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SOCIAL VALUE
A STUDY IN ECONOMIC THEORY CRITICAL AND CONSTRUCTIVE
BY
B. M. ANDERSON, JR., PH.D.
_Instructor in Political Economy Columbia University_
BOSTON AND NEW YORK
HOUGHTON MIFFLIN COMPANY
The Riverside Press Cambridge
1911
COPYRIGHT, 1911, BY HART, SCHAFFNER & MARX
ALL RIGHTS RESERVED
_Published November 1911_
TO MY FATHER
BENJAMIN M. ANDERSON
OF COLUMBIA, MISSOURI
MY FIRST TEACHER OF
POLITICAL ECONOMY
PREFACE
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.
In the year ending June 1, 1910, the following topics were assigned:--
1. The effect of labor unions on international trade.
2. The best means of raising the wages of the
unskilled.
3. A comparison between the theory and the actual
practice of protectionism in the United States.
4. A scheme for an ideal monetary system for the United
States.
5. The true relation of the central government to
trusts.
6. How much of J. S. Mill's economic system survives?
7. A central bank as a factor in a financial crisis.
8. Any other topic which has received the approval of
the Committee.
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.
The present volume was awarded the second prize.
PROFESSOR J. LAURENCE LAUGHLIN,
_University of Chicago, Chairman_.
PROFESSOR J. B. CLARK,
_Columbia University_.
PROFESSOR HENRY C. ADAMS,
_University of Michigan_.
HORACE WHITE, ESQ.,
New York City.
PROFESSOR EDWIN F. GAY,
_Harvard University_.
A NOTE
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 Economic Prize Contest of that year. Part IV 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.
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.
It is due Professor J. B. Clark, since I discuss 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 _Value and Distribution_ is a most significant work in the history of
economic theory, and my indebtedness to it will be manifest.
THE AUTHOR.
COLUMBIA UNIVERSITY,
May, 1911.
ANALYTICAL TABLE OF CONTENTS
PART I. INTRODUCTION
CHAPTER I
PROBLEM AND PLAN OF PROCEDURE
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 Boehm-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 3
PART II. CRITIQUE OF CURRENT VALUE THEORY
CHAPTER II
FORMAL AND LOGICAL ASPECTS OF THE VALUE CONCEPT
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" 13
CHAPTER III
VALUE AND MARGINAL UTILITY
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 good to a
marginal individual, even though we assume the
commensurability and homogeneity of human
emotions--Clark's Law 28
CHAPTER IV
JEVONS, PARETO AND BOeHM-BAWERK
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--Boehm-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 34
CHAPTER V
DEMAND CURVES AND UTILITY CURVES
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, Boehm-Bawerk, Wieser, Pierson, Patten, Hadley,
Ely, Schaeffle, Flux, Marshall, and Davenport 40
CHAPTER VI
THE VICIOUS CIRCLE OF THE AUSTRIANS
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 45
CHAPTER VII
PROFESSOR CLARK'S THEORY OF SOCIAL VALUE
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 _Philosophy of Wealth_ and
that of his later writings--The point of view of the
earlier book, supplemented by later studies in social
psychology, will afford the basis for an organic
conception of society, and a valid doctrine of social
value 49
PART III. THE PRESUPPOSITIONS OF ECONOMIC
THEORY
CHAPTER VIII
THE PHILOSOPHICAL AND PSYCHOLOGICAL PRESUPPOSITIONS
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 59
CHAPTER IX
THE SOCIOLOGICAL PRESUPPOSITIONS
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 72
PART IV. A POSITIVE THEORY OF SOCIAL VALUE
CHAPTER X
VALUE AS GENERIC--THE PSYCHOLOGY OF VALUE
Economic value a species, coordinate with ethical,
legal, aesthetic, 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 _phases_ in value, but neither is _the_
worth-fundamental, and each may vary in intensity
without affecting amount of value--Value and reality
judgment: Meinong and Tarde; Urban--On _structural_
side, feeling, desire, and "reality feeling" are all
significant phases in value--But real significance of
value lies in its _functional_ aspect: the function of
value is the function of _motivation_--Essence of value
is _power_ in motivation--For concrete experience, this
power a quality of the object--Positive and negative
values--Complementary 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,
aesthetic--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 93
CHAPTER XI
RECAPITULATION--THE SOCIAL VALUES--FUNCTIONS OF
THE VALUE CONCEPT IN ECONOMICS
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 115
CHAPTER XII
SOCIAL VALUE: THE THEORIES OF URBAN AND TARDE
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 124
CHAPTER XIII
ECONOMIC SOCIAL VALUE
How get out of Austrian circle?--Temporal _regressus_
_vs._ logical analysis of the concrete whole of the
Social Mind--Even in 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 _vacuo_,
would lead to anarchy; any concrete economic tendency
depends on legal and moral forces quite as much as on
"pure economic" forces--Illustrations 132
CHAPTER XIV
ECONOMIC SOCIAL VALUE (_continued_)
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 _men_--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 148
CHAPTER XV
SOME MECHANICAL ANALOGIES
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 156
CHAPTER XVI
PROFESSOR SELIGMAN'S PSYCHOLOGICAL DOCTRINE OF THE
RELATIVITY OF VALUES
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 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 162
CHAPTER XVII
THE THEORY OF VALUE AND THE THEORY OF PRICES
Price and _Preis_--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 175
CHAPTER XVIII
THE THEORY OF VALUE AND THE THEORY OF PRICES (_concluded_)
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 _meanings_, which only
theory of value can explain 188
CHAPTER XIX
THE THEORY OF VALUE AND THE SOCIAL OUTLOOK--SUMMARY
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 194
INDEX OF NAMES 201
PART I
INTRODUCTION
SOCIAL VALUE
CHAPTER I
PROBLEM AND PLAN OF PROCEDURE
Recent economic literature has had much to say about "social value." The
conception, while not entirely new,[1] 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 _The New Englander_ in 1881 (since
reproduced as the chapter on the theory of value in his _Philosophy of
Wealth_). The conception has been found attractive by many other American
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.[2] 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.[3]
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
_in parvo_ what society does, as an organic whole, on a bigger scale.[4]
The precise relation of social value to social marginal utility is
variously stated by the writers named: for Professor Clark, value is the
_measure_ of effective, or marginal, utility;[5] for Professor Seligman,
social value is the _expression_ of social marginal utility;[6] for
Professors Ross, Merriam, and Kinley, value _is_ that social marginal
utility itself.[7] 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.
