Chapter 13: Economic Social Value
Benjamin McAlester Anderson Jr.
How are we to get out of our circle: The value of a good, A, depends, in part, upon the value embodied in the goods, B, C, and D, possessed by the persons for whom good A has "utility," and whose "effective demand" is a sine qua non of A's value? The most convenient point of departure seems to be the simple situation which Wieser has assumed in his Natural Value. Here the "artificial" complications due to private property and to the difference between rich and poor are gone, and only "marginal utility" is left as a regulator of values. But what about value in a situation where there are differences in "purchasing power"? How assimilate the one situation to the other?
A temporal regressus, back to the first piece of wealth, which, we might assume, depended for its value solely. upon the facts of utility and scarcity, and the existence of which furnished the first "purchasing power" that upset the order of " natural value," might be interesting, but certainly would not be convincing. In the first place, there is no unbroken sequence of uninterrupted economic causation from that far away hypo-
(133) -thetical day to the present, in the course of which that original quantity of value has exerted its influence. The present situation does not differ from Wieser's situation simply in the fact that some, more provident than others, have saved where others have consumed, have been industrious where others have been idle, and so have accumulated a surplus of value, which, used to back their desires, makes the wants of the industrious and provident count for more than the wants of others. And even if these were the only differences, it is to be noted that private property has somehow crept in in the interval, for Wieser's was a communistic society. And further, an emotion felt ten thousand years ago could scarcely have any very direct or certain quantitative connection with value in the market to-day. Even if there had been no "disturbing factors " of a non-economic sort, the process of "economic causation" could not have carried a value so far. It is the living emotion that counts! Values depend every moment upon the force of live minds, and need to be constantly renewed. And there would have been, of course, many " non-economic " disturbances, wars and robberies, frauds and benevolences, political and religious changes a host of historical occurrences affecting the weight of different elements in society in a way that, by historical methods, it is impossible to treat quantitatively.
What is called for is, not a temporal regressus, which, starting with an hypothesis, picks up abstractions by the way, and tries to synthesize them into a concrete reality of to-day, but rather a logical analysis of existing psychic forces, which shall abstract from the concrete social situation the phases that are most significant. This method will not give us the whole story either. Value will not be completely explained by the phases we pick out. But then, we shall be aware of the fact and we shall know that the other phases are there, ready to be picked out as they are needed, for further refinement of the theory, as new problems call for further refinement. And, indeed, we shall include them in our theory, under a lump name, namely, the rest of the "presuppositions " of value.
Our reason for choosing a logical analysis of existing psychic forces instead of a temporal regressus - instead, even, of an accurate historical study of the past - is a twofold one: first, we wish to coordinate the new factors we are to emphasize with factors already recognized, and to emerge with a value concept which shall serve the economists in the accustomed way - it is illogical to mix a logical analysis with a temporal regressus. But, more fundamental than this logical point, is this: the forces which have historically begot a social situation are not, necessarily, the forces which sustain it. The rule doubtless is that new institutions have to win their way against an opposition which grows simply out of the fact that we are, through mental inertia, wedded to what is old and familiar. We resist the new as the new. Even those who are most disposed to innovate are still conservative, with reference to propaganda that they themselves are not concerned with. The great mass of activities of all men, even the most progressive, are rooted in habit, and resist change. When, however, a new value has won its way, has become familiar and established, the very forces which once opposed it become its surest support. Or, waiving this unreflecting inertia of society, as things become actualized they are seen in new relations. What, prior to experiment, we thought might harm us, we find beneficial after it has been tried, and so support it - or the reverse may be true. The psychic forces maintaining and controlling a social situation, there-
(136) -fore, are not necessarily the ones which historically brought it into being.
We turn, therefore, to a logical analysis of existing social psychic forces for our explanation of social economic value, and for the explanation of the motivation of the economic activity of society. It will still pay us, however, to halt for a moment in Wieser's hypothetical "natural" community, for we shall find there that many of the concrete complexities which he sought to eliminate have really persisted in slight disguise. Really there is no such simplicity as Wieser supposes. The "natural" society has, indeed, no private property, or differences between rich and poor, but it has, none the less, legal and ethical standards of distribution, which are just as efficient in the determination of economic values as are the results of our present system of distribution. The term, "natural," has misled Wieser, when it leads him to say that marginal utility alone will rule. For "natural" here means, not "simple," but "ethically ideal." The word has - as Wieser and others who have used it often fail to see - a positive connotation of its own: a definite set of legal and ethical values are bound up in it in this case. That such a society should exist, and that in it "marginal utility" should be the only variable affecting value (apart from the limitations of physical nature), implies the legal rule of equality in distribution, and such a set of moral values actually ruling the behavior
(137) of the people as to make this legal rule effective, - or else the most extraordinary activity on the part of the government to maintain the rule. Wieser himself fails to see this, for he concedes that the "moral" principle of distribution in such a society would recognize the superior merits of the leaders who furnish ideas and direction, as entitling them to a higher reward than the merely mechanical laborers. But this, it is evident, would give them an excess of that same vexatious "purchasing power "  - whether embodied in gold or commodities or labor-checks matters little - and so would destroy the efficiency of the principle of "marginal utility" as the ruler of values.
