Part 12 (1/2)

The possession and use of commodities are, then, not in themselves and directly economic facts at all. As material things commodities serve certain purposes and effect certain results. They are means to ends and their serving so is a matter of technology. But do I seriously want their services? This is a matter of my ethical point of view. Do I want them at the price demanded or at what price and how many? This is the economic question and it obviously is a question wholly ethical in import--more broadly and inclusively ethical, in fact, than the ethical question in its earlier and more humanly inviting form. And what we have now to see is the fact that no consideration that has a bearing upon the problem in its ethical phase can lose its importance and relevance in the subsequent phase.

There can be no restriction of the economic interest, for example, to egoism. If on general principles I would really rather use goods produced in safe and cleanly factories or produced by ”union labor,”

there is no possible reason why this should not incline me to pay the higher prices that such goods may cost and make the needful readjustment in my budget. Is there reason why my valuation of these goods should _not_ thus be the decisive act that takes me out of one relation to industrial workers and sets me in another--can anything else, indeed, quite so distinctly do this? For economic valuation is only the fixation of a purchase price, or an exchange relation in terms of price and quant.i.ty, upon which two schemes of life, two differing perspectives of social contact and relations.h.i.+p converge--the scheme of life from which I am departing and the one upon which I have resolved to make my hazard.

It is this election, this transition, that the purchase price expresses--drawing all the strands of interest and action into a knot so that a single grasp may seize them. The only essential egoism in the case lies in the ”subjectivism” of the fact that inevitably the emergency and the act are mine and not another's. This is the ”egocentric predicament” in its ethical aspect. And the egocentric predicament proves Hobbes and La Rochefoucauld as little as it proves Berkeley or Karl Pearson. No social interest, no objective interest of any sort, is shown ungenuine by my remembering in season that if I cannot fill my coal-bin I shall freeze.[57]

-- 15. This logical and psychological continuity of the ethical and economic problems suggests certain general considerations of some practical interest. In the first place as to ”egoism.” I am, let us say, an employer. If I am interested in procuring just ”labor,” in the sense of foot-pounds of energy, then undoubtedly labor performed under safe and healthful conditions is worth no more to me than other labor (provided it does not prove more efficient). But is this att.i.tude of interest in just foot-pounds of energy the att.i.tude _par excellence_ or solely ent.i.tled to be called economic? And just this may be a.s.serted for the reason that an exclusive interest in just _labor_ is the only interest in the case that men of business, or at least many of them, can entertain without going speedily to the wall. If, then, I do _in fact_ pay more than I must in wages or if I expend more than a bare minimum for conveniences and safety-guards this is not because of the valuation I put upon _labor_, but only because I take pleasure in the contentment and well-being of others. And this is not ”business” but ”uplift”--or else a subtle form of emotional self-indulgence. Suppose, however, that by legislation similar working conditions have been made mandatory for the entire industry and suppose that the community approves the law, even to the extent of cheerfully paying so much of the additional cost thereby imposed as may be s.h.i.+fted upon them.

Shall we say that this is an ethical intrusion into the sphere of economics or shall we say that the former economic demand for labor ”as such” has given place to an economic demand for labor better circ.u.mstanced or better paid? The community at all events is paying the increase of price or a part of the increase. It seems arbitrary to insist that the old price is still the _economic_ price of the commodity and the increase only the price of a quiet conscience. The notion of a strictly economic demand for labor pure and simple seems in fact a concept of accounting. To meet the community's demand for the commodity a number of producers were required. The least capable of these could make both ends meet at the prevailing price only by ignoring all but the severely impersonal aspects of the process. Taking these costs as a base, other more capable or more fortunate producers may have been able to make additional expenditures of the sort in question, charging these perhaps to ”welfare” account. The law then intervenes, making labor in effect more expensive for all by requiring the superior conveniences or by compelling employers' insurance against accidents to workmen or by enforcing outright a higher minimum wage. The old basic labor cost becomes thus obsolete. And without prejudging as to the expediency of such legislation in particular industrial or business situations may we not protest against _a priori_ and wholesale condemnation of such legislation as merely irresponsibly ”ethical” and ”unscientific”? Is it not, rather, economically experimental and constructive, amounting in substance to a simple insistence that henceforth the hiring and paying of labor shall express a wider range of social interests--shall signalize a more clearly self-validating level of comprehension, on the part of employers and consumers, of the social significance of industry than the old? And may we not protest also, as a matter of sheer logic, against carrying over a _producer's_ distinction of accounting between ”labor” cost and ”welfare” cost into the _consumer's_ valuation of the article? How and to what end shall a distinction be drawn between _his_ ”esteem” for the trimmed and isolated article and _his_ esteem for the men who made it--which, taken together, dispose him to pay a certain undivided price for it?