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 _Yale Review_
of 1892,[8] 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
_Quarterly Journal of Economics_, vol. XV, and also in his _Principles of
Economics_, has espoused the conception, and has shown how, assuming its
truth, a great many 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.[9] 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.[10]
For the purposes of this discussion, Professor Clark will be considered as
the representative of 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 _Philosophy of
Wealth_, 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, Boehm-Bawerk:--
Man pflegt den objektiven Tauschwert im Gegensatz zu
dem auf individuellen Schaetzungen beruhenden
subjektiven Wert haeufig auch als den
_volkswirtschaftlichen Wert_ der Gueter zu bezeichnen.
Ich halte diesen Gebrauch fuer 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
koenne, dass er also das volks- und
sozialwirtschaftliche Wertphaenomen _per eminentiam_
sei, so waere dagegen nichts zu erinnern. Gewoehnlich
mischt sich aber mit jener Benennung auch die
Vorstellung, dass der Tauschwert der Wert sei, den ein
Gut _fuer_ die Volkswirtschaft habe. Man deutet ihn als
ein ueber den subjektiven Urteilen der einzelnen
stehendes Urteil der Gesellschaft, welche Bedeutung ein
Gut fuer sie im ganzen habe; gewissermassen als
Werturteil einer objektiven hoeheren Instanz. Dies ist
irrefuehrend.[11]
Equally emphatic is Wieser:--
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 L100 is not only ten times as dear as B
whose market price is L10, 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.[12]
Sax, likewise, expresses his dissent:--
Da fuer die exacte Forschung die Psyche einer
fabelhaften Collectiv-Personlichkeit nicht existirt, so
kann der Ausgangspunkt unserer Untersuchung auch wieder
nur der Individualwerth sein.[13]
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 of Adolph Wagner, who
accepts Rodbertus' notion.[14]
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 _the_ 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.
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 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.
FOOTNOTES:
[1] The value concept of Marx is not, strictly speaking, a social value
concept. _Cf._ Pareto, V., _Cours d'Economie Politique_, 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 _socialer_ Gebrauchswerth.... Der zweite
ist der Gebrauchswerth, den ein aus vielen individuellen Organismen
bestehender _socialer Organismus_ 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 gegenueber
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 _Zeitschrift fuer die Gesammte
Staatswissenschaft_, 1878, pp. 223-24. Wagner indicates his approval of
this concept, though he makes little use of it, in his _Grundlegung der
politischen Oekonomie_, Leipzig, 1892, pp. 329-30. Ingram, in his _History
of Political Economy_ (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.
[2] Seligman, E. R. A., _Principles of Economics_, New York, 1905,
especially pp. 179-82 and 192-93. Bullock, C. J., _Introduction to the
Study of Economics_, 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, _Money_, 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," _Annals of the American Academy_, vol. III; "Money as a
Measure of Value," _ibid._, 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," _ibid._, vol. III; "The Total Utility
Standard of Deferred Payments," _ibid._, 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," _Quarterly
Journal of Economics_, 1901.
[3] See chapter XII.
[4] See especially Professor Clark's _Essentials of Economic Theory_, New
York, 1907, pp. 41-42.
[5] See especially _The Philosophy of Wealth_, 1892 ed., pp. 73-74.
[6] _Principles_, pp. 179-82.
[7] The general references for Ross and Merriam have been given _supra._
_Cf._ p. 62 of Dean Kinley's _Money_.
[8] "Ultimate Standard of Value." This article is substantially the same as
chap, XXIV of _The Distribution of Wealth_, New York, 1899.
[9] In his discussion of social value in the _Principles_, Professor
Seligman modifies a statement made in his article, "Social Elements in the
Theory of Value" (_Quarterly Journal of Economics_, vol. XV). The two
discussions are parallel in part, the former being based upon the latter.
The passage quoted is from the _Q. J. E._ article, pp. 323-24. The same
passage is essentially reproduced in the _Principles_ (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. _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._ If an
apple is worth twice as much as a nut, it is only because the community,
after comparing _and averaging_ individual preferences," etc. The
conception of social value as an _average_ of individual values is
withdrawn in the second treatment, and no substitute is offered for it.