As phases in the " presuppositions " of economic value, then, coordinate with "marginal utility," our theory puts the legal and ethical values concerned with distribution, which rule in a community at a given time. Reinforcing and validating the values of goods are the social values of men. President F. A. Walker  defines value as "the power an article confers upon its possessor irrespective of legal authority or personal sentiments, of commanding, in exchange for itself, the labor, or the products of the labor, of others." [Italics are mine.] In our view, this definition is precisely wrong. A change in laws or in morals respecting the social ranking of men, respecting property rights, will at once affect economic values. Earlier economists often wrote as if
(138) distribution were primarily a physically determined matter, and so we got from them an "Iron Law of Wages," etc. But it is pertinent to quote from one who, though in many ways allied to the older school, and in value theory avowedly their follower, still stands as a bridge between the theories I am criticizing and my own. John Stuart Mill  says:
The laws and conditions of the production of wealth, partake of the character of physical truths. There is nothing optional or arbitrary in them.... It is not so with the Distribution of Wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, 'Can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms. Further, in the social state, in every state except total solitude, any disposal whatever of them can only take place by the consent of society, or rather of those who dispose of its active force. Even what a person has produced by his individual toil, unaided by any one, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society only remained passive; if it did not either interfere en masse, or employ and pay people for the purpose of preventing him from being disturbed in the possession. The distribution of wealth, therefore, depends on the laws and customs of society. The rules by which it is determined, are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries; and might be still more different, if mankind so chose.
The. distribution of wealth, then, depends on social psychic forces. And among these are tile social, ethical and legal values of men and of so-
(139)-cial classes. Economists of an earlier school took these factors for granted, when they thought of them at all, and assumed that they are constant, relatively unchangeable things, a sort of fixed framework within which the forces of a Malthusian biology, or the forces of "self-interest" might work. Commonly, indeed, they thought of them not at all, and wrote as if the factors which they allowed to vary told the whole story. Such is, indeed, still the procedure, in our present day "pure economic" theories of distribution, which either exclude the non-economic factors, or else relegate them to the "pound
(140) of 'coeteris paribus.'"  If ours were a stagnant civilization, this procedure might be safe, but
(141) in a highly "dynamic" society, where laws, morals, class relations, the very fundamentals of organization, are being made the subjects of scrutiny, agitation, class struggle, etc., are being subjected to " transvaluations," and are continually changing them with the principles, machinery and results of distribution, and so one of the biggest factors lying back of economic values, no study of value can afford to ignore them.
It is of course recognized that a purely ethical and legal theory of distribution would be as much an abstraction as the "reinwirtschaftlich" theory of distribution - and probably a much less useful abstraction. Either abstraction is legitimate, if it do not seek to abolish the other factors. We may safely enough define a set of legal and moral values, concerned with the organization of society and industry, and, assuming them constant, a sort of frozen framework, let man's values with reference to the immediate consumption and production of economic goods ("utilities and costs" in current phrase) vary, and see what the consequences, both on the ranking of men, and the ranking of goods, will be. Or, assuming "utilities and costs" constant, we may let the legal and moral values vary, and see what consequences would follow. Or, assuming all other factors constant, we may vary the size of the population, or vary the proportions between labor and productive instruments, or between land and population, or pick out any other factor of the concrete situation we happen to be interested in, as the "standard of living,"
(142) and let it change, and see what consequences flow therefrom. But, in doing this, we must not forget that the other factors remain essential, equally potent in the general situation with the one on which we have centred our attention. And we must not forget that changes in one factor, while we may in thought allow it to occur alone, cannot occur without bringing in changes in the others as well. An increase in the number of laborers, e.g., may also mean an increase of voters of a given political tendency, and may mean a change in the political power of classes, and a change in the laws. And it may be tremendously significant whether the increased number of laborers consists of Irish Catholics, or of Russian Jews, or of native Americans, or of negroes, - significant from the standpoint of distribution, of the values of economic goods, and the direction of economic activity. Reduce your labor force to "efficiency units," so that from the standpoint of productive power of the additions no difference is made whether they be of the one class or the other, and still it is a matter of
(143) consequence, from the standpoint of distribution, and ultimately of the values of goods, whether they belong to one class or the other. One sort of laborer may be capable of efficient labor union organization, with the result that a large share of the product goes to labor. Another sort of laborer may be incapable of much organization, may work at cross-purposes with the rest of the labor force, and may be an easy victim of exploitation. "Other things equal," we may concede that productive efficiency, or "standard of living," or other abstract principle, determines the share that goes to labor - but many indeed are "the other things." The distribution of wealth is not an "arbitrary" matter - if by that it be meant that no scientific laws can be worked out to describe it. Mill himself would be first to protest against any metaphysical "freedom of the will" here. But it is a matter into which law and morals and personal friendship and monopoly privilege and charity and benevolence and statesmanlike purpose and selfish struggle - in a word, the whole intermental. life of men in society -are involved. And any principle of distribution that we may select is only true, not only if other things are "equal," but also if other things are in a particular set of relations. We have seen the assumptions of a non-economic sort that are implicit in Wieser's conception of a "natural society." It may be interesting to note what is involved in the situation which Professor Clark treats in his Distribution of Wealth. That his system should hold,
(144) we must have, of course, private property, and personal freedom. We must have perfectly free competition. We must have absolutely no monopoly privilege of any sort. We must have such rapid and free communication of ideas that no monopoly of knowledge should exist. But imagine the moral values that must rule in a society where such a situation holds! How are men to be prevented from getting monopolies? How prevent laws in the interests of the alert and influential? How prevent the monopoly of ideas? A very different moral situation must obtain in such a society from that we know. And a very different system of laws. In saying this, of course, I say nothing that was not obvious enough to Professor Clark when he constructed his system on the basis of "heroic abstraction," but still it cannot be neglected. Not every one who has undertaken to interpret Professor Clark, and to make practical application of his theories, has seen these limitations.
