第3章

NOTES:

1。WhatIproposetocall“NaturalValue“hasbeenhithertocalledsocialusevalue。Withtheword“valueinuse“

(Gebrauchswerth)areconnectedtoomanymisunderstandingstopermitofourusingitwithoutdanger。Usevalueiscommonlyunderstoodasusefulness，orsomethingcloselyrelatedtothat，andnotasactualvalue。Itis，moreover，rarelyusedinconnectionwithproduction，andIwishtospeakasmuchofthevalueofproductiongoodsandofcosts，asofthedirectusevalueofconsumptiongoods。

2。Thequestionwhethersuchacommunitycanoreverwillexistisonewhichdoesnotintheleastconcernus。Weshallcontentourselveswithimaginingit，anditwillbeanexcellentaidinraisingwhatwouldremain。ofourpresenteconomyifwecouldthinkawayprivateproperty，aswellasallthetroubleswhichareaconsequenceofhumanimperfection。Mosttheorists，particularlythoseoftheclassicalschool，havetacitlymadesimilarabstractions。Inparticular，thatpointofviewfromwhichpricebecomesasocialjudgmentofvalue，reallyamountstoadisregardofalltheindividualdifferenceswhichemergeinpurchasingpower，andwhichseparatepricefromnaturalvalue。A

greatmanytheoristshavethuswrittenthevaluetheoryofcommunismwithoutbeingawareofit，andindoingsohaveomittedtogivethevaluetheoryofthepresentstate。Bymakingourassumptionsquiteclear，andguardingagainstasimilarerror，wemaydomoreforvalueaswefinditthantheyhave。

Chapter7

TheSocialistTheoryofValueSocialistwriters，howevermuchtheyfindtoobjecttoinvalueasitisinthepresentday，havelittleenoughtosayconcerningitsfuture。Theygiveusveryscantyinformationastothepartitwouldhavetoplayinthesocialiststate。KarlMarx，inexplanationofthisreserve，saysthat“thesocialrelationsofmantohislabourandtotheproductsofhislabourareheretransparentlysimple。“Itwouldappearthatvalue，inthesocialistsense，resemblesthoseorgansofthehumanbodyofwhoseexistence，whendiseased，wearepainfullyconscious，whileinhealththeyarescarcelynoticed。Physicianseven，whoknowtheirpathologythoroughly，arenotabletosaywhatvitalfunctionstheyserve。

Thesocialiststeachthattheoneandonlysourceofvalueislabour。Inthesocialiststatetherearetobeonlytwoobjectsofvalue，——labour，andconsumptiongoodsproducedbylabour。

Landandcapitalwillnotbeobjectsofvalue。Valuepresupposesutility，butdoesnotoriginateinit。Itiscreatedbylabour，andtheexpenditureoflabournaturallyattractstoitselftheinterestofman。Itsmeasureislabour-time，oreventheexertioninvolvedinlabour。Ofthesocialservicesrenderedbyvalueonlythatofthedistributionofgoodsisretained，andeventhisonlytoalimitedextent；theproducedconsumptiongoods，estimatedaccordingtotheirlabour-value，aredistributedamongthelabourersaccordingtotheamountoflabourservicetheyhaverendered。Productivelandandcapitalaretheexclusivepropertyofthestate，andareneitherobjectsnorstandardsofthedistribution。Theotherservicerenderedbyvalue，thatofbeingthecontrollingpowerofsocialeconomy，and，inparticular，ofproduction，isnotclaimedatall。Theonlyclaimsallowedarethoseofutilityorofusevalue，butby“usevalue“isnottobeunderstoodvalueinthesensewegivetoit，bututilitypureandsimple，andthereforeutilitywithoutthatpeculiarmeasuringpowerwhicharisesfromcomparisonofwantandprovision。

This，inoutline，isthesocialistprogrammeofthefutureforthevaluationofgoods，——although，ofcourse，notexpressedintheoriginallanguageofitsauthors。Inmyopiniontherehasneverbeen，inthewholecourseofhistory，amoreimportantchangecontemplatedinthesocialorderthanthatnowdesiredineconomiclife；andneverhasplanofalterationbeenmoreimperfectlythoughtout。Tochangeafeudalkingdomintoamodernadministration，oramonarchyintoarepublic，oranaristocracyintoademocracy，wouldbenothingtothis；foritistheattemptataneconomicrevolutionwhichwouldaffectnotonlythosefewwhoareinterestedinpoliticalmatters，butthewholebodyofthepeople，——affectthem，too，justwheretheyaremoststronglyconsciousoftheirowninterests。Dreamsofpoliticalfreedom，ofequality，ofbrotherhood，eventhereligiousdreamsofakingdomofGodontheearth，howeverfantasticallytrickedout，haveneverbetrayedsoimperfectaknowledgeoftheirobject，asdoesthesocialisttheoryofvalue。Thesehaveatleasttheexcusethattheyappealtofeelingsofhumannaturewhichmaysoartounknownheights，andwhich，oftheirverynature，givenourishmenttothemostextravagantexpectations。

Butvalueisathingforthemostunimpassionedthought。Hereitiswrongforanyonetoletimaginationspeakinsteadofreason，——wrongfortheacademicwriter，andeversomuchmorewrongforthesocialreformerandagitator。Notforonedaycouldtheeconomicstateofthefuturebeadministeredaccordingtoanysuchreadingofvalue；indeedthefirstpreliminaryarrangementsforitsintroductionwouldshowitsutteruselessness。

Toacertainextent，however，thesocialistsarejustifiedbytheirveryopponents。Theideaoflabourvalue，andmanyotherideasofsocialisttheory，originatedamongthebourgeoiseconomists，andwerefoundbytheleadersofthelabourpartytobe，theoretically，perfectlydeveloped:itonlyrefinedtomakeapracticalapplicationofthemforthebenefitofthesocialistparty。Itwashardnottomakeuseoftheadvantagethusputintotheirhands。Ifitbeacknowledgedthatlabouralonecreatesvalue，itseemsimpossibletodenytheclaimthatthelaboureraloneshouldenjoythevalue。Intheacademicstrugglethesocialistsundoubtedlygotanimportanttacticaladvantagethroughtheunqualifiedacceptanceofthattheory——thetheoryheldbyalargesectionoftheiropponents，andasectionwhich，underthecircumstances，mightbeconsideredthemostformidable。

Ifallthetremendousconflictofinterestscouldhavebeenendedbytheargumentsusedbythespokesmenofthesocialistpartyintheirwordywarfare，atacertainperiodoftheliterarydevelopmentthevictoryofsocialismwouldprobablyhavebeencomplete。But，ofcourse，whatwasgoodenoughinargumentwouldhavebrokendowninfaceoffacts，fornoamountofplausibilitycanimposeonthem，——and，aftervanquishingtheiropponentswithonetheory，thesocialistswouldhaverequiredtomakeupanothertosupporttheirposition。

Inthesocialisttheoryofvalueprettynearlyeverythingiswrong。Theoriginofvalue，whichliesinutilityandnotinlabour，ismistaken。Therelationofsupplytodemand——thatfactwhichimpelsustoattributeutilitytogoods，anduponwhosefluctuationsdepend，inthelastresort，thefluctuationsinamountofvalue——isoverlooked。Theobjectstowhichvalueattachesarenotallembraced，foramongthosemustbeincludedproductivelandandcapital，bothaselementsinthecalculationofcosts，andalsoperse。Andtheservicerenderedbyvalueineconomiclifeisonlyhalfunderstood，inasmuchasthemostessentialpartofit，thematerialcontrolofeconomy，isneglected。

Allofthisweshallrequire，——nowthatwehavemadeacquaintancewiththeelementaryphenomena，——todemonstrateinthecircumstancesofproduction。Inparticularweshallhavetoshowthat，inthenaturalorderofeconomy，labourisvaluedaccordingtoitsutility，valueattachestolandandcapital，andlandrent，aswellasinterestoncapital，iscalculatedamongcosts。Ifthisweretobeneglectedproductionwouldbecomechaos。

NaturalValue byFriedrichWieserBookIII:TheNaturalImputationoftheReturnfromProductionPARTI:TheGeneralPrinciplesofImputationChapter1

ReturnValueProductiongoods，aswellasconsumptiongoods，affordutility。Land，capital，andlabouraffordutilityinasmuchastheyproduceusefulobjectsofconsumption。Asthelatterservedirectly，sodotheformerindirectly，towardthesatisfactionofwants。Theseed，thetree，thesoil，theyarn，thecoal，themachine:——thesearenotindeedripeorfinishedgoods，likethefruitandthegarment，buttheyarejustasreallygoods。Theycontainprospectiveorpotentialutility。

