THE SCALE OF VALUE
If the cause of any good having value is that the satisfaction of some
want is dependent upon it, the degree or amount of value must, one
would imagine, be measured by the importance of the dependent want;
that is to say, by the amount of wellbeing its satisfaction conditions.
But here most people will hesitate. They would, probably, be willing to
admit that utility is, in a general way, the cause of value, or, like
Ricardo, that utility is “absolutely essential to exchangeable value.”
But they are shaken in this belief when they remember that things which
seem to be of great utility, like salt, are little valued, while things
of little utility, like diamonds, are very highly valued, and are told
that it is this contradiction which led to the distinction between
“value in use” and “value in exchange”—practically to the abandonment
of the former.
We have here a heritage from our earlier economic science. Old
classifications are more easily dismissed than got rid of; and it
may not be wasted time to point out in this chapter how Adam Smith
hopelessly confused utility and value by the introduction of the
hermaphrodite “use-value.”
We have already defined the economically Useful as that which is
capable of satisfying the want of man. If utility, then, is relative to
human want, it would seem that, before pronouncing on what has great
and what has little utility, we must classify the various wants, and
arrange them on some sort of scale. The familiar expression, however,
“One man’s meat is another man’s poison,” might be taken as a text
to show the difficulty of classifying wants. There are certain wants
which require periodical or continuous satisfaction, such as the needs
of food and warmth. These wants seem to tie us to the earth, and they
keep us perpetually in mind of our physical limitations. However
high we soar into the regions of spirit, hunger and cold bring us to
earth again; and, if these wants are not satisfied, the animal nature
asserts itself, and we are ready to sell our birthright for a mess of
pottage. Such wants, then, are fundamental and universal—instinctively
we call them “needs.” But there are two very notable circumstances
connected with them. One is that they are limited. More meat than the
body requires clogs the wheels of life; more than a certain amount of
clothes is a burden. The other is that these fundamental and limited
wants are precisely the ones for which nature makes the most abundant
provision. There must be many millions of people who have never known
what hunger is except by hearsay, nor imagined the torturing cold of a
night on the street.
But, on this simple and, to a certain extent, measurable basis of
necessary, universal, and limited wants, we rear a superstructure of
other kinds of want. Of the distinctively human wants, there are many
that become “necessary” from the individual or social development of
intellectual and spiritual beings. Beyond these, again, there are
innumerable desires, caprices, and follies. These, however, are not
in the least limited in their demands: here “the appetite grows by
what it feeds on.” As civilisation and as wealth progress, not only
does the old circle of want expand, but new wants awaken. This makes
classification of such wants all but impossible. Between the wants of
the savage or the child and those of the educated man or delicately
nurtured woman, there is a long gradation of almost infinite fineness.
How are we to put in one category the hunger and thirst which are
satisfied, among members of one class, by bacon and beer, and, among
members of another class, by stately dinners and rare vintages; or
the “love of dress,” which in one sphere demands “a black silk and a
gold brooch,” in another, diamonds and old lace? Yet the fact that
goods may be purchased at prices from a farthing upwards, proves that
the community _has_ classified its wants in some sort of way. We find
exchange existing in all communities, even the simplest, and exchange
presupposes that we have already arranged our wants on a scale, and
said that the satisfaction of such and such wants confers a high value
on the goods which satisfy them, and the satisfaction of such and such
a low value. What is the principle of this scale?
Adam Smith, and all who have followed him in paraphrasing his text “a
diamond has scarce any value in use,” certainly referred to a scale
of wants, and considered this scale so important, and so universally
recognised, that they had to separate off the value measured by it
(use value) from the value measured by money or barter (exchange
value). But they did so instinctively, and, if we inquire what this
scale is, we have some difficulty in translating the instinctive
expression.
There is a rough, but sometimes convenient, division of goods
into Necessaries, Comforts, and Luxuries. Corresponding with this
classification of goods, we might consider the physical needs satisfied
by “necessaries” as the most important; and in the first rank of
utilities, therefore, we should put goods necessary to sustain life,
such as food, clothes, shelter. Next would come health and fulness of
life, and in the second rank of utilities we should put good food,
good clothes, good shelter. Last we should put the refinements or
the artificial appetites of life, and, corresponding with these, we
should have music and pictures, liquor, tobacco, and so on. It is easy
to see that the sanction or principle of this scale is a negative
one. It is not based on the satisfaction we get from goods, but on
the consequences which will ensue to our lives if these wants go
unsatisfied. Food is in the first rank of goods, because here death
follows unsatisfied need. Tobacco is in a subordinate place, because
the want of it causes, at worst, discomfort. And diamonds come in the
lowest rank of useful goods because the loss of them involves a quite
trifling loss of wellbeing. Here is a scale of wants with a definite
enough principle.