[10] Davenport, "Seligman, 'Social Value,'" _Journal of Pol. Econ._, 1906;
_Value and Distribution_, Chicago, 1908. This last work reproduces, in
abridged form, the article on Professor Seligman, in a footnote, pp. 444
_et seq._ Schumpeter, "On the Concept of Social Value," _Q. J. E._, Feb.,
1909; "Die neuere Wirtschaftslehre in den Vereinigten Staaten," _Jahrbuch
fuer Gesetzgebung, Verwaltung und Volkswirtechaft im Deutschen Reich_, 1910,
pp. 913 _et seq._ 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 _Quarterly Journal_ contains Schumpeter's fullest
treatment of the topic.
[11] Boehm-Bawerk, "Grundzuege der Theorie des wirtschaftlichen Gueterwerts,"
Conrad's _Jahrbuecher_, N. F., Bd. XIII, 1886, p. 478.
[12] _Natural Value_, p. 52, n.
[13] Sax, Emil, _Grundlegung Der Theoretischen Staatswirtschaft_, Vienna,
1887, p. 249.
[14] See _supra_, p. 3, note 1.
PART II
CRITIQUE OF CURRENT VALUE THEORY
CHAPTER II
FORMAL AND LOGICAL ASPECTS OF THE VALUE CONCEPT
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.[15]
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,[16]
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 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 _ratio of exchange_, then, is a ratio between two quantities
of social marginal utility, or social value, rather than between two
physical objects, and _price_, 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.
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.
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 _justum
pretium_ belongs to the first class, 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."[17] 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.[18] 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.
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 _measured_ by the process of exchanging, but 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.[19] Karl Marx and Henry George
agree with them upon this latter point. Value is a quantity, and not a mere
relation, for both.[20] Wieser would concur here.[21]
Professor Carver, in a recent article in the _Quarterly Journal of
Economics_,[22] insists on the conception of value as a quantity. Gabriel
Tarde states the matter illuminatingly in a passage in his _Psychologie
Economique_:[23]--
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.
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,[24] and others, as a
quantity of goods to be got in exchange, comes out in the statement, so
common in the text-books, that, while there can be a general rise or fall
of _prices_, there cannot be a general rise or fall of _values_, 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 _can_ 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.
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:[25]--
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.
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.
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[26]--by those who would object 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.[27] But 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 _is_ the market ratio. Now a quantitative
ratio is between commensurable quantities. Gold and milk must be, then,
commensurable quantities, _i.e._ must have a common _quality_, present in
each in definite quantitative degree, before comparison is possible, or a
ratio can emerge. This quality is _value_. The difficulty, from the
standpoint of logic, is only covered up, and not avoided, if we say with
Professor Davenport,[28] "Value is a ratio of exchange between two goods,
_quantitatively specified_." [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 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.[29]
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,[30] 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 _things_ related,
ratios must have quantitative _terms_, additions require _homogeneous_
quantities to make up a sum.
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)[31] 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
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 _eo ipso_ every time a new comparison
is made.
Further, it is in the process of exchange, and by the method of comparison,
that the value of goods becomes quantitatively _known_, as a rule. That is
to say, we find out precisely _how much_ 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 _causally_ determined by the process of exchange.[32] 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
distinguish, in Kantian phrase, between the "_ratio essendi_" and the
"_ratio cognoscendi_." _Value_ and _evaluation_ 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
_giving_ value, but to _finding out_ 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,[33] and the keen mathematical economists, Pareto[34]
and Edgeworth.[35]
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,[36] 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.[37] 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 value differ as substance and
attribute," (Senior, quoted with approval by F. A. Walker.[38]) With this
view, Marx[39] would concur. "Wealth is that which has value," Professor
Laughlin states.[40] 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."[41] 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,[42] 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:--
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.[43]
Only on the basis of a definition of value as a quantity is it proper to
speak of a "measure of values."[44]
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.
FOOTNOTES:
[15] Clark, J. B., "Ultimate Standard of Value," _Yale Review_, 1892. p.
258.
[16] _E.g._, _The Philosophy of Wealth_, chap. v.
[17] _Economics_, p. 92. See also the article by President Hadley on
"Value" in Baldwin's _Dictionary of Philosophy_, etc., and
"Misunderstandings about Economic Terms," _Yale Review_, vol. IV, pp.
156-70. The same ideas are expressed in all.
[18] 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 _Grundriss_, etc., 4te Aufl, Bd. I, pp.
17-18. Professor O. D. Skelton's admirable _Socialism_ (Hart, Schaffner &
Marx Series, 1911) comes to hand while the proof sheets of the present
volume are being revised. _Cf._ his interesting chapter on the Marxian
theory of value.
[19] Seligman, _Principles_, pp. 184-85. See also Taylor, W. G. L.,
"Values, Positive and Relative," _Annals A. A._, vol. IX, pp. 70-106.
Taylor, who follows Professor Clark largely, accepts the conception of
social value as a quantity.
[20] Marx, _Capital and Capitalistic Production_, London, 1896, pp. 2-4.
George, _Science of Political Economy_, New York, 1898, chap. XI.
[21] _Natural Value_, p. 53, n.
[22] "The Concept of an Economic Quantity," _Q. J. E._, May, 1907.
