Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book III: The Natural Imputation of the Return from Production

Chapter VII
The Principle of Solution (continued). The Economic Service of Imputation

NV-III-7.1 Thanks to the imputation of the “productive contribution,” every production good, without exception, has ascribed to it a greater effect than it could obtain through its own powers, No production good, not even the most powerful of all, labour, could by itself produce anything; every such good requires the co-operation of others, and is nothing by itself. On the other hand, again, every production good without exception, has, thanks to this imputation, a lesser effect ascribed to it than might be expected from the degree of dependence in which the complementary goods stand to it. If we take from a group any element, however unimportant, so long as it is a necessary and economic element, not only is its own return lost, but the other elements also are robbed of a portion of their effect. This holds of labour in its relation to capital, as well as of capital in its relation to labour. The well-worn argument, then, that without labour nothing would bring forth fruit, and that to labour consequently must be imputed the entire return, is false. Only those who misunderstand the rules of imputation in everyday use, could employ it. Nothing is easier than to reduce it to an absurdity by supposing labour obliged to work without land or capital.
NV-III-7.2 The imputation of the productive contribution assigns in this way to every production good a medium share.1 To calculate the productive contribution, and therefore also the value, at this medium amount, is sound common sense. It is the only practical and useful kind of calculation; it justifies its logic by its utility. The value of production goods should be the controlling power of production. Now it will be so, most perfectly, if it is based, according to our standard, on the productive contribution of these goods. On the other hand, it will be so only imperfectly or not at all, if we depart from the principle. The sum of all the contributions is, as we have seen, equal to the value of the greatest possible total return, and this return will be actually reached if we demand from each factor a service equal to the contribution imputed to it. If we do not impute anything to the means of production, we deprive ourselves of all possibility of controlling their employment by reference to their value. If we impute to them either more or less than their actual “contribution,” our control will be at fault, as it will induce us either to a too limited or a too extensive employment.
NV-III-7.3 Perhaps I may be allowed to pursue these ideas still further into detail.
NV-III-7.4 If we did not ascribe any share in the return to labour, nor yet to land and capital, we should have to use all these without being in any way guided by their value. If again the whole return were imputed to labour and none of it to the material instruments, production would be misled by productive value. Land and capital would be declared valueless; there would be no need to consider them at all; whereas labour would be overestimated, and would, consequently, be far too greatly withheld. The most overestimated would be that labour which got the most intensive material assistance, and so gave the absolutely largest returns. Labour which, in cooperation with a large amount of capital, gave a total return of 100, would be estimated more highly than labour of equal amount, but different quality, which, with a tenth part of the capital, gave a return of 99. Artistic labour, working without much outside assistance, would have a low valuation, while plentifully assisted labour, even although unskilled and mechanical, would have a high valuation. With the former extravagance might be allowable, while with the latter we should have to economise. The whole sphere of production would be dominated at every point by confusion and perversity.
NV-III-7.5 The imputation of return to land, capital, and labour, according to the measure of their respective productive contributions, is a natural economic dictate; it holds in all forms of economic life – in the communistic state as well as in the present one. It may – possibly – be a just demand that the whole product be given over to the labourers as personal income; but in any case, and even should this come to pass, it is an economic demand that the products be credited to the sources of the return, according to the contributions which they afford, in order that we may have a standard for the further employment of the means of production.
NV-III-7.6 It need scarcely be said that there is a limit to the application of this law. When too large a number of production goods are grouped together as one unit – as when theorists talk of all kinds of labour as “labour,” all kinds of capital as “capital,” and all varieties of ground as “land” – there is no longer the number of equations necessary for any solution. Of “land, capital, and labour” there is nothing to be said except that, together, they bring forth everything; alone, nothing. In practical life, we have often occasion to look at things in this wholesale way. But, even if these occasions were more frequent than they actually are, the individual imputation would not be any the less necessary. Although production is carried on under these wholesale modes and conditions required for preparation, introduction, and security, still, in the conduct of production it necessarily comes, in the long run, to detailed calculation. The man who calculates the result most exactly, who measures and makes a difference as regards even the smallest amounts, will, so far as it depends on the working out, get the largest total result; while the poorest will fall to him who estimates things only in the gross, and in an outward and superficial way. If it be everywhere a sign and a principle of human advance that we make more and more minute division and classification of causes, it must also be so in the great sphere of economic life. If socialism means to do away with the productive imputation, it will induce a condition of things worse than that experienced in the deepest barbarism. The savage knows what he owes to his net, and what to his bow and arrow, and would be badly off if he did not know. Happily the same instinct which directs him is possessed by all men, and no amount of theories will ever make people neglect to measure the effects of the productive powers in the way that practical self-interest demands.
NV-III-7.7 On the other hand, again, the individual imputation does not do away with the necessity of considering production as a whole. The preparation for and introduction of productive labour often requires, as has been said, very large and wholesale standards, where it is not sufficient merely to reckon up the productive contributions. These contributions correspond to the individual results which emerge where production succeeds. But how if it does not succeed? How if certain goods are wanting, and the want retards production, limits it, or even makes it quite impossible? Then, indeed, we get results from the single good which go far beyond the amount of its contribution. Then it becomes evident that the individual good not merely creates “its own return,” but, besides this, conditions the returns of other goods. The disturbing power of a want or loss of goods – the difference between “contribution” and “co-operation” – is larger, the larger the quantity of goods lost. Where, then, there is any danger of a loss, and especially a loss of wide extent, individual imputation is not sufficient; it reckons the damage too low; its only standards have too small a range. In this case it is necessary to be fully informed concerning the whole circle of conditions upon which the production depends, and the whole importance of the co-operation of all the factors.
NV-III-7.8 Individual imputation and observation of production as a whole, although they may lead to different valuations of the same goods, do not on that account contradict each other, nor cancel each other. Each valuation can be employed only for its own purposes. Individual imputation serves, in the carrying out of production, to measure the economic employment of each portion of a nation’s resources; consideration of production as a whole serves to guarantee that the production is carried through. The labour powers of a nation, for instance, must be individually valued and employed according to the exact amount of their contributions, while, at the same time, particular care must be taken to meet the perils which so often all at once threaten the labour power of individual groups, and indeed of great classes. Again, the various forms of a nation’s capital must be individually valued and employed according to the measure of their contributions. At the same time care must be taken that capital as a whole, and capital in the chief branches of production, remains and increases in the face of possible danger and attack. The consideration of production as a whole must thus aim at securing against all disturbance the essential foundations of production, and the harmonious relation of its elements.
NV-III-7.9 In the economic life of to-day individual imputation devolves chiefly upon the individual citizen, while consideration of production as a whole is mainly undertaken by the government. The former belongs peculiarly to the sphere of private economic valuation, the latter peculiarly to that of public economic valuation. Here we only indicate the distinction, leaving more exact consideration to the last book.

NV-III-7.n1.1 1 Medium, that is, between the greater and the lesser shares just mentioned. The share of labour, for instance, is not determined by the (socialist) consideration that capital without labour is dead, nor by the (opposite) consideration that labour without capital is crippled. In becoming organic every element gains in importance by becoming arbiter of others, but loses as it puts itself into the same position of dependence upon others. – W.S.

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