Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book III: The Natural Imputation of the Return from Production

Chapter V
The Principle of Solution. The Productive Contribution

NV-III-5.1 Suppose that a hunter’s life depends on his last cartridge killing the tiger about to spring on him. If he misses, all is lost. Rifle and cartridge together have here an exact calculable value. Taken together, the value equals that of the success of the shot, neither more nor less. Taken singly, on the other hand, there is no means of calculating the value of each. They are two unknown quantities for which there is only one equation. Let us call them x and y, and put the successful result at 100; all that can be said as to their value lies in the equation x + y = 100.
NV-III-5.2 Again, suppose an artist were to fashion a pewter vessel which commanded great admiration on account of its perfect form. Suppose, further, that this were the only artist who could do really artistic work, and that his was the only artistic work known. And suppose that, besides the piece of pewter which he had employed, no other material of similar suitability were to be had, neither gold, silver, wood, clay, nor even another piece of pewter. It would be absolutely impossible to distinguish in the value of the vessel between the value of the labour and that of the material. The skill of the artist who conceived and executed, and the suitability of the material which yielded to his hand and retained the form he gave, would be regarded as equally irreplaceable conditions of success. If we, under existing economic conditions, do understand how to value the artist, and how to value the material, we have to thank the circumstance which distinguishes every act done under the influence of exchange from the adventure of the lonely hunter; – the circumstance, namely, that these acts are not isolated, but take place along with many others of the same kind, and can be compared with them. This very pewter, out of which the artist creates a vessel of great artistic value, serves at the same time to furnish articles for ordinary use of very trifling value. We conclude from this that the pewter itself can have but a trifling value, and that only a small portion of the high value of the artistic product falls to it, while by far the greater share must be the property of the artist. We should be confirmed in this opinion were we to observe that every work of the artist was highly valued. But if, at the same time, we observe that he also works with such materials as gold and precious stones, and that these, on their side, equally lend a high value to all products of which they form part, we are forced to the conclusion that, in spite of his talent, the greater part of the value of his products does not always belong to the artist, and that, when he employs these materials, a highly important, if not very much the more important, part of the value must be ascribed to them. Certainly we can never succeed in considering either the artistic power or the material by itself alone, and thus we cannot succeed in measuring the effects of which they are independently capable. Every productive factor, if it is to be effective, must be combined with others and join its action with theirs; but the elements that are bound up with it may alter, and this fact makes it possible for us to distinguish the specific effect of each single element, just as though it alone were active.
NV-III-5.3 It is possible not only to separate these effects approximately, but to put them into exact figures, so soon as we collect and measure all the important circumstances of the matter; such as the amount of the products, their value, and the amount of the means of production employed at the time. If we take these circumstances accurately into account, we obtain a number of equations, and we are in a position to make a reliable calculation of what each single instrument of production does. To put in the shortest typical formula the full range of expressions which offer themselves, we have, for instance, instead of the one equation x + y = 100, the following: –

  x + y = 100.
2x + 3z = 290.
4y + 5z = 590.

Here x = 40, y = 60, and z = 70.
NV-III-5.4 According to the number of individual productive combinations carried out within the entire field of production, will be the individual equations. In these equations the combined factors of production on the one side, and the value of the jointly acquired (or anticipated) returns on the other, are set against each other as equivalent amounts. If we add together all the equations, the total amount of productive wealth will stand as equivalent against the total value of the return. This sum must be ascribed, entirely and without remainder, to the individual productive elements, according to the standard of the equation value. To every element there thus falls a definite share in the total performance, and this share could not be figured out either higher or lower, without overthrowing the equivalence between productive wealth and return.
NV-III-5.5 It is the share in the return, thus credited to the individual productive factor, which is usually called shortly the “return” of the factor in question; – the return of labour, return of land, return of capital. I shall describe it as the “Productive Contribution” (see Ursprung des Werthes, p. 177), in order that it may always be clear whether we are speaking of the return as a whole, or of the share of the single factor in the return. The productive contribution, then, is that portion of return in which is contained the work of the individual productive element in the total return of production. The sum of all the productive contributions exactly exhausts the value of the total return.
NV-III-5.6 It need scarcely be said that, as a matter of fact, calculation can rarely be made so exactly, and never so comprehensively. The equations indeed are all set down, and in every case the productive outlay is estimated according to the standard of the greatest attainable return. But the stating of the equations is frequently made with only a trifling degree of exactitude; and the sum of all the equations is never fully taken, and thus cannot be divided out among the individual elements. None the less we are constantly trying to ascertain the result of the addition and division; only that, instead of calculating directly, we try to attain our end, in a somewhat circumstantial way, by a method of testing. The values obtained in the individual case are applied, so far as they appear suitable, to other cases, and corrected, the one by the other, till in the end the right division is attained. And this is rendered immeasurably easier by the fact that we already possess, in the familiar and authenticated productive values, a key to the division which only requires to be adapted to the changes which emerge from time to time. At no time has the whole mass of production goods to be calculated all at once; it is only the contributions of individual members among these which require to be calculated anew, and even for them a good basis is found in the old values. New calculations require to be made only in those branches of production where the attainable returns and their values either rise or fall. This gives rise to new equations for the factors in question, either with more favourable or less favourable total values. According as it is one or the other, will production be extended or limited, and productive elements attracted from other branches of production, or attracted to them, until the most favourable plan of production is again discovered. The experience obtained while transferring now one, now another productive element, and watching the effect of each combination upon the value of the return, gives us sufficient information as to the amount with which the individual elements are bound up in the total return.1

NV-III-5.n1.1 1 If we are to succeed in our calculation of the productive contributions there must be a sufficiently large number of equations. There must be at least as many equations as there are unknown quantities. Now this condition is certainly fulfilled. How many unknown quantities are there? Just as many as there are classes of production goods distinguishable in exchange. Without doubt these are very numerous. When theorists speak simply of land, capital, and labour, they include within each of these groups an enormous number of classes of goods which in exchange are as far as possible from being homogeneous. The value of labour is not to be calculated as one thing; there must be separate calculations for every kind and quality of labour between which one can distinguish. In calculating the value of agricultural land there will be, in one and the same district, as many different and distinguishable types of land, as would be distinguished in the register of a perfectly exact land tax imposed both on the cultivating and propertied agricultural classes. As to capital and its incalculable variety of forms we need not speak. But however far exchange may be specialised, the classes of productive combinations are undoubtedly even more numerous than the classes of production goods. The classes of combinations into which a good like iron or coal (even of one distinct origin or quality) may be introduced, are incalculable, and the same may be said of unskilled or day’s labour. One and the same field is planted in rotation with the most various crops. And thus it comes that a mere change in the quantity of the same kind of goods in a group is sufficient to produce a new equation. Among all the many kinds of goods employed in production, it would be difficult to find one which, either as regards quantity or kind, would always be combined with others according to the same unalterably fixed formula. Different degrees of wealth, of knowledge, of skill, of local conditions, involve that even those kinds of goods which only admit of one single kind of employment, – that is to say, which are only suited to produce one single kind of product – must, at the same time and for the same purpose, go into a manifold variety of combinations. If there are exceptions to this rule they are only isolated ones. The contribution of such goods can, however, still be calculated – always supposing that there are not two such elements in one and the same group. In this case, indeed, the principle we have established would not work, because we should have two unknown quantities and only one equation.

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