Professor Carver insists on the quantitative nature of value, taking as his
point of departure the point made _infra_, 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. _Cf._ his use of the term
"purchasing power" in his _Distribution of Wealth_, 1904, pp. 51-52, where
the _relativity_ of value is insisted on as a basis for a criticism of
Professor Clark's amendment of the Austrian theory.
[23] Paris, 1902, vol. I, p. 63.
[24] Fisher, Irving, _The Nature of Capital and Income_, New York, 1906,
pp. 13 _et seq._ Ely, R. T. (and others). _Outlines of Economics_, 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 _ante_); 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 _marginal utility_. _Cf._ the confusions
of utility and demand pointed out _infra_, chapter v. This loose treatment
of the value concept, while doubtless accentuated by the fact that four men
have cooperated 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.
[25] _Natural Value_, p. 53, n.
[26] _Principles of Economics_, p. 183. Professor Seligman in the _Q. J.
E._ article (_supra_, p. 6, note I) indicates that Pantaleoni expresses a
similar thought (_Pure Economics_, London, 1898, p. 127). This idea is
elaborated by Professor Georg Simmel, _Philosophie des Geldes, Erster Teil,
Kap. 2_. (A translation of this chapter, under the title, "A Chapter in the
Philosophy of Value," appears in the _American Journal of Sociology_, 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 (_Phil. des Geldes_, p. 34). But
later, exchange is declared to be "a sociological structure _sui generis_"
(_ibid._, p. 56). Again, only in the vaguest sort of sense is exchange used
in this expression, "_wo wir Liebe um Liebe tauschen_" (_ibid._, 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
_equality_ 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.
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, _the anxiety lest the object escape_ [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" (_A. J. S._, 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" (_Phil. des
G._, 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" (_A. J. S._, 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 _unsatisfied want_. _Cf._
Pareto, _Cours d'Economie Politique_, vol. I, p. 34.
See further, on the psychology of value, chapter X, and on Professor
Seligman's theory of the relativity of value, chapter XVI, of the present
volume.
[27] Laughlin, J. L., _Elements of Political Economy_, 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," _Journal of P. E._, 1902, where Professor Laughlin insists that
exchange value is "something physical." Professor Davenport, _Value and
Distribution_, Chicago, 1908, p. 569, defines value similarly.
[28] _Value and Distribution_, p. 569.
[29] Professor Davenport, caught between two apparently invincible logical
difficulties, accepts this situation frankly, as, seemingly, the only thing
possible. See _Value and Distribution_, p. 184, n. The ratio has no terms
for him.
[30] _Value and Distribution_, pp. 330-31.
[31] "Values, Positive and Relative." _Annals_, vol. IX.
[32] It is, of course, recognized that exchange modifies value in so far as
exchange is a _productive_ process. But the essential thing here is the
_transfer_ aspect of exchange, which would hold even in a communistic
society where value relations might be found out by some process other than
exchange.
[33] _Political Economy_, New York, 1888, p. 84.
[34] _Cours d'Economie Politique_, vol. I, pp. 8-9.
[35] Edgeworth, F. Y., _Mathematical Psychics_, London, 1881, chapter on
"Unnumerical Mathematics," pp. 83 _et seq._
[36] A fuller discussion of the functions of the value concept is given in
chapter XI where this argument is materially strengthened. The points here
made, however, seem adequate.
[37] Jevons, _Principles of Economics_, 1905 (posthumous), p. 50.
[38] Walker, _op. cit._, p. 5.
[39] Marx, _op. cit._, vol. I, chap. I.
[40] Laughlin, _Elements_, p. 77. _Cf._ also, Ely, _op. cit._, 99-100.
[41] _Ibid._, 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. (_Nature of Capital and Income_, chap. I.)
[42] _Principles_, pp. 8-11.
[43] _Money_, p. 288.
[44] _Cf._ Kinley, _op. cit._, Merriam, _loc. cit._, and Carver, "The
Concept of an Economic Quantity," _loc. cit._ _Cf._ also, Laughlin,
_Money_, 1903, pp. 14-16; and Davenport, _Value and Distribution_, p. 181,
n.
CHAPTER III
VALUE AND MARGINAL UTILITY
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.[45] 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.
If the Austrian analysis be taken as meaning anything more than a method of
determining surface ratios of exchange, difficulties at once arise. 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, _quantitatively_ related to
value in the market?
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 Boehm-Bawerk implies it clearly enough in places.[46]) 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
_units_ 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.
A B C D E
Sellers will take: $20 $30 $40 $50 $60
Buyers will give: $60 $50 $40 $30 $20
_Price_ is then fixed at forty dollars. Now if all these men were "normal"
men, and if all had equal wealth, we could say here, _marginal utility_ =
_value_. 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 _price_ is, and the utility theorists, when very careful, do not
always claim to do more than that.[47] But _price_ is not _value_.
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 which we shall call
"Clark's Law."[48] 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
additional service of speed and exhilaration he _is_ 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 _total_ 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
_society_, 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 _value_ has
become very uncertain indeed.
FOOTNOTES:
[45] 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. XIII, _infra_.
[46] For further discussion of this doctrine, see chapters IV and VIII of
this book. Boehm-Bawerk, _Positive Theory_, 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. _Cf._
Veblen, Thorstein, "Professor Clark's Economics," _Q. J. E._, 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.e._, 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.