For the egoism of men is no fixed and unalterable fact. Taking it as a postulate, a mathematical theory of market phenomena may be erected upon it, but such a postulate is purely formal, taking no note of the reasons which at any given time lie behind the individuals' ”demand” or ”supply schedules.” It amounts simply to an a.s.sumption that these schedules will not change during the lapse of time contemplated in the problem in hand.

And it therefore cannot serve as the basis for a social science. As an actual social phenomenon egoism is merely a disclosure of a certain present narrowness and inertness in the nature of the individual which may or may not be definitive for him. It is precisely on a par with anemia, dyspepsia or fatigue, or any other like unhappy fact of personal biography.

-- 16. There is another suggestion of ethical and economic continuity that may be briefly indicated. If our view of this relation is correct, a problem, by becoming economic, may lose something in dramatic interest and grandiosity but gains in precision and complexity. In the economic phase an issue becomes sensibly crucial. It is in this phase that are chiefly developed those qualities of clear-headedness, temperateness of thought and action, and well-founded self-reliance that are the foundation of all genuine personal morality and social effectiveness.

And one may question therefore the ethical consequences of such measures as old age, sickness, and industrial accident insurance or insurance against unemployment. In proportion as these measures are effective they amount to a constant virtual addition to the individual's income from year to year without corresponding effort and forethought on his part.

They may accordingly be condemned as systematic pauperization--the ”endowment of the unfit.” There is evidently a fundamental problem here at issue, apart from all administrative difficulties. Clearly this type of criticism a.s.sumes a permanent incapacity in ”human nature” or in most actual beings therewith endowed, to recognize as seriously important other interests than those upon which hinge physical life and death. The ordinary man, it is believed, is held back from moral Quixotism as from material extravagance by the fear of starvation alone; and it is a.s.sumed that there are no other interests in the ”normal” man that can or ever will be so wholesomely effective to these ends. And two remarks in answer appear not without a measure of pertinence. First, if what is alleged be true (and there is evidence in Malthus' _Essay_ and elsewhere to support it) it seems less a proof of original sin and ”inperfectibility” than a reproach to a social order whose collective tenor and inst.i.tutions leave the ma.s.s untouched and unawakened above the level of animal reproduction and whose inequalities of opportunity prevent awakened life from growing strong. And second, the democratic society of the future, if it exempts the individual in part or wholly from the dread of premature physical extinction must leave him on higher levels of interest similarly dependent for success or failure upon his ultimate personal discretion. And is it inconceivable that on higher levels there should ever genuinely be such a persisting type of issue for the mult.i.tude of men?[58]

-- 17. We have held constructive comparison in its economic phase to be a reciprocal evaluating of the ”salient members” of two budgets. The respective budgets in such a case express in the outcome (1) the plane of life to which one is to move and (2) the plane one is forsaking. It was the salient member of the former that presented the problem at the outset. In the course of the process its a.s.sociates were _gathered about_ it in their due proportions and perspective. The salient member of the latter (i.e., whatever the purchase is to oblige one to do without), it was the business of constructive comparison to _single out_ from among its a.s.sociates and designate for sacrifice. In any case at all departing from the type of subst.i.tution pure and simple, the commodities sacrificed will come to have a certain ”value in exchange”

that clearly is a new fact, a new judgment, in experience. This value in exchange, this ”subjective” or ”personal” exchange value, may fittingly be termed a ”value for transition.” The transition once made, the exchange once concluded, I shall deem the motor-car, for example, that I have _not_ bought to replace one used-up, to be worth less than the piano I _have_ bought instead. This indeed (in no disparaging sense) is a tautology. But does this lesser relative value equal or exceed or fall short of the value the car would have had if no question of a piano had been raised at all and I had bought it in replacement of the old one as a matter of course? How can one say? The question seems unmeaning, for the levels of value referred to are different and discontinuous and the magnitudes belong to different orders. In a word, because a ”value for transition” marks a resolve and succinctly describes an act, it cannot be broken in two and expressed as an equating of two magnitudes independently definable apart from the relation. The motor-car _had_ its value as a member of the old system--the piano _has_ its value as a member of the new. ”The piano is worth more than the car”; ”the car is worth less than the piano”--these are the prospective and retrospective views across a gulf that separates two ”specious presents,” not judgments of static inequality in terms of a common measure.