Andtheproductiongoods，land，labour，andcapital，mustreceivevalueonaccountoftheirutility，sofarastheyarenotavailableinsuperfluity。Theatomofair，whichfloatsabovethefieldincompanywiththecountlessothersthatthrongspace，isusefulbutvalueless，becauseitsplaceisatanytimetakenandfinedbyanother。Ontheotherhand，inthejudgmentofeconomicmen，allthoseelementsofproductionmustreceivevalueonaccountoftheirusefuleffect，which，howevernumeroustheybe，areyetnotnumerousenoughtopreventevenasmalllossinthembeingperceptibleandbringingharminitstrain。Productiondoesnotdespisefreegoods；itdoesnotdisdainthefruitfullandalthoughitshouldstretchawayinexcessofallrequirements，orthewoodintheprimevalforest，orfreewaterpower:onthecontrary，itseeksthemoutandpreferstousethemwhereveritcan，becausetheirservicesarethemostperfectpossible，andpresentnobreakintherendering。Nonethelessitmustbesaidthatproductionpayslittleattentiontofreegoods，——indeedlessthanlittle。Itdoesnotconsiderthematall。Itmerelyusesthem；itascribestothemnovalue。Itdoesnotevenreckontothemtheservicestheyrender。Utilityalonegivesnovalue；

theremustbelimitationofsupplyaswell，beforevalueemergesfromutility。Utilityisandremainsthesourceofvalue，butinordertosetthesourceflowingtheremustbeapeculiarmotivepower，whichwilldirecttheattentionofmantothenecessityofwatchingandattendingtoit。

Itis，however，notusualtofollowthevalueofproductiongoodstoitssourceinutility。ToestimatethevalueofafieldIdonotconsiderwhatsatisfactionsofwantcanbehadfromitscrop。Icontentmyselfwithcalculatingwhatandhowmuchcropitwillprobablyyield；thiscropthenIestimateaccordingtothevaluewhichattachestoitinvirtueofitsutility；andthisvalueistomethebasisfromwhichIascertainthevalueofthefield。Theactofvaluationofproductiongoods，whichoughttoreachrightbacktowants，is，therefore，usuallycarriedonlytothatpointatwhichtherelationofthesegoodstothevalueoftheirproductsisclearlyestablished，forinthevalueofproductsthecalculationofthewantsisalreadyrepresented。Tothisextentitispossibletosaythatthevalueofproductiongoodsisdeterminedbythevalueoftheirproductsorbythevalueofthereturn。Productivevalueisreturn-value。Theconsiderationthat，fromproductiongoods，onecanobtainareturningoodswhichpossessnotonlyutilitybutvalue，givesproductiongoodstheirvalue。

Accordingtothemannerinwhichproductionisplannedandcarriedout，itispossibletoobtainfromthesamegoodswidelydiversekindsandamountsofreturn。Economicprinciplesdemandtheobtainingofthegreatestpossiblereturn；thatis，thereturnpossessingthegreatestvaluewhichitispossibletoobtainunderthecircumstances。Itisthis“greatestpossiblereturn“whosevalueshouldserveasbasisforthevaluationofproductiongoods。(1*)Probablyitneverispossibletodecidethisbeforehandwithabsoluteaccuracy，butsomeanticipatoryestimatetheremustbe。Itisnotthereforeactuallythevalueofthereturnwhichformsthegroundofproductionvalue，——buttheexpectationwhichisformedofit。Itistheanticipatedvalueoftheanticipatedreturn。

Thegreaterthereturnreckonedon，thegreaterwillbetheproductivevalue。Thegreaterthedividendexpectedfromastock，thehigherwillbethevalueputuponthestock。Thisfrustrationofstocksanddividendsis，onthewhole，thebestthatcouldbegiventoexplainproductivevalue。Everymeansofproduction，everytool，everypieceoflandorrawmaterial，everyserviceoflabour，represents，ifonemaysayso，ashareinanundertaking。

Thissharecontributestotheresultoftheundertaking，andconsequentlygetsascribedtoitaquotaoftheresult，andupontheamountofthisresultitsvaluemustdepend。(2*)

NOTES:

1。Thevalueoftheproductiveunitagainisdecidedaccordingtothemarginallaw——i。e。bytheleastamongthesereturns。Seebelow，BookIII。chap。viii。

2。Theclassicalpoliticaleconomyreallyexaminesonlythevalueofproducts，or，moreexactly，ofproducedconsumptiongoods。Sofarasthefactorsofproductionareconcerned，itlooksuponthem，ontheoneside，assourcesofincome(rent，interest，wage，and，perhaps，alsoundertaker\'sincome)；ontheotherside，astheelementswhichgotoformthecostsofproduction，andareconsideredtodecide，principally，thevalueoftheproducts。

Butwhenonecompareswiththistheendeavourswhich，explicitlyorimplicitly，guidethenewwritersonthetheoryofvalue，wefindthecircleofthephenomenatowhichtheideaofvalueisappliedextraordinarilywidened。Factorsofproduction——betterexpressedbythelaterwritersas“productiongoods“——

areconceivedofallthroughasobjectsofvalue；costsaredirectlyphenomenaofvalue；andevenincomemustbesoconceived。Furtherthanthis，therelationsbetweenthevalueofutilitiesandthevalueofproductiongoodsisturnedjusttheotherwayabout——theformerbeingconsideredasdetermining，thelatterasdetermined。Onthepresentoccasionwehavefirsttodowiththepropositionwhichmayserveasstarting-pointforthewholetheory，——thatproductiongoodsreceivetheirvaluefromthevalueoftheproductswhichtheyservetocreate。

Gossen，Jevons，Menger，andWalrasareallagreedonthispointInmyopinionitisagainMengerwhogivesthemostclearandcomprehensivestatementofthematter。Hedivides(asdoesalsoGossen，thoughmuchlessperfectly)theentiregoodswhichstandintheproductivenexusintoRanks，andvalueisconductedfromranktorank。Thefirstandlowestrankisformedbythoseutilitieswhichreceivetheirvaluedirectfromwants。Thevaluethusreceivedpassesoverfirsttogoodsofthesecondrank，those，namely，whichservedirectlytowardstheproducingofgoodsofthefirstrank；ase。g。themealandthelabourofthebakerinthepreparationofbread。Fromthesevaluepassesontogoodsofthethirdrank(e。g。wheatandthelabourofthemiller)；andsoon，stepbystep，tillitreachesthehighest，or，asBohm-Bawerkcallsthem，themostremoteranks。

Chapter2

TheProblemofImputationNoproductiveinstrument，beiteversoefficient，yieldsareturnbyitsunaidedagency；italwaysrequirestheassistanceofothers。Andthemoretheartofproductionisdeveloped，themorenumerouswillbetheproductiveinstrumentswhichco-operate。Theverysimplestproductsoftenrequirethemostcomplicatedmethodsofproduction，becausethey，morethananyothers，allowoftheapplicationofmachineryand，therefore，ofpowerinthemass。Thepropositionthatproductiongoodsobtaintheirvaluefromthevalueoftheirreturns，sufficesonlyforthevaluationoftheco-operatingproductivefactorsasawhole；

notfortheirvaluationindividually。Toobtainthisalso，weneedarulewhichwillmakeitpossibletodivideupthewholereturnintosingleparts。

Whenland，capital，andlabourworktogether，wemustbeabletoseparateoutthequotaofland，thequotaofcapital，andthequotaoflabourfromthejointproduct。Morethanthat，wemustbeabletomeasuretheservicesofeachseparatepieceofland，ofeachseparatequantityofcapital，andofeachseparatelabourer。Ofwhatuseisittoknowthereturnwhichfallstomachinery，coal，andrawmaterialtogether？Itisnecessarytodistinguishwhateachhascontributedtothetotalresult，justasthecontributionofthestone-cutterwhohewstheblockmustbedistinguishedfromthatoftheartistwhochiselsitintothestatue。

Ifwemayformajudgmentfromeconomicpractice，weshouldsaythereissucharuleofdivision。Noone，practically，islimitedtosayingthatreturnisduetoalltheproducingfactorstogether；everyoneunderstandsandpractises，moreorlessperfectly，theartofdivisionofreturn。Agoodbusinessmanmustknow，anddoesknow，whatadaylabourerandwhataskilledworkerwouldyieldhim；whatprofitamachinewillbringin；howmuchhastobeascribedtotherawmaterial；whatreturnthisandwhatreturnthatpieceoflandwillproduce。Ifhedidnotknowthis；ifhecouldonlycomparehisoutlayandhisresultsasawholeandinthelump，hewouldnotknowwhattodoincasethereturnprovedlessthantheoutlay。Musthegiveuptheproductionaltogether？Musthealterthemanagement？Musthebemoresavingwithlabourorcapital，withmachineryorrawmaterial；or，onthecontrary，mustheemploymoreofthese？Onlyifthereissomeadequatemeansoffollowingoutindividuallytheworkingofeachproductiveelement，canhejudgeclearlyuponthesepointsThatthereissuchameansistestifiedbythefactthateconomicdecisionsofthenaturewehavejustmentionedaremade，andmadewithasmuchconfidenceandasfavourableresultsasareanyotherdecisionsinmattersofvaluegenerally。Theexistenceofthismeansofcalculationisstillmorecertainlyprovedbythefactthatdecisionsofthisnaturearesooftenmadeinthesamewaybymanypeople，——infact，byallpersonswhofindthemselvesinthesamecircumstances。Whyatacertainpointoftimedoestheentirebodyofundertakers，insomeparticularbranchofmanufacture，suddenlyreplacehandlabourbymachinery，whenpreviouslytheyhadnotfoundmachineryprofitable？Whyisagricultureinonecountrysomuchmore“intensive“thaninanother？Chanceandcapricearehereoutofthequestion。Itiscalculationsofproductionthateffectthesealterations。Theygivearithmeticalproofthatitisadvantageoustoeliminatetheoneelementofproduction，withitsaccompanyingshareinthereturn，andsubstituteforittheother。Themoreperfecttheproduction，themoreexactwillbeitscalculations，andthemorehighlywilltheartofdistributingthereturnbedeveloped。A“modeleconomy“calculateseverything。Buttherudestpeasant，andthewildestsavage，makecalculations，inexactandhastythoughtheybe。They，too，makeuseoftheirexperience，thoughveryimperfectlyofcourse，inregardtomatterswheretheimpulseandtheconfidencearegivenbynature。

