Social Economics

492 Pages·1927·40.067 MB·English

by  Friedrich von Wieser

SOCIAL ECO:NOl\IICS
ADELPHI ECONOMIC SERIES
GENERALECONOMICHISTORY
MaJr W,~,,.
CYCLICAL FLUCTUATIO~S
Sim....K..u"II:C
SOCIAL ECONOMICS
V."
F. Wi,s,r
MONEY
Karl H'/JIiricl
SOCIAL
ECONOMICS
By
FRIEDRICH v'on WIESER
TranJ'lafed hy
A. FORD HINRICHS
AJ'J',".rlani ProjeJ'J'orojEconomicJ',Brown Uni"erJ'ify
With a Prciface hy
WESLEY CLArEt MITCHELL
ADELPHI CO'MPANY
NEW "fO:RK
COPYRIGHT, 1927 BY GREENBERG, PUBLISHER, INC.
MANUFACTURED IN THB UNITED STATES OF AMERICA
BY THE VAIL-BALLOU PRESS, INC., BINGHAMTON. N. Y.
CONTENTS
FOREWORD-,WESLEY C. MITCHELL ix
TRANSLATOR'S PREFACE xiii
AUTHOR'S PREFACE xvii
INTRODUCTION 1
1. THEMETHOD OF THE FOLLOWING STUDY 3
2. THE DIVISION OF THE SUBJECT :MJ~TTER 9
BOOK I THEORY OF THE SIMPLE ECONOMY
3. PURPOSE AND POWER IN THE ECONOMY 18
4. HUMAN NEEDS 21
5. GOSSEN'S LAW OF THE SATIE,TYOFNEEDS 25
6. THE DEGREES OF HUMAN NEEDS 29
7. THE ApPRAISAL OF FUTURE NEEDS 35
8. COMMODITIES 39
9. BUILDING UP THE SIMPLE EOONOJ~Y 43
10. THE UNITY OF THE ECONOMY 49
11. THE THEORY OF PRODUCTS 53
12. THE THEORY OF LABOR 56
13. THE THEORY OF CAPITAL 62
14. THE THEORY OF LAND 74
15. COSTPRODUCTIVE MEANS AND SPEOIFIO PRODUCTIVE MEANS, COST
PRODUCTS AND SPECnnC PRODUCTS 81
16. 'MARGINAL UTILITY IN THE lSOLA'.I~EDHOUSEHOLD ANDTHE FUN-
DAMENTAL LAW OF THE ECONOMIC COMPUTATION OF UTILITY 85
17. MARGINAL UTILITY IN IDEALIZED PRODUCTION 96
18. THE LAW OF THE COST OF PRODUCTION IN THE SIMPLE EOONOMY 98
19. CHANGES OF COSTS AND THE COMPUTATION OF UTILITY 106
20. THE PROBLEM OF ATTRIBUTION Ol~ YIELDS 111
21. COMMON AND SPECIFIO ATTRIBU'rION OF YIEWS 119
22. THE ECONOMIO COMPUTATION OF UTILITY 124
23. NET-YIELD AND THE PRODUCTIVITY OF CAPITAL 129
24. CAPITAL COMPUTATION 135
25. ECONOMIC VALUE 142
BOOK II THEORY OF THE SOCIA:L ECONOMY
PART I THEORY OF ECONOMIC SOCIETY 149
26. THE ECONOMIC PROCESS ANDTHE THEORY OF SOCIETY 149
27. THE BASIC FORMS OF SOCIAL ,AOrION 154
28. THE INDIVIDUAL IN ECONOMIC SOCIETY 158
29. SOCIAL INSTITUTIONS 162
vi CONTENTS
PARTII THE INSTITUTIONS OF EXCHANGE 167
30. EXCHANGE 167
31. THE MARKET 171
32. THE PROBLEM OF THE GENERAL DOCTRINE OF PRIOES 177
33. THE FUNDAMENTAL LAW OF PRIOE-FORMATION 178
34. THE STRATIFIOATION OF PRICES 186
35. THE DEMAND-INDEX OF CONSUMPTION AND THE UNITY OF THE
HOUSEHOLD 189
36. THE FUNDAMENTAL LAW OF THE CHANGEOF PRICE 191
37. THE FORMATION OF PRICES IN THEDISORGANIZED MARKET 195
. 38. THE PEICE OF PRODUCTS. I. THE SUPPLy-INDEX OF COSTS 198
39. THE PRICE OF PRODUCTS. II. THE COMPETITIVE PRICE 204
40. THE PRICE OF PRODUCTS. III. THE MONOPOLY OF SUPPLY 211
41. THE PRICE OF PRODUCTS. IV. THE DEMAND-MONOPOLY 218
42. THE PRICE OF PRODUCTS. V. THE MONOPOLOID INSTITUTIONS 220
43. PERSONAL (SUBJECTIVE) VALUE-IN-EXCHANGE 2.28
44. E,CONOMIC (OBJECTIVE) VALUE;"IN-ExCHANGE 233
45. THE CONCLUSIONS OF THE GENERAL THEORY OF PRICE 235
