In the history of human society, a similar generalization is possible. The human individual is found, not in primitive life, but late in the scale of social evolution. Individuality is a social product. The savage is not a free, self-conscious person, who can set himself off against the group, and feel himself an isolated centre of power. His life is wrapped up in the group life. In the great barbarian states like Ancient Egypt or China, the life of the individual was so controlled by social tradition, and innovation was so ruthlessly crushed out that individuality had little scope. Greece and Judea gave larger scope to individual variation, but the individual still felt himself bound up with his group, and was stoned, given hemlock, or crucified if he challenged the existing social order too seriously. The break-up of the Greek city states, as independent sovereignties, and their subjection to the universal sway of Rome, made it possible for the cultured Greek to set himself up in opposition to the State; the coming of Christianity, substituting personal relations with deity, for the communal worship which had preceded it, gave the individual a vital interest apart from the life of the group about him, so that he could still further feel independent of his immediate social environment. The development by the Roman lawyers of the Jus Gentium, the law which is common to all nations as distinguished from the particular law of a given group, emphasized the doctrine of the Christian religion and of the Stoic philosophy of a humanity which transcends the limits of a given state,[22]—a notion which tended to free the individual from dependence on his immediate associates. But note that in all this we have merely a widening and multiplying of social relationships, and that the individual gains freedom from one set of social relationships only by coming into others. The Christian gains freedom from his immediate surroundings because he feels himself in communion with "angels and archangels and all the glorious company of Heaven." Francis Bacon could survive his degradation in the England of his day because he could leave his "name and memory ... to foreign nations and to the next age."

Bagehot, in his Physics and Politics, Tarde, and Baldwin, to name no others,[23] have shown how tremendously responsive human beings are to suggestion, how wide is the sway of imitation in human life, how fashion, mode, custom, etc., make and mold the individual. Cooley,[24] with an improved psychology, has amplified the analysis, tracing the development of the individual mind in interaction with the minds of those about him, making still clearer the sweep and pervasiveness of social factors in framing the very self of the individual. In what follows, I assume the results of these investigations. They constitute the starting point from which we set out on the quest of a theory of economic value.

So much for the individual. He is a social product. But what of society? Objective, external, constraining and impelling forces, which are not physical, which are seemingly not the products of the will of other individuals with whom the individual holds converse, meet the individual on every hand. There is the Moral Law, sacred and majestic, which stands above him, demanding the sacrifice of many of his impulses and desires. There is the Law, external to him and to his fellows, in seeming, failure to obey which may ruin his life. There is Public Opinion, which presents itself to him as an opaque, impersonal force, before which he must bow, and which he feels quite powerless to change. There are Economic Values ruling in the market place, directing industry in its changing from one sort of production to another, bringing prosperity to one individual and bankruptcy to another, not with the caprice of an individual will, but with the remorseless impersonality of wind and tide. He who conforms to them, who anticipates their mutations, gains great wealth—but no business man dare set his personal values against them. There are great Institutions, Church and State and Courts and Professions and giant Corporations and Political Parties, and multitudinous other less formal or smaller institutions, which go on in continuous life, though the men who act within them pass and change. Their Life seems an independent life, and the individual who tries to change their course finds that his efforts mean little indeed, as a rule. There is a realm of Social Objectivity, a realm of organization, activity, purpose and power, not physical in character, not mechanical in nature, which is set in opposition to individual will, purpose, power, and activity. How is the individual related to this objective social world?

Three main types of theory have sought to answer this question. On the one hand, there is a type of theory, doubtless the oldest type, a type which arises easily in a period when social changes are slow, which sees in the objective social world something really separate and distinct from individual life, having a non-human origin, and deriving its power from something other than the human will. On the other hand, there is an extreme individualism, which emphasizes individual separateness, which posits as a datum the individuality which we have seen to be a social product, and thinks of the objective social realm as a mere mechanical, mathematical summing up of individual factors, or as a something which individuals have consciously made, by contract or agreement, or what not. Finally, there is a type of theory, to which the present writer would adhere, which finds a false antithesis in the contrast thus sharply made between society and individual, which holds that the individual is not, in his psychological activity, so much set off from the activities of his fellows as the contrast would indicate, but rather shares in the give and take of a larger mental life. This larger mental life is completely accounted for when all the individuals are completely accounted for, but it cannot be accounted for by considering the individuals separately. No individual is completely, or primarily, accounted for until his relations to the rest of the group are analyzed. Thinkers who start out with the individuals separately conceived, and then seek to combine them in some arithmetical way, abstract from those organic social relations which constitute the very heart of the phenomenon we are seeking to explain. The parts are in the whole, but the whole is not the sum of the parts. The relationships are not arithmetical, additive, mechanical, but are vital and organic. Men's minds function together, in an organic unity.[25]

The first two of these types of theory (perhaps because individuals are physically sharply marked off from one another, and go on in biological functioning in obvious separateness) have falsely accentuated the self-dependence and separateness of individual minds. The second type of theory, which has sought to work out the whole thing on the basis of this false conception of the individual, has largely failed to see the objective social realities, or has, with methodological rigor, denied their existence. This second type of thinking has especially characterized a good deal of economic theory, which rests on the philosophy and psychology of David Hume.[26] We will set our doctrine in clearer light if we contrast three parallel types of theory which have appeared with reference to the nature of morality, of law, and of economic value. For each of these phenomena, we have theories which represent all three of the types of social thinking to which we have referred.