Is value, then, absolute or relative? Is value or price the prior notion? Was the cla.s.sical English economics superficial in its predilection for the relative conception of value? Or is the reigning Austrian economics profound in its reliance upon marginal utility? By way of answer let us ask--What in our world can be more absolute a fact than a man's transition from one level of experience and action to another? Can the flight of time be stayed or turned backward? And if not can the acts by whose intrinsic uniqueness and successiveness time becomes filled for me and by which I feel time's sensible pa.s.sage as swift or slow, lose their individuality? But it is not by a mere empiric temporalism alone that the sufficient absoluteness of the present act is attested. My transition from phase to phase of ”finitude” is a thing so absolute that Idealism itself has deemed an Absolute indispensable to a.s.sure its safe and sane achievement. And with all Idealism's distrust of immediate experience for every evidential use, the Idealist does not scruple to cite the ”higher obviousness” of personal effort, attainment, and fruition as the best of evidence for his most momentous truth of all.[59] And accordingly (in sharp descent) we need not hesitate to regard value in exchange as a primary fact in its own right, standing in no need of resolution into marginal pseudo-absolutes. A price agreed to and paid marks a real transition to another level. There are both marginal valuation and _Werthaltung_ on this level, but they are subordinate incidents to this level's mapping and the conservation of its resources. On this level every marginal utility is relative, as we have seen, to every other through their common relation to the complex plan of organization as a whole.[60]

-- 18. In conclusion one more question closely related to the foregoing may be briefly touched upon. We have held that the individual's att.i.tude toward a commodity is in the first instance one of putting a price-estimate upon it and only secondarily that of holding it in a provisionally settled marginal esteem. If this principle of the priority of price-estimation or exchange value is true, it seems evident that there can be no line of demarcation drawn (except for doubtfully expedient pedagogical purposes) between (1) ”Subjective valuations” with which individuals are conceived to come to a market and (2) a mechanical equilibration of demand and supply which it is the distinctive and sole function of market concourse to effect. In such a view the market process in strict logic must be timeless as it is s.p.a.celess; a superposition of the two curves is effected and they are seen to cross in a common point which their shapes geometrically predetermine.

Discussion, in any proper sense, can be no inherent part of a market process thus conceived. Once in the market, buyers and sellers can only declare their ”subjective exchange valuations” of the commodity and await the outcome with a dispa.s.sionate certainty that whoever may gain by exchanging at the price to be determined, those who cannot exchange will at all events not lose. But considered as a typical likeness of men who have seen a thing they want and are seeking to possess it, this picture of mingled hope and resignation is not convincing. Most actual offering of goods for sale that one observes suggests less the dispa.s.sionate manner of the physiologist or psychologist taking the measure of his subject's reactions, sensibilities, and preferences than the more masterful procedure of the physician or the hypnotist who seeks to uproot or modify or reconstruct them. This is the process known in economic writing since Adam Smith as ”the higgling and bargaining of the market.”

In fact, the individual's ante-market valuation, when there temporarily is one, is an exchange valuation of the constructive or experimental and therefore (in any significant sense of the word) perfectly objective type, and the market process into which this enters is only a perfectly h.o.m.ogeneous temporal continuation of it that carries the individual forward to decisive action. There is no more reason for a separation here than for sundering the ante-experimental sketching out of an hypothesis in any branch of research from the work of putting the hypothesis to experimental test. The results of experiment may serve in a marked way in both sorts of process to elucidate or reconstruct the hypothesis.

The ”higgling and bargaining of the market” has been accorded but scant attention by economists. It has apparently been regarded as a kind of irrelevance--a comedy part, at best, in the serious drama of industry and trade, never for a moment hindering the significant movement and outcome of the major action. As if to excuse the incompetence of this treatment (or as another phase of it) theory has tended to lay stress upon, and mildly to deplore, certain of the less amiable and engaging aspects of the process. The very term indeed as used by Adam Smith, imported a certain aesthetic disesteem, albeit tempered with indulgent approbation on other grounds. In Bohm-Bawerk's more modern account this approbation has given place to a neutral tolerance. A certain buyer, he says (in his discussion of simple ”isolated” exchange), will give as much as thirty pounds for a horse; the horse's owner will take as little as ten pounds--these are predetermined and fixed valuations brought to the exchange negotiations and nothing that happens in the game of wits is conceived to modify them. The price will then be fixed somewhere between these limits. But how? ”Here ...” we read, ”is room for any amount of 'higgling.' According as in the conduct of the transaction the buyer or the seller shows the greater dexterity, cunning, obstinacy, power-of-persuasion, or such like, will the price be forced either to its lower or to its upper limit.”[61] But the higgling cannot touch the underlying att.i.tudes. Even ”power of persuasion” is only one part of ”skill in bargaining,” with all the rest and like all the rest; if it were more than this there would be for Bohm-Bawerk no theoretically grounded price limits to define the range of accidental settlement and the whole explanation, as a theory of price, would reduce to nullity.[62]

With this, then, appears to fall away all ground for a one-sided, or even a sharply two-sided, conception of the process of fixation of market-values. A ”marginal utility” theory and a ”cost of production”

theory of market price alike a.s.sume that the factor chosen as the ultimate determinant is a fixed fact defined by conditions which the actual spatial and temporal meeting-together of buyers and sellers in the market cannot affect. In this logical sense, the chosen determinant is in each case an ante-market or extra-market fact and the same is true of the blades of Marshall's famous pair of scissors.