[47] Boehm-Bawerk and Wieser are certainly seeking an objective value, but
Jevons and Pareto are concerned simply with the ratio. See Wieser, _Natural
Val._, p. 53, n. Jevons, Pareto, and Boehm-Bawerk are discussed, with
reference to this point, in chap. IV.
[48] This law is first set forth by Professor Clark in an article in the
_Q. J. E._, vol. VIII, "A Universal Law of Economic Variation." See also,
_The Distribution of Wealth_, pp. 210-45. A brief exposition of the
doctrine is found in Seligman, _Principles_, 1905, pp. 185-88.
CHAPTER IV
JEVONS, PARETO AND BOeHM-BAWERK
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:[49]--
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 _non-ego_ 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.
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[50] 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.[51] This is
brought out very clearly when he discusses the question of the concrete
dimensions of these three quantities. Total utility has dimensions, 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.[52] 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 _can_ be found on Jevons's psychological
assumptions--then the term should be abandoned altogether.
Pareto's position[53] 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 etablit l'egalite des deux ophelimites pour lui, et
que le laboureur fait de meme, mais qu'il n'y a aucun rapport entre
l'ophelimite du vin pour le vigneron et pour le laboureur, ni entre
l'ophelimite du ble pour le vigneron et pour le laboureur. Il faut toujours
se rapeller ce caractere subjectif de l'ophelimite." (21.) Now no quantity
of value, irrespective of the particular holder of the good, emerges for
Pareto. Value is either a "_rapport de convenance_" between a man and a
good, i.e., ophelimity, or is a "_taux d'echange_," a ratio between two
goods. (30.) The older term, "_puissance d'achat_," 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.
Davenport, who recognizes clearly "the rich-man-poor-man complication,"[54]
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,[55] 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.[56]
The same may be said for Boehm-Bawerk, so far as his formal analysis goes.
It is true that he recognizes the existence of an "objective value in
exchange"[57] in addition to "subjective value" and "subjective value in
exchange," and in addition to price,[58] 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--_not utilities_--in the market. The nature of his objective
exchange value is expected to become clear, somehow, from this surface
determination of price:--
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 _capable_, and why it is capable, of
obtaining a definite price. The law of Price, in fact,
contains the law of Exchange Value.[59]
But (as will be elaborated more fully in chapter VI), Boehm-Bawerk's law of
price does not explain the _why_ 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 _modus operandi_ of the determination of _particular_ 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.[60]
FOOTNOTES:
[49] _Theory of Political Economy_, 3d edition, p. 14.
[50] _Op. cit._, pp. 76-84.
[51] _Ibid._, p. 83.
[52] _Op. cit._, p. 81.
[53] _Cours d'Economie Politique_, vol. I, pp. 1-40. The numerals in the
text refer to pages in this volume.
[54] _Value and Distribution_, p. 444.
[55] Professor Davenport's attitude on this point we shall discuss more
fully in chapter VIII.
[56] _Ibid._, pp. 184, n., and 330-31.
[57] It is not wholly clear whether or not Boehm-Bawerk means his "objective
value in exchange" to be considered as an absolute or as a relative
concept. His formal definition ("Grundzuege der Theorie des wirtschaft
lichen Gueterwerts," Conrad's _Jahrbuecher, N. F._, XIII, 1886, p. 5) is as
follows: "Hierunter ist zu verstehen die objective Geltung der Gueter im
Tausch, oder mit anderen Worten, die Moeglichkeit fuer sie im Austausch eine
Quantitaet anderer wirtschaftlicher Gueter zu erlangen, diese Moeglichkeit als
eine Kraft oder Eigenschaft der ersteren Gueter gedacht." The concluding
phrase would seem to point to an absolute conception, as would also his
criticism of the expressions, "ratio of exchange," "_Austauschverhaeltnis_,"
and "_Tauschfuss_" (_Ibid._, p. 478, n.): "Diese Ausdruecke haben naemlich
eine Nueance an sich, die es unmoeglich macht, sie sprachlich den Guetern als
Eigenschaft beizulegen, oder von einer groesseren oder geringeren Hoehe
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
_Capital and Interest_ (p. 203) is based on the relative conception of
value. _Cf._ our discussion of the practical usage of the Austrians in
chapters XI and XVIII.
[58] 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.
[59] _Positive Theory_, p. 132.
[60] See chapter VI, _infra_.
CHAPTER V
DEMAND CURVES AND UTILITY CURVES
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,"[61] made up of
many individuals, differing in wealth and in tastes.[62] The former curve
does express a diminishing scale of absolute feeling-magnitudes,[63]
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 Boehm-Bawerk and Wieser, especially, have been adequately
commented on by Professor Davenport,[64] 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.[65] 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."[66]
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:[67]--
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.
Similar confusions appear in Professor Patten's _Theory of Prosperity_, in
a number of places.[68] President Hadley's discussion of "Speculation"
falls into this confusion, also.[69] Professor Ely's confusion on this
point is instanced in his _Outlines of Economics_, 1908 edition, pp.
358-59.[70] Schaeffle, in his _Quintessence of Socialism_,[71] 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."[72] 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.[73] And still more disheartening to find Professor Davenport,
at the 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:--
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.
With great esteem for good singing, and with the rarity
of good singers, the high gains of prima donnas find
sufficient explanation.
