RECAPITULATION. THE SOCIAL VALUES. FUNCTIONS OF THE VALUE CONCEPT IN
ECONOMICS
Our conclusions reached in previous chapters, from the standpoint of
economic theory, and from the standpoint of sociological theory, alike
forbid us to stop with the results so far obtained as to the nature of
value. From the standpoint of social theory, we are unable to consider the
individual values discussed in the last chapter as completely accounted for
on the psychical side by what goes on in the individual mind: every
individual mind is a part of a larger whole; every thing in the individual
mind has been influenced by processes in the minds of others; every process
in the individual mind influences, directly or indirectly, processes in the
minds of others. There is a social mind. And the values in the mind of an
individual constitute no self-complete and independent system, either in
their origin, in their interactions, or in their consequences for action.
In our psychological phrase, their "presuppositions" include elements in
the minds of other men, and they themselves constitute part of the
"presuppositions" of the values in the minds of other men. Finally, there
are values which correspond to the values of no individual mind, great
social values, whose presuppositions are tremendously complex, including
individual values in the minds of many men, as well as other factors which
we shall have to analyze in considerable detail, great social values whose
motivating power directs the activities of nations, of great industries, of
literary and artistic "schools," of churches and other social
organizations, as well as the daily lives of every man and woman--impelling
them in paths which no individual man foresaw or purposed. In Urban's
phrase,--
between the subjectively desired and the objectively
desirable in ethics, between subjective utility and
sacrifice and objective value and price in economic
reckoning, between the subjectively effective and the
objectively beautiful in art, there is a difference for
feeling so potent that in naive and unreflective
experience the feelings with such objectivity of
reference are spoken of as predicates of the objects
themselves.[144]
And our theory carries us even further than Professor Urban cares to go
here. Naive and unreflecting experience is perfectly justified in treating
these objective values as qualities of the objects themselves. To the
individual man, an objective value, say the value of an economic good, _is_
as a rule, a quality almost wholly independent of his personal subjective
feelings or point of view. The average man, "by taking thought," can no
more affect the value of wheat or corn or other big staple than he can "add
a cubit to his stature." For the great mass of men, and the great mass of
commodities, this holds true. The individual finds the world of economic
values a part of the brute universe, like the force of gravity, or the
weather, or the law against murder--less invariable than the force of
gravity, and less variable, as a rule, than the weather--to which he must
adapt his individual economy. He is not wholly impotent to change this
world of economic values, nor is he wholly without influence on the balance
of cosmic forces. And, if possessed of enough social _power_ (which we
shall find to constitute the essence of these social values) he may
substantially modify the action of the law against murder, or the values of
those commodities about which the rich may be capricious; or even, if
intelligent in the use of his power, he may undertake a successful "bull"
campaign, and force up the value of wheat or cotton. But even in such
cases, he deals with objective facts,--which often, in the midst of a bull
campaign, behave in a most surprising and disconcerting manner![145] The
existence of external constraining and directive forces are matters of
every day experience. Laws, moral values, social constraints of a thousand
subtle and obvious kinds, are facts so well known that education has made
it its central task to teach the individual how to adjust himself to them.
They have been described and elaborated in innumerable books.[146] _That_
they exist is certain. Their origin, nature and function we shall study in
what is to follow.
We were led to a similar conclusion by the analysis of the necessities of
economic theory. Economic value as a quality, present in a good in
definite, quantitative degree, regardless of the idiosyncrasy of the
particular holder of the good, we found a necessity of economic thought.
The argument may be briefly recapitulated, and a few points added. If goods
are to be added together and a sum of wealth obtained, there must be a
homogeneous element in them by virtue of which the addition can be made. We
do not add a crop of wheat and a lead-pencil,[147] and a gold watch, and
twenty dollars and a theatre ticket, on the basis of length or weight or
other physical quality. Only by picking out the homogeneous quality, value,
can we add them. We cannot compare two economic goods, and put them into a
ratio, except on the basis of such a homogeneous quality. We have no terms
for our ratios apart from quantities of value, and yet our ratios must have
terms. We find economists speaking of value as the essential characteristic
or quality of wealth. We find theorists speaking of money as a "measure of
values"--a conception only possible if value be a quality of the sort of
which we speak, present both in the money measure and in the thing measured
in definite quantitative degrees. A point or two may be added. We find
economists, notably the Austrians, undertaking the problem of
"Imputation," breaking up the value of a consumption good into different
parts, one part being assigned to the labor immediately concerned in its
production, and other parts of that value to goods of the next
"rank"--owned by people different from those who consume the good--and this
value further subdivided among goods of remoter ranks,--the whole process
possible only if the original value be an objective quantity of the sort
described. We find a differential portion of a crop of wheat compared with
the land which produced it, and spoken of as a percentage of the land,
which is true only if the _value_ of each be considered--and indeed is
meaningless, else. Or, we find merchants reckoning their gains in the form
of money at the end of the year, as a certain percentage of their
capital--which has consisted throughout the year of goods of various sorts.
Everywhere in the economic analysis this conception of value has been
essential for the validity of the analysis, and this is especially true
when we come to the ultimate problems of monetary theory. We may ignore,
sometimes, the element of value when dealing with non-monetary problems, in
terms of quantities of money, simply because it is not necessary to refer
to fundamental principles explicitly all the time. But when we come to the
problem of money itself, we must make use of the value concept, and the
value concept is implicit in the whole procedure.
