to usage in English and German, I think no one has a right to dogmatize when Friedrich Wieser, Adam Smith, Ricardo, W. F. Lloyd, J. B. Clark, A. S. Johnson, L. S. Meriam, E. A. Ross, David Kinley, W. A. Scott, T. S. Adams, and W. G. L. Taylor,' to mention no others, have explicitly recognized the absolute notion, and have, with greater or less consistency, used the term in that way. That practically all economists have used the absolute notion, when they have got past the chapter on definition, as a necessary tool of thought, I have tried to show in Social Value.


I turn now to the more usual conceptions of relativity that one meets in current economic literature: "ratio of exchange," "power in exchange," "purchasing power,' "taux d'échange, ""Tauschfuss," "Tauschkraft." These terms, when used as equivalents of value, are not all identical by any means, but they have in common two corollaries: (1) the doctrine that a general rise or fall of values is impossible, since a rise in the value of good A means that B has gone lower in value with reference to A; and (2) the contention that if one piece of wealth existed alone, it could have no value, — that two goods, different in some particular (else no occasion for exchange would exist), must be present before value can be predicated of either of them. As against these doctrines, the absolute value concept would contend,

1 The index of names in Social Value will give references to my discussion of the writers listed. Tarde, G., Psychologie Économique, vol. i, pp. 63 ff. Johnson, A. S., "Davenport's Economics and the Present Problems of Theory," Quarterly Journal of Economics, May, 1914. See also Am. Econ. Rev., June, 1912, p. 320. Cf. Professor Davenport's discussion of the German use of " Wert," Value and Distribution, p. 296. The non-relative meaning is the usual meaning of "Wert," in Professor Davenport's Judgment. Preis " (not confined to money-price) is the more common term for value-relations, in German.

(1) that there can be a general rise or fall in values, with or without a change in exchange relations, and (2) that if only one piece or one kind of wealth existed, it would have value, and that value would function in the control of economic activity. To illustrate the last point, let us assume a society in the tropics where the bread-fruit tree is abundant, the water supply adequate, wants for other goods too slight to induce labor, except that one good, red cloth, can be produced from superabundant vegetable resources without the use of tools,

no technical appliances being known. Would that red cloth have value? Assuredly. That value would induce economic activity. As that value rose or fell, the activity would increase or decrease. There would be no possibility of measuring the value in exchange, for no motive to exchange would exist. By hypothesis, the labor of the community is valuable only because it can produce the red cloth, and hence no exchange of labor for cloth would occur. The time element might induce men to trade present labor in making cloth for future labor in making cloth, or even present cloth for future labor, but Professor Clark, as a good Austrian, will see in this after all only an exchange of cloth (present) for cloth (future) and so, after all, no measurement of the value of cloth. There could be no variation in the relation between a given day's labor and a specified unit of cloth, since my hypothesis excludes " diminishing returns" from land, and assumes a constant (labor-time) cost. To the labor-time Professor Clark (as an Austrian) will attribute a value reflected from its product. I may simplify my hypothesis by making the cloth non-reproducible. Then the value cannot even be measured by its power to call forth productive activity. It will still function, however, in the care with which the community economizes in the use of the

cloth, in the concern with which the group views the wearing away of the supply, in the measure of resistance which the group might offer to enemies who sought to rob them of it, in their grief if the supply were lost. On either hypothesis, we cannot measure the value of the cloth in the usual way, by comparing it with some other economic good (tho exchange is not necessary for even this comparison). But is capacity for precise measurement a sine quâ non of existence? Is there a definite distance between the earth and the remotest star in the Milky Way? How much is it? Would the distance be altered if we measured it?