This, as a separate, unqualified proposition in the "Summary of
Doctrine,"[74] is hardly to be counted anything but a _lapsus_, even though
recognition is later accorded to the necessity of backing up "utility" with
"purchasing power."
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.[75]
FOOTNOTES:
[61] See Jevons, _Theory of Pol. Econ._, 3d ed., pp. 88-90; 95-96.
[62] See, especially, Pareto, _op. cit._, vol. I, pp. 36-37.
[63] Our question here is primarily a _logical_, and not a _psychological_,
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. _Cf._ the chapter in this work on the psychology of value.
[64] _Op. cit._, pp. 300, 312, 313 _et seq._, 320, 325, n., 327, 328 n.,
329, and chap. XVII.
[65] _Principles_, 1898 ed., p. 176.
[66] _Op. cit._, p. 300.
[67] _Principles of Economics_, London, 1902, p. 57.
[68] 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.
[69] _Economics_, 1904 ed., pp. 101-104.
[70] See _supra_, p. 17, n.
[71] English edition, London, 1889, pp. 90-91
[72] Flux, A. W., _Economic Principles_, London, 1904. Compare pp. 4, 29,
and 27.
[73] _Principles_, 1907 ed., pp. 348-50.
[74] _Op. cit._, p. 569.
[75] As shown in chapter II. 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," _Trans. of the
Connecticut Academy of Arts and Sciences_, vol. IX, 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 _the marginal utilities of all articles_ CONSUMED [capitals
mine] _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_." 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
_expenditure_ and _consumption_. Compare, however, Boehm-Bawerk's view,
"Grundzuege," Conrad's _Jahrbuecher, N. F._, XIII, 1886, pp. 516 _et seq._
CHAPTER VI
THE VICIOUS CIRCLE OF THE AUSTRIANS
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 _milieu_; 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,[76] much abstraction, is legitimate and necessary. Where
to draw the line is often a perplexing question, 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 _explanation_ phenomena to enable us to
explain our _problem_ 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 _definition_ of
value,[77] 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,[78] 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 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
_value_! 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
_value_.--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:--
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,
_purchasing power_.[79] [Italics mine.]
This _purchasing power_ 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 _Natural Value_ already quoted.[80] The circle
becomes still more explicit in Hobson.[81] Hobson attempts to coordinate
the Austrian theory with the older cost theory, and in this connection
gives a table analyzing the forces that lie 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.
FOOTNOTES:
[76] The extreme abstraction of the utility school is made very clear by
Pareto, _op. cit._, introductory chapter. He is concerned only with "the
science of ophelimity" (p. 6), and ophelimity is a "wholly subjective
quality" (p. 4).
[77] See _supra_, chap. II.
[78] But as later indicated (_infra_, chap. XIII), the apparent simplicity
of his analysis simply covers up, and does not eliminate, the complexity of
the situation.
[79] _Op. cit._, pp. 61-62.
[80] See _supra_, chap. II.
[81] _Economics of Distribution_, p. 81.
CHAPTER VII
PROFESSOR CLARK'S THEORY OF SOCIAL VALUE
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.[82] 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.[83] 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
_Yale Review_ for 1892, in the article above referred to, "The Ultimate
Standard of Value" (since reproduced as chapter XXIV of the _Distribution
of Wealth_), has attempted so to add up individual units of cost and
individual units of 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[84] 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 _Distribution of
Wealth_. 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).
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.
Work, however, is miscellaneous and heterogeneous. There is needed "a
pervasive element 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
_unit of value_.
Of society regarded as a unit the same is true.
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.
(It might be questioned parenthetically here whether _all_ are fed before
_any_ 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
_ultimate standard of value_. It is in equilibrium with the sum of the
utilities of the final hour's products to all the laborers considered as
consumers. This 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--_not the same part_!--the problem
still remains as to the connection of the marginal utility and the value of
the _particular_ 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):--
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 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.
But suppose they are _bought_ with monopolized products, and suppose that a
monopoly element enters, at some stage or other, into _every_ 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?[85] "_Differences in
wealth between different producers cause the cost of products to vary from
their value._" (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 how that pervasive element can in any way be an ultimate
explanation or measure of value.
The rich worker stops producing early, while the
sacrifice entailed is still small; but his product
sells as well as if it were costly.
If we say that the prices of things correspond with the
amount and _efficiency_ 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.
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 _the
value of the wealth of the different producers_, and the efficiency, which
can be defined only in terms of _value product_, 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.
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 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 _quantum_ 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:--
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.
A sympathetic connection between members of society
exists, etc.[86]
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 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,[87] not
available, for the most part, when Professor Clark's article was written,
in an effort to get nearer the heart of the problem.
The doubly abstract conceptions of individual costs and individual
satisfactions, connected with economic goods,--abstracted first from the
social _milieu_, 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.
FOOTNOTES:
[82] See _inter alia_ Boehm-Bawerk, "Ultimate Standard of Value," _Annals of
the American Academy_, vol. V; also his "Grundzuege," p. 516, n.; Wieser,
_op. cit._, bk. V.
[83] See Laughlin, J. L., "Marshall's Theory of Value and Distribution,"
_Q. J. E._ vol. I, pp. 227-32. See also Marshall's reply in the same
volume.
