It may be well to suggest rough differentiæ which mark off these values from one another. Legal values are social values which will be enforced, if need be, by the organized physical force of the group, through the government. Moral values are social values which the group enforces by approbation and disapprobation, by cold shoulders and ostracism or by honor and praise. Economic values are values which the group enforces under a system of free enterprise, by means of profits and losses, by riches or bankruptcy. The group may, under a communistic or socialistic system, rely in whole or in part upon the machinery of the law; in which case economic values appear not in their own form as immediately guiding production, but as "presuppositions" of some of the legal values.
The differentiation of these types of social value may also run in terms of their functions,[31] though it is not so easy to mark them off here, since their functions overlap. The function of economic values is to guide and control the economic activities of men, to send labor from one industry to another, to cause one sort of thing to be produced or another, to supply the motive force which impels industry. Legal and moral values also directly affect industry, often working to check the results which the economic values alone would lead to—as when the law forbids the production and sale of liquor, or checks child labor, etc. The law, on the other hand, does not, primarily, in its influence on industry, seek positively to determine its direction. The law forbids the production of liquor, but does not decree the production of bread. The law may seek to affect industry positively, by protective tariffs, for example, which aim at the building up of certain industries, but its effects are here indirect, reached through modifications in the economic values. Economic values, on the other hand, do not primarily aim at the regulation of the conduct of men outside the market place, or the shop or the farm, etc. Economic values are not primarily concerned with making men be good husbands or good neighbors, or brave soldiers. Economic values may be used, in part, for these purposes, as when a father-in-law uses his wealth as a lever to make his son-in-law behave—or, indeed, as a bait to get a son-in-law! It is hard to find a phase of social life which is not touched by all types of social values, but it is possible, roughly, to mark off those phases of social life which are subject to primary regulation by one or the other sort of social value.
The differentiation is easier when we look at the social institutions which have to do primarily with the one or the other sort of value. Courts and legislatures are easily marked off from stock exchanges and banking houses. There is not so clearly an institutional nucleus for moral values, since the church has lost its control over the moral situation.
When we view the matter from the standpoint of the objects of value, differentiæ also appear. The main type of object of moral value is modes of conduct; the "type object" of economic value is physical things which men eat, wear, drink, etc., even though quantitatively the major part of the sum total of economic values attach to other things, instrumental goods, lands, labor, and social relations, like franchise rights, good will, which in the main reflect the values of consumers' goods;[32] objects of legal value are in large degree the same as objects of moral value, namely, modes of conduct, but moral values attach to a wider group of objects, and legal values attach to certain forms of conduct which are morally indifferent.
It is not so easy to make the differentiation when we view the thing from the standpoint of the consciousness of men who are at the centre of the situation, to whose consciousness the social values are presented. We may put at the very forefront of the economic value of oranges the gustatory feelings or desires of those who consume them; at the forefront of the moral value of a heroic rescue by a fireman the thrill that runs through the onlookers. Qualitatively, these psychological states are different, as those who have experienced both will know. But it is difficult indeed to put the difference into words. When it comes to a legal value, say the legal value of a given contract right which a man seeks to enforce in court, it is not easy to find any particular emotion or state of consciousness which is peculiar or appropriate to it. The value is so highly institutionalized and impersonal, that it seems to the court and lawyers and even the litigants to be merely a question of fact to be intellectually analyzed. Its roots are deep in human emotions, but not in the emotions, primarily, of those who are handling the transaction. Perhaps the jurist has states of consciousness we know not of. There may be a distinctively legal emotion. It seems to crop out at times when one questions, in conversation with a judge or lawyer, the infallibility of the courts. But the law does not derive its power therefrom! Rather, the law derives its power from the general consent and acquiescence and support of the mass of men, who turn over to experts the details of administering it, and who support The Law in general, rather than the rule of the corpus delicti, with their emotional sanction.
