THE THEORY OF VALUE AND THE SOCIAL OUTLOOK. SUMMARY
The belief that social optimism and social pessimism are in an essential
way linked with the theory of value is one that finds expression in a good
many writers. The socialist theory of value is supposed to serve as a
condemnation of the existing social _regime_; Professor Clark's system of
value and distribution is often interpreted as justifying an optimistic
outlook. This view is expressed by Professor Frank Fetter, for one, who
especially stresses this aspect of value theory.[215] Professor Joseph
Schumpeter, in his article on social value several times mentioned,[216]
indicates that an optimistic social outlook is a necessary corollary of the
theory of social value. Wieser's objection to the doctrine that economic
value signifies social importance[217] seems to be based on the belief that
the doctrine means, not merely that society is responsible for the existing
value situation, but also that that situation is consequently a just and
righteous one. And the same notion seems to be, in part at least, the
inspiration of Professor Davenport's attack in his recent article in the
_Quarterly Journal_.[218]
It is not necessary to discuss here the question as to whether Professor
Clark means that his theory should be so interpreted.[219] What I wish to
insist upon is that no implication, either optimistic or pessimistic, as to
the existing social order, can be drawn from the theory defended in this
book. Whether or not economic values in particular cases correspond with
ethical values, whether or not goods are ranked on the basis of their
import for the ultimate welfare of society, and the extent to which this is
the case, will depend on the extent to which the ethical forces in society
prevail over the anti-ethical forces. The theory as such is neutral. Assume
our existing society, modified in the one particular that competition shall
henceforth be perfectly free, and still the conclusion does not follow.
Idle sons of our multimillionaires may inherit ill-gotten wealth, may
invest it and draw an endless income from it. With this income to back
their desires, they may make the services of panders worth more than the
services of statesmen and inventors. The values of goods depend on the more
fundamental values of men, even though the values of men, under abstract
economic laws, depend upon the value productivity of their labor or their
possessions. The theory is a theory of economic value, even though the
tremendous influence of ethical and other values be recognized as entering
into economic values. They may be overpowered by opposing forces. The
theory is a general theory, and holds for a decadent as well as for an
improving society; for a society where justice reigns, if such a society
there be, and for a society where corruption is rampant, and wolves prey.
The justification of the existing social order is to be sought
elsewhere--the theory of economic value, as such, does not contain it.
* * * * *
The main steps of our argument may be briefly recapitulated here: Value is
a quantity, socially valid; value is not logically dependent upon exchange,
but is logically antecedent to exchange; a circle in reasoning is involved
if the relative conception of value be treated as ultimate; the Austrian
theory, and the cost theory, and combinations of the two, all fail alike to
lead us to an ultimate quantity of value; they fall into another circle,
that of explaining value in terms of value, if they attempt to do so; the
defect is in the highly abstract nature of the determinants of value which
these theories start from; they abstract the individual mind from its
connection with the social whole, and then abstract from the individual
mind only those emotions which are directly concerned with the consumption
and production of economic goods; this abstraction is necessitated by the
individualistic, subjectivistic conception of society, which, growing out
of the skeptical philosophy of Hume, has dominated economic theory ever
since; present day sociology has rejected this conception of society, and
has reestablished the organic conception of society in psychological
(rather than biological) terms, which make it possible to treat society as
a whole as the source of the values of goods; this does not obviate the
necessity for close analysis, nor does it, in itself, solve the problem,
but it does give us an adequate point of view; the determinants of value
include not only the highly abstract factors which the value theories here
criticized have undertaken to handle arithmetically, but also all the other
volitional factors in the intermental life of men in society--not an
arithmetical synthesis of elements, but an organic whole; legal and ethical
values are especially to be taken into account in a theory of economic
value, particularly those most immediately concerned with distribution; the
theory of value and the theory of prices are to be sharply distinguished.
The function of economic values is the motivation of the economic
activities of society. Value as treated by the cost theories, or value as a
sum of money costs, is a blind thing, a product rather than an end, and
fails utterly as a guiding, motivating principle for economic activity. It
is the merit of the Austrian School to have pointed this out. But the
abstract individual factors which the Austrians have substituted are just
as helpless in explaining the motivation of social activity. Every man's
course is made for him far more by outside forces than by his own
individual motives. Economic activity in society is an intricate, complex
thing, for the motivation of which no individual's motives can suffice. If
motivated at all its guidance comes from something superindividual, and
that something is social value. Ends, aims, purposes, desires, of many men,
mutually interacting and mutually determining each other, modifying,
stimulating, creating each other, take tangible, determinate shape, as
economic values, and the technique of the social economic organization
responds and carries them out.
THE END
FOOTNOTES:
[215] _Principles of Economics_, New York, 1905, pp. 415 _et seq._
[216] "On the Concept of Social Value," _Quar. Jour. Econ._, 1909, pp.