[84] There is a needless complication here. For Professor Clark's purposes
it is not necessary to seek a _unit_ of value; what is needed is simply a
vindication of the quantitative social value concept. The unit may then be
arbitrarily chosen--_e.g._, the amount of value in 23.22 grains of gold.
_Cf._ the discussion of abstract units of value, _infra_, chap. XVII, pp.
183-84.
[85] The issue appears to be shifted here. If an ultimate _cause_ of value
is being sought, it is certain that labor does not supply it for the
monopolized goods; and if it be simply a _measure_ 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 _valuable_--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, _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_."
(Italics mine.) Ricardo, _Works_, McCulloch edition, 1852, p. 213.
[86] _Philosophy of Wealth_, 1892 ed., p. 83.
[87] Tarde, _The Laws of Imitation_, _Psychologie Economique_, 2 vols.,
Paris, 1902. Cooley, C. H., _Human Nature and the Social Order_, _Social
Organisation_. Baldwin, Mark, _Social and Ethical Interpretations_. Elwood,
C. A., _Some Prolegomena to Social Psychology_, Chicago, 1901; "The
Psychological View of Society," _American Journal of Sociology_, March,
1910. Hayden, Edwin Andrew, _The Social Will_, 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.
PART III
THE PRESUPPOSITIONS OF ECONOMIC THEORY
CHAPTER VIII
THE PHILOSOPHICAL AND PSYCHOLOGICAL PRESUPPOSITIONS
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 _will_ creep in, and the scientist has no option
about it. The only thing he can do is to be critical, and know definitely
_what_ philosophical assumptions he is making,--and most of our treatises
on economic theory do not bear evidence that this critical work has been
done.
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 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.
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 _Republic_--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 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.
The mediaeval 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.
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, naively 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:
"_Ethica more geometrico demonstrata_." The conception of society which
characterizes this period is, again, not naive, 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 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.
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.[88] 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 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 _crystallized_, and still form
part of the current stock in trade of economic science, even though
rejected by philosophy itself.
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,[89] mechanically connected with
his fellows, who are to him "a part of the _non-ego_,"[90] but spiritually
self-sufficient and inaccessible. The doctrine appears in Marshall's
statement:[91] "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 IV. The doctrine appears in Professor Veblen's recent article in
criticism of Professor Clark:[92]--
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, _no continuity of nervous tissue_
[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.
In the recent elaborate study, _Value and Distribution_, 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 _Pendennis_ is given as a footnote,[93] in which
Professor Davenport's own conception is expressed:--
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.
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 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 "_Ding an sich_,"--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 _not_
this that psychology attempts. It is concerned with the laws and behavior
of minds in general, with the "_typisch und allgemeingueltig_" and not with
the mental idiosyncrasies of the particular individual.
But the doctrine can be met from the standpoint of epistemology itself. The
writers who are responsible for this subjective analysis, have held that
_mind_ 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 thought. Now I base
myself upon the present day pragmatic philosophy,[94] 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, _values_, lie at the basis
of intellect.[95] 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.[96] Consequently, if there be anything at all, outside of
our own mind, which we _can_ understand, it must be the feelings and
emotions of other men.
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 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.[97] 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.
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[98]--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 mind is a unity, not of
consciousness, but of _function_. 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 _immediately_ 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.[99]
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, 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,"[100] 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.
FOOTNOTES:
[88] 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 _Adam Smith and Modern Sociology_, Chicago,
1907, esp. p. 51.
[89] 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, _Principles of Psychology_, 1905 ed., vol. I, 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 _Appearance and Reality_, esp. chaps. II and III. 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. _Cf._ William James,
_The Meaning of Truth_, New York, 1909, p. xiii; and also his _Psychology_,
vol. I, pp. 224-25. _Cf._ also the writings of Professor John Dewey.
[90] Jevons, _Theory of Pol. Econ._, 3d ed., p. 14.
[91] _Principles_, 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 _Principles_, p. 172.
[92] "Professor Clark's Economics," _Q. J. E._, 1908, p. 170.
[93] Davenport, _op. cit._, 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.
[94] See, especially, William James, _Pragmatism_, and _The Meaning of
Truth_; John Dewey, _Essays in Logical Theory_; and F. C. S. Schiller,
_Humanism_.
[95] 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.
[96] I am indebted for suggestions here to Professor H. W. Stuart's article
on "Valuation as a Logical Process," in Dewey's _Studies in Logical
Theory_, pp. 322-23.
[97] _Cf._ Baldwin, _Social and Ethical Interpretations_, _passim_, and
Cooley, _Human Nature and the Social Order_, _passim_.
[98] The most interesting discussion of these topics I know is that of
Friedrich Paulsen, in his _Introduction to Philosophy_ (translated by
Professor Frank Thilly).
[99] _Cf._ Perry, R. B., "The Hiddenness of the Mind," _Jour. of Phil.,
Psy., and Sci. Meth._, Jan. 21, 1909; "The Mind Within and the Mind
Without," _Ibid._, April 1, 1909; "The Mind's Familiarity with Itself,"
_Ibid._, March 4, 1909. Urban, W. M., _Valuation_, p. 243.
[100] Davenport, _op. cit._, p. 331.
CHAPTER IX
THE SOCIOLOGICAL PRESUPPOSITIONS
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
_analogous_ 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.