Thepeasant，dwellinginsomecleftofthemountain，saystohimselfthatthisfieldismorevaluablethanthat；andthishecouldnotdounlessheunderstoodtheartofseparatingthereturnofthefieldfromthereturnoftheco-operatinglabourers，tools，andmaterials。Theseareruleswhicharisenaturally，fromtheverynatureofman，whenhefindshimselfconfrontedwiththeproblemsofeconomiclife。Inapplyingthem，theattemptwouldundoubtedlybemadeevenbyacommunisticstate，tocalculatetheresultofeachindividualproductiveelement。Andinahighlycultivatedstatethesecalculationswouldbemadewithgreatexactitude，inordertolaydownthatplanofproductionwhich，forthetimebeing，wasmosteffective。

Itissingularhowfewofthosewriterswhohaveattemptedtograspeconomicproceduresintotheunityoftheoryhavetriedtodiscoverthisrule，——whichiscertainlyoneofthemostimportantfollowedinpracticaleconomicdealings。Ofthemanydifficultieswhichhavetobeovercomeifwearetoget，apartfromactualtransactions，apurelytheoreticalandscientificaccountofwhatpeopleactuallydowhenimpelledbycircumstances，probablythefirstandmostdifficultofallistoputbeforeourselveswhataretheproblemsreallyputinbusinesstransactions。Everytheorybeginswiththeleastimportantofthethingsithastodo，andonlyintheendarrivesatitstruevocation。

Theseconddifficultyistostatetheproblemcorrectly。Thefewwriterswhohavemanagedtogetoverthefirstobstaclementionedhavealmostallcometogriefatthesecond。Forthemostparttheypitchthequestiontoohigh，andthuschange，whattothesimplemanisasimpleandnaturalthing，intoasubtleandsophisticalriddle，ofwhichtheythensay，rightlyenough，thatnosolutionispossible。Theytry。todiscoverwhichportionofthejointproduct，physicallyconsidered，eachfactorhasproduced，orofwhichpartoftheresulteachfactoristhephysicalcause。This，however，isnottobediscovered。Atthemostitcouldbepossibleonlyincaseswheretheproductisacomplexofmaterialsexternallyboundtogether；andeventhatonlysofarasregardsthematerials，andnotasregardsthepowerwhichmakesthemacomplex——apowerwhoseeffectsinhereinalltheconstituentpartsofthemass，withoutbeingincorporatedinanyoneofthem。Lookedatinthisway，wecannotgetbeyondthepropositionthattheresultisthejointproductofallitsfactorsandcauses；thatthosefactorsmustworkincombinationortheycannotworkatall，——likethefourbrothersinthetalewhosavedtheprincessonlybytheirunitedendeavours。Ifwewishtofindtheprinciplefordivisionofreturnwhichisappliedinpracticallife，thequestionmustbeputquitedifferently；itmustbeputaspracticallifeputsit，anditmustbeputsimply。

Thecausesofanyphenomenon，whateveritmaybe，canbeinterpretedinveryvariousways。Thephilosopherlooksattheminonelight，thepeasantinquiteanother；andyetbothmayjudgerightly，and，sofarastheirjudgmentiscorrect，mayapplyrightlytheirconception。Thedifferenceintheiropinionsrestsonthefactthattheyjudgefromdifferentpointsofview。

Theformersearchesafterthefinalcausesthatmaybegraspedbyhumanreason；thelatterlimitshisattentiontotheproximateandimmediatecauses，takingforgrantedtheagencyofallthosewhicharefurtherremoved。Eachwouldfailwerehetomakeuseoftheother\'sknowledge；thepeasant\'smaximdoesnotanswerthepurposeofphilosophy，andthephilosophicconceptionhasnoplaceintheeconomyofthepeasant；yeteachisserviceableenoughinitsownplace。Inwhateverindustrialsituationmencometoajudgmentastothecausesofthephenomenawhichtheyencounter，thehorizonofthejudgmentisalwaysstrictlylimitedbythepointofviewtheytake。Whateverliesbeyondthatcannotproperlybetakenintoconsideration，orthejudgmentwouldnevercometoanything。Itwouldonlyendinneedlesscriticalreflection，whichwouldbeofnohelpasregardstheobjectsaimedat。Ifwewishtoobtainapracticaljudgmenttheobjectmustbekeptinview，andthematterlookedatfromthepointofviewofthoseconcerned。Atheorywhichproposestoexplaintheideainbusinesslife，must，ofallthings，notbeaboveitsbusiness；itmustlimititself，soasnottogivetoodeepameaningto，andtherebyreallydistort，thelimitedsubject。

Asciencenearlyrelatedtoourownasregardsitssubject，thatofjurisprudence，maygiveusadmirableinstructiononthispoint。Foranactofmurdertheremustnecessarilybeaperpetrator，avictim，aninstrument，andanopportunity。Besidesthese，theactisinfluencedbyinnumerablecircumstances，whichcanoftenbeshowntoreachbacktoafardistantpastintheprevioushistoryofthemurderer，andeveninthehistoryofthecommunityamongwhichhecameintoexistenceandgrewintomanhood。Thesociologist，thehistorian，thephilanthropist，andthelawgiverwillhavemuchtoconsiderthathasbutanindirectconnectionwiththecommittingofthemurder。But，howeverfarbacktheymaycarrytheirconsideration，someidlebraincanalwaysgostillfurther，andfollowadinfinitumtheseriesofcauseswhichledtothedeed，——as，forinstance，thehistoryofthetoolwithwhichitwasdone，aswellasthehistoryofthedoer。Thejudge，ontheotherhand，who，inhisnarrowly-definedtask，isonlyconcernedaboutthelegalimputation，confineshimselftothediscoveryofthelegallyresponsiblefactor，——

thatperson，infact，whoisthreatenedwiththelegalpunishment。Onhimwillrightlybelaidthewholeburdenoftheconsequences，althoughhecouldneverbyhimselfalone——withoutinstrumentsandalltheotherconditions——havecommittedthecrime。Theimputationtakesforgrantedphysicalcausality。Itcannotfalluponanyonewhostandsoutsidetheseriesofcauseswhichledtotheresult，andanyproofthattheaccuseddoesstandoutsideexemptshimfromcondemnation。Butifthecausalnexusisonceestablished，farmoreislaidtotheaccountofthedoerthanwasorcouldbephysicallydonebyhim。Onlyafoolishinterpretationofthejudgmentcouldtakeexceptiontothis。Theexpression“thismanhasdoneit“doesnotmean“thismanalonehasdoneit，“but“thismanalone，amongalltheactivecausesandfactors，islegallyresponsibleforthedeed。“

Inthedivisionofthereturnfromproduction，wehavetodealsimilarlynotwithacompletecausalexplanation，butwithanadequatelylimitingimputation，——savethatitisfromtheeconomic，notthejudicialpointofview。ObservationofthefruitsoftheearthsuggeststoareligiousmindtheCreatorofallthings。Ascientificinvestigatorisdirectedbythesameobservationtowardsthepursuitofthecognisablecausesoftheircreation。AFaustpinesafterknowledgeregardingthehiddenforcesoftheirlife。Thefarmer，asfarmer，thinksdifferentlyfromallofthese。Heascribeshiscrops，soberlyandunsentimentally，toaverylimitedandsmallcircleofallthecauseswhichhaveactuallyproducedthem。Heasks——“TowardswhatthingsmustIdirectmyeconomicattentioninordertoreceivethisreturn？“——andreckonstheresultaccordingly。Hethereforesetsapartfromthetotalactivecausesallthosewhichliebehindinthepast。Fromthepresentcauseshethensetsapartallthosewhichcanbeofnouse，orarenotrecognisedashavinganyuse。Fromtherecognisedanduseful，again，hedividesoffallthosewhicharenotundereconomiccommand。Fromtheselasthe，finally，separatesoutallthosecauseswhichneednotbecaredfor，becausetheyarepresentinsuperfluity。Aswecanreadilyunderstand，hedoesnotintheleastbelievethattheremainderisthesoleoriginatingcauseofhisreturn。Atthesametimeherightlyattributesorimputesthereturntoitalone，takingtheworkingofalltheotherelementsasassured。

Hisjudgment，thoughlimited，isneitherfalsenoreveninexact。

Itembracesallthecauseswhichhavetobeconsideredbyhimifhislabouristobeattendedbygoodresults。