222-23.
[217] _Nat. Val._, p. 52, n. Quoted _supra_, chap. I.
[218] "Social Productivity _vs._ Private Acquisition," _Quar. Jour. Econ._,
Nov., 1910, pp. 112-13. "Economic productivity is not a matter of piety or
merit or deserving, but only of commanding a price. Actors, teachers,
preachers, lawyers, prostitutes, all do things that men are content to pay
for. So wages may be earned by inditing libels against a rival candidate,
or by setting fire to a competitor's refinery, or by sinking spices. The
test of economic activity in a competitive society is the fact of private
gain, irrespective of any ethical criteria, and unconcerned with any social
accountancy.... If whiskey is wealth, distilleries are capital items. If
Peruna is wealth, the kettle in which it is brewed must be accepted as
capital. Then so is the house rented as a dive; and if the house is
productive, and is therefore capital, so, also, must the inmates be
producers according to their kind. The test of social welfare is invalid to
stamp as unproductive any form of wealth, or any kind of labor. If jimmies
are capital, being productive for their purpose, so also is burglary
productive; if sandbags, so highway robbery.... Always and everywhere, in
the competitive _regime_, the test of productivity is competitive gain."
If only my conception of social value is granted, I may safely enough
concede Professor Davenport all the depravity he can find in society, and
recognize that that depravity has its part in the determination of the
concrete values. Only, I would insist, virtue as well as depravity is a
factor in the social will, and plays its role in determining economic
values, and motivating economic activities. Legal values are not "absolute"
values, in the sense that everybody obeys the law, but laws as well as
lawlessness affect economic values.
It may be well at this point for me to make clear my relation to Professor
Davenport. Throughout this book, his theories have been subject to frequent
criticism. The obvious reason is, of course, that he has made himself the
leading critic of the social value concept, and hence, if that concept is
to be defended, his point of view must be met. But, if that were all, he
would have occupied far less of our space than has been the case. The fact
is, in my judgment, that Professor Davenport is one of the commanding
figures in economic theory. I think no economist has even approximated the
clearness and explicitness with which he has set forth the presuppositions
of the view which this book opposes, and that no economist has ever
reasoned more clearly upon the basis of these presuppositions. Professor
Davenport thus presents the very best object of attack, if one is to
justify the social viewpoint in economic theory. My indebtedness to him is
marked, and I have tried to indicate the fact from time to time in notes.
His book has aided me greatly in clarifying my own ideas, and has also
substantially abridged my bibliographical labors. With many of his
criticisms of existing value theory, those criticisms, especially, which
are concerned with the internal logical contradictions of existing value
theory, I am in hearty accord. The chief difference between us at this
point will be, I think, that I try to go further than he has gone. And the
fundamental differences between his view and mine grow out of the different
psychological, philosophical, and sociological presuppositions with which
we start. I feel that the individualistic method of approaching the value
problem is foredoomed, provided it be logically carried out, and I think
Professor Davenport has logically carried it out!
[219] I regret exceedingly that Professor Clark's absence from Columbia
University during the academic year, 1910-11, has prevented my discussing
this, and a host of other questions raised in this book, with him.
INDEX OF NAMES
Adams, T. S., 120, n.
Anaximander, 60.
Anaximenes, 60.
Aristotle, 61, 101.
Austrian School, 7, 8, 16, n., 17, 28, 29, 30, 31, 38, n., 39, 40, 41,
chap. VI, 49, 108, 113, 119, 121, 125, 126, 152, n., 188-89, 192, 197, 198.
Baldwin, M., 15, n., 56, 69, n., 73, 74, n., 75, 80, 84, 95, n., 167.
Berkeley, G., 62.
Boehm-Bawerk, E. von, 7, 29, 31, n., 37-39, 40, 44, n., 49, n., 121,
152, n., 192.
Bradley, F. H., 65, n.
Buckle, H. T., 153.
Bullock, C. J., 4.
Cairnes, J. E., 65, n., 177.
Carey, H. C., 73.
Carver, T. N., 16, 27, n.
Clark, J. B., 3, 4, 5, 6, 7, 8, 13, 16, 30, n., 31-33, 39, chap. VII,
65, 139, n., 143-44, 152, n. 156, 165, 173, 174, 194, 196.
Clow, F. R., 20, n.
Commons, J. R., 157, n.
Comte, A., 73.
Conrad, J., 15, n., 127, n.
Cooley, C. H., 56, 69, n., 77 _et seq._, 84, 157.
Darwin, Charles, 63.
Davenport, H. J., 6, 21, 22, n., 23, 27, n., 37, 41, 42, 66, 71, n., 87-89,
98, 113, n., 121, n., 122, 133, n., 140, n., 142, n., 175, n., 182, 191,
194, 195, n.
DeGreef, G., 72-76.
