abolish value? Or would values, measured in other ways than by exchange, continue to function in the guidance of social production and consumption? We have, on the wider notion, a useful theoretical tool for discussing socialistic programs-witness Schaeffle's Quintessence of Socialism. Further, to the extent that collective activity encroaches on the domain of private enterprise and exchange, we shall have problems for which the strict exchange-value notion will be inadequate as Professor Clark indeed suggests in his opening paragraph. The capitol building at Washington has economic value, has it not? And yet it cannot be exchanged. An entailed estate cannot be sold, yet has value a value that may manifest itself, e. g., in the amount of insurance a company would be willing to write upon the buildings on it, or in the care and expense its owner would incur to conserve it. Legal abolition of exchange does not necessarily destroy economic value. A man cannot be sold, but if you kill him in a railroad accident his economic value gets a money measure. Again, value and exchangeability are not necessarily coincident. Certainly many things that have high value, as a farm, have low exchangeability, while a copper cent has high exchangeability. On this fact, Menger has constructed a theory of the origin of money.1

labor might be exacted as a sine qua non of receiving goods from the social stock, with labor-checks used as intermediaries, the notion that values are determined in the exchanging process would not be maintained, since the terms of these exchanges would be fixed authoritatively, on the basis of some assumed principle or principles of justice or social expediency. It is my contention that economic values, perhaps by no means represented in these "prices," and having no influence on distribution, would exist and function in such a society, tending to compel a readjustment of the social apportionment of labor and capital among different occupations in production if that apportionment were not in accord with the economic values.

1 Economic Journal, 1892. It seems necessary to point out this essential lack of correlation between value and exchangeability since Mr. Horace White, in his Money and Banking (fifth ed., p. 135), identifies value and exchangeability: "Value is an ideal thing in the same sense that weight is. The former means exchangeability; the latter

Now in this lack of connection between value and exchangeability comes an important difference between the absolute value notion and the relative value notions. Forced sales of land, e. g., lead to prices sometimes which do not correctly express the value of the land. This is not a statement about " normal value " or " just value." I mean simply that the market is caught by surprise, and that social forces which would have led to a much higher price had they had time to operate, were forestalled in the snap judgment. You could not buy that farm from the new owner five minutes later for anything like so low a price as he paid, nor could you buy any similar farm in the neighborhood for so low a price. It is the same sort of thing that happens when a minority in a parliamentary body catches the majority napping. The point is essentially the same as that made by Professor A. S. Johnson, in his recent article 1 on Professor Davenport's Economics of Enterprise: the distinction between the timeless, mathematical, static equilibrium and the causal process requiring time. Economic values are, in general, the causes of prices. The cause changes first, in time, and then the effect follows later. With every change in values, therefore, there is a temporary discrepancy between values and prices. In a highly organized market, this time is usually so short as to be negligible. As most price theory has assumed a highly organized market, the notion of values as completely expressed in prices has seemed natural enough. If the social value theory be content to be a theory of only the highly organized market, it, too, may abstract from this time element. Since it wishes to be more realistic, it recognizes the time ele

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means force of gravity. A dollar is a definite amount of exchangeability." Cf. also Amasa Walker's contention that exchangeable value" is tautology, equivalent to "exchangeable exchangeability!" Science of Wealth, 5th ed., p. 9.

1 Quarterly Journal of Economics, May, 1914, p. 431.

ment, and a gradation in the time element, depending on the degree to which exchange has been organized, or can be made automatic, in the case of any given class of commodity. Of course many writers, as BöhmBawerk, have pointed out that certain prices, as those due to accident or fraud or disguised benevolence, are not "economic prices," and have then gone on to discuss "economic prices" on the assumption of the fluid market with its timeless adjustments. The social value theory, and the absolute value theories in general, do not need to make so sharp a sundering between "economic prices" and non-economic prices, but may recognize a gradation in the degree of control which values have over prices, and in the amount of time which the perfect adjustment requires. The theory of value is

essentially a theory of causation.

Further, there is often a hiatus between actual price and the price which would correctly express economic value, because the price is controlled, in part or in whole, by a value of a non-economic sort. The price itself may become an object of value, may become conventionalized, made sacred or at least tenacious, by the influence of custom or tradition, or even may be directly prescribed by law. In such cases, it is worth while to make a distinction between two cases: (a) where the economic values tend to raise the price but are checked, and (b) where the economic values are checked in their tendency to lower the price. In the latter case, adjustment is easy, and prices do correctly express values, in very many cases, because, if the supply of the good in question is dependent on continuous production, the productive factors may be diverted to other employments, and the supply shortened, until the values are brought into harmony with the prices. This would not be possible, of course, where such a shifting is not pos

sible. A minimum wage law, e. g., would be easier to enforce by far in a single industry than over the whole field. The value of labor might be brought into perfect correspondence with a minimum wage in a given industry; if such a law were enforced over the whole field, some laborers might get a wage exceeding the measure of their value. But this does not mean that such a law could not be enforced. Economists have often spoken of the helplessness of law when in opposition to economic forces, but what we practically get in such a case is a conflict between values which tend to move prices in opposite directions, with a marginal equilibrium between them. I do not wish to go far into the theory of the minimum wage here, and shall illustrate by some simpler cases the control of prices by law or other noneconomic values in opposition to economic values. Where, as in case (a), the economic values tend to raise prices, but law seeks to check the tendency, we have had our most strenuous insistence on the powerlessness of law. The English "Statutes of Laborers" have been cited again and again as evidence of the powerlessness of such laws. And yet I think it perfectly certain that these laws were not without effect. They did not perfectly control the price of labor; wages rose more or less steadily during the period of their operation. But it surely cannot be contended that they did not delay the process, that at many points wages were not kept to the statute rate because of the statutes; that, in fact, you had a shifting marginal equilibrium between the social forces in the economic value and the social forces in the law, an equilibrium expressed in the price of labor, and varying as the one force or the other gained or lost in magnitude. A modern case may be suggested. Suppose that railroad freight rates are legally fixed at a point lower than necessary to provide

the facilities for which the shippers of a given region are willing and able to pay, so that competition among shippers would lead to the offering of prices higher than the legal rates if the railroad were free to accept them. Suppose, however, that the regulating authorities have full access to the railroad's books, and have power to punish with imprisonment any deviation from legal rates. Will economic values control prices here? Will there not be a divergence between values and prices ? The economic values might lead to higher prices paid, not to the railroad, but to speculators who had chartered cars, if that were feasible. The economic values might function in the bribing of employés to give preference to one shipper over another. But the aggregate amount paid for a given amount of transportation would be much less than would be the case if the values were free to work unobstructed. A similar situation arises in the efforts of theatres to prevent speculation in their tickets, to interfere with the free play of economic values in controlling prices. These efforts are less successful than I have assumed would be the case in the illustration just given, partly because the efforts are often not very sincere, and partly because the moral and legal values supporting such efforts are not strong. In the case, however, of the price of tickets at the Harvard-Yale football game, where a powerful sentiment exists among the students of the Universities as to the impropriety of ticket speculation, and where the fear of being excluded from future privileges of buying tickets is real, the non-economic values resist very powerful economic values, and the price of tickets remains pretty much where it is placed by the athletic authorities. These are cases where exchange-relations do not adequately represent economic values. Would Professor Clark give a different answer? To be consistent he would have to do so.

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