#Page_8'>8</a>, <a href='#Page_13'>13</a>, <a href='#Page_16'>16</a>, <a href='#Page_30'>30</a>, n., <a href='#Page_31'>31</a>-33, <a href='#Page_39'>39</a>, chap. <span class="smcap"><a href="#CHAPTER_VII">vii</a></span>, + <a href='#Page_65'>65</a>, <a href='#Page_139'>139</a>, n., <a href='#Page_143'>143</a>-44, <a href='#Page_152'>152</a>, n. <a href='#Page_156'>156</a>, <a href='#Page_165'>165</a>, <a href='#Page_173'>173</a>, <a href='#Page_174'>174</a>, <a href='#Page_194'>194</a>, <a href='#Page_196'>196</a>.<br /> +<br /> +Clow, F. R., <a href='#Page_20'>20</a>, n.<br /> +<br /> +Commons, J. R., <a href='#Page_157'>157</a>, n.<br /> +<br /> +Comte, A., <a href='#Page_73'>73</a>.<br /> +<br /> +Conrad, J., <a href='#Page_15'>15</a>, n., <a href='#Page_127'>127</a>, n.<br /> +<br /> +Cooley, C. H., <a href='#Page_56'>56</a>, <a href='#Page_69'>69</a>, n., <a href='#Page_77'>77</a> <i>et seq.</i>, <a href='#Page_84'>84</a>, <a href='#Page_157'>157</a>.<br /> +<br /> +<br /> +Darwin, Charles, <a href='#Page_63'>63</a>.<br /> +<br /> +Davenport, H. J., <a href='#Page_6'>6</a>, <a href='#Page_21'>21</a>, <a href='#Page_22'>22</a>, n., <a href='#Page_23'>23</a>, <a href='#Page_27'>27</a>, n., <a href='#Page_37'>37</a>, <a href='#Page_41'>41</a>, <a href='#Page_42'>42</a>, <a href='#Page_66'>66</a>, <a href='#Page_71'>71</a>, n., <a href='#Page_87'>87</a>-89, <a href='#Page_98'>98</a>, <a href='#Page_113'>113</a>, n., <a href='#Page_121'>121</a>, n., <a href='#Page_122'>122</a>, <a href='#Page_133'>133</a>, n., <a href='#Page_140'>140</a>, n., <a href='#Page_142'>142</a>, n., <a href='#Page_175'>175</a>, n., <a href='#Page_182'>182</a>, <a href='#Page_191'>191</a>, <a href='#Page_194'>194</a>, <a href='#Page_195'>195</a>, n.<br /> +<br /> +DeGreef, G., <a href='#Page_72'>72</a>-76.<br /> +<br /> +DesCartes, René, <a href='#Page_62'>62</a>, <a href='#Page_63'>63</a>, <a href='#Page_81'>81</a>.<br /> +<br /> +Dewey, J., <a href='#Page_65'>65</a>, n., <a href='#Page_68'>68</a>, n., <a href='#Page_84'>84</a>, n., <a href='#Page_95'>95</a>, n., <a href='#Page_96'>96</a>, n., <a href='#Page_100'>100</a>, <a href='#Page_168'>168</a>, n.<br /> +<br /> +Draper, J. W., <a href='#Page_72'>72</a>.<br /> +<br /> +Durkheim, E., <a href='#Page_117'>117</a>, n.<br /> +<br /> +<br /> +Edgeworth, F. Y., <a href='#Page_25'>25</a>.<br /> +<br /> +Ehrenfels, C., <a href='#Page_94'>94</a>, <a href='#Page_98'>98</a>, <a href='#Page_106'>106</a>, n., <a href='#Page_108'>108</a>, n., <a href='#Page_110'>110</a>, n., <a href='#Page_111'>111</a>, n.<br /> +<br /> +Elwood, C. A., <a href='#Page_56'>56</a>, n., <a href='#Page_76'>76</a>, n., <a href='#Page_84'>84</a>, n.<br /> +<br /> +Ely, R. T., <a href='#Page_17'>17</a>, n., <a href='#Page_42'>42</a>, <a href='#Page_118'>118</a>, n.<br /> +<br /> +English School, <a href='#Page_17'>17</a>, <a href='#Page_38'>38</a>, n., <a href='#Page_47'>47</a>, <a href='#Page_121'>121</a>, <a href='#Page_164'>164</a>, <a href='#Page_165'>165</a>, <a href='#Page_166'>166</a>, <a href='#Page_188'>188</a>, <a href='#Page_192'>192</a>.<br /> +<br /> +<br /> +Fetter, F., <a href='#Page_194'>194</a>.<br /> +<br /> +Fisher, I., <a href='#Page_17'>17</a>, <a href='#Page_26'>26</a>, n., <a href='#Page_43'>43</a>, n.