DesCartes, Rene, 62, 63, 81.
Dewey, J., 65, n., 68, n., 84, n., 95, n., 96, n., 100, 168, n.
Draper, J. W., 72.
Durkheim, E., 117, n.
Edgeworth, F. Y., 25.
Ehrenfels, C., 94, 98, 106, n., 108, n., 110, n., 111, n.
Elwood, C. A., 56, n., 76, n., 84, n.
Ely, R. T., 17, n., 42, 118, n.
English School, 17, 38, n., 47, 121, 164, 165, 166, 188, 192.
Fetter, F., 194.
Fisher, I., 17, 26, n., 43, n.
Flux, A. W., 42, 120, n.
George, Henry, 16.
Giddings, F. H., 75, n., 82, 83.
Goethe, J. W. von, 70.
Gompers, S., 190.
Hadley, A. T., 15, 42.
Hayden, E. A., 56, n.
Hayes, E. C., 155, n.
Hegel, G. W. F., 63.
Hermann, F. B. W. von., 38, n.
Hesiod, 73.
Hobson, J. A., 47, 49.
Hume, David, 62, 63, 198.
Ingram, J. K., 3, n.
James, Wm., 65, n., 68, n., 184, n.
Jevons, W. S., 4, 7, 25, 28, 29, 31, n., 34-36, 39, 40, 41, 42, 65, 73,
176, n.
Johnson, A. S., 140, n.
Kallen, H. M., 94, n.
Kant, Immanuel, 25, 63, 67.
King, Gregory, 169.
Kinley, D., 4, 5, 27, n., 120, n.
Kreibig, J. C., 94, n.
Laughlin, J. L., 20, n., 26, 27, n., 49, n.
Law, John, 171.
Lilienfeld, P. von, 74.
Lloyd, W. F., 176, n.
Locke, John, 62.
Mackenzie, J. S., 111, n.
Malthus, T. R., 139.
Marshall, A., 41, 42, 49, 65, 140, n., 177, 182, 185, n.
Marx, Karl, 3, n., 15, 16, 26, 153.
Meinong, A., 94, 95, n., 98, n., 99, 102, 111, n.
Merriam, L. S., 4, 5, 27, n.
Mill, James, 63, n.
Mill, J. S., 37, 63, n., 74, n., 138, 143, 172, 177, 191.
Montague, W. P., 94, n.
Novikow, J., 74.
Pantaleoni, M., 19, n.
Pareto, V., 3, n., 20, n., 25, 31, n., 34, 36-37, 39, 40, n., 45, n., 65,
154, n.
Patten, S. N., 42, 175.
Paulsen, Friedrich, 69, n., 85, n., 95, n., 97, n.
Perry, R. B., 70, n.
Pierson, N. G., 41.
Plato, 61, 184.
Ricardo, David, 53, n., 175, 176.
Rodbertus, J. K., 3, n., 8, 9.
Ross, E. A., 4, 5, 117, n., 148, n., 173.
Rousseau, J. J., 63.
Royce, J., 117, n.
Santayana, G., 96.
Sax, E., 8.
Schaeffle, A., 42, 120.
Schiller, F. C. S., 68, n.
Schumpeter, J., 6, 140, n., 175, 181, 194.
Scott, W. A., 120, n., 180, n.
Seligman, E. R. A., 4, 5, 6, n., 13, 16, 19, 20, n., 26, 32, n., 87, 145,
153, chap. XVI, 176, n., 177, n., 191.
Senior, N. W., 26.
Shaw, C. C., 95, n.
Simiand, F., 74.
Simmel, G., 19, n., 20, n., 94, n., 95.
Skelton, O. D., 15, n.
Slater, T., 95, n.
Small, A. W., 63, n.
Smith, Adam, 63, 176.
Socrates, 61.
Sophists, 60.
Spencer, Herbert, 72, 83.
Spinoza, Benedict de, 62, 63.
Stuart, H. W., 68, n., 95, n., 168, n.
Tarde, G., 4, 16, 56, 95, 97, n., 103, 118, n., chap. XII, 148, n.,
172, 179.
Taylor, W. G. L., 16, n., 23.
Thackeray, W. M., 66.
Thales, 60.
Tufts, J. H., 95, n.
Tuttle, C. A., 4.
Urban, W. M., 70, n., 95, 97, n., 98, n., 99, 101, n., 103, 108, n., 110,
n., 116, chap. XII, 167, n.
Veblen, T., 30, n., 65.
Wagner, Adolph, 3, n., 9.
Walker, F. A., 25, 26, 137.
Wicksteed, P. H., 111, n., 113, n.
Wieser, F. von, 8, 16, 17, 18, 28, 29, 31, n., 34, 35, 40, 46, 47, 49, n.,
120, n., 132, 133, 136, 137, 143, 190, 194.
Wundt, W., 85, n.
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