Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book II: Exchange Value and Natural Value

Chapter VI
Natural Value

NV-II-6.1 Even in a community or state whose economic affairs were ordered on communistic principles, goods would not cease to have value. Wants there would still be, there as elsewhere; the available means would still be insufficient for their full satisfaction; and the human heart would still cling to its possessions. All goods which were not free would be recognised as not only useful but valuable; they would rank in value according to the relation in which the available stocks stood to the demand; and that relation would express itself finally in the marginal utility. Social supply and demand, or amount of goods and utility socially compared with one another, would decide value. The elementary laws of valuation, as we have explained them, would be entirely and unlimitedly effective for the whole community.
NV-II-6.2 That value which arises from the social relation between amount of goods and utility, or value as it would exist in the communist state, we shall henceforth call “Natural Value.”1 I choose the name in full consciousness of the double sense which an appeal to the “natural” has in the disposition of human affairs. In its simplicity, purity, and originality it is so attractive, and at the same time so contradictory to all experience, that it is doubtful whether it can ever be more than a dream. So too we shall think of the communistic state as the perfect state. Everything will be ordered in the best possible way; there will be no misuse of power on the part of its officials, or selfish isolation on the part of its individual citizens; no error or any other kind of friction will ever occur. Natural value shall be that which would be recognised by a completely organic and most highly rational community.2
NV-II-6.3 The laws which we found in the elementary theory of value are its natural laws, as those would take shape under the simplified assumption that goods come into men’s disposal without requiring to be first produced. If we do away with this assumption we obtain the natural laws of value in production. It will now be our task to find out these laws. We shall ask ourselves what productive instruments would be likely to obtain value in a communistic state, whether labour alone, or also land and capital; in what measure they would obtain value; whether there is a natural rent from land and a natural interest on capital – and so on through all the circumstances of production, till we arrive at the question of cost value and its natural measurement.
NV-II-6.4 The relation of natural value to exchange value is clear. Natural value is one element in the formation of exchange value. It does not, however, enter simply and thoroughly into exchange value. On the one side, it is disturbed by human imperfection, by error, fraud, force, chance; and on the other, by the present order of society, by the existence of private property, and by the differences between rich and poor, – as a consequence of which latter a second element mingles itself in the formation of exchange value, namely, purchasing power. In natural value goods are estimated simply according to their marginal utility; in exchange value, according to a combination of marginal utility and purchasing power. In the former, luxuries are estimated far lower, and necessaries, comparatively, much higher than in the latter. Exchange value, even when considered as perfect, is, if we may so call it, a caricature of natural value; it disturbs its economic symmetry, magnifying the small and reducing the great.
NV-II-6.5 The fact that natural value forms an element in the formation of exchange value, puts our investigation in touch with reality, and gives it its empirical importance. The value which would be recognised by an extremely rational and completely united commonwealth is not entirely foreign to that value which is recognised by the society of to-day. Every individual desires for his own part to form a rational judgment about value, but it is not always within his power to do so; and, in the coming into connection with others in exchange, the final effect becomes altered, as I said, into caricature. There are innumerable more or less correct approximations to natural value. Every one finds them within his own economic circle; and even when the single circles come together these individual valuations are not entirely lost, but only somewhat altered. It will be of interest to investigate closely to what extent the phenomena of exchange value are of natural origin, and how great, accordingly, is the formative power of natural value in existing conditions of society. I believe the sequel will show that it is enormously greater than is usually supposed. Land rent is, perhaps, the formation of value that is most frequently attacked in our present economy. Now I believe our examination will show that, even in the communistic state, there must be land rent. Such a state must, under certain circumstances, calculate the return from land, and must, from certain portions of land, calculate a greater return than from others: the circumstances upon which such a calculation is dependent are essentially the same as those which to-day determine the existence of rent, and the height of rent. The only difference lies in this, that, as things now are, rent goes to the private owner of the land, whereas, in a communistic state, it would fall to the entire united community. In such a state it would not form personal property, but it would be calculated separately in the total income of the community, and that on essential grounds; – namely, in order to find out what is the quota which individual lands contribute to the total return, and to judge therefrom what outlay may and ought to be expended to obtain this quota. In other words, the economic-technical service, that of controlling production, would remain, while the personal part it plays, as a source of private income, would fall away. Should our examination succeed in establishing this and similar facts, no one will be able to deny that it helps us to a clearer understanding of existing economic conditions. It would show what part of the present forms of value not only exists for the satisfaction of self-interest, but renders at the same time a technical service to social economy; it would show therefore what part must never be given up, on pain of leaving the economy without power of calculation and without control.
NV-II-6.6 On this account the examination of natural value will be useful, as well for those who wish to understand the economy of the present, as for those who wish to evolve a new one. Defenders of the existing order of things, equally with those who are fighting to prepare the way for a new and ideal state, may, without prejudice and without going against their principles, unite in this study. Natural value is a neutral phenomenon, the examination of which, whatever may come of it, can prove nothing for and nothing against socialism. If land rent and interest on capital are natural phenomena of value, they will have their place in the socialistic state also, without necessarily breaking it up and leaving the way clear again for capitalists and landowners. Every natural form of value may be left its material office, without connecting with it any personal privilege of income.
NV-II-6.7 So little is natural value a weapon against socialism, that socialists could scarcely make use of a better witness in favour of it. Exchange value can have no severer criticism than that which exposes its divergences from the natural measurement, although, indeed, this forms no particular proof for the essence of socialism. As is well known, however, the socialists have another theory of value. This we shall find again and again in contradiction with the claims that rest on natural value, and although we say nothing against socialism, but wish to remain throughout within the neutral sphere of natural value, we shall be obliged again and again to speak against the socialists.
NV-II-6.8 It will be of advantage to the statement which follows if we first try to make a general survey of the socialist theory of value.

NV-II-6.n1.1 1 What I propose to call “Natural Value” has been hitherto called social use value. With the word “value in use” (Gebrauchswerth) are connected too many misunderstandings to permit of our using it without danger. Use value is commonly understood as usefulness, or something closely related to that, and not as actual value. It is, moreover, rarely used in connection with production, and I wish to speak as much of the value of production goods and of costs, as of the direct use value of consumption goods.
NV-II-6.n2.1 2 The question whether such a community can or ever will exist is one which does not in the least concern us. We shall content ourselves with imagining it, and it will be an excellent aid in realising what would remain of our present economy if we could think away private property, as well as all the troubles which are a consequence of human imperfection. Most theorists, particularly those of the classical school, have tacitly made similar abstractions. In particular, that point of view from which price becomes a social judgment of value, really amounts to a disregard of all the individual differences which emerge in purchasing power, and which separate price from natural value. A great many theorists have thus written the value theory of communism without being aware of it, and in doing so have omitted to give the value theory of the present state. By making our assumptions quite clear, and guarding against a similar error, we may do more for value as we find it than they have.

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