Or, again, what does the system of competition mean? Why do we have such varied estimates from different writers? Why do some see in it a benevolent influence, while for others it is a ghastly nightmare? The answer is, I think, that competition is an abstraction, which each makes in his own way. If we look on competition as a system where each is free to follow his "pure economic" tendencies in the shortest and simplest manner, I think there can be no question but that we must condemn it. The "pure economic impulse," namely, the im-
(145) -pulse to get the maximum of wealth with the minimum of effort, left unchecked and unguided by any other social forces, would lead, by the shortest and simplest path, to theft, robbery, and murder. They are easier than work! And more sensible than work, if one be " reinwirtschaftlich," and live in a society where there is little chance that he who creates wealth will enjoy it. Or, partly checked by social constraints (thinking of these as "external" matters solely), the "economic tendency" may lead - as it has led - to the dynamiting of rival plants, to the securing of preferential rates from common carriers, to the corrupting of legislatures and judges, to the spreading of false rumors, etc. On the other hand, if the " rules of the game " are high, if competition be limited to doing things which result in a better commodity with a decreased outlay of human effort and physical resources, and with kindly feeling among competitors (or even without this last), we may see in it a great source of justice and progress. It all depends on what Professor Seligman calls the "level of competition." That is to say, it depends on the extent to which the system includes factors of moral, legal and social nature, other than the " pure economic a thing " that never was on land or sea."
And what shall we say of "inevitable economic tendencies "? A good many of them - leading in diverse directions - have appeared in the literature of economics. On the one hand, in-
(146) -evitable tendencies towards a divine "economic harmony." On the other hand, inevitable tendencies toward monopoly; toward ever more numerous panics; toward greater concentration of wealth; toward proletarian misery of an ever more hopeless sort - all bringing us finally to a socialistic state. I see no inevitable economic tendencies anywhere. The "economic in motive," as already indicated, if left free to work in vacuo, would lead us to anarchy. But it does n't work in vacuo. And the question as to where the infinite complex of social forces may lead us is not one that can be settled "reinwirtschaftlich." We can only say that economic values, at a given moment, are the focal points at which the laws and moral values and loves and hates, and " utilities " and " costs " directly connected with economic goods, and the multitudinous other values of concrete social life exert their motivating influence on the economic activities of society. Then, given these economic values, and assuming that they alone are of significance for the activity of society, we may see where they would lead us. But we should still be in a world of abstractions if we did so. For the economic social values do not exhaust the social forces of motivation. Very much of social activity is non-economic -in character. And the force of a given moral value - say that of elevating the condition of a degraded class -may be divided, tending indirectly by raising the value of a certain sort of economic good, to encourage its production, and tending directly to prevent its pro-
(147) -duction. Let us assume, for example, that this moral value leads to an increase in the income of the degraded class, and so tends to increase the demand for liquor; but assume, further, that this same moral value is the force leading to a prohibition law, that forbids the production and sale of liquor. Ethical, religious, legal, esthetic, and other values may indirectly motivate the economic activity of men through entering into economic values, or they may directly, in their own form, antagonize these economic values, by constraining those who do not "participate" in them, and by impelling those who do feel them to activities in lines other than those where the greatest surplus of economic value is to be gained. Even, then, though we have a theory of economic value which includes these other social forces, we have no right to speak of "inevitable economic tendencies." Social life is one organic whole. There is no phase of social activity which is wholly directed by one set of values, and there is no one set of values that exclusively depends on one sort of motive. And when we give exclusive attention, in our study, to one set of values, as it is often necessary to do, we must recognize that we are handling an abstraction, that the other forces remain, and must be dealt with before our conclusions have any validity for practice.