In the theory of morals, we have, at one extreme, doctrines like those of Kant and Fichte, according to whom morality is a matter of obligation, independent of the human will, independent of consequences, inherent in the nature of things. Man's mind can find out what the moral law is, but man's mind has nothing to do with the making of the moral law. The same notion is involved in the ideas of "natural rights," "justice though the heavens fall," and the like. The conception is strikingly brought out in the question about which old theologians sometimes debated: is Right right because God enjoins it, or does God enjoin Right because it is Right? Whether or not Right is supreme over God, these old theologians never questioned that Right is supreme over all human wishes and desires, and in no sense an outcome of them. At the other extreme, we have the moral doctrine of the Sophists, for whom each man's will was right for him—a doctrine which reappears in every individualistic and anarchistic age. For this doctrine, there are no valid social standards of right and wrong. There is nothing binding on the moral agent but his own will. In between, is the moral doctrine of such thinkers as Friedrich Paulsen, or John Dewey, who represent the reigning type of moral theory to-day. For them, morality is a purely human matter. It grows out of the needs and interests of men. What is good at one time and place is not necessarily good at another time and place. There are no immutable moral principles, valid throughout the ages. None the less, morality is not a private matter, about which men may do as they please. Morality is the product of an organic society, the product of the interplay of many minds. To a given individual, the moral law is, indeed, an external constraining and impelling force. It is the will of the rest of the group. It may be his own will too, but if it is not, it overrides his personal preference, He, on the other hand, is part of the group which constrains and guides every other individual. There are, in fact, many sets of moral values: on the one hand, the social moral values par excellence, which the group will enforce in various ways; and then, for each individual, his own moral values, which may correspond qualitatively more or less with the group values, or may antagonize them. But the Moral Law is the will of the group. It is no simple composite of the moral values of individuals. It has its organic interrelations with all phases of social life. Economic changes modify it, legal changes modify it, religious values modify it, all phases of social life are expressed in it.

In legal theory, we find these three types of doctrine also. The first type is clearly indicated in the general attitude of American and English courts, especially toward the common law, though it influences their interpretation of all law. The law is something which the mind of man may find out, but may not make. If a new situation arises, the court "finds" the law—in theory the principle "discovered" by the court was in the common law at the beginning. Of course, we know that the judge invents the rule he makes, to fit a novel case, but the judge himself will not admit it. The theory of the law and the theory of morality have developed in close connection, and the notion of "natural right" is a juristic as well as a moral idea. At the other extreme, we have from certain recent students of law the doctrine that "The Law" is a myth, that there is nothing but the particular opinion of a particular judge at a particular time. Individualism cannot go so far in legal theory as to give every individual in society a chance to put his oar in, and have a separate law for himself! The social and institutional character of law is too obvious to permit that. But individualism has gone so far in legal theory as to deny all objectivity to law except in a given decision in a particular case. In between these two extreme views, appear the views of writers like Savigny, or Professor Munroe Smith, for whom the law is a changing product of social psychology, volitional[27] rather than intellectual in character, objective enough to the individual who violates it, or the judge who seeks to pervert it, but none the less not outside the minds and interests of men. In Professor Munroe Smith's phrase, law is "that part of the social order which by virtue of the social will may be supported by physical force."[28] I venture to describe this type of legal theory as the "social value" theory of the law. In the chapter on "The Reconciliation of Statics and Dynamics," infra, I have cited certain opinions of Mr. Justice Holmes which apply it, and even bring into it the notions of the marginal analysis.

There are, similarly, three types of economic theory. At the one extreme we have theories of "intrinsic" value, which would place economic value outside the wills of men. The mediæval discussions of "just price" often illustrate this notion. It creeps not infrequently into judicial opinions,—to which such notions are essentially congenial! The working economist of our own day has found little use for it, but in periods when economic change was slow it suggested itself not unnaturally to men, as an explanation of the seeming impersonality of market phenomena, and as a practical idea for combatting extortion and injustice. Something of the idea is involved in a sentence of Shakspere's:[29]

"But value dwells not in particular will;
It holds his estimate and dignity
As well wherein 'tis precious of itself
As in the prizer."

At the opposite extreme would be those economists, as Professor Davenport and Jevons, who find no value for a good except in the minds of individual men, so that there may be as many different values as there are different men. That something social and objective exists in the market place can hardly be denied, but when pressed for an account of it, these writers reduce it to a bare, abstract, mathematical ratio.[30] Each individual mind is shut up within its own limits, inscrutable to other minds, and there can be no psychological phenomena which include activities in many minds, for this view. In between these two extremes, is the social value theory of the present writer. Economic value is not intrinsic in goods, independent of the minds of men. But it is a fact which is in large degree independent of the mind of any given man. To a given individual in the market, the economic value of a good is a fact as external, as objective, as opaque and stubborn, as is the weight of the object, or the law against murder. There are individual values, marginal utilities, of goods which may differ in magnitude and in quality from man to man, but there is, over and above these, influenced by them in part, influencing them much more than they influence it, a social value for each commodity, a product of a complex social psychology, which includes the individual values, but includes very much more as well. Our theory puts law, moral values, and economic values in the same general class, species of the genus, social value, alike in their psychological "stuff" and character, to be explained by the same general principles, even though differentiated in their functions, and in the extent to which they depend on various factors in the social situation. They are parts of a social system of motivation and control. They are the social forces, which govern, in a social scheme, the actions of men.