From the Editor Preface:
In the preface to my Introduction to the Theory of Value, in which I attempted to make clear to English readers the main lines of that theory as expounded by the Austrian School, I said that injustice to Professor Wieser, I stopped short of his application of the value theory to distribution, preferring to put the translation of his brilliant and suggestive work into the hands of one of my former students.
The rendering of Natural Value which follows will, I think, justify at once my reserve and my selection of a translator. The theory of value, of which the Austrian economists are now the chief exponents, is the Final or Marginal Utility theory, best known to English economists through Jevons's great work published in 1871. In the same year, and quite independently, appeared Monger's Gnindsdtze a work typical of Teutonic thoroughness and strength.
This was followed, in 1884, by Wieser's Urspning and Hauptgesetze des wirthschaftlichen Werthes. The Positive Theory of Capital of Bbhm-Bawerk (1889) contains a masterly exposition of value, price, and costs, on which the author bases his well-known theory of interest. Previous to that, in 1887, Sax published his Grundlegung, in which he applied the value theory to the economic functions of the state. Finally came the present work, which at once catches up many loose ends in previous expositions, and carries the whole theory, with its applications, to a higher level of completeness. The main purpose of Natural Value may be read in chap. vi. of Book II. (p. 60).
The general reader, however, will possibly find the most suggestive matter in chapters incidental to this main development, particularly in the attacks on Socialist theory.
To English economists, again, I venture to think that there are three points which will especially commend themselves as original contributions to our science. These are, the re-setting of the elementary conception of value in Book I., the application to distribution in Books III. and IV., and the bringing of the law of cost of production within the compass of the general Marginal Law in Book V. If an editor's preface has any function it is, I imagine, to elucidate points which his, presumably, close study of the book have shown to be difficult, and my connection with the Austrian School may, perhaps, justify me in putting these points in my own way.
The first book contains the general statement of the theory of value according to the Austrian School. Its main lines are as follows. The man in the street asked the simplest questions about value, betrays the popular belief that value originates in Utility, while he is, at the same time, aware of many phenomena which seem to contradict this faith. For instance, free gifts of nature have no value: some confessedly very useful things have little value: scarcity, as well as use, confers value: cost seems the very antithesis of value.
It is a fundamental principle of the school that the investigation of value is the investigation of human acts of valuations, and, accordingly, no theory of value can be satisfactory which does not bring these contradictions under its law. A slight analysis shows that, in the last resort, the " use " of goods or the use we get from them is nothing but the satisfaction of want, or rather of desire. Goods that do not satisfy some desire are of no use to anybody: if we could satisfy desire without goods we should have no desire for goods: these two considerations point to the conclusion that it is not goods in themselves that are either desirable or desired, but satisfactions. We must, first, then, look deeper into the nature of wants and satisfactions.
Gossen's law gives us a correct analysis. According to it, want or desire diminishes with every successive draught of satisfaction till the point of satiation is reached. This is true of all desires, higher and lower if we are careful to consider the same desires and not other varieties of them, and if the desires in question are full-grown, and not merely awakening or in course of development. Thus the satisfaction of every want describes a falling scale, and, at each degree on the scale, the sensations of want are of different intensity.
But here are two things which may be spoken of as " want": the want as a whole, or kind, or class, and the individual sensation of want. However, we classify the kinds of wanting according to as we look at them from a moral, or hedonistic, or intellectual standpoint the more important kinds of wanting to remain the more important. But, in these kinds, the sensation .of. want varies from an indefinite higher point down to zero, according to the circumstances of provision for it. Taken day by day, the appetite for food is constant and important: at any point of the day, its importance depends on the satisfaction afforded by the last meal.
It has been said that one finds in Adam Smith nearly all the explanations of value that have ever been attempted. What is certain is that, in his explanation, Adam Smith has put together two views that contradict each other.
To put it shortly: he gives two theories, one philosophical, the other empirical. In the first he tries to make clear what should be thought of as the characteristic attribute of value; what it is we ascribe to some things and deny to others that, to all appearance, are entirely the same; what it is of which we ascribe a great deal to certain things and very little to other things which, measured by outside standards, seem infinitely superior. In this view value is an attribute per se, coinciding with no other that we know, and, least of all, with the usefulness of things. In carrying out this attempt Adam Smith first of all abstracts from the complicated circumstances of ordinary economic life, and confines himself to the simple, primitive, natural state. In this state, he finds that it is labour in which value originates.
Goods are worth to us what they cost in labour, and what, therefore, their possession saves us in labour. The idea of value thus arrived at Adam Smith goes on to apply to the empirical instances of the phenomenon of value. Thereafter when he comes across value he sees nothing mysterious in it; he has a means of distinguishing it from the other attributes of things; he knows how to get to the heart of it; indeed, through its relation to the labour from which it receives its content, he can even measure it.
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