I think that we have here a clue to a vital point for our theory. We need not expect to find the major part of the explanation of any of these social values in the conscious emotions of those who are moved by them. In the case of the orange or the heroic act, we are, indeed, close to pretty simple human feelings and desires. In general, in the case of moral values, the individual emotion and the social value are qualitatively comparable, since moral values rarely take on a highly institutional character. They are more free from class or institutional control than other social values. This need not be true. Thus, the plantation negro need not feel any personal shame in the moral delinquency which he none the less hides from the "white folks" whose values he must more or less conform to. But, on the whole, moral values are much more "participation values,"[33] shared by the whole group in common, than are economic values or legal values. When we pass beyond the simple case of a consumption good, and get into the realm of the more institutional economic values, we lose all guidance from the clue of satisfactions in consumption. Just what emotion, for example, is appropriate in the presence of the four and a half per cent convertible bond of the Chesapeake and Ohio Railway Co.? If it be answered that ultimately that bond represents satisfactions in consumption, since the owner of it may spend the income for consumers' goods, or since the railroad in question carries coal which goes to Italy to be used in a cruiser which will sink an Austrian warship, thereby giving consumers' satisfactions to individuals in Italy, so that the value of the bond is ultimately reducible to specific satisfactions of given individuals, we may still hold that those satisfactions do not constitute the value of the bond, as such. Moreover, the same is true of the legal values. Ultimately, very specific human emotions are affected by the rule of the corpus delicti, or the rule governing pleas in estoppel. Both in legal and in economic values we have an elaborate and complex system of social psychological character, which can by no means be reduced to elementary desires or feelings of individuals, even though when the whole story is told, no part of the system will be found outside the minds of individual men. The point has been well put by Professor C. H. Cooley: "It would be as reasonable to attempt to explain the theology of St. Thomas Aquinas, or the Institutes of Calvin, by the immediate working of religious instinct as to explain the market values of the present time by the immediate working of natural wants."[34] I think that any attempt to differentiate the various kinds of social value on the basis of the type of emotion in the minds of those who have most immediately to do with them, or to explain them primarily by those emotions, is foredoomed. The law does not get its power from the emotion of the judge who gives a decision, nor does the value of a rare painting rest chiefly in the intensity of desire of the few rich connoisseurs who compete for it. Back of the judge, giving validity to his decision, stands the will of the group; back of the rich connoisseurs stand the legal and other social values concerned with the distribution of wealth, by virtue of which they are able to make their wants felt in the market. Both judge and connoisseur are focal points, through which stream the social forces affecting the values in question. Both are important. But the emotions and ideas of neither exhaust the psychological causation involved in the values.
This is very much more apparent when we consider the values that arise in the great speculative markets, say in the wheat pit, or the stock exchange. Those who buy and sell are primarily interpreters, students, of impersonal, social forces, seeking to adjust themselves to them, to forecast them, in such a way as to derive profit from them. Their choices and decisions are also factors. Indeed, it is possible to view the matter in such a way as to make their decisions the whole story. In the same way, it is possible to make the mind of the judge the final explanation of the legal value. But the speculators themselves are under no such illusion. They know very well that if they run counter to the facts they will lose money. And the judge knows very well that the range of arbitrary choice which he can exercise without impeachment, or at least without reversal by a higher court, is very limited. Nor is even a Supreme Court of the United States free to do its arbitrary will. Just because it is so conspicuous, and because its doings are so important, it has manifested more respect for judicial tradition, and more responsiveness to the tides of public sentiment, than any other court in the Federal Judiciary.[35]
The head of a great banking house makes a decision regarding an underwriting operation. On his decision depends the question of whether or not the securities are issued. On the issue of the new securities depends, in part, the values of the existing securities of the corporation in question, and the nature of the future employment of thousands of men and great quantities of land and capital. Tremendous power is concentrated in the hands of this banker. But it is not his power! He cannot exercise it in an arbitrary or capricious way. He approaches his problem in much the same spirit that the judge approaches a disputed question of law. He analyzes the factors involved. He considers the condition of the money-market, the question of the probable ease or difficulty of marketing the new securities to investors, the prospects of the business of the corporation in question, the probable future demand for its products, the stability of that demand, the personnel of the management of the corporation, the attitude of the government toward it, the nature of its other outstanding securities, with special reference to the proportion of bonds to stocks, and the amount of "fixed charges" against its earnings. He may also take into account other enterprises of similar character which he has connections with, and the question of whether or not building up the corporation in question may injure other corporations to which he has responsibilities. He looks far into the future, seeking to conserve his prestige, and unwilling to assume responsibility for an issue which investors will later lose faith in. Proximately, his decision is tremendously important, and his thoughts and feelings are of immense significance, but ultimately, they are determined by all manner of social considerations, and always, the degree to which they count in determining values depends on his weight in the economic situation, which rests (1) on his prestige, i. e., the massing of beliefs and hopes of many men, (2) on his wealth, which rests in the legal and moral values governing distribution, and (3) on his institutional relationships, which again are psychological facts, partly legal in character. He is as much a social instrument as is the judge. Both may abuse their power. Both do at times abuse their power. But the significant point is that the power both have is social power, and is in no sense proportional to the intensity of their own emotions. It arises from the emotional power in the minds of many men.
