Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book VI: Value in the Economy of the State

Chapter II
The Province of a State Economy

NV-VI-2.1 It is generally assumed that the object of the individual economy is provision for the wants of the individual – that is to say, those wants which the individual feels as an individual; and that the economy of a community provides for the common or collective wants – that is, those which are experienced by the individual as member of a community, or, to put it differently, the wants of a community. The economy of a state therefore provides for the wants of the state, i.e. those wants experienced by the citizens of a state in consideration of their civic connection with each other. This conception, however, scarcely corresponds with the actual division of the economic sphere. National interests, which are undoubtedly to be reckoned under the head of collective interests, are frequently furthered by personal sacrifice and expenditure. And more numerous instances may be adduced of the contrary case – that individual interests are fostered by collective efforts. The desire to possess a means of coming and going to one’s business, is undoubtedly personal in the highest degree; but the highways of traffic have been included among the concerns of the commonwealth almost since the beginning of time. In the communistic state the care of providing for the entire sum of individual wants, would fall altogether to the economy of the state without these wants having changed their nature in any way. It must, therefore, be some circumstance which does not touch the nature of the want itself that determines the division of the economic sphere.
NV-VI-2.2 A simple consideration enables us to recognise what circumstance this is.
NV-VI-2.3 The personal ability of the individual is in many cases sufficient to secure him the realisation of his personal wishes. In particular, the sphere within which the individual is capable of making himself felt with effect, is quite extraordinarily enlarged when men have learnt to make use of the division and co-operation of labour. By means of this they enter into combinations and exchange with one another, and thus increase enormously their power of work, while, at the same time, they calculate and distribute out again to the individual the advantages obtained, and thus remain separate from each other, as individuals with individual rights. There are, however, certain results which demand a more intimate kind of connection, – a condition of real community, – and cannot be obtained without it. The desire to obtain these results, which often amounts to the feeing of a peremptory necessity, leads to the formation of the commonwealth.
NV-VI-2.4 There are various reasons which may make the attainment of a certain result dependent upon the formation of collective bodies, and upon the carrying out of collective actions.
NV-VI-2.5 In the first place may be mentioned the nature of the action in question. For many kinds of action the individual, as individual, is not qualified; he feels himself too weak, or, it may be, quite incapable. From the first it has devolved upon the state to represent the common weal, in cases where nothing but the solidarity of many or of all is able to create the force that is lacking to the scattered individuals. Only as a united state can a people hope to ward off its enemies, and to protect its citizens when in foreign countries. Only a union of people can succeed in guarding a country’s peace, and preserving order against crime within its borders. From the general feeing of justice are obtained the weight and power necessary for the laying down of laws which will bind every one, and for the appointing of judges and officers who will make every one bow before the one common law. And thus numerous interests, partly collective, partly the most ordinary general interests of the individual, lead to an ever-widening extension of the sphere of the state’s activity, wherever the opinion prevails that only the state possesses the power of offering any guarantee of the satisfaction, or the full satisfaction, that is desired.
NV-VI-2.6 In the case of such actions as are executed in common, there is an overwhelming tendency to bear the burden in common, and to enjoy the results in common. Even if the power of the state is set in motion for the sake of one solitary citizen, the occasion cannot well be judged merely from the standpoint of the interest of that one citizen. The very fact that the power of the state has been set in motion at all, engages the interest of the public, because this power, once set in motion, cannot be allowed to move in vain. All its future success depends on the recognition of this. For this reason the outcome, for instance, of every single criminal or civil process is full of importance to the whole community. Every such process must be so conducted that respect for the law may be strengthened, not shaken. But generally speaking the occasions on which the machinery of the state appears on the scene are, in their origin, matters of great importance and of great compass – frequently, of the greatest importance and the greatest compass; they are indeed such matters as only the united strength of the whole people is sufficient for. This circumstance of itself makes it impossible, as a rule, to divide out among the individual citizens the result obtained by the combined effort, or even to charge it to the individual according to its effects; hence the necessity of making the benefit universally accessible, or ascribing it to the people as a whole without further distinction. It happens comparatively seldom that individuals can be indicated and singled out, whose interests are exceptionally concerned, and for whom the services of the state may be exceptionally interposed and charged.
NV-VI-2.7 In the second place, just as the results of a war are not to be bought or sold, and a war cannot therefore be carried on as a private matter,1 so it happens that, among the undertakings for which the means and powers of the individual citizens suffice, there are very many which must be excluded from the circle of private business because of the impossibility of obtaining any profit out of them. The most various circumstances may have this effect. The streets of a town would be useless for purposes of traffic if they were not free to use without payment; this makes it impossible that any citizen should retain public routes for his own benefit. The same principle holds in all cases where goods whose production costs something must be made over to the public free of charge – “quasi-free goods,” as Menger calls them. Many undertakings also, although the public interest demands them at once, give promise of return only in the distant future; – so distant indeed that no private individual could be expected to wait for it: this is the case, e.g., as regards many railways. Very often again it is doubtful whether the return of an undertaking will ever be sufficient to cover the costs, while at the same time the results in case of success are temptingly large; here private enterprise would hesitate, either on account of the great amount of capital necessary or for other incidental reasons. Very often there is a scarcity of capable and energetic private undertakers, simply on account of the defective economical development of the citizens. And there are often cases where the goods concerned are, for the private economy, only in process