If，intheeconomicworkingout，partsofthetotalresultshouldbetracedbacktoindividualinstrumentsofproduction，itisthatwecontinuethereasoningwithwhichwestarted:wetracebackthetotalresultnottoitsnumerouswidercauses，butsimplytotheeconomicinstrumentsofitsproduction。Inregardtothepartwelimitourselvesstillmorethanwedidinregardtothewhole；weseekoutthatoneamongtheeconomicelementstowhichthepartispracticallytobeimputed，although，certainly，itcouldhaveproduceditonlyincombinationwiththeotherelements。Here，again，thereisneitherfallacy，noreveninaccuracy。Onthecontrary，sofarasthismethodsucceedsinfounding，upontheimputationofthereturn，avaluationofgoodsandaplanofproductionwhichinsuresthemostsuccessfulemploymentofeachsingleelement，itistheheightofpracticalwisdom。

Toshowthatimputationinthissenseisbothallowableandpracticabletakeonesinglecase。Supposethattwofields，theonefertile，theotherpoor，butbothworkedwithsimilaramountsofcapitalandlabour，givedifferentreturns。Towhichaccountisthesurplusreturnofthebetterfieldtobeattributed——tothatoftheseed，orthemanure，ortheplough，orthelabour？

Butthesewerethesameinbothfields。Isitnotrathertobeattributedtothelanditselfanditsgreaterfertility？Noonecanbeindoubtastothat，norcanoneraisetheobjectionthat，withoutseed，manure，plough，andlabour，therecouldhavebeennosurplusreturn。Takingthingsastheyare，moredependsuponthepossessionofthebettersoil——justasmuchmore，infact，asthesurplusreturnamountsto。

Itisofgreatimportancethatweshouldtrytoformulatetheoreticallytherulesfortheimputationofproductivereturn，notonlyasregardslandbutasregardsallproductiveinstruments。Ifwedonotsucceedindoingso，thevaluationofproductiongoodswillremainanenigma；andtheexistingorderofthings，underwhichtheactualimputationofreturnsformsthebasisforthedistributionofnationalincomeamongthecitizens，willlieundertheaccusationofarbitrariness，ifnottheworseaccusationofforceandinjustice。Itwouldnotevenbepossibletojustifythedifferenceinwagespaidtosomelabourersascomparedwithothers。Ifthereisnorulebywhichtoadjustthequarrelbetweenownersandworkers，neitheristhereanybywhichtomeasuretherankoftheinventoragainstthatoftheday-labourerwhocarriesouttheinvention。Itwouldbepurelyarbitraryifonetried，evenapproximatelyandbywayofvaluation，toshowrespecttogenius，devotion，art，power，skill——inshortallthevirtuesandexcellenceswhich，fromtimeimmemorial，havebeenheldinrespectineconomicmattersaswellasinothers，andwhichsocietyhastothankforthemostbeneficentandusefulservicesofitsmembers。

Chapter3

TheSocialistReadingoftheProblem。TheClaimoftheLabourertotheEntireReturnThesocialisttheorysogreatlylimitsthecircleofthosethingswhichmaybecountedasmeansofproductionthattheproblemofimputationisalsosensiblynarrowed。

Socialistsdonotrecognisethreeproductivefactors，land，capital，andlabour:theyacknowledgeonlyasingleproductivepower，Labour。Onlyhumanlabour，theysay，iscreative；italonecanreallyproduce。Ofcourse，tobeeffective，itrequireslandandcapital，buttheseholdasubordinatepositiontolabour，andactmerelyasauxiliarymeansofproduction。Butintheexistingorderofthings，landownersandcapitalists——ashavingexclusivepossessionofthematerialauxiliarymeansofproduction——areplacedinapositiontoforcethelabourertogiveuptothemagreatpartoftheproductoflabour，asitisonlyonthisconditionthattheywilllendtheirpropertyandallowlabourtouseit。Byreasonofthis，landandcapitalhavebecomesourcesofpersonalincomefortheidleclasses，butunjustlyso；anditwouldbeagreaterrortoinferthefactofproductivepowerfromthatofincome。Whentheownersrefusetogranttolabourtheuseoftheseauxiliaries，theyplaceobstaclesinthewayoflabour，asRodbertussays；whentheydograntthisuse，theydonothingmorethanmerelyremovetheobstructiontheyhavethemselvescreated；theysimplywithdrawtheirownarbitraryfiat。Itisalwaysthelabourerwhomustproduce。Landandcapitalareonlyconditions，notcausesofproduction。Allreturnisexclusivelylabour-return。

AsamatteroffactRodbertusisperfectlyrightwhenhesaysthatnoconclusioncanbedrawnfrompersonalincometomaterialreturn。Theproblemofdistributionofreturnmustbeentirelyseparatedfromthatofdistributionofincome，ifitistobejudgedofcorrectly。Butiftheproblemistobeentirelyseparated，itmustalsobesoinitsapplication。Letusthenleavethepersonalquarrelentirelyoutofconsideration。Letuscompletelydisregardthequestionastowhatpersonsshouldhavetheproducts；and，withoutregardtoconsequences，simplyapplyourselvestofindoutwhichfactorsaretothankfortheirproduction，andtowhichfactorstheyshouldbeimputed。Letusimaginetoourselvesthecommunisticstateasseekingforthenaturallawsofimputation。Heretheentireproductfallstotheenjoymentofthelabouringcommonwealth。Thequestionthenis:——

Doesitthereforeconsiderthewholeproductasaresultofitslabour，ordoesitalsoimputetheproducttoitspossessionoflandandcapital？

Clearlythiswilldependonthestandpointfromwhichtheimputationiscalculated。Ifitisthemoralimputationthatisinquestion，thencertainlynoonebutthelabourercouldbenamed。Landandcapitalhavenomeritthattheybringforthfruit；theyaredeadtoolsinthehandofman；andthemanisresponsiblefortheusehemakesofthem。Evidentlyallthosewho，inanysortofway，haveassistedinbringingabouttheresult，arecountedamongthelabourers，——thosewhodirectaswellasthosewhocarryout。Indeed，thereisnopossibledoubtthatthegreatestthanksarenotduetomechanicalexertions，ifwearespeakingofimputationinthehighestsenseoftheword。

Abovethesemuststandtheservicesofthosewhodirecttheexecutantlabourer；whonotonlysupplyhimwithideas，organisation，andenergy，butalsoprocureforhimthematerialsforlabour，contrivethemachinery，andbringtogetherthelabourerswhoaretoworkwithhim。Comparedwithpotenciessuchasthese，theexecutantlabourerhimselftakesthesamepositionasthematerialmeansofproductiondoascomparedwithhimself。

Morallyconsidered，thingsareauxiliariestohim，buthehimselfistheauxiliaryofhisleader。

Thismoralimputationmaybeimportantforthepersonaldispositionofincome；forthematerialdivisionofreturn，ofwhichalonewearenowspeaking，itisofnoconsequence。Thequestionhereis:Onwhatfactorsarewepracticallydependentifthereturnistobeobtained？Everyonewhoknowseconomiclifeasitis，willanswerquiteplainly。Uponlabourandproductivewealth。Increaseofpossessionraisesthereturnjustassurelyasdoesadditionalindustry。Noonefeelsthatthereturnisdependentuponthoseproductiongoodsofnaturewhichareasabundantastheatomofairfloatingabovethefield，orthetreesinaprimevalforest。Buteveryonefeelsthatthereturnisdependentuponallgoodswhich，howeverabundanttheymaybe，areyetscarce；thosegoodswhichoneeconomisesandtriestomultiply。Wherewouldnotsuchpossessionshavevalue？Andiftheyhavevaluewhyisit，ifnotonaccountofthereturn，andaccordingtotheamountofthereturn，whichtheysecure？Solongasmenconsiderthemselvesrichinpossessinglandandcapital，solongdotheyprovethattheyimputetothemaportionofthefruitswhichtheyassistinbringingforth，andsolongdotheyattributetolabouronlytheremainderofthetotalreturn。Thesocialistwhowishestoseehisstateasrichinpropertyaspossible，confutestherebyascompletelyaspossiblehisowntheory，thatlabouralonemakesrich。(1*)

Allmeansofproductioninwhichvalueisrecognised，arerecognizedtherebyaspracticallyinfluentialcausesofproduction。Tothesemeansofproductionlandandcapitalwillbelong，solongastheyarenotavailableinever-assuredsuperfluity。Noonecanseriouslydoubtthis。Theonlythingthatcanbedoubtediswhetheritbejustandadvantageousforsocietytopermittheexistenceofprivateandindividualpropertyinlandandcapital，wherebythereturnfromlandandcapitalistransferredexclusivelytosingleindividuals。Onthisquestionitisnotsoeasytocometoadecision，andsofaraswehavegonewehavenotmadeany，noreventriedtodoso。Wehaveonlyexplainedthematerialrelationbetweenproductsandmeansofproduction，withoutinanywayanticipatingtherankingofpersonalclaims。

NOTES:

1。Weshallfindfurtheron(BookV。chap。x)，inthesocialisttheoryitself，amuchclearerconfessionthatlabourisnottheonlyfactorintheformationofvalue。SeealsoBookIII，chap。

xvii。

Chapter4

PreviousAttemptsatSolutionTheonlywriterwhohasmadeanyattemptatanexhaustivetreatmentoftheproblemnowoccupyingourattentionisMenger。

InthisMengerstartsfromthefundamentalideaofhistheoryofvalue。SupposingthatIpossessastockofconsumptiongoods，theclearestwayoffindingthevalueofonesingleitemofthestockisbyassumingthatIloseit。InthiswayIfindwhatenjoymentdependsuponthisitem——themarginalenjoymentalreadydescribed，——andfindatoncethesourceandamountofitsvalue。ThismethodofdeterminingvalueMengernowappliestothemorecomplicatedcaseinwhichonehastodecidethevalueofasingleitem，amongseveralco-operatingproductiongoods。Herealsoheaskswhatwouldbetheconsequenceoflosingasingleitem，oradefiniteportionofanysuchitem，fromamongtheentiregroupofavailablegoods(land，seed，agriculturalimplements，labour，cattle，manure，andsoon)——e。g。acart-horseorquantityofmanure。Thedecreaseinthetotalreturnwhichwouldtakeplace，giveshimtheamountofreturnwhichtheownerfeelstobedependentuponthepossessionoftheiteminquestion，andgiveshimatthesametimethefoundationofitsvalue。

InapplyingthisMengerhasarrivedatsomeveryremarkableandimportantresults。Noproductiongoodcanworkbyitself:toaccomplishanythingeverygoodrequirestheco-operationofothers；and，insofarasproductiongoodsmutuallydemandandsupplementeachother，theyare，touseMenger\'sexpression，“complementarygoods。“Atthesametimethecombinationswhichtheyenterintoarelessstrictthanmightbeexpected。Ifasinglegoodfallsoutofaproductivegroupofgoods，theefficiencyoftheremaininggoodsisnot，asarule，completelydestroyedthereby。Ithappensfrequentlythatthegroupmaystillremainagroup，andstillbeeffectivelyemployed，althoughwithsomewhatdiminishedreturn，withoutthelostgoodbeingreplacedatall。Land，e。g。，yieldssomereturnevenwithoutmanure，orwithoutthewholeamountofmanuredemandedbygoodfarming。Orthelossmaybemadeup，ifnotwithquitethesameeffect，bythesubstitutionofagoodtakenfromsomeothergroup，inwhichlattergroup，naturally，thereturnmustequallysinkalittle。

Oritmayhappenthatthegoodsleftoverbecomeineffective，ortoolittleeffective，whengroupedaswasoriginallyintended，butallowofbeingannexedtoothergroups，whosereturnistherebyraised，although，perhaps，notbytheentireamountofwhatwaslostoriginally。Take，asexample，agriculturalcapitalandlabour，whichhavelosttheiroriginalemploymentthroughlayingwasteofthegroundforwhichtheywereintended，andareturnedtoindustrialpurposes。

Itwillbeseenthatthecomplementarynatureofgoodsdoesnotreachsofarasatfirstsightmightbesupposed。Everysinglegoodrequirestheco-operationofothersinordertobereallyofuse，buttheconnectionofthegoodsisnotaverystrictone。Onlyaportionofthereturnfromthecombinationeverdependsuponanyonesingleelementofproduction；never(exceptinafewcaseswhichscarcelyrequiretobeconsidered)

theentirereturn。

WhatMengerhasdoneisdistinguished，aswellbythelogicalsequenceofhisargumentasbyhisskillinobservation，andthelifelikeinterpretationofthatobservation。Itbringslightintothedarknessofasubjectwhichnoothertheoristcouldhavefaced，muchlessillumined。AtthesametimeevenMengerhasnotgiventheentiresolutionquiteperfectly。Anexamplewillmakethisclear。

Supposethreeproductiveelements，employedinthemostrationalplanofproductionpossible，promiseincombinationaproductwhosevalueamountsto10unitsofvalue。Ifthethreeelementsweretobeemployedotherwise，incombinationwithothergroups，theywouldcertainlyraisethereturnofthesegroups，butitisagainstourhypothesis——whichisthatofthemostrationalplanofproduction，——thatthereturncanberaisedby10units；otherwisethefirstcombinationchosenwouldnotafterallhavebeenthebest。Thereisalwaysaninfinitenumberofwaysinwhichtheelementsinquestioncanbegrouped，butthereisalwaysoneplan，andthatthebest，whichshouldbecarriedout:ifthisbegivenupinfavourofanother，theresultmustbesmaller，evenifonlytoatriflingextent。

Suppose，again，thatthethreeelementsareemployedinsomeplanotherthanthebest——which，beitremembered，demandedtheirbeingcombinedwithoneanotherinadistinctgroup。Saythat，bybeingeachseparatelyemployedinsomeothergroup，thereturnofeachofthesethreegroupsisraisedby3units，andthethreeelementsaccordinglynowproduceareturnamountingto9unitsofvalue。

HowinthiscasewillthevalueofeachsingleitembereckonedaccordingtoMenger\'sprinciple？Bythedecreaseinreturnwhichensuesinthecaseofloss。Inthiscasethedecreaseamountsto10units——thefullreturnofthebestcombinationnowbrokenup——ofwhich，however，6canberecoveredbythenewemploymentofthetworemainingelements。

Theloss，therefore，amountsfinallyto4，andthisistrueindifferentlyofanyofthethreegoods。12，then，isthevalueofthethreetakentogether。Butthisisimpossible，since，whenmostprofitablyemployed，theycangiveonlyareturnof10。

Thismistakeintheresultproceedsfromamistakeinthemethod。Thenormalanddeterminingassumptiononwhichonecalculatesthevalueofagood，isnotthatofitsloss，butthatofitsundisturbedpossession，andoftheuseitgivesinfulfillingitsend。Theassumptionoflossserves，incertaincircumstances，toshowmoreclearlytheadvantageofpossession。

IseemoreclearlywhatIhavebypossessingathingwhenI

imaginewhatwouldbetheconsequenceifIceasedtohaveit。Butthisholdsonlyundercertaincircumstances，namely，asregardsastockofgoodsofthesamekind，whereif，inimagination，Itakeawayonegoodfromtheothers，itisthisonegoodaloneandnothingelsethatistakenaway。Itdoesnotholdinthecaseofastockofheterogeneousandco-operatingproductiongoods，whereif，inimagination，Iremoveone，Ideprivetheothersalsoofaportionoftheireffect。

Thefulleffectofalltheelementsinanyproductivecombinationcanonlyberealisedwhentheseelementsremaintogetherundisturbed；itisthereforeimpossibletodiscoverwhatvalueIreceiveandenjoyfromthisundisturbedpossession，ifI

beginbyassumingthedissolutionofthecombination，andthenaskwhatstillremains。Thequestionmustbeputpositively:WhatdoIactuallyobtainfromthegoodsastheystandatmydisposal？

Thoseproductiveemploymentswhichstandfirst，——theemploymentswhicharemostdesirableandwouldbefirstchosen——

decidethevalue；notthosewhichstandsecond，andwouldbetakenuponlyintheexceptionalcaseofsomedisturbanceoftheoriginalcombination。Twopersonswhoarebothinexactlythesamecircumstances，andwhosejudgmentagreesastothebestarrangementsforproduction，mustobviouslyascribepreciselythesamevaluetotheirproductivepossessions，althoughoneofthemshouldhavesomethingbettertofallbackuponincasethefirstplanfallsthrough。AccordingtoMenger，however，thevalues，inthislattercase，wouldrequiretobeassesseddifferently，andindeedthehighervaluationwouldbethatofthepersonwhohadtheleasttofallbackupon，becausetohimitwouldbemuchmoreimportantthatthefirstplanshouldnotfallthrough。

Theassumptionoflossissufficientifwhatisrequiredisthedividingupofthereturnwhichtheelementsofonecombinationguaranteewhenputintoothercombinations；butitisofnousewhenwhatiswantedistocalculateaswellthesurplusbywhichthefirst-chosencombinationexcelsallothers。Thissurplusisleftanundividedremainderofthereturn，andasregardsittheproblemofimputationisnotsolved，butcomesupagainforsolution。(1*)

ItneedsonlyaveryslightturntocorrecttheerrorinMenger\'stheory。Everywell-thought-outtrainofreasoningteachesbyitsveryfaults，asthesefaultsalsopossessthefirstrequisiteofscientificinsight，thatis，clearness；andMenger\'stheorycontainsinitselftheindicationastohowtheerrormaybecorrected。Thedecidingelementisnotthatportionofthereturnwhichislostthroughthelossofagood，butthatwhichissecuredbyitspossession。(2*)

NOTES:

1。Mengerreckonsthisundividedresiduetoeachseparatefactorinsteadofchargingittotheentireamount，andthusthevaluecomesouttoohigh。Inourexamplethesurplusequals1(10-9)。

Mengercalculatesitthreetimesinsteadofonlyonce；thuscalculatingtwounitstoomany，andshowingavalueof12wherethereisonlyareturnof10。