Further, the value concept has been called upon to explain the motivation
of the economic activity of society, and value has been conceived of as a
motivating force.[148] Schaeffle, especially, has stressed this phase of
the matter in his criticism of the socialistic theories of value. "Utility
value," he holds, does direct industry into proper channels, but a value
based on labor-time would get supply and needs into a hopeless
discrepancy.[149]
No ratio "between objective articles" will serve these functions which the
economists have put upon the value concept. Value as a purely individual
phenomenon, varying from man to man, will in no way[150] serve these
purposes of the economists. Value as a mere brute quantity of physical
objects given in exchange for other physical objects, could in no way serve
these purposes. Value must be an objective quality, a _power_, embodied in
the object, independent of the individual judgment or desire. A strong
feeling that this is so is manifested in the term which the English School
so often uses as the equivalent of value, namely, "purchasing
power"[151]--a term which Boehm-Bawerk approves.[152] The notion of
relativity which has, historically, been bound up with this term, we have
criticized in chapter II, and it is not necessary to repeat the argument
here. But the other aspect of it, its recognition of the dynamic character
of value, and of the quantitative character of value, even though often
confusedly and vaguely, seems very much to strengthen the case for the
thesis I am maintaining.[153]
The effort of the Austrians, and of other schools of economic theory, to
explain and justify this notion of value as an objective quantity, has
already been considered, and our conclusion has been that, through a too
narrow delimitation of their determinants, they have been led into
circular reasoning. A further criticism is now possible, in the light of
our sociological and psychological conclusions: the picking out of _any_
abstract elements, however numerous, with the effort, by a synthesis, to
combine them into a concrete social quantity, must fail. In the process of
abstraction we leave out vital elements of the concrete social situation;
how shall we expect these vital elements left out to reappear when we put
the abstract elements into a synthesis? They cannot, if the synthesis be
logically made. And it is precisely because Professor Davenport is so
accurate in his logic that he fails to get a social quantity out of the
abstract elements of subjective utility, etc. But the majority of
economists, less careful in their formal logic, but more impressed by the
facts of social life and by the exigencies of getting a working set of
concepts, have assumed and used the quantitative concept, with satisfactory
results so far as practical problems are concerned, but without fundamental
theoretical consistency. The elements which the abstract theories suppress
persist, under the guise of economic value itself, in the facts of life,
and take their vengeance on the theory by forcing it into a circle. Our
problem, then, is not to find out certain elements out of which to
construct social value by a synthesis. The proper procedure will be the
reverse of that: to take social value as we find it--i.e., as it
_functions_ in economic life,--and then to analyze it, picking out certain
prominent and significant phases, or moments, in it, which, taken
abstractly, are not the whole story, but which furnish the criteria of
social value, and control over which is significant for the purpose of
controlling social values.
In subsequent chapters, we shall, carrying out this plan, try to put
concrete meaning into our abstract formulation of the problem.
FOOTNOTES:
[144] _Op. cit._, p. 17.
[145] _Cf._ Royce, J., _The World and the Individual_, New York, 1901, vol.
I, pp. 209-10, and 225.
[146] I may refer here particularly to Durkheim, _De la division du travail
social_, Paris, 1893. In giving this reference, of course, I do not commit
myself to the "mediaeval realism" of which Durkheim has been, perhaps
justly, accused. _Cf._, also, Professor Ross's admirable _Social Control_.
[147] _Cf._ Ely, _Outlines of Economics_, 1908 ed., pp. 99-100, and Tarde,
_Psychologie Economique_, vol. I, p. 85, n. See _supra_, chap. II.
[148] _Cf._ Wieser, _Natural Value_, pp. 65, 162-63, 210-12, and 36; Flux,
_Economic Principles_, chap. II.
[149] _Quintessence of Socialism_, London, 1898, pp. 55-59, 91 _et seq._,
123-24.
[150] I take pleasure in availing myself of the privilege which Professor
W. A. Scott, of the University of Wisconsin, accords me, of quoting him to
the effect that "such a conception of value [a value concept which makes
the value of a commodity a quantity, socially valid, regardless of the
individual holder of the coin or the commodity, and regardless of the
particular exchange ratio into which the value quantity enters as a term]
is absolutely essential to the working-out of economic problems." Professor
Scott has been driven to this conclusion in the course of his studies in
the theory of money. Dean Kinley expresses a somewhat similar view in his
_Money_, p. 62. It is, of course, in the theory of money that the need for
such a concept makes itself most acutely felt. But the same view is
expressed by Professor T. S. Adams, from the standpoint of the
statistician. See his article, "Index Numbers and the Standard of Value,"
_Jour. of Pol. Econ._, vol. X, 1901-02, pp. 11 and 18-19.
[151] Even Professor H. J. Davenport finds a quantitative value concept
necessary in places. For example, on page 573 of his _Value and
Distribution_, he speaks of capital, considered as a cost concept, as
standing "for the total invested fund of value, inclusive of all
instrumental values, and of all the general purchasing power devoted to the
gain-seeking enterprise." It might be unkind to remind him of his
definition of value on page 569, and ask him what a "fund" of "ratio of
exchange" might mean! And the notion of value as a quantity, instead of a
ratio, is involved, as indicated in the text, in the term, "purchasing
power," which he also uses in the passage quoted. This term, "purchasing
power," as apparently a substitute for value, Professor Davenport uses in
several instances, where the ratio notion clearly will not work: on page
561, "distribution of purchasing power," page 562, "redistribution of
purchasing power," and page 571. I say "apparently," for I do not think
Professor Davenport anywhere in the volume gives a formal definition of
"purchasing power."
[152] "Grundzuege," etc., Conrad's _Jahrbuecher_, 1886, pp. 5 and 478, n.
[153] This line of argument, drawn from the usage of the economists in the
treatment of other terms, and in the handling of problems, might be almost
indefinitely expanded. Almost everybody has a quantitative value concept in
mind when he is reasoning about practical problems. The trouble comes only
when a value theory has to be constructed! _Cf._ the discussion of
production as the "creation of utilities," _infra_ chap. XVIII.