FOOTNOTES:
[163] See chaps. vi and vii, supra.
[164] Bk. ii, chap. vi.
[165] Cf. Davenport, op. cit., p. 560. "For, in truth, not merely the distribution of the landed and other instrumental, income-commanding wealth in society, but also the distribution of general purchasing power ... are, at any moment in society, to be explained only by appeal to a long and complex history [italics mine], a distribution resting, no doubt, in part upon technological value productivity, past or present, but in part also tracing back to bad institutions of property rights and inheritance, to bad taxation, to class privileges, to stock-exchange manipulation ... and, as well, to every sort of vested right in iniquity.... But there being no apparent method of bringing this class of facts within the orderly sequences of economic law, we shall—perhaps—do well to dismiss them from our discussion...." [Italics are mine.] It may be questioned if the "orderly sequence" is worth very much if it ignore facts so decisive as these. It is precisely this sort of abstractionism which has vitiated so much of value theory. Most economists slur over the omissions; Professor Davenport, seeing clearly and speaking frankly, makes the extent of the abstraction clear. I venture to suggest that the reason he can find no place for facts like these within the orderly sequence of his economic theory is that he lacks an adequate sociological theory at the basis of his economic theory. A historical regressus will not, of course, fit in in any logical manner with a synthetic theory which tries to construct an existing situation out of existing elements. Our plan of a logical analysis of existing psychic forces makes it possible to treat these facts which have come to us from the past, not as facts of different nature from the "utilities" with which the value theorists have dealt, but rather as fluid psychic forces, of the same nature, and in the same system, as those "utilities."
[166] I do not, of course, mean to question the immense light which history throws upon the nature of existing social forces.
[167] Wieser, op. cit., pp. 79-80.
[168] Ibid., p. 62.
[169] Pol. Econ., 1888 edition, p. 5.
[170] Principles, bk. II, chap. I.
[171] Professor Clark seems to desire to exclude all phases of social life except the "pure economic," from his static conception, as indicated by the footnote which follows, taken from page 76 of his Distribution of Wealth: "The statement made in the foregoing chapters that a static state excludes true entrepreneurs' profits does not deny that a legal monopoly might secure to an entrepreneur a profit that would be as permanent as the law that should create it—and that, too, in a social condition which, at first glance, might appear to be static. The agents, labor and capital, would be prevented from moving into the favored industry, though economic forces, if they had been left unhindered, would have caused them to move to it. This condition, however, is not a true static state, as it has here been defined. Such a genuine static state has been likened to that of a body of tranquil water, which is held motionless solely by an equilibrium of forces. It is not frozen into fixity; but as each particle is impelled in all directions by the same amounts of force, it retains a fixed position. There is a perfect fluidity, but no flow; and in like manner the industrial groups are in a truly static state when the industrial agents, labor and capital, show a perfect mobility, but no motion. A legal monopoly destroys at a certain point this mobility [so would a law forbidding the manufacture of, say, opium or liquor, or any law or moral force that prevents the individual's using his labor and capital in the manner most advantageous to himself regardless of public consequences], and is to be treated as an element of obstruction or of friction that is so powerful as not merely to retard a movement that an economic force, if unhindered, would cause, but to prevent the movement altogether." This would seem to leave economic forces working in vacuo in Professor Clark's static state—if "unhindered" is to be taken literally. It is probably a juster interpretation, however, to hold that Professor Clark has in mind a constant legal situation, in which absolutely free competition is assured by law. But even in his scheme for an economic dynamics, there is no place for legal or ethical changes. There are five general sets of dynamic changes which Professor Clark mentions, whose operation is to constitute the subject matter of economic dynamics. They are (Essentials, p. 131, and Distribution, pp. 56 et seq.): (1) population increases; (2) capital increases; (3) methods of production change; (4) new modes of organizing industry come into vogue; (5) the wants of men change and multiply. These five categories are all, primarily, at least, economic in character. While legal and ethical changes would doubtless influence them, they certainly cannot comprehend the full influence of these legal and ethical changes, especially those affecting the ranking of men, and the distribution of wealth. There seems to be a marked difference between Professor Clark's point of view in his Distribution of Wealth and that of his earlier Philosophy of Wealth, and I must confess my preference for the earlier point of view. In saying this, of course, I am far from impeaching the masterly economic analysis which the later book contains—rather, I join heartily in the general estimate which counts that book as of altogether epoch-marking significance. My point is, rather, as will be indicated more fully in the chapters on the relation between value-theory and price-theory, that the presuppositions and significance of such a study as Professor Clark's need clarification and interpretation in the light of a theory of value which takes account of the rich complexity of social life.