The following extract, freely translated and substantially abridged, is
taken from chapter I of DeGreef's _Introduction a la Sociologie_:--
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 _History of the Intellectual Development of
Europe_, 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 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 _jeu d'esprit_. 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.
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 (_Social Science_). 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.
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,[101] writing much later, of course, puts it
thus:--
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.
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;[102] 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 _elite_
the social _sensorium_; 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.[103] But this, though suggestive, is
not an ultimate social philosophy or even an approach 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.[104]
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
_ideal thinking_.[105] 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").
DeGreef's conception seems to me better, on this logical point,--though of
course Baldwin's analysis of facts represents a great advance--but it is
not satisfactory:[106]--
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, _a priori_, that the collective force
which constitutes the social superorganism presents the
same characteristics.
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.
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 _function_ rather than of _structure_,[107] though
there is some structural unity.
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 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 _Social Organization_. As this
book, however, presupposes certain doctrines set forth in Professor
Cooley's earlier book, _Human Nature and the Social Order_, 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 _Social Organization_, 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 problems, make allowance
for the extent to which it is untrue.
In his earlier book,[108] 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.
There are several forms of individualistic views: (1) _Mere_ 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 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 _debris_ 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, 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.
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.[109] The thought process within
the "individual mind" is a social process,--we think in words, and, indeed,
in conversations.[110] I shall not develop these notions at length. They
are of similar nature to those in Professor Baldwin's _Social and Ethical
Interpretations_, 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.
_Social Organization_, which appeared in 1909, takes up the collective
aspect of human-mental life.
Mind is an organic whole, made up of cooperating
individualities, in somewhat the same way that the
music of an orchestra is made up of divergent but
related sounds.[111] 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.
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
cooperation, cannot well be denied.[112]
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
"_cogito_," "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, "_cogitamus_," "we think," is just as obvious.[113] 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."[114]
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' _Principles
of Sociology_:--
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.
The social mind for Professor Giddings is thus made to depend upon an
_identity of content_ 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 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.[115]
* * * * *
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:--
(1) Society is an organism. Organism as here used is a generic term, with
the following connotation: (_a_) an organism has different parts, with
different functions; (_b_) these parts are interdependent; (_c_) 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; (_d_) an organism has a central theme, not externally
imposed, to the working-out of which the different parts contribute; but
the organism--or the parts--is not necessarily conscious of this central
theme; (_e_) 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 _Human Nature and the Social Order_.) (_f_) An organism grows, by
progressive differentiations and integrations.
(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, _plus_ 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 _function_,
however.[116]
(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 _organic_
character of the social mind, by introducing the fact of _differentiation_.
The integrating element is found in the points which individual minds have
in common.
(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.
(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 minds. "Social self-consciousness" is a rare, if not
non-existent phenomenon.
(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.
(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.
(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.
(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.
* * * * *
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 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.[117] 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 _sum_ of
_similar_ individual activities, as Professor Davenport seems to think in
the article criticizing Professor Seligman,[118] and if the individual be
an isolated monad, then Professor Davenport's criticisms will hold. But if
the individual 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 _sum_ of _similar_ individual activities, but an
_integration_ and _organization_ of _differentiated_ and _complementary_
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.
FOOTNOTES:
[101] Baldwin, Mark, _Social and Ethical Interpretations_, 1906 ed., pp.
8-9.
[102] _Cf._ John Stuart Mill's _Logic_, book VI, on the nature of social
laws.
[103] Cited by Baldwin, _op. cit._, p. 495, n.
[104] See Giddings, _Principles of Sociology_, 1905 ed., p. 194.
[105] _Op. cit._, p. 571.
[106] _Op. cit._, chap. XIII.
[107] _Cf._ Elwood, C. A., _Some Prolegomena to Social Psychology_,
Chicago, 1901. _Cf. infra_ in this chapter the note on Professor Elwood's
view.
[108] _Human Nature, etc._, chap. I.
[109] _Op. cit._, chaps. V and VI.
[110] _Ibid._, pp. 52 _et seq._
[111] 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.
[112] _Social Organization_, pp. 3-4.
[113] _Social Organization_, pp. 6-9.
[114] _Ibid._, p. 9.
[115] Compare Professor Giddings' more detailed and concrete treatment of
the subject in his _Readings in Descriptive and Historical Sociology_, New
York, 1906, pp. 124-428.
[116] Professor C. A. Elwood, in the essay mentioned _supra_, _Some
Prolegomena to Social Psychology_, is the first, so far as I know, to apply
Professor Dewey's psychological viewpoint to the study of the social mind.
Chap. II 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
_activity_, for the adjustment of the organism to its environment, rather
than the _structure_ or _content_ 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
_activity_, _function_. 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 _some_ 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 _function_.
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,
preevolutionary 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. _Cf._ Friedrich Paulsen's _Introduction to
Philosophy_, on "soul-substance," and Wundt's _Voelker-Psychologie_, vol. I,
chap. I.
[117] Davenport, _op. cit._, pp. 467-68.
[118] _Op. cit._, pp. 445-46. (The reference is given to Professor
Davenport's book for the convenience of the reader. The original article
appears in the _Journal of Political Economy_ 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....
"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 cooperation; 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, cooperatively, by aggregates, and will not bear
thinking over into this form.
"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."
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 _different_ and _complementary parts_.
PART IV
A POSITIVE THEORY OF SOCIAL VALUE