2。Theotherattemptsatsolutionoftheproblemdonotgobeyondsuggestions。InBohm-Bawerkalone(Werth，p。56)isthereamoredetailedstatement，——anditprofessesonlytopointoutthedirectioninwhichprobablythesolutionoftheproblemmightbesought——“Tomeasurethesharewhicheachoneofseveralco-operatingfactorstakesinproducingthecommonproduct。“

Bohm-Bawerk，speakingfirstofsomelessimportantcasesof“complementariness，“establishesfirmlythefundamentalmaximthatnoelementinagroupwhichadmits，firstly，ofaseparateemploymentoutsidethegroup，andwhich，secondly，maybereplacedatthesametimeinthegroupbyothergoodsofthesamenature——obtainedfromsomeoutsidesource——canreceiveavaluehigherthanits“substitutionvalue。“Bysubstitutionvaluehemeans“thatwhichisderivedfromthedecreaseofutilityinthosebranchesofproductionfromwhichthesubstitutedgoodsareprocured。“Ofsuchanatureare，e。g。，thebricksdestinedforhousebuilding。Ifsomecartloadsofthesearedestroyed，itwillnothinderthebuilding，astheyaresimplyreplacedbyothers。

ThispropositionBohm-Bawerkappliestothecasesofproductivecomplementariness，dividingthetotalamountofcomplementaryproductiongoodsintotwocategories。Ofthese，one——whichincludestheoverwhelmingmajority——containsthosegoodswhich，asmarketablewares，are“replaceableatwill“；e。g。，“theservicesofhiredlabourers，rawmaterials，fuel，tools，andsoon。“Theothercategory——whichcontainstheminority——

includesthoseproductiveelementswhich“cannotbereplaced，oraredifficulttoreplace；e。g。thepieceoflandwhichthepeasantcultivates，mines，railwayplant，factories，theactivityoftheundertakerhimselfwithhishighpersonalqualities。“Thevalueofthosegoodswhichbelongtothefirstgroupisdecided，ineverycase，throughtheotheremploymentspossibletothem；itis，sofar，fixed。Thisvalueisfirstdeductedfromthetotalreturn，andtheresiduethenfalls“tothememberormemberswhichcannotbereplaced“；thusthe“peasantascribesittohisland，themine-ownertohismine，themanufacturertohisfactory，themerchanttohiscapacity。

“Similarideasmaybefoundmoreorlessclearlystatedbyvariouswriters；intheUrsprungdesWerthesIhavemyselfpointedtoasimilarsolution。Probablyweshouldnotbefarwrongwerewetoassumethatthereasonwhysomanywritershaveneglectedtotakeupthisproblemofdistribution，isthattheysupposeddistributioninthissensetobeaseasilysolvedintheoryasitisinpractice。Howisit，however，whenseveral“unreplaceable“goodscometogether？Donotthemineandtheactivityofitsowner，asemployer，gotogether？Andarenotmany——indeedverymany-replaceablegoodsoftencombined？Thevalueofthese，which，practically，canalwaysbeascertainedbyreferringtotheirsecondaryemploymentandvaluation，must，theoretically，befirstseparatedfromthecombination，asagainthesecondaryemploymentitselfalwaysrequirescombinationwithcomplementarygoods，——buthowcanthisbedoneunlesstherulesofdistributionareknown？

IftheseobservationsofBohm-Bawerkcangivenosolutionoftheproblemofimputation，theynonethelesscontainanimportantandnotablecontributiontowardsitstheory，forthatcouldneverbecompletewithoutrecognisingthedistinctiontowhichhehasdrawnattention。Onthispointsee，inBookIII，chap。xii，theexaminationof“costgoodsandmonopolygoods。“

Chapter5

ThePrincipleofSolution。TheProductiveContributionSupposethatahunter\'slifedependsonhislastcartridgekillingthetigerabouttospringonhim。Ifhemisses，allislost。Rifleandcartridgetogetherhavehereanexactcalculablevalue。Takentogether，thevalueequalsthatofthesuccessoftheshot，neithermorenorless。Takensingly，ontheotherhand，thereisnomeansofcalculatingthevalueofeach。Theyaretwounknownquantitiesforwhichthereisonlyoneequation。Letuscallthemxandy，andputthesuccessfulresultat100；allthatcanbesaidastotheirvalueliesintheequationx+y=100。

Again，supposeanartistweretofashionapewtervesselwhichcommandedgreatadmirationonaccountofitsperfectform。

Suppose，further，thatthisweretheonlyartistwhocoulddoreallyartisticwork，andthathiswastheonlyartisticworkknown。Andsupposethat，besidesthepieceofpewterwhichhehademployed，noothermaterialofsimilarsuitabilityweretobehad，neithergold，silver，wood，clay，norevenanotherpieceofpewter。Itwouldbeabsolutelyimpossibletodistinguishinthevalueofthevesselbetweenthevalueofthelabourandthatofthematerial。Theskilloftheartistwhoconceivedandexecuted，andthesuitabilityofthematerialwhichyieldedtohishandandretainedtheformhegave，wouldberegardedasequallyirreplaceableconditionsofsuccess。Ifwe，underexistingeconomicconditions，dounderstandhowtovaluetheartist，andhowtovaluethematerial，wehavetothankthecircumstancewhichdistinguisheseveryactdoneundertheinfluenceofexchangefromtheadventureofthelonelyhunter；——thecircumstance，namely，thattheseactsarenotisolated，buttakeplacealongwithmanyothersofthesamekind，andcanbecomparedwiththem。Thisverypewter，outofwhichtheartistcreatesavesselofgreatartisticvalue，servesatthesametimetofurnisharticlesforordinaryuseofverytriflingvalue。Weconcludefromthisthatthepewteritselfcanhavebutatriflingvalue，andthatonlyasmallportionofthehighvalueoftheartisticproductfallstoit，whilebyfarthegreatersharemustbethepropertyoftheartist。Weshouldbeconfirmedinthisopinionwerewetoobservethateveryworkoftheartistwashighlyvalued。Butif，atthesametime，weobservethathealsoworkswithsuchmaterialsasgoldandpreciousstones，andthatthese，ontheirside，equallylendahighvaluetoallproductsofwhichtheyformpart，weareforcedtotheconclusionthat，inspiteofhistalent，thegreaterpartofthevalueofhisproductsdoesnotalwaysbelongtotheartist，andthat，whenheemploysthesematerials，ahighlyimportant，ifnotverymuchthemoreimportant，partofthevaluemustbeascribedtothem。

Certainlywecanneversucceedinconsideringeithertheartisticpowerorthematerialbyitselfalone，andthuswecannotsucceedinmeasuringtheeffectsofwhichtheyareindependentlycapable。

Everyproductivefactor，ifitistobeeffective，mustbecombinedwithothersandjoinitsactionwiththeirs；buttheelementsthatareboundupwithitmayalter，andthisfactmakesitpossibleforustodistinguishthespecificeffectofeachsingleelement，justasthoughitalonewereactive。

Itispossiblenotonlytoseparatetheseeffectsapproximately，buttoputthemintoexactfigures，sosoonaswecollectandmeasurealltheimportantcircumstancesofthematter；suchastheamountoftheproducts，theirvalue，andtheamountofthemeansofproductionemployedatthetime。Ifwetakethesecircumstancesaccuratelyintoaccount，weobtainanumberofequationsandweareinapositiontomakeareliablecalculationofwhateachsingleinstrumentofproductiondoes。Toputintheshortesttypicalformulathefullrangeofexpressionswhichofferthemselves，wehave，forinstance，insteadoftheoneequationx+y=100，thefollowing:——

x+y=100。

2x+3z=290。

4y+5z=590。

Herex=40，y=60，andz=70。

Accordingtothenumberofindividualproductivecombinationscarriedoutwithintheentirefieldofproduction，willbetheindividualequations。Intheseequationsthecombinedfactorsofproductionontheoneside，andthevalueofthejointlyacquired(oranticipated)returnsontheother，aresetagainsteachotherasequivalentamounts。Ifweaddtogetheralltheequations，thetotalamountofproductivewealthwillstandasequivalentagainstthetotalvalueofthereturn。Thissummustbeascribed，entirelyandwithoutremainder，totheindividualproductiveelements，accordingtothestandardoftheequationvalue。Toeveryelementtherethusfallsadefiniteshareinthetotalperformance，andthissharecouldnotbefiguredouteitherhigherorlower，withoutoverthrowingtheequivalencebetweenproductivewealthandreturn。

Itistheshareinthereturn，thuscreditedtotheindividualproductivefactor，whichisusuallycalledshortlythe“return“ofthefactorinquestion；——thereturnoflabour，returnofland，returnofcapital。Ishalldescribeitasthe“ProductiveContribution“(seeUrsprungdesWerthes，p。177)，inorderthatitmayalwaysbeclearwhetherwearespeakingofthereturnasawhole，oroftheshareofthesinglefactorinthereturn。Theproductivecontribution，then，isthatportionofreturninwhichisconfinedtheworkoftheindividualproductiveelementinthetotalreturnofproduction。Thesumofalltheproductivecontributionsexactlyexhauststhevalueofthetotalreturn。