Professor Joseph Schumpeter, of Vienna, carries out economic abstractionism to its logical limits, both in "statics" and in "dynamics." For an estimate of his statics, vide Professor Alvin S. Johnson's review of Schumpeter's Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (Leipzig, 1908), in the Journal of Political Economy, 1909, pp. 363 et seq. His dynamics is also to be "reinwirtschaftlich." An essay in economic dynamics, the introduction to which sets forth his general point of view, appears in the Austrian Zeitschrift für Volkswirtschaft, etc., 1910, under the title, "Das Wesen der Wirtschaftskrisen." In this Professor Schumpeter narrows, by a process of exclusion, the conception of what would constitute a "pure economic" explanation of crises virtually to a pinpoint—and then fails to carry out his program of giving us a "reinwirtschaftlich" theory. For, in order to get any periodicity into his economic movement, he is obliged to bring in, from the field of sociological theory, the factor of imitation—he does not use the term, imitation, though he does use the verb, "kopieren." (Vide esp. pp. 298-99.) Professor Schumpeter very explicitly recognizes the existence of factors other than the "reinwirtschaftlich," but counts them as "external" factors.
[172] Cf. Professor Marshall's discussions in his sections on economic law and method, and Professor Davenport's classification of the factors in the economic environment (Value and Distribution, pp. 514-15).
[173] The danger of the abstract individualistic study, from the entrepreneur's viewpoint—a useful enough method within limits—is well illustrated by Professor Davenport's contention that "men as employees are passive facts, mere agents under the direction of managing producers, and are therefore only potentially directing forces. The problem of production and of marginalship is, accordingly, an entrepreneur problem." (Op. cit., p. 279, n.) This is set forth as a limitation on the doctrine, stated in the paragraph which precedes it, that "man is to be conceived as the subject and centre of economic science, etc." Surely Professor Davenport's contention is an impossible abstraction from the rich facts of social control. The managing entrepreneur knows better, when he deals with union rules and walking delegates. And the economist, tracing the subtler forces that underlie values, and so motivate the direction of industry, should know more, rather than less, than the entrepreneur.
[174] Principles, 1905 ed., pp. 147 et seq.
CHAPTER XIV
ECONOMIC SOCIAL VALUE (continued)
Back to the concrete whole, then, of social-mental life. The abstract elements with which the Austrians and the pain-abstinence cost school undertook to solve the value problem, have their place in this whole. The "utility" of goods to individuals, growing out of the nature of their wants, depends very largely on social causes. Mode,[175] fashion, custom—how powerfully they mould our wants. And individual "cost," likewise: a university athlete could dig a ditch far more easily, so far as bodily pain is concerned, than could an aged negro, and yet would suffer much more in doing it than would the negro. A social standard would bring a feeling of shame to him which the negro would not share. If we abstract from the concrete forms which individual wants and "costs" take, and define them in their lowest physical terms, we might leave out a social reference. But men do not desire raw meat, and the skins of beasts, and caves in which to live. Their food they wish to eat in accordance with the conventions of their class, and of a sort that their fellows eat, their water, of late, they wish free from germs, their houses and clothing must be "in style,"—facts well enough recognized, though not in themselves enough for a theory of "social value." These individual "utilities" and "costs" have little meaning till we know the social ranking of the men who feel them, till we know how much the men who have them count for in the scale of fundamental human values. And their effect on "supply price" and "demand price"—the money measures of infinitely complex social forces, to which the entrepreneur immediately looks for his "cue"—has absolutely no constant relation to their intensity. The wants of slaves may count for little. The utterly unattractive and inefficient man may starve. The gilded parasite of a prerevolutionary French monarch may command untold resources, while the useful and productive millions may barely exist. On the other hand, with a changed set of legal and moral values, we may have men of social influence and power striving constantly to increase the incomes and relieve the sufferings of the poor and helpless. Our legislatures may be busy with laws shortening the hours of all labor, laws prohibiting child labor, laws restricting the labor of women, laws for the protection of miners, laws relating to the conditions of pay for labor and to compensation for accidents—which promptly reflect themselves in the values of the goods produced in the industries affected, and in the increased values—through increased "demand"—of the goods consumed by these classes.