46. CREDIT 237
47. THE MEANS OF PAYMENT BY CREDIT 242
48. THE NATIONAL ECONOMIC COMMUNITY OF PAYMENT 250
49. THE DEVELOPED FORM OF MONEY 258
50. THE ECONOMIC (OBJECTIVE) EXOHANGE VALUE OF MOENY, OR
THE VALUE OF MONEY 262
51. THE MONETARY MATERIAL AND THE BULLION VALUE OF MONEY 265
52. THE NOMINAL VALUE OF MONEY 272
53. THE LAW OF CHANGE IN THE VALUE OF GOLD 279
54. THE HISTORICAL CHANGES IN THE VALUE OF MONEY AND THE
DISAPPEARANCE OF NATURAL ECONOMY 287
55. MEASURING·THE VALUE OF MONEY 290
56. THE MONEy-FORM OF CAPITAL 292
57. THE PROCESS OF CAPITAL-FORMATION IN THE MONEy-ECONOMY 298
58. THE CAPITAL MARKET 303
59. THE COMPUTATION IN MONEY 304
PART III THE CREATION OF THE COMMUNITY OF ACQUISITION AND
THE FORMATION OF INCOME 309
60. THE DIVISION OF LABOR 309
61. THE LOCALIZATION OF.INDUSTRY 314
62. THE ECONOMIC STRATIFICATION OF SOCIETY 317
63. THE ENTERPRISE 322
64. SOCIAL ECONOMY AND SOCIAL INCOME 330
65. AGRICULTURAL RE;NT 334
66. RENT OF URBAN LANDS 338
67. PRODUorIVE INTEREST 345
68. CONSUMPTIVE INTEREST 350
69. ENTREPRENEUR INCOME AND ENTREPRENEUR PROFITS 353
70. PROMOTER'S ENTERPRISE AND PROMOTER'S PROFITS 358
CONTJE,N'rS vii
71. SPECULATION ON THE EXCHANGE AND THE PROFITS OF SPECU-
LATION 363
72. THE THEORY OF WAGES 367
73. THE FORMATION OF WAGES IN THE MODERN LABOR-MA.RKET 372
74. YIELD-WAGE AND THE VALUE OF LABOR 380
PART IV THE·CONSTITUTION OF THE PRIVATE ECONOMY 389
75. THE) CONSTITUTION OF'THE PRIVATE ECONOMY AT THE DAWN OF
THE CAPITALISTIC ERA 389
76. THE DOMINATION OF CAPITALISM IN MODERN NATIONALECONOMY 400
77. THE THEORETICAL FOUNDATIONS FOR THE DOMESTIC POLICY OF
THE NATIONAL-ECONOMY OF THE PRESENT DAY 408
BOOK III THEORY OF THE STA.TE-ECONOiMY
78. THE PUBLIC ECONOMIC PROCESS 419
79. VALUE IN THE ECONOMY OF THE STATE 425
80. THE ECONOMIC PRINCIPLE IN STATE ECONOMY 430
BOOK IV THEORY OF THE WORLD ECONOMY
81. THE WORLD ECONOMY 437
82. THE INTERNATIONAL·FORMATION OF PRICES 441
83. EXCHANGE-VALUE AND CURRENT ·VALUES OF MONEY IN INTER-
NATIONAL TRADE 444
84. THE EQUALIZATION OF THE INTERNATIONAL BALANCE OF PAY-
MENTs AND THE MOVEMENTS 0]' THE TRADE BALANCE 448
85. THE DEVELOPMENT OF NATIO:N"AL AND WORLD ECONOMIES 456
ABBREVIATIONS 463
INDEX 465
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FOREWORD
Friedrich von Wieser's Social Economics holds a place in the litera
ture of the Austrian School such as ~rohn Stuart ;Mill's Political
Economy holds in the literature of classical theory. It sums up,
systematises, and extends the doctrines developed by the founder of
the school, the author, and his fellow 'workers. Like Mill's great book,
it is distinguished by admirable exposition-elegant in proportions,
mature in expression, authoritative in source. And it promises to be
come like Mill's book·the point of departure from which a generation
of younger men set out in.their efforts to increase knowledge.