Itneedscarcelybesaidthat，asamatteroffact，calculationcanrarelybemadesoexactly，andneversocomprehensively。Theequationsindeedareallsetdown，andineverycasetheproductiveoutlayisestimatedaccordingtothestandardofthegreatestattainablereturn。Butthestatingoftheequationsisfrequentlymadewithonlyatriflingdegreeofexactitude；andthesumofalltheequationsisneverfullytaken，andthuscannotbedividedoutamongtheindividualelements。Nonethelessweareconstantlytryingtoascertaintheresultoftheadditionanddivision；onlythat，insteadofcalculatingdirectly，wetrytoattainourend，inasomewhatcircumstantialway，byamethodoftesting。Thevaluesobtainedintheindividualcaseareapplied，sofarastheyappearsuitable，toothercases，andcorrected，theonebytheother，tillintheendtherightdivisionisattained。Andthisisrenderedimmeasurablyeasierbythefactthatwealreadypossess，inthefamiliarandauthenticatedproductivevalues，akeytothedivisionwhichonlyrequirestobeadaptedtothechangeswhichemergefromtimetotime，Atnotimehasthewholemassofproductiongoodstobecalculatedallatonce；itisonlythecontributionsofindividualmembersamongthesewhichrequiretobecalculatedanew，andevenforthemagoodbasisisfoundintheoldvalues。Newcalculationsrequiretobemadeonlyinthosebranchesofproductionwheretheattainablereturnsandtheirvalueseitherriseorfall。Thisgivesrisetonewequationsforthefactorsinquestion，eitherwithmorefavourableorlessfavourabletotalvalues。Accordingasitisoneortheother，willproductionbeextendedorlimited，andproductiveelementsattractedfromotherbranchesofproduction，orattractedtothem，untilthemostfavourableplanofproductionisagaindiscovered。Theexperienceobtainedwhiletransferringnowone，nowanotherproductiveelement，andwatchingtheeffectofeachcombinationuponthevalueofthereturn，givesussufficientinformationastotheamountwithwhichtheindividualelementsareboundupinthetotalreturn。(1*)

NOTES:

1。Ifwearetosucceedinourcalculationoftheproductivecontributionstheremustbeasufficientlylargenumberofequations。Theremustbeatleastasmanyequationsasthereareunknownquantities。Nowthisconditioniscertainlyfulfilled。

Howmanyunknownquantitiesarethere？Justasmanyasthereareclassesofproductiongoodsdistinguishableinexchange。Withoutdoubttheseareverynumerous。Whentheoristsspeaksimplyofland，capital，andlabour，theyincludewithineachofthesegroupsanenormousnumberofclassesofgoodswhichinexchangeareasfaraspossiblefrombeinghomogeneous。Thevalueoflabourisnottobecalculatedasonething；theremustbeseparatecalculationsforeverykindandqualityoflabourbetweenwhichonecandistinguish。Incalculatingthevalueofagriculturallandtherewillbe，inoneandthesamedistrict，asmanydifferentanddistinguishabletypesofland，aswouldbedistinguishedintheregisterofaperfectlyexactlandtaximposedbothonthecultivatingandpropertiedagriculturalclasses。Astocapitalanditsincalculablevarietyofformsweneednotspeak。Buthoweverfarexchangemaybespecialised，theclassesofproductivecombinationsareundoubtedlyevenmorenumerousthantheclassesofproductiongoods。Theclassesofcombinationsintowhichagoodlikeironorcoal(evenofonedistinctoriginorquality)maybeintroduced，areincalculable，andthesamemaybesaidofunskilledorday\'slabour。Oneandthesamefieldisplantedinrotationwiththemostvariouscrops。Andthusitcomesthatamerechangeinthequantityofthesamekindofgoodsinagroupissufficienttoproduceanewequation。Amongallthemanykindsofgoodsemployedinproduction，itwouldbedifficulttofindonewhich，eitherasregardsquantityorkind，wouldalwaysbecombinedwithothersaccordingtothesameunalterablyfixedformula。Differentdegreesofwealth，ofknowledge，ofskill，oflocalconditions，involvethateventhosekindsofgoodswhichonlyadmitofonesinglekindofemployment，——thatistosay，whichareonlysuitedtoproduceonesinglekindofproduct——must，atthesametimeandforthesamepurpose，gointoamanifoldvarietyofcombinations。Ifthereareexceptionstothisruletheyareonlyisolatedones。Thecontributionofsuchgoodscan，however，stillbecalculated——alwayssupposingthattherearenottwosuchelementsinoneandthesamegroup。Inthiscase，indeed，theprinciplewehaveestablishedwouldnotwork，becauseweshouldhavetwounknownquantitiesandonlyoneequation。

Chapter6

ThePrincipleofSolution(continued)。ContributionandCo-operationThedifferencebetweenoursolutionandthatofMengerisasfollows。

Mengerassumesaneconomiccourseofeventsdifferentfromthatwhichactuallyregulateseconomiclife。Todiscoverwhatreturnisobtainedfromtheproductiongoodswhichwepossess，hetriestoshowwhatwouldhappenshouldweceasetopossessthem。

AccordingtoMenger，forexample，thevaluetoafarmerofacart-horseiscalculatedbythediminutionofreturnwhichwouldensuewerethefarmertolosethehorse，andbeforcedtogoonwithoutit。ThatportionofreturncalculatedbyMengertothesingleproductiongoodwemaydesignate“thesharedependentuponitsco-operation。“We，ontheotherhand，startbyassuminganeconomiccourseofeventssuchasownersofproductiongoodswouldexpect。Wetracetheeffectsthatwillensueifalltheproductiongoodswhichwepossessareactuallyemployedaswewishandplan。Inthiswaywecalculatewhatwehavecalledthe“productivecontribution“ofeachfactor。

Thesumofallthe“productivecontributions“isexactlythesameasthesumofvalueofalltheproducts；thesumofallthe“sharesdependentuponco-operation“is，ontheotherhand，aswehavealreadyshown，greater。Inotherwords，the“productivecontribution“isessentiallysmallerthanthe“sharedependentuponco-operation，“Wereckonforinstancethereturnwhichthecart-horsegivestothefarmlowerthanMengerdoes，asweonlyestimateitataportionofthedecreasethatwouldensueweretheownerobligedtofarmwithoutit。AccordingtoMenger，consequently，thefarmerwholoseshiscart-horselosesonlythevalueoftheanimal，whereas，accordingtoourconception——

whichcalculatesdifferentlythesamenumericalloss——notonlydoeshelosethevalueoftheanimal，buthesuffers，beyondthis，somedisturbanceinthevalueofhisremainingproductivewealth。

Menger\'sisundoubtedlythesimplerandclearermethod。Thedistinctionwhichwefinditnecessarytomakebetweenthe“contribution“andthe“co-operation“ofafactor，appearscontradictoryandartificial。Asamatteroffact，weintroduceintothequestionnomoredifficultiesthanareactuallycontainedinit。“Contribution“and“Co-operation，“underwhatevernamestheymaybeknown，areeverywheredistinguished，andmustbedistinguished，fromeachotherinpracticaleconomiclife。Itisagenerally-acceptedfactthateveryproductivefactorfurnishesthebasis，notonlyforitsownvalue，butalsoforthatofalltheotherfactorsintheproduction。Ifanyessentialelementisremovedfromanyundertakingwhatever，thewholeundertakingmustsensiblysuffer。Iftherebeascarcityofrawmaterial，humanlabourandmachinerywilllosesomeoftheircapacityofservice，andviceversa；experiencecanshowthousandsofsuchcases。Ininnumerablewaysexperienceshowsthatmeansofproductionmutuallydemandandmutuallyhampereachother。Increasedactivityonthepartoflabourraisesthereturntoproductivewealth，andextendedexploitationofproductivewealthraisesthereturntolabour。Whatdoesthisprovebutthattheshareofreturnwhichfurnishesthebasisofvalueforitsfactor——the“return“imputedtoitwhichwehavecalledits“contribution“——doesnotexhausttheentiresharecontributedbyittothesuccessoftheproduction？Thuswefindthatthedistinctionsmentionedreallyexist，andarenotintroducedbyusintoeconomiclifeforthepurposeofaidingoursolution；wefindthat，bymeansofthissolution，weexplainanotherwiseinexplicableeconomiccontradiction，andourtheoryreceivestherebynosmalldegreeofsupportandcredibility。Ordoesitappearnocontradictiontosaythatlabour，besidesaffecting“itsown“return，makesthe“returntocapital“riseorfall，orthatcapital，besides“itsown，“alsoaffectsthe“returntolabour“？

