Social Value

Chapter 19: The Theory of Value and
the Social Outlook. Summary

Benjamin McAlester Anderson Jr.

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THE belief that social optimism and social pessimism are in an essential way linked with the theory of value is one that finds expression in a good many writers. The socialist theory of value is supposed to serve as a condemnation of the existing social regime; Professor Clark's system of value and distribution is often interpreted as justifying an optimistic outlook. This view is expressed by Professor Frank Fetter, for one, who especially stresses this aspect of value theory.[1] Professor Joseph Schumpeter, in his article on social value several times mentioned,[2] indicates that an optimistic social outlook is a necessary corollary of the theory of social value. Wieser's objection to the doctrine that economic value signifies social importance[3] seems to be based on the belief that the doctrine means, not merely that society is responsible for the existing value situation, but also that that situation is consequently a just and righteous one. And the same notion seems to be, in part

(195) at least, the inspiration of Professor Davenport's attack in his recent article in the Quarterly Journal.[4]

(196)

It is not necessary to discuss here the question as to whether Professor Clark means that his theory should be so interpreted.[5] What I wish to insist upon is that no implication, either optimistic or pessimistic, as to the existing social order, can be drawn from the theory defended in this book. Whether or not economic values in particular cases correspond with ethical values, whether or not goods are ranked on the basis of their import for the ultimate welfare of society, and the extent to which this is the case, will depend on the extent to which the ethical forces in society prevail over the antiethical forces. The theory as such is neutral. Assume our existing society, modified in the one particular that competition shall henceforth be perfectly free, and still the conclusion does not follow. Idle sons of our multimillionaires may inherit ill-gotten wealth, may invest it and draw an endless income from it. With this income to back their desires, they may make the services of panders worth more than the services of statesmen and inventors. The values of goods depend on the more fundamental values of men, even though the values of men, under abstract eco-

(197) -nomic laws, depend upon the value productivity of their labor or their possessions. The theory is a theory of economic value, even though the tremendous influence of ethical and other values be recognized as entering into economic values. They may be overpowered by opposing forces. The theory is a general theory, and holds for a decadent as well as for an improving society; for a society where justice reigns, if such a society there be, and for a society where corruption is rampant, and wolves prey. The justification of the existing social order is to be sought elsewhere - the theory of economic value, as such, does not contain it.

The main steps of our argument may be briefly recapitulated here: Value is a quantity, socially valid; value is not logically dependent upon exchange, but is logically antecedent to exchange; a circle in reasoning is involved if the relative conception of value be treated as ultimate; the Austrian theory, and the cost theory, and combinations of the two, all fail alike to lead us to an ultimate quantity of value; they fall into another circle, that of explaining value in terms of value, if they attempt to do so; the defect is in the highly abstract nature of the determinants of value which these theories start from; they abstract the individual mind from its connection with the social whole, and then abstract from the individual mind only those emotions which are directly concerned with the consumption and production of economic goods; this abstraction

(198) is necessitated by the individualistic, subjectivistic conception of society, which, growing out of the skeptical philosophy of Hume, has dominated economic theory ever since; present day sociology has rejected this conception of society, and has reestablished the organic conception of society in psychological (rather than biological) terms, which make it possible to treat society as a whole as the source of the values of goods; this does not obviate the necessity for close analysis, nor does it, in itself, solve the problem, but it does give us an adequate point of view; the determinants of value include not only the highly abstract factors which the value theories here criticized have undertaken to handle arithmetically, but also all the other volitional factors in the intermental life of men in society - not an arithmetical synthesis of elements, but an organic whole; legal and ethical values are especially to be taken into account in a theory of economic value, particularly those most immediately concerned with distribution; the theory of value and the theory of prices are to be sharply distinguished.

The function of economic values is the motivation of the economic activities of society. Value as treated by the cost theories, or value as a sum of money costs, is a blind thing, a product rather than an end, and fails utterly as a guiding, motivating principle for economic activity. It is the merit of the Austrian School to have pointed this out. But the abstract individual factors which the Austrians have substituted

(199) are just as helpless in explaining the motivation of social activity. Every man's course is made for him far more by outside forces than by his own individual motives. Economic activity in society is an intricate, complex thing, for the motivation of which no individual's motives can suffice. If motivated at all its guidance comes from something superindividual, and that something is social value. Ends, aims, purposes, desires, of many men, mutually interacting and mutually determining each other, modifying, stimulating, creating each other, take tangible, determinate shape, as economic values, and the technique of the social economic organization responds and carries them out.

THE END

Notes

  1. Principles of Economics, New York, 1905, pp. 415 et seq.
  2. "On the Concept of Social Value," Quar. Jour. Econ., 1909, pp. 222-23.
  3. Nat. Val. p. 52, n. Quoted supra, chap. I.
  4. " Social Productivity vs. Private Acquisition," Quar Jour. Econ., Nov., 1910, pp.112-13. "Economic productivity is not a matter of piety or merit or deserving, but only of commanding a price. Actors, teachers, preachers, lawyers, prostitutes, all do things that men are content to pay for. So wages may be earned by inditing libels against a rival candidate, or by setting fire to a competitor's refinery, or by sinking spices. The test of economic activity in a competitive society is the fact of private gain, irrespective of any ethical criteria, and unconcerned with any social accountancy. . . . If whiskey is wealth, distilleries are capital items. If Peruna is wealth, the kettle in which it is brewed must be accepted as capital. Then so is the house rented as a dive; and if the house is productive, and is therefore capital, so, also, must the inmates be producers according to their kind. The test of social welfare is invalid to stamp as unproductive any form of wealth, or any kind of labor. If jimmies are capital, being productive for their purpose, so also is burglary productive; if sandbags, so highway robbery. . . . Always and everywhere, in the competitive régime, the test of productivity is competitive gain."
    If only my conception of social value is granted, I may safely enough concede Professor Davenport all the depravity he can find in society, and recognize that that depravity has its part in the determination of the concrete values. Only, I would insist, virtue as well as depravity is a factor in the social will, and plays its rôle in determining economic values, and motivating economic activities. Legal values are not "absolute" values, in the sense that everybody obeys the law, but laws as well as lawlessness affect economic values.
    It may be well at this point for me to make clear my relation to Professor Davenport. Throughout this book, his theories have been subject to frequent criticism. The obvious reason is, of course, that he has made himself the leading critic of the social value concept, and hence, if that concept is to be defended, his point of view must be met. But, if that were all, he would have occupied far less of our space than has been the case. The fact is, in my judgment, that Professor Davenport is one of the commanding figures in economic theory. I think no economist has even approximated the clearness and explicitness with which he has set forth the presuppositions of the view which this book opposes, and that no economist has ever reasoned more clearly upon the basis of these presuppositions. Professor Davenport thus presents the very best object of attack, it one is to justify the social viewpoint in economic theory. My indebtedness to him is marked, and I have tried to indicate the fact from time to time in notes. His book has aided me greatly in clarifying my own ideas, and has also substantially abridged my bibliographical labors. With many of his criticisms of existing value theory, those criticisms. especially, which are concerned with the internal logical contradictions of existing value theory, I am in hearty accord. The chief difference between us at this point will be, I think, that I try to go further than he has gone. And the fundamental differences between his view and mine grow out of the different psychological, philosophical, and sociological presuppositions with which we start. I feel that the individualistic method of approaching the value problem is foredoomed, provided it be logically carried out, and I think Professor Davenport has logically carried it out!
  5. I regret exceedingly that Professor Clark's absence from Columbia University during the academic year, 1910-11, has prevented my discussing this, and a host of other questions raised in this book, with him.

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