Yet in certain respects a comparison 'with Mill does less than jus
tice to Wieser. Social Economics is the first systematic treatise upon
economic theory at large produced by the Austrian School, whereas
several attempts to cover the field of classical theory had been made
before Mill wrote. Wieser's economie work is also more original than
Mill's. His own early writings ranlt: higher among the constructive
contributions which he weaves into a balanced exposition than do
Mill's Essays upon some Unsettled IQuestions of Political Economy.
More than that, in deepening and broadening his earlier discussions,
Wieser reveals again the thoroughness, vigor, and originality for
which he has always been notable. ]\fiU wrote his Principles at high
speed to round out his social philosophy. Even in later editions he
did not incorporate all the changes 'which he admitted were desirable
in the classical doctrines. Wieser, on the. contrary, broug-ht his
full power to bear upon his treatise. It is the fruition ofa lifetime's
reflection as well as the crowning achievement of a famous school.
In his Gymnasium days, von Wieser had been fascinated by Homer,
Virgil, the Niebelungenlied,.and by history which followed epic tradi
tions. He dreamed of becoming an historian. But he came from one
of the aristocratic Viennese families whose sons commonly enter the
public service, and the path to public service was the law. While fol
lowing this path at the University, he chanced upon Herbert Spen
cer's early writings on sociology, and was fired with a new ambition.
Spencer'8 logic convinced him for the time that the "great-man
theory" of history is an illusion; it is the culture of a people which
ix
SOCIAL ECONOMICS
produces the hero. Therefore, to understand history one must un
derstand society first. The aspect of social relations most open to un
derstanding is the economic aspect. And the central problem of eco
nomic life is the problem of value. So the young jurist concentrated
upon the economic courses ofthe lawcurriculum, and began to ponde!
the problem which he was later to illuminate.
Carl Menger had published his Grunds·iitze der Volks'wirtschafts
lehre in 1871, and been appointed to a professorship at Vienna.in
1873. .Von Wieser did not attend Menger's lectures, but he found
in Menger's book the clues he needed. After taking a law degree
in 1875, he and his.friend Eugen von Bohm-Btawerk spent two years
at the Universities ofHeidelberg, Leipzig and Jena. While at Heidel
berg in the spring of 1876, the two Austrians presented reports to
KarIKnies'seminar. One report dealt with "The Relation of Cost
to Value," the other report with.the theory of··interest. At the next
opportunity, Wieser showed his manuscript to Menger, and was en
couraged to seek a·university·career.
On returning to Vienna from his German studies, the young econo
mist received an appointment- in the Tax Administration. .In 1883
he became Privatdozent at the University. Next year he published
the book expected from aspirants to an academic chair, Ursprung
tt·nd Hauptgesetze deswiJrtsckaftlichenWerthes" and was soon
made professor in the German University of·Prague. In this first
book, von Wieser analyzed a valuation made apart from others by a
single person,.but a person who represents the population of a mod
ern nation. In his second book, Der naturlicke Werth, he attempted
"to exhaust the entire sphere of the phenomena of value·without any
exception." The analytic power here revealed ranked the writer
with Menger and Bohm-Bawerkas one of the three ma-sters of the
Austrian school. When Professor William Smart was introducing
the Austrian theory to English-speaking economists, he chose Wieser's
Natural Value for translation in preference to Menger's Grundsiitze.
So far von Wieser had concentrated his scientific effort·upon one
central problem. After the publication of Der naturliche Wertk in
1889, he turned to questions of money, public finance, politics, and
sociology. In.1903 he left his chair inPtague ·to become professor
of economics in Vienna. He also served for a while as Minister
of Commerce. During the twenty-five years following 1889, his pub
lications dealt mainlywith detailed problems; butall this time he was
quietly.developing and maturing his thoughts upon e'conomic theory
at lar.~e, and upon his·still ·earlier .problem of the·relations between
society and its leaders. Always critical of his own work, he seldom