It will be seen from the foregoing, that my objections to the relative conception of value do not rest on the particular term chosen. "Purchasing power" and "ratio of exchange" seem to me alike objectionable. I have indicated this in Social Value. I found, however, in the notion of "ratio of exchange" certain special objectionable features, unless a prior absolute value were posited to constitute the terms of the ratio. No ratio is possible between incommensurable quantities. Milk and gold, on the basis of their conventionally measured physical qualities, are not commensurable, or if compared on the basis of weight or bulk, would be related in a different ratio from the exchange ratio which we find. Of course, there is one kind of homogeneity for all things: everything may be counted, even tho each be numbered in a different unit, and ratios may be made between the abstract numbers which the counting results in. But this gives an abstract ratio merely,' which, I contended, is of no use to the economist. I indicated, in the chapter on Jevons and Pareto, that their theories had developed only such abstract ratios, ratios lacking concrete terms, and that Böhm

1 Social Value, p. 22.

Bawerk, altho seeking something much more concrete,

had really found nothing more.

recognized this very explicitly.

Jevons himself had My contention with

reference to this point is not that an abstract mathematical ratio violates the canons of logic, but that, for the economist, it is meaningless; meaningless, that is, till further analysis gives it "economic quantities " for terms. Now Professor Clark appears to meet this by a plea of confession and avoidance. It is not clear to me, however, that he has done more than take the abstract mathematical ratio, rename it rate," and propose it as the equivalent of value. I grant cheerfully the legitimacy, as a matter of logic, of his notion, but I raise the question, what use can he make of the notion?


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Some things he can do with the notion, perhaps, but not many. You cannot add rates of exchange, to get a sum of values. "The questions to be answered are quantitative. Reciprocal comparisons give no Ratios [or rates] of exchange alone afford us no answers to the economist's chief inquiries." 1 Nor, for expressions of this criticism, do I need to confine myself to those who accept fully the absolute notion of value. Professor Carver, who defines value as purchasing power" still finds a quantitative notion of some sort necessary. A "rate" would be of no use to him. Böhm-Bawerk criticizes the notions of "ratio of exchange," "Austauschverhaeltnis," and "Tauschfuss" (perhaps correctly identified with Professor Clark's "rate of exchange") by saying that these expressions have a peculiar shade of meaning which makes it impossible to attribute them to goods as quali

1 J. B. Clark, "Ultimate Standard of Value," Yale Review, 1892, p. 258. 2" Concept of an Economic Quantity," Quarterly Journal of Economics, May, 1907.

ties, or to speak of a greater or less magnitude of them.1 Böhm-Bawerk considers value (his" objective value in exchange") relative, but none the less wishes to treat it as a "Kraft oder Eigenschaft" of goods." Professor Clark's "rate" lends itself no more than does "ratio " to the notion of money as a measure of values." Just as it will not serve when one wishes to add items of wealth to get a sum, so it fails when one wishes a sum of value as a distribuendum for the theory of distribution. One cannot speak of value as the attribute or quality of wealth, if value be merely a "rate" of exchange. Nor can one speak of a unit of value.3 shall not elaborate these considerations, drawn from the practical needs of the economist in handling his problems, since I have discussed this matter pretty fully in chapters 2 and 11 of my Social Value. I shall, however, give some illustrations of the difficulties arising in the absence of the absolute value concept that have come to my attention since the book was written.


But first, I would raise a further question: if the value of wheat be its rate of exchange, which rate is it? Its rate of exchange with iron, or coal, or corn, or hats? Each is a different rate. Will Professor Clark choose among them? Or will he try to average them? How does one average rates of exchange? Or will he confine himself to the rate of exchange with money, and limit value to money prices? Or will he say that a good has as many values as there are other goods on the market?" C. M. Walsh, in his Measurement of General Exchange Value, treating value as a quantity rather than a ratio, a

1 Grundzüge der Theorie des wirtschaftlichen Güterwerts, Conrad's Jahrbücher, N. F., vol. xiii, 1886, p. 478, n. 2 Ibid., p.

Cf. Am. Econ. Rev., Supplement, March, 1913, p. 43.


See p. 707, n., infra.

This is the strictly logical outcome. It is definitely stated by not a few writers, notably Davenport, Economics of Enterprise, p. 243, and Ely, Outlines of Economics, 1909 ed., p. 157.

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