The ideal of "no pay without function" may attain—as I think it is to-day attaining—a value of increasing power. And it may lead men to strive for the abolition of monopoly incomes, and the correction of the gross inequalities in the distribution of wealth. If it do not succeed—and it does not by any means succeed—it is because opposing values check it. At any given moment, there is an equilibrium, usually unstable, between the forces tending to correct, and to perpetuate, these inequalities. And it need not be an evil force that is the real obstacle to the realization of greater justice in distribution. The legal value of private property—one of those social "absolute values" which do not readily lend themselves to the "marginal process"—checks at an early stage many of our well-meant, but badly planned, efforts at justice. Glad as most of us would be to deprive plutocratic pirates of what they have not earned, we still do not care to upset the fundamentals of our social system in the process. But the conflict between these values brings them both into clearer light. We see, and feel, the significance, the "presuppositions," the "funded meanings," of each. And while, for the present, there is a "mechanical haul and strain" between them, which, if no more light comes, may ultimately lead to the triumph of one and the complete defeat of the other, still, we may hope to get a result like that which often comes in the case of conflicts between values in the individual psychology—a fuller appreciation of the significance of both values, which will get us away from the "absoluteness" of each, and effect a marginal equilibrium between them, or, perhaps, get a new value which will comprehend them both. Of course, the thing is not so simple as this. It is not a conflict simply between two values, both of which the same man may "participate" in. Our plutocrats are also parts of the social will. They count! The economic value they control may bribe lawmakers, may corrupt judges, may seduce writers and preachers and teachers and others who have to do with the making of public sentiment and the shaping of social values. And, in subtler ways, through the social prestige which their mere wealth too often gives, through the ideals which they themselves honestly feel, and communicate to those about them, do they create values opposing the values making for a juster distribution of wealth. Infinitely complex is the situation, many and varied are the values, which reinforce each other, oppose each other, and come into equilibrium with each other, in a given moment in the social will.
Older egoistic theories of political economy, which assumed perfect freedom of competition, and gloried in the "harmonies" which result therefrom, whereby the interests of the individuals and of society converge, and the maximum of social welfare is attained by the individual's attaining his own interests—these theories have been much attacked of late by those who accept the premise of egoism, but reject the premise of freedom. To them economic "friction" means simply an opportunity for the strong to prey upon the weak, and the social outlook is gloomy indeed. The harmonies are shattered and gone. If we reject the other premise also, however, as necessarily a dominant principle, the outlook is changed or may be changed. It is true that there are ignorance, helplessness, and passions among men, and that wolves prey. But it is also true that there are forces of righteousness alert and militant in the world, not merely in the pulpit and cloister and missionary field. And the struggle between these contending forces is pregnant with implications for value theory. An astute corporation lawyer argues before a court; an honest attorney-general defends the rights of the people; and the ticker on 'Change records whether right or wrong has prevailed. Prices are big with the moral tidings they would speak—shall we read in them only mathematical ratios between quantities of physical objects?
It is by turning, then, to the concrete whole of social-mental life, and especially to the moral and legal values of distribution, that we break the circle[176] of our economic values. Economics has failed to profit by the example of the other social sciences here. Ethics has frankly recognized the tremendous import of economic values for ethical values. Jurisprudence has frankly accepted the fact that law grows, in large part, out of economic needs—even though it remains behind the needs of the present economic situation. But economic theory has sought to make itself too much a thing apart, to isolate its phenomena from other phases of social life, and has busied itself exclusively with "utility" and "cost" and "prices," and the like. And where the economist has consented to consider the relations between his own field and adjacent fields, he has done so with a preconception of the priority of his own phenomena, and his results have been an "economic" interpretation of history, ethics, jurisprudence, etc. That the economic interpretation of the other fields has much to commend it is certain, but it is equally certain that law and morality react on economic values, especially in the higher stages of civilization. This has been so fully and convincingly stated by Professor Seligman, in his Economic Interpretation of History, that I forego further elaboration here. One comment is necessary however: even though we might grant Marx and Buckle that the physical environment and the progress of economic technique are of ultimate ruling significance for the direction of social progress, it is still a far cry from that doctrine to the doctrine that the "utilities" and "costs" directly connected with the production and consumption of economic goods, in the minds of individual men, are an adequate explanation of anything.
Were we interested in ethical and political values for their own sake, it would be easy to show that our conception of the nature of society and of social values has a similar significance for politics and ethics. There is no one distinctive emotion, as fear, or the love of domination, that lies at the basis of the state; there is no one emotion, as sympathy, or the love of pleasure, which constitutes the essence of the moral values, nor is there any single type of mental activity, as imitation, or consciousness of kind, which furnishes the peculiar theme of sociology. Social life is not in water-tight compartments. It is one whole, of which the different sciences study different aspects. And the principle of division of labor among the social sciences is not that one science shall offer one theory of society and another science another theory, but rather, that each science shall take as its problem a phase of society, and explain it by reference to a general set of facts which all have in common. The differentiation comes not in the explanation phenomena[177]—no science has any monopoly on any set of forces which may be used for the purpose of explanation—but in the phenomena to be explained, in the problem phenomena.[178]