of becoming – still incomplete, unripe, latent; where the goods must first be got at, or the goods that are to supplement and complement them be discovered, before they become capable of rendering any useful service. How much latent labour power there is which must first become conscious of its own existence and train itself, before it can find a market! What hidden wealth may not slumber in a land favoured by nature but uncultivated, its existence suspected, even known, but out of reach owing to the general backward condition of industry, of wealth, of education, of credit, of law, or of peace! And, although, in such a case, there is as yet no secure foundation for private enterprise, what government would not regard it as a duty itself to come forward and take hold, not only in the way of general administration, but by economic undertakings which train and ripen human faculty though they may give no direct return? Sometimes only the want is there, crying urgently for satisfaction, while those who feel it have no power to pay for its satisfaction; in this case no private undertaker can do anything, and the state must step in to mitigate an evil which might grow to be a great public ill. Many other similar circumstances might be added, all acting in the same direction; that is to say, excluding private enterprise by reason of their unprofitableness, but demanding the activity of the state on account of the importance of the goods concerned.
NV-VI-2.8 In the third place, many undertakings which lie within the power of a citizen, and which also hold forth to him a promise of gain, are reserved to the state, for the simple reason that they would put too much power into the hands of the private undertaker, or assure him too great a gain. The fear is that the exceptional position they would necessary give to the person who undertook them might be misused. The businesses which belong to this class are mostly necessary monopolies, – particularly monopolies of great extent, such as the post and the railway. We do not expect, in an independent private undertaker, the requisite reliableness, or the will to undertake such huge businesses, or to carry them through as we should like; or we expect that too high a price would be charged for the service. But in all these points people look for something better from a government. This does not, however, in the least involve that the form of undertaking for profit be entirely rejected. It may be retained, but, with the endeavour to obtain the highest business return, must be conjoined, in some way or other, the endeavour to serve the interests of the public. In particular, where any considerable want is concerned while the power to pay is wanting, the service must be undertaken at limited prices, – that is to say, valuation according to exchange value must be replaced by valuation according to natural value. Thus emerges the “public enterprise.” In the communistic state all production would be the affair of the state, and fall under public enterprise, from a consideration which amounts essentially to this; – that private production is one-sided, and looks to the interests of the richer classes, while putting in the background the interests of the community in general. Even the affairs of the private household would be, for the most part, given over to the state.
NV-VI-2.9 If we cast a glance over the whole series of duties which constitute the economy of the state, it will easily be seen that, apart from the diversity of originating causes just described, they are also distinguished from each other by their content. Certain of them – of which the last-mentioned group is the best instance – are very closely related to private undertakings. Like them they have to do with the direct application of labour to goods; they have to do with detail and with individual production; and they are scattered in countless separate actions and occupations – many of these of a similar nature – over countless separate goods. Here it is considerations more remote and far-reaching that exclude private administration in matters where, otherwise, it might be suitable enough. This can be most clearly realised if we consider the businesses of production and of housekeeping as transferred to a communistic state. These would indeed cease to be matters of private economy in the personal sense, but, essentially or technically, they would remain, if the expression may be employed, “economic in detail.”
NV-VI-2.10 Quite different is the character of the remaining acts of state economy, which chiefly belong to the first and second groups just described. Their duties do not admit of being discharged by private economies for various reasons, but these reasons all lead, in the last resort, to the same issue; – that such acts are beyond the calculation of the individual, either because their products cannot be bought and sold, or cannot be bought and sold individually. Their results go without money and without price to the public, – either in whole or in great part, – according to what Sax calls the Princip des allgemeinen Genussgutes [Online editor’s note: “Principle of the general consumption good.” – RTL]. They are transactions on a great scale, working with large means, and large returns, – returns which it is often entirely impossible to distribute. They assure the general foundations of personal life and of economic action. Their results must be distributed over all the community and not divided out individually, even supposing it possible to conceive of them as distributed to the individual. Of course they are undertaken on account of the utility they promise; but it is frequently far from certain – as e.g. in the case of war - whether the desired result will ever be attained. And even if it is attained its amount can, for the most part, be only approximately determined, partly on account of the wide range which it covers, partly on account of the large number of persons concerned, partly on account of the impossibility of conceiving the individual’s share in it, partly on account of the long process of development, and the long time that must elapse before many of its effects emerge. Very often all that one knows of an action is that it must not be neglected, and that we must summon all our forces to undertake it; while it is almost entirely uncertain how in the end the life of the people may be affected thereby. Often it is other generations that must pass judgment upon it.
NV-VI-2.11 In the communistic state also, if all economical matters are to devolve upon the state, decisions will certainly be made from this point of view; the affairs of the household and of ordinary production will be kept separate from those of the general economic and state administration. In the former case goods will be estimated at their natural value as that is now determined in private economy, i.e. according to marginal value; in the latter case, this form of valuation will be – as we shall go on to show – to a great extent abandoned. Alongside of it, or in its stead, will be placed another form of valuation, which we may best call “national economic” valuation, – a term which certainly does not express the formulas of communism, but those of existing economical conditions.

NV-VI-2.n1.1 1 This, however, is not the reason why it is reserved for government to carry on wars; that reason being simply that no private individual possesses the means necessary for it.

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