But it is a scale adapted to circumstances so simple as to have no
resemblance to any known form of society. Possibly the economists’
favourite classic, Robinson Crusoe, has had something to do with the
making of it. Certainly there never was a people who divided out
their labour to satisfy successively the wants of such a scale, not
producing anything for fulness of life till all had the necessaries,
nor anything for pleasure till all had the necessaries of efficiency.
Such a division of labour would evidence a higher level of reason and
self-restraint than our communities have reached, since it would be
founded on a deliberate theory of social life. The very suggestion that
the loss of diamonds is “trifling” would justify the reproach one has
sometimes to bear, that “it is well seen political economy was written
by men!” The fact remains that this is nobody’s scale: the poorest
savage, the worst paid mill-girl, the most refined woman, will put
ornament only second to bare necessaries.
Yet it seems that it must have been a scale something like this by
which the older economists measured utility. In the interpretation
they gave to “use value,” they assumed that utility is relative to
mere physical life. Those who speak of diamonds having no use-value,
and of food as having infinite use-value, must be drawing their ideas,
not from the life of men but from the life of cattle. It is possible
to draw out a scientific catalogue of what things and amounts and
conditions will put a sheep or bullock into the best condition for
the market, just as it is possible to consider the human labourer as
a force of so many foot-pounds. But the economic end of the sheep
is—mutton, while the economic end of labour is—the labourer. That is to
say, the “life” by which economists, as distinguished from butchers,
must measure utility, is the life of a spiritual being for whom and
towards whom all economic effort exists. To such a being, it is
inconceivable that bread should have the highest use-value and diamonds
none at all.
Compared with this purely theoretical scale, let us inquire of facts as
to the scale which men in ordinary life adopt as regards goods.
Consciously or unconsciously, every man whose means or wealth or
resources are more limited than his wants—and this is, practically, the
case with human beings generally—has a scale of wants in his mind when
he arranges his expenditure. On the basis of this scale, he satisfies
what are his more urgent wants, and leaves the less urgent unsatisfied.
But which are the more urgent wants on his scale? Are they determined
by anything like the classification just mentioned? If so, how is it
that a tramp with sixpence in his pocket will spend threepence on a bed
in a lodging house, a penny on bread, and twopence on tobacco?
This by itself is sufficient to show that Adam Smith’s graduation of
wants is quite misleading in the present connection. When we ask about
the “degree” or “urgency” of any individual want, we get no information
by determining to what class or kind it belongs—whether, for instance,
it is the need for a necessary or the desire for a luxury. The craving
for food, as has been suggested, belongs so conspicuously to the
first class of wants, that we do not so often speak of “wants” of
subsistence, as of “needs” of subsistence. The desire for liquor,
again, some people would scarcely dignify by the name of “want” at
all. Yet many people will attach as much importance to the one as to
the other. If we are to judge by his expenditure, the working man may
graduate his wants thus: bread, house room, liquor, tea, tobacco,
clothes, meat; while a rich man may spend more on his horses than
he does on his house, and his grocer’s bill may be less than his
florist’s. The fact seems to be that, with the scale of wants which
each man makes for himself, the graduation by classes or kinds has very
little to do. From the consideration already pointed out, that certain
wants are fundamental, necessary, and universal, the class must,
indeed, have something to do with it, but the other two considerations,
the limited nature of these wants and the abundance of provision for
them in most communities, throw the consideration of necessity quite
into the background.
There is one case, however, where Adam Smith’s scale comes nearly
true;—where the income is just sufficient, and no more, to cover the
barest wants of man as a living being. If a seamstress has to sustain
life on a shilling a day, she will take care to dispose of the shilling
in such a way that she spends on food just enough to keep life in, on
clothes, enough to keep her warm, while the meanest roof that will keep
out the rain will satisfy her “want of shelter.” And, in proportion as
we approximate to this direst poverty, will the class have more to do
with the scale. Even the seamstress, however, will probably “jump” the
class of comforts, and spend her last penny on the highest concrete
want among the luxuries of the poor, tea.
This was the first mistake made by the older economists in the matter:
it based “use-value” on a false or, at least, an unduly limited,
conception of utility. The second—and more subtle—was in keeping no
clear distinction between this utility and the so-called “use-value.”