It would be easy to elaborate the points in which morals, laws, and economic values are alike, and to show in detail that the theory of economic value is merely a special case of the general theory of social value. For our present purposes, however, it is enough to have illustrated the general doctrine, and to have set up the economic values as true social forces. It may be noticed that the effort to differentiate the different kinds of value is not altogether successful. They are not in watertight compartments in social life. It is a commonplace among students of ethics that moral values grow, in greater or less degree, out of economic factors. Indeed, the "economic interpretation of history" has as its central theme the doctrine that morality, law, and ideal values in general are governed by the economic situation. This is a one-sided view. Moral and legal values are influenced and modified by economic forces. Legal and moral values do, in part, derive their power from economic values. But on the other hand, economic values likewise derive part of their power from legal and moral values. The "social mind" is an organic whole, in which no factors exist "pure," and in which there is constant give and take. The effort to explain moral values by a single principle, as sympathy, legal values by another simple principle, as fear, and economic values by a different simple principle, as utility, is foredoomed. It has been given up by the students of law and morals, and should be abandoned by the students of economics.
Let us consider more narrowly the main factors affecting and explaining economic social values. Let us take, first, the simplest case, that of goods and services which minister directly to human wants, goods and services "of the first order." Goods of this sort would be oranges, bread, clothing, jewels. Services of this sort would be the services of the barber, the valet, the physician, the preacher, the teacher, the actor. I abstract, in discussing these values, from the complications that grow out of the friction in retail trade, and the existence of many customary prices, and prices fixed by other than economic values, in the case of teachers, or preachers. I shall concentrate attention upon such things as oranges, bread, clothing, and jewels. The focus of the values of these things, and an essential condition of their existence, is their utility, that is to say, their power to satisfy human wants. Utility as used in economics does not mean usefulness in any moral sense. From the standpoint of the economist, whiskey and opium are as useful as bread, if they satisfy wants equally intense. And the economist is not concerned with the general utility of things considered in their totality. Air is more useful than jewels, but a carat of air is not as useful as a one-carat diamond. Air exists in such abundance that it does not need to be economized. Scarcity with reference to the extent of the wants involved is also essential to economic value. A combination of the ideas of utility and scarcity gives us the simple notion for which the formidable name of "marginal utility" has been devised. The marginal utility of a good to a man is the power the last, or "marginal," unit of the good which the man consumes has to give him satisfaction, or, viewed from the standpoint of the man, is the intensity of his desire[36] for, or of his satisfaction in, the final unit consumed. So far, our account of the value of the orange will seem perfectly acceptable to those accustomed to traditional discussions of the problem in the text-books. The difference is that many text-books stop at this point, leaving the impression that with the definition of marginal utility the whole value problem has been solved. For the social value theory, the conception of marginal utility is barely a starting point. Indeed, it is not even a starting point. We shall have to look both in front of it and behind it. Recognizing that marginal utilities to individuals are essential to economic values of consumption goods, we shall have to point out other things which are also essential, and we shall have to explain the factors determining these marginal utilities themselves.