Social Value: A Study in Economic Theory, Critical and ConstructiveAnderson, Benjamin M. (Benjamin McAlester)
General
Social Value: A Study in Economic Theory, Critical and Constructive
Anderson, Benjamin M. (Benjamin McAlester)
Value
Much of the foregoing would be needless were it not for the fact that there
has been, and is, in the writings of the Austrians and those who have
followed them, a confusion of two very different things: on the one hand,
the curve of utility for a single individual of a given good, measured in
terms of money, on the assumption that the marginal utility of money
remains constant to him; and, on the other hand, the demand-price curve of
that commodity for a whole community or a "trading body,"[61] made up of
many individuals, differing in wealth and in tastes.[62] The former curve
does express a diminishing scale of absolute feeling-magnitudes,[63]
concerned with the consumption of the good. The latter does not. The latter
is not necessarily a diminishing utility curve at all, for the poor man
whose price offer is lowest may easily desire the good more intensely than
does the rich man whose demand price is highest. These confusions, in the
writings of Boehm-Bawerk and Wieser, especially, have been adequately
commented on by Professor Davenport,[64] who adheres pretty carefully
throughout to the distinction drawn above, and to the strictly
individualistic, subjectivistic conception of price determination, with its
correlate of relativity. Jevons's confusion on this point has been noted by
Marshall.[65] It is amazing, really, when one sets about to find them, how
numerous are the occasions on which leading economists have been guilty of
this confusion--a confusion that utterly vitiates very many of the
conclusions based upon it. In truth, Professor Davenport is not far wrong
when he asserts that "the general understanding of Austrian theory has come
to be that it explains market value by marginal utility, and resolves
market value into marginal utility."[66]
To go through the roll of the economists in pointing out this confusion is
a needless task here, but a few representative names must be called, in
addition to those mentioned above. Thus, Pierson:[67]--
There is nothing to prevent our treating a group of
persons as a unit, and examining the position which
commodities occupy in relation to that unit. If we do
this, we shall see that the above diagram [the regular
diminishing utility diagram of Jevons], depicting the
position which they occupy in many cases in relation to
the individual, must depict the position which they
occupy in a still larger number of cases in relation to
the group. And the truth of this statement is greater
in proportion to the size of the group.
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