<br /> +<br /> +Flux, A. W., <a href='#Page_42'>42</a>, <a href='#Page_120'>120</a>, n.<br /> +<br /> +<br /> +George, Henry, <a href='#Page_16'>16</a>.<br /> +<br /> +Giddings, F. H., <a href='#Page_75'>75</a>, n., <a href='#Page_82'>82</a>, <a href='#Page_83'>83</a>.<br /> +<br /> +Goethe, J. W. von, <a href='#Page_70'>70</a>.<br /> +<br /> +Gompers, S., <a href='#Page_190'>190</a>.<br /> +<br /> +<br /> +Hadley, A. T., <a href='#Page_15'>15</a>, <a href='#Page_42'>42</a>.<br /> +<br /> +Hayden, E. A., <a href='#Page_56'>56</a>, n.<br /> +<br /> +Hayes, E. C., <a href='#Page_155'>155</a>, n.<br /> +<br /> +Hegel, G. W. F., <a href='#Page_63'>63</a>.<br /> +<br /> +Hermann, F. B. W. von., <a href='#Page_38'>38</a>, n.<br /> +<br /> +Hesiod, <a href='#Page_73'>73</a>.<br /> +<br /> +Hobson, J. A., <a href='#Page_47'>47</a>, <a href='#Page_49'>49</a>.<br /> +<br /> +Hume, David, <a href='#Page_62'>62</a>, <a href='#Page_63'>63</a>, <a href='#Page_198'>198</a>.<br /> +<br /> +<br /> +Ingram, J. K., <a href='#Page_3'>3</a>, n.<br /> +<br /> +<br /> +James, Wm., <a href='#Page_65'>65</a>, n., <a href='#Page_68'>68</a>, n., <a href='#Page_184'>184</a>, n.<br /> +<br /> +Jevons, W. S., <a href='#Page_4'>4</a>, <a href='#Page_7'>7</a>, <a href='#Page_25'>25</a>, <a href='#Page_28'>28</a>, <a href='#Page_29'>29</a>, <a href='#Page_31'>31</a>, n., <a href='#Page_34'>34</a>-36, <a href='#Page_39'>39</a>, <a href='#Page_40'>40</a>, <a href='#Page_41'>41</a>, <a href='#Page_42'>42</a>, <a href='#Page_65'>65</a>, <a href='#Page_73'>73</a>, <a href='#Page_176'>176</a>, +n.<br /> +<br /> +Johnson, A. S., <a href='#Page_140'>140</a>, n.<br /> +<br /> +<br /> +Kallen, H. M., <a href='#Page_94'>94</a>, n.<br /> +<br /> +<span class='pagenum'><a name="Page_204" id="Page_204">[Pg 204]</a></span>Kant, Immanuel, <a href='#Page_25'>25</a>, <a href='#Page_63'>63</a>, <a href='#Page_67'>67</a>.<br /> +<br /> +King, Gregory, <a href='#Page_169'>169</a>.<br /> +<br /> +Kinley, D., <a href='#Page_4'>4</a>, <a href='#Page_5'>5</a>, <a href='#Page_27'>27</a>, n., <a href='#Page_120'>120</a>, n.<br /> +<br /> +Kreibig, J. C., <a href='#Page_94'>94</a>, n.<br /> +<br /> +<br /> +Laughlin, J. L., <a href='#Page_20'>20</a>, n., <a href='#Page_26'>26</a>, <a href='#Page_27'>27</a>, n., <a href='#Page_49'>49</a>, n.<br /> +<br /> +Law, John, <a href='#Page_171'>171</a>.<br /> +<br /> +Lilienfeld, P. von, <a href='#Page_74'>74</a>.<br /> +<br /> +Lloyd, W. F., <a href='#Page_176'>176</a>, n.<br /> +<br /> +Locke, John, <a href='#Page_62'>62</a>.<br /> +<br /> +<br /> +Mackenzie, J. S., <a href='#Page_111'>111</a>, n.<br /> +<br /> +Malthus, T. R., <a href='#Page_139'>139</a>.<br /> +<br /> +Marshall, A., <a href='#Page_41'>41</a>, <a href='#Page_42'>42</a>, <a href='#Page_49'>49</a>, <a href='#Page_65'>65</a>, <a href='#Page_140'>140</a>, n., <a href='#Page_177'>177</a>, <a href='#Page_182'>182</a>, <a href='#Page_185'>185</a>, n.<br /> +<br /> +Marx, Karl, <a href='#Page_3'>3</a>, n., <a href='#Page_15'>15</a>, <a href='#Page_16'>16</a>, <a href='#Page_26'>26</a>, <a href='#Page_153'>153</a>.