Social Value
Chapter 4: Jevons, Pareto and Böhm-Bawerk
Benjamin McAlester Anderson Jr.
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IN the foregoing analysis, the assumption of the homogeneity and communicability of human wants was made. Only on this assumption could value as a quantity of utility appear even in Wieser's "natural" community. How hopeless the case becomes when individualistic methods and assumptions are pushed to the extreme, will appear from a consideration of Jevons and Pareto, both of whom insist on the entirely subjective and incommunicable nature of human wants. Thus, Jevons: [1]
I see no means by which such a comparison [between the motives of one man and those of another] can be accomplished. The susceptibility of one mind may, for what we know, be a thousand times greater than that of another. But, provided that the susceptibility was different in a like ratio in all directions, we should never be able to discover the difference. Every mind is thus inscrutable to every other mind, and no common denominator of feelings seems to be possible. . . . But the motive in one mind is weighed only against other motives in the same mind, never against the motives in other minds. Each person is to other persons a portion of the outside world - the non-ego as the metaphysicians call it. Thus the motives in the mind of A may give rise to phenomena which may be represented by motives in the mind of B; but between A and B there is a gulf, Hence the weighing of motives must always be confined to the bosom of the individual.
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This question as to the homogeneity and communicability of emotional states in different men is one fundamental to any value theory which starts with individual feelings or desires as elements - and, indeed, from a somewhat different viewpoint, is fundamental to all value theory. Value, as a concrete quantity of desire or feeling, embodied in a given good at a given time, regardless of who is purchaser and who is seller, can exist only if feelings and desires are homogeneous and can interact -even in Wieser's ideal society, where the complication of differences in wealth does not obtain. And value must have some very different meaning unless this assumption be held. In illustration of this, I wish to quote further from Jevons. Jevons finds for value[2] three distinct meanings, for each of which he employs both a "popular" and a cc scientific" name: (1) value in use ("popular" name) -total utility ("scientific" name); (2) esteem, or urgency of desire ("popular" name) -final degree of utility ("scientific" name); (3) purchasing power ("popular" name)= ratio of exchange(" scientific" name). Now the first two of these are purely subjective, individual facts, varying as to their quantities for each individual. The only one that can have social meaning is the third, and that, as Jevons explicitly states, is a numerical ratio, an abstract number.[3] This is brought out very clearly when Jac discusses the question of the concrete dimensions of these three quantities. Total utility has dimen-
(36) -sions, and so has final utility, but ratio of exchange, which he considers the precise scientific equivalent for the popular term, purchasing power, has no dimension at all. Its dimension is zero. Finding these ambiguities in the word value, Jevons proposes to abandon it altogether, and to use instead either of the three expressions discussed, depending on which sense of the word value is intended.[4] He can find no definite meaning for value as an unqualified term. Now in this I believe he is correct. Economic value is not total utility to an individual, nor marginal utility to an individual, nor is it a mere ratio of exchange. If no other meaning of the term can be found -and no other meaning can be found on Jevons's psychological assumptions - then the term should be abandoned altogether.
Pareto's position [5] is essentially similar. "Ophelimity" (which he uses in place of the more ambiguous "utility" to mean what Jevons means by the latter term) "is an entirely subjective quality." (4.) "On ne doit pas oublier que le vigneron établit l'égalité des deux ophelimités pour lui, et que le laboureur fait de même, mais qu'il n'y a aucun rapport entre l'ophelimité du vin pour le vigneron et pour le laboureur, ni entre l'ophélimite du ble pour le vigneron et pour le laboureur. Il faut toujours se rapeller ce caractère subjectif de l'ophélimité." (9-1.) Now no quantity of value, irrespective of the particular
(37) holder of the good, emerges for Pareto. Value is either a "rapport de convenance" between a man and a good, i.e., ophelimity, or is a "taux d'echange," a ratio between two goods. (30.) The older term, " puissance d'achat," power in exchange, which John Stuart Mill makes synonymous with value in exchange, is, at bottom, nothing but a vague conception of ophelimity. (30.) The two conceptions, ratio of exchange and ophelimity, are to be sharply distinguished, power in exchange is ruled out as a vague and confused conception, and value as an objective quantity does not appear at all.
Davenport, who recognizes clearly "the richman-poor-man complication," [6] and avoids, for the most part, the confusion into which others have fallen, of mixing a demand-price curve and a utility curve (a confusion dealt with in detail in the next chapter), and who accepts the psychological assumption of subjective isolation unreservedly, [7] reaches, as already indicated, the same conclusion regarding the nature of value. For him there is no social validity in value except as a ratio of exchange.[8]
The same may be said for Böhm-Bawerk so far as his formal analysis goes. It is true that he recognizes the existence of an "objective value in exchange" [9] in addition to "subjective value"
(38) and "subjective value in exchange," and in addition to price,[10] but he makes no effort to exhibit its nature, or to show its origin. His study has to do with individual subjective ratios, between the marginal utilities of two goods, and the market ratio, or price, that results from the meeting of these individual ratios - not utilities - in the market. The nature of his objective exchange value is expected to become clear, somehow, from this surface determination of price:
Exchange Value is the capacity of a good to obtain in exchange a quantity of other goods. Price is that other quantity of goods. But the laws of these two coincide. So far as the law of price explains that a good actually obtains such and such a price, and why it obtains it, it affords at the same time the explanation that the good is capable, and why it is capable, of obtaining a definite price. The law of Price, in fact, contains the law of Exchange Value.[11]
(39) But (as will be elaborated more fully in chapter VI), Böhm-Bawerk's law of price does not explain the why any more than do those of Jevons and Pareto, and the assumption that an cc objective value in exchange" exists, in addition to the ratio of exchange and the subjective values, might just as logically be added to their systems as to his, with the assumption that the problem of its nature and causes had been cleared up. The Austrian analysis, even with Professor Clark's correction, is simply an explanation of the modus operandi of the determination of particular ratios in the market. It tells us nothing of quantitative values, and, in fact, assumes a whole system of values already predetermined, before the question of any particular price can be approached.[12]