For want of this distinction, it was overlooked that, in the relation
between wants and goods in which value emerges, the _supply_ of goods
plays a part. Value emerges when a good becomes the condition of a
satisfaction; it is conferred by the dependence of a _felt_ want,
not of a _possible_ one. Hunger, for instance,—understanding by that
the overmastering craving which puts all other feelings into the
background—is not a felt want if food lies around like the manna on
the Israelites’ plain. The nearer we get to making any object of want
similar to a gift of nature, the less value has that object—not that
its capability of use is any less, but that the abundance of supply has
abolished the relation of _dependence_. A want never felt, would, of
course, not be a want at all. But a trifling want unsupplied attains an
importance for wellbeing which elevates it into a cause of value. Now,
in the case of goods adapted to satisfy the necessary and universal
wants of mankind, as no man can escape from these wants, there is
always a large and steady market for these goods, and we call them
“necessaries.” Wherever we have such a market in economic life, we may
be sure that the brains of men and the resources of nature have been
taxed to the utmost to make the supply abundant and cheap. Hence the
tendency of economic progress is to assure the satisfaction of these
fundamental and limited wants; in proportion as this is done, do men
escape from that dependence which gives value: and thus many goods
tend to come nearer to the free gifts of nature—their value falls and
falls. The old theory, then, in taking hunger as the type of the most
urgent want, was not dealing with wants, but with _possibilities_
of want. Want is, at bottom, a feeling of incompleteness. It may
indicate something wanting to our physical organism which, if entirely
unsupplied, will cause death. But if a few mouthfuls be sufficient to
make this want disappear for the moment, and if there be no probability
of these mouthfuls ever being absent, we have been too hasty in giving
it the highest rank among human wants. To consider food as having
the highest use value because the want of food means death, is like
estimating the greatness of a danger by the loss of life which it
might cause, without considering the precautions taken to prevent it:
it reminds one of the schoolboy’s proposition, “Pins have saved many
thousands of lives—By people not swallowing them.”
To sum up. In assuming that bread and water had a higher “use-value”
than iron, iron than gold, gold than diamonds, the earlier economists
evidently referred to a theoretical scale of wants which is not
recognised by any man as _his_ scale; and, as they could not ignore
the fact that practical men, in making their valuations, seemed to
put diamonds above gold, gold above iron, and iron above bread, they
had to divide off their so-called “use-value” sharply from the value
which ruled the economical transactions of the world, and to call the
latter “exchange value.” The modern economist says that the phenomenon
of bread possessing little value and diamonds much value, is not in
contradiction with the theory that value depends entirely on utility.
Bread is little thought of, and diamonds much thought of, because,
when all the circumstances are taken into account—the circumstance
of limitation of want and the circumstance of provision for want—the
importance to concrete human want of the one is little, and of the
other is much.
NOTE
The Austrian writers, whose economics are strongly coloured by the
utilitarian psychology, usually put the matter in the following way.
The course of the satisfaction of a want may be represented by a
diminishing scale. Of most wants, material and intellectual alike, it
is true that the pleasure got from the first draught of satisfaction
is the keenest. The complete satisfaction, then, of any want might be
represented by a graduated scale diminishing to zero—beyond zero, the
satisfaction turning into satiety and disgust.
If we combine this scale with the other alluded to in the text—that
which has the negative sanction of loss of wellbeing—we get a scheme
like the following:
I II III IV V VI VII VIII IX X
10
9 9
8 8 8
7 7 7 7
6 6 6 — 6
5 5 5 — 5 5
4 4 4 4 4 4 4
3 3 3 — 3 3 — 3
2 2 2 — 2 2 — 2 2
1 1 1 1 1 1 — 1 1 1
0 0 0 0 0 0 0 0 0 0
Here the Roman figures indicate classes or kinds of wants, the Arabic,
the concrete wants, or part wants, in each class. We thus see at a
glance that, the more important the class, the more important are
the concrete wants that stand highest in the class: that, even in
the highest class, there are concrete wants which are outweighed by
concrete wants of almost every other lower class: and that there are
classes of want, like IV and VII, which are not satisfied gradually, as
in the assuaging of hunger, but where want breaks off at a high level
and does not emerge again till wants of much inferior classes have been
met.
As an illustration, this scheme has a certain value, but it suggests
more objections perhaps than it settles. The division of wants into
kinds or classes, whether the principle of that division be determined
by the nature of the sensations or by the objects which satisfy them,
requires a better psychological basis than has yet been demonstrated.
For instance, a generic want like that called Needs of Subsistence, is
about as vague a conception as could well be imagined. And, again, on
the “calculus of pleasure and pain,” the satisfaction of want generally
involves degrees and levels of physical, intellectual, and æsthetic
feeling which cannot be represented by any such simple diagram. For
these reasons—and also because the theory of value is not accredited
by seeming to rest so much on a utilitarian psychology—I have not
included the _Sättigungscala_ in the text. There are some ingenious and
interesting calculations on the subject in Wieser (_Natürlicher Werth_,
p. 27), which I have added in the Appendix.