<br /> +<br /> +Meinong, A., <a href='#Page_94'>94</a>, <a href='#Page_95'>95</a>, n., <a href='#Page_98'>98</a>, n., <a href='#Page_99'>99</a>, <a href='#Page_102'>102</a>, <a href='#Page_111'>111</a>, n.<br /> +<br /> +Merriam, L. S., <a href='#Page_4'>4</a>, <a href='#Page_5'>5</a>, <a href='#Page_27'>27</a>, n.<br /> +<br /> +Mill, James, <a href='#Page_63'>63</a>, n.<br /> +<br /> +Mill, J. S., <a href='#Page_37'>37</a>, <a href='#Page_63'>63</a>, n., <a href='#Page_74'>74</a>, n., <a href='#Page_138'>138</a>, <a href='#Page_143'>143</a>, <a href='#Page_172'>172</a>, <a href='#Page_177'>177</a>, <a href='#Page_191'>191</a>.<br /> +<br /> +Montague, W. P., <a href='#Page_94'>94</a>, n.<br /> +<br /> +<br /> +Novikow, J., <a href='#Page_74'>74</a>.<br /> +<br /> +<br /> +Pantaleoni, M., <a href='#Page_19'>19</a>, n.<br /> +<br /> +Pareto, V., <a href='#Page_3'>3</a>, n., <a href='#Page_20'>20</a>, n., <a href='#Page_25'>25</a>, <a href='#Page_31'>31</a>, n., <a href='#Page_34'>34</a>, <a href='#Page_36'>36</a>-37, <a href='#Page_39'>39</a>, <a href='#Page_40'>40</a>, n., <a href='#Page_45'>45</a>, n., <a href='#Page_65'>65</a>, <a href='#Page_154'>154</a>,<br /> +n.<br /> +<br /> +Patten, S. N., <a href='#Page_42'>42</a>, <a href='#Page_175'>175</a>.<br /> +<br /> +Paulsen, Friedrich, <a href='#Page_69'>69</a>, n., <a href='#Page_85'>85</a>, n., <a href='#Page_95'>95</a>, n., <a href='#Page_97'>97</a>, n.<br /> +<br /> +Perry, R. B., <a href='#Page_70'>70</a>, n.<br /> +<br /> +Pierson, N. G., <a href='#Page_41'>41</a>.<br /> +<br /> +Plato, <a href='#Page_61'>61</a>, <a href='#Page_184'>184</a>.<br /> +<br /> +<br /> +Ricardo, David, <a href='#Page_53'>53</a>, n., <a href='#Page_175'>175</a>, <a href='#Page_176'>176</a>.<br /> +<br /> +Rodbertus, J. K., <a href='#Page_3'>3</a>, n., <a href='#Page_8'>8</a>, <a href='#Page_9'>9</a>.<br /> +<br /> +Ross, E. A., <a href='#Page_4'>4</a>, <a href='#Page_5'>5</a>, <a href='#Page_117'>117</a>, n., <a href='#Page_148'>148</a>, n., <a href='#Page_173'>173</a>.<br /> +<br /> +Rousseau, J. J., <a href='#Page_63'>63</a>.<br /> +<br /> +Royce, J., <a href='#Page_117'>117</a>, n.<br /> +<br /> +<br /> +Santayana, G., <a href='#Page_96'>96</a>.<br /> +<br /> +Sax, E., <a href='#Page_8'>8</a>.<br /> +<br /> +Schaeffle, A., <a href='#Page_42'>42</a>, <a href='#Page_120'>120</a>.<br /> +<br /> +Schiller, F. C. S., <a href='#Page_68'>68</a>, n.<br /> +<br /> +Schumpeter, J., <a href='#Page_6'>6</a>, <a href='#Page_140'>140</a>, n., <a href='#Page_175'>175</a>, <a href='#Page_181'>181</a>, <a href='#Page_194'>194</a>.<br /> +<br /> +Scott, W. A., <a href='#Page_120'>120</a>, n., <a href='#Page_180'>180</a>, n.<br /> +<br /> +Seligman, E. R. A., <a href='#Page_4'>4</a>, <a href='#Page_5'>5</a>, <a href='#Page_6'>6</a>, n., <a href='#Page_13'>13</a>, <a href='#Page_16'>16</a>, <a href='#Page_19'>19</a>, <a href='#Page_20'>20</a>, n., <a href='#Page_26'>26</a>, <a href='#Page_32'>32</a>, n., <a href='#Page_87'>87</a>, <a href='#Page_145'>145</a>, <a href='#Page_153'>153</a>, chap. <span class="smcap"><a href="#CHAPTER_XVI">xvi</a></span>, <a href='#Page_176'>176</a>, n., <a href='#Page_177'>177</a>, n., <a href='#Page_191'>191</a>.<br /> +<br /> +Senior, N. W., <a href='#Page_26'>26</a>.<br /> +<br /> +Shaw, C. C., <a href='#Page_95'>95</a>, n.