Chapter7

ThePrincipleofSolution(continued)，TheEconomicServiceofImputationThankstotheimputationofthe“productivecontribution，“

everyproductiongood，withoutexception，hasascribedtoitagreatereffectthanitcouldobtainthroughitsownpowers，Noproductiongood，noteventhemostpowerfulofall，labour，couldbyitselfproduceanything；everysuchgoodrequirestheco-operationofothers，andisnothingbyitself。Ontheotherhand，again，everyproductiongoodwithoutexception，has，thankstothisimputation，alessereffectascribedtoitthanmightbeexpectedfromthedegreeofdependenceinwhichthecomplementarygoodsstandtoit。Ifwetakefromagroupanyelement，howeverunimportant，solongasitisanecessaryandeconomicelement，notonlyisitsownreturnlost，buttheotherelementsalsoarerobbedofaportionoftheireffect。Thisholdsoflabourinitsrelationtocapital，aswellasofcapitalinitsrelationtolabour。Thewell-wornargument，then，thatwithoutlabournothingwouldbringforthfruit，andthattolabourconsequentlymustbeimputedtheentirereturn，isfalse。Onlythosewhomisunderstandtherulesofimputationineverydayuse，couldemployit。Nothingiseasierthantoreduceittoanabsurditybysupposinglabourobligedtoworkwithoutlandorcapital。

Theimputationoftheproductivecontributionassignsinthiswaytoeveryproductiongoodamediumshare。(1*)Tocalculatetheproductivecontribution，andthereforealsothevalue，atthismediumamount，issoundcommonsense。Itistheonlypracticalandusefulkindofcalculation；itjustifiesitslogicbyitsutility，Thevalueofproductiongoodsshouldbethecontrollingpowerofproduction。Nowitwillbeso，mostperfectly，ifitisbased，accordingtoourstandard，ontheproductivecontributionofthesegoods。Ontheotherhand，itwillbesoonlyimperfectlyornotatall，ifwedepartfromtheprinciple。Thesumofallthecontributionsis，aswehaveseen，equaltothevalueofthegreatestpossibletotalreturn，andthisreturnwillbeactuallyreachedifwedemandfromeachfactoraserviceequaltothecontributionimputedtoit。Ifwedonotimputeanythingtothemeansofproduction，wedepriveourselvesofallpossibilityofcontrollingtheiremploymentbyreferencetotheirvalue。Ifweimputetothemeithermoreorlessthantheiractual“contribution，“ourcontrolwillbeatfault，asitwillinduceuseithertoatoolimitedoratooextensiveemployment。

PerhapsImaybeallowedtopursuetheseideasstillfurtherintodetail。

Ifwedidnotascribeanyshareinthereturntolabour，noryettolandandcapital，weshouldhavetouseallthesewithoutbeinginanywayguidedbytheirvalue。Ifagainthewholereturnwereimputedtolabourandnoneofittothematerialinstruments，productionwouldbemisledbyproductivevalue。Landandcapitalwouldbedeclaredvalueless；therewouldbenoneedtoconsiderthematall；whereaslabourwouldbeoverestimated，andwould，consequently，befartoogreatlywithheld。Themostoverestimatedwouldbethatlabourwhichgotthemostintensivematerialassistance，andsogavetheabsolutelylargestreturns。

Labourwhich，incooperationwithalargeamountofcapital，gaveatotalreturnof100，wouldbeestimatedmorehighlythanlabourofequalamount，butdifferentquality，which，withatenthpartofthecapital，gaveareturnof99。Artisticlabour，workingwithoutmuchoutsideassistance，wouldhavealowvaluation，whileplentifullyassistedlabour，evenalthoughunskilledandmechanical，wouldhaveahighvaluation。Withtheformerextravagancemightbeallowable，whilewiththelatterweshouldhavetoeconomise。Thewholesphereofproductionwouldbedominatedateverypointbyconfusionandperversity。

Theimputationofreturntoland，capital，andlabour，accordingtothemeasureoftheirrespectiveproductivecontributions，isanaturaleconomicdictate；itholdsinallformsofeconomiclifeinthecommunisticstateaswellasinthepresentone。Itmay——possibly——beajustdemandthatthewholeproductbegivenovertothelabourersaspersonalincome；

butinanycase，andevenshouldthiscometopass，itisaneconomicdemandthattheproductsbecreditedtothesourcesofthereturn，accordingtothecontributionswhichtheyafford，inorderthatwemayhaveastandardforthefurtheremploymentofthemeansofproduction。

Itneedscarcelybesaidthatthereisalimittotheapplicationofthislaw。Whentoolargeanumberofproductiongoodsaregroupedtogetherasoneunit——aswhentheoriststalkofallkindsoflabouras“labour，“allkindsofcapitalas“capital，“andallvarietiesofgroundas“land“——thereisnolongerthenumberofequationsnecessaryforanysolution。Of“land，capital，andlabour“thereisnothingtobesaidexceptthat，together，theybringfortheverything；alone，nothing。Inpracticallife，wehaveoftenoccasiontolookatthingsinthiswholesaleway。But，eveniftheseoccasionsweremorefrequentthantheyactuallyare，theindividualimputationwouldnotbeanythelessnecessary。Althoughproductioniscarriedonunderthesewholesalemodesandconditionsrequiredforpreparation，introduction，andsecurity，still，intheconductofproductionitnecessarilycomes，inthelongrun，todetailedcalculation。

Themanwhocalculatestheresultmostexactly，whomeasuresandmakesadifferenceasregardseventhesmallestamounts，will，sofarasitdependsontheworkingout，getthelargesttotalresult；whilethepoorestwillfalltohimwhoestimatesthingsonlyinthegross，andinanoutwardandsuperficialway。Ifitbeeverywhereasignandaprincipleofhumanadvancethatwemakemoreandmoreminutedivisionandclassificationofcauses，itmustalsobesointhegreatsphereofeconomiclife。Ifsocialismmeanstodoawaywiththeproductiveimputation，itwillinduceaconditionofthingsworsethanthatexperiencedinthedeepestbarbarism。Thesavageknowswhatheowestohisnet，andwhattohisbowandarrow，andwouldbebadlyoffifhedidnotknow。Happilythesameinstinctwhichdirectshimispossessedbyallmen，andnoamountoftheorieswillevermakepeopleneglecttomeasuretheeffectsoftheproductivepowersinthewaythatpracticalself-interestdemands。

Ontheotherhand，again，theindividualimputationdoesnotdoawaywiththenecessityofconsideringproductionasawhole。

Thepreparationforandintroductionofproductivelabouroftenrequires，ashasbeensaid，verylargeandwholesalestandards，whereitisnotsufficientmerelytoreckonuptheproductivecontributions。Thesecontributionscorrespondtotheindividualresultswhichemergewhereproductionsucceeds。Buthowifitdoesnotsucceed？Howifcertaingoodsarewanting，andthewantretardsproduction，limitsit，orevenmakesitquiteimpossible？

Then，indeed，wegetresultsfromthesinglegoodwhichgofarbeyondtheamountofitscontribution。Thenitbecomesevidentthattheindividualgoodnotmerelycreates“itsownreturn，“

but，besidesthis，conditionsthereturnsofothergoods。Thedisturbingpowerofawantorlossofgoods——thedifferencebetween“contribution“and“co-operation“——islarger，thelargerthequantityofgoodslost。Where，then，thereisanydangerofaloss，andespeciallyalossofwideextent，individualimputationisnotsufficient；itreckonsthedamagetoolow；itsonlystandardshavetoosmallarange。Inthiscaseitisnecessarytobefullyinformedconcerningthewholecircleofconditionsuponwhichtheproductiondepends，andthewholeimportanceoftheco-operationofallthefactors。

Individualimputationandobservationofproductionasawhole，althoughtheymayleadtodifferentvaluationsofthesamegoods，donotonthataccountcontradicteachother，norcanceleachother。Eachvaluationcanbeemployedonlyforitsownpurposes。Individualimputationserves，inthecarryingoutofproduction，tomeasuretheeconomicemploymentofeachportionofanation\'sresources；considerationofproductionasawholeservestoguaranteethattheproductioniscarriedthrough。Thelabourpowersofanation，forinstance，mustbeindividuallyvaluedandemployedaccordingtotheexactamountoftheircontributions，while，atthesametime，particularcaremustbetakentomeettheperilswhichsooftenallatoncethreatenthelabourpowerofindividualgroups，andindeedofgreatclasses。

Again，thevariousformsofanation\'scapitalmustbeindividuallyvaluedandemployedaccordingtothemeasureoftheircontributions。Atthesametimecaremustbetakenthatcapitalasawhole，andcapitalinthechiefbranchesofproduction，remainsandincreasesinthefaceofpossibledangerandattack。Theconsiderationofproductionasawholemustthusaimatsecuringagainstalldisturbancetheessentialfoundationsofproduction，andtheharmoniousrelationofitselements。

Intheeconomiclifeofto-dayindividualimputationdevolveschieflyupontheindividualcitizen，whileconsiderationofproductionasawholeismainlyundertakenbythegovernment。Theformerbelongspeculiarlytothesphereofprivateeconomicvaluation，thelatterpeculiarlytothatofpubliceconomicvaluation。Hereweonlyindicatethedistinction，leavingmoreexactconsiderationtothelastbook。

NOTES:

1。Medium，thatis，betweenthegreaterandthelessersharesjustmentioned。Theshareoflabour，forinstance，isnotdeterminedbythe(socialist)considerationthatcapitalwithoutlabourisdead，norbythe(opposite)considerationthatlabourwithoutcapitaliscrippled。Inbecomingorganiceveryelementgainsinimportancebybecomingarbiterofothers，butlosesasitputsitselfintothesamepositionofdependenceuponothers——

W。S。