The price of a certain article let us say is $5. According to the current type of a.n.a.lysis this is the price because, intending buyers'

and sellers' valuations of the article being just what they are, it is at this figure that the largest number of exchanges can occur. Were the price higher there would be more persons willing to sell than to buy; were it lower there would be more persons willing to buy than to sell.

At $5 no buyer or seller who means what he says about his valuation when he enters the market goes away disappointed or dissatisfied. With this price established all sellers whose costs of production prevent their conforming to it must drop out of the market; so must all buyers whose desire for the article does not warrant their paying so much. More fundamentally then, Why is $5 the price? Is it because intending buyers and the marginal buyer in particular do not desire the article more strongly? Or is it because conditions of production, all things considered, do not permit a lower marginal unit cost? The argument might seem hopeless. But the advantage is claimed for the principle of demand.

Without demand arising out of desires expressive of wants there would simply _be_ no value, no production, and no price. Demand evokes production and sanctions cost. But cost expended can give no value to a product that no one wants.

Does it follow, however, that the cost of a commodity in which on its general merits I have come to take a hypothetical interest can in no wise affect my actual price-offer for it? Can it contribute nothing to the preciser definition of my interest which is eventually to be expressed in a price offer? If the answer is ”No, for how can this external fact affect the strength of your desire for the object?”--then the reason given begs the question at issue. _Is_ my interest in the object an interest in the object alone? And _is_ the cost of the object a fact for me external and indifferent? It is, at all events, not uncommon to be a.s.sured that an article ”cannot be produced for less,”

that one or another of its elements of cost is higher than would be natural to suppose. Not always scientifically accurate, such a.s.surances express an evident confidence that they will not be without effect upon a hesitant but fair-minded purchaser. And in other ways as well, the position of sellers in the market is not so defenseless as a strict utility theory of price conceives--apart from the standpoint of an abstract ”normality” that can never contrive to get itself realized in empirical fact.[63] It is true that, in general, one tends to purchase an article of a given familiar kind where its price, all things considered, is lowest. In consequence the less ”capable” producers or sellers must go to the wall. But the fact seems mainly ”regulative” and of subordinate importance. Is it equally certain that as between branches of expenditure, such as clothing, food, and shelter, children, books, and ”social” intercourse, the shares of income we expend upon them or the marginal prices we are content to pay express the original strength of separate and unmodified extra-market interests? On the contrary we have paid in the past what we have had to pay, what we have deemed just and reasonable, what we have been willing experimentally to hazard upon the possibility of the outlay's proving to have been worth while. In these twilight-zones of indetermination, cost as well as other factors of supply have had their opportunity. Shall we nevertheless insist that our ”demands” are _ideally_ fixed, even though in fallible human fact they are more or less indistinct, yielding and modifiable? On the contrary they are ”in principle and for the most part” indeterminate and expectant of suggested experimental shaping from the supply side of the market. It is less in theory than in fact that they have a salutary tendency (none too dependable) toward rigidity.

CONCLUSION

-- 19. The argument may now be summarily reviewed.

I. How are we to understand the acquisition, by an individual, of what are called new economic needs and interests? Except by a fairly obvious fallacy of retrospection we cannot regard this phenomenon as a mere arousal of so-called latent or implicit desires. New products and new means of production afford ”satisfactions” and bring about objective results which are unimaginable and therefore unpredictable, in any descriptive fas.h.i.+on, in advance. In a realistic or empirical view of the matter, these const.i.tute genuinely new developments of personality and of social function, not mere unfoldings of a preformed logical or vital system. ”Human nature” is modifiable and economic choice and action are factors in this indivisible process (---- 2-4). Now ”logically” it would seem clear that unless a new commodity is an object of desire it will not be made or paid for. On the other hand, with equal ”logic,” a _new_ commodity, it would seem, _cannot_ be an object of desire because all desire must be for what we already know. We seem confronted with a complete _impa.s.se_ (-- 5). But the _impa.s.se_ is conceptual only. We have simply to acknowledge the patent fact of our recognition of the new as novel and our interest in the new in its outstanding character of novelty. We need only express and interpret this fact, instead of fancying ourselves bound to explain it away. It is an interest not less genuine and significant in economic experience than elsewhere (---- 6, 7).