<br /> +<br /> +Simiand, F., <a href='#Page_74'>74</a>.<br /> +<br /> +Simmel, G., <a href='#Page_19'>19</a>, n., <a href='#Page_20'>20</a>, n., <a href='#Page_94'>94</a>, n., <a href='#Page_95'>95</a>.<br /> +<br /> +Skelton, O. D., <a href='#Page_15'>15</a>, n.<br /> +<br /> +Slater, T., <a href='#Page_95'>95</a>, n.<br /> +<br /> +Small, A. W., <a href='#Page_63'>63</a>, n.<br /> +<br /> +Smith, Adam, <a href='#Page_63'>63</a>, <a href='#Page_176'>176</a>.<br /> +<br /> +Socrates, <a href='#Page_61'>61</a>.<br /> +<br /> +Sophists, <a href='#Page_60'>60</a>.<br /> +<br /> +Spencer, Herbert, <a href='#Page_72'>72</a>, <a href='#Page_83'>83</a>.<br /> +<br /> +Spinoza, Benedict de, <a href='#Page_62'>62</a>, <a href='#Page_63'>63</a>.<br /> +<br /> +Stuart, H. W., <a href='#Page_68'>68</a>, n., <a href='#Page_95'>95</a>, n., <a href='#Page_168'>168</a>, n.<br /> +<br /> +<br /> +Tarde, G., <a href='#Page_4'>4</a>, <a href='#Page_16'>16</a>, <a href='#Page_56'>56</a>, <a href='#Page_95'>95</a>, <a href='#Page_97'>97</a>, n., <a href='#Page_103'>103</a>, <a href='#Page_118'>118</a>, n., chap. <span class="smcap"><a href="#CHAPTER_XII">xii</a></span>, <a href='#Page_148'>148</a>, n., <a href='#Page_172'>172</a>, <a href='#Page_179'>179</a>.<br /> +<br /> +Taylor, W. G. L., <a href='#Page_16'>16</a>, n., <a href='#Page_23'>23</a>.<br /> +<br /> +Thackeray, W. M., <a href='#Page_66'>66</a>.<br /> +<br /> +Thales, <a href='#Page_60'>60</a>.<br /> +<br /> +Tufts, J. H., <a href='#Page_95'>95</a>, n.<br /> +<br /> +Tuttle, C. A., <a href='#Page_4'>4</a>.<br /> +<br /> +<br /> +Urban, W. M., <a href='#Page_70'>70</a>, n., <a href='#Page_95'>95</a>, <a href='#Page_97'>97</a>, n., <a href='#Page_98'>98</a>, n., <a href='#Page_99'>99</a>, <a href='#Page_101'>101</a>, n., <a href='#Page_103'>103</a>, <a href='#Page_108'>108</a>, n., <a href='#Page_110'>110</a>, n., <a href='#Page_116'>116</a>, chap. <span class="smcap"><a href="#CHAPTER_XII">xii</a></span>, <a href='#Page_167'>167</a>, n.<br /> +<br /> +<br /> +Veblen, T., <a href='#Page_30'>30</a>, n., <a href='#Page_65'>65</a>.<br /> +<br /> +<br /> +Wagner, Adolph, <a href='#Page_3'>3</a>, n., <a href='#Page_9'>9</a>.<br /> +<br /> +Walker, F. A., <a href='#Page_25'>25</a>, <a href='#Page_26'>26</a>, <a href='#Page_137'>137</a>.<br /> +<br /> +Wicksteed, P. H., <a href='#Page_111'>111</a>, n., <a href='#Page_113'>113</a>, n.<br /> +<br /> +Wieser, F. von, <a href='#Page_8'>8</a>, <a href='#Page_16'>16</a>, <a href='#Page_17'>17</a>, <a href='#Page_18'>18</a>, <a href='#Page_28'>28</a>, <a href='#Page_29'>29</a>, <a href='#Page_31'>31</a>, n., <a href='#Page_34'>34</a>, <a href='#Page_35'>35</a>, <a href='#Page_40'>40</a>, <a href='#Page_46'>46</a>, <a href='#Page_47'>47</a>, <a href='#Page_49'>49</a>, n., <a href='#Page_120'>120</a>, n., <a href='#Page_132'>132</a>, <a href='#Page_133'>133</a>, <a href='#Page_136'>136</a>, <a href='#Page_137'>137</a>, <a href='#Page_143'>143</a>, <a href='#Page_190'>190</a>, <a href='#Page_194'>194</a>.<br /> +<br /> +Wundt, W., <a href='#Page_85'>85</a>, n.<br /> +</p> + + +<h4>The Riverside Press</h4> + +<h4>CAMBRIDGE. MASSACHUSETTS</h4> + +<h4>U. S. 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