The Value of MoneyAnderson, Benjamin M. (Benjamin McAlester)
General
The Value of Money
Anderson, Benjamin M. (Benjamin McAlester)
Money
It is the one great contribution of the Austrian economists to have
shown that the causation in value runs, primarily, from consumption
goods to the goods of higher "orders" which are concerned with their
production, and that these values of instrumental goods, etc., are
derived and secondary values. The value of wheat is based on the value
of bread, the value of land on the value of wheat. The value of the
stock of United States Steel rests in part on the value of iron lands,
which rests on the value of ore, which rests on the value of pig iron,
which rests on the value of steel rails, which rests on the value of the
service of transporting building materials, which rests on the value of
a building, which rests on the value of the services which a dentist
performs in an office in the building. This is the main line of
causation. This is the first approximation which gives us a clue,
without which we should find problems insoluble. But is it not clear
that this cannot be the whole story? At every step complications enter.
The whole thing cannot be got out of the value of the dentist's
services, and the other consumers' goods and services, which are
indirectly aided by the property to which title is given by ownership of
U.S. Steel stock; nor is the value of the stock to be fully explained by
the value of the property to which it gives title.
At every step, we meet the complication that men must estimate and
calculate, for one thing. And rarely indeed can men see all the steps,
the end from the beginning. Take first a very simple case, wheat land.
The value of the wheat land of to-day rests on the value of wheat, but
it is the wheat of to-morrow and for many years to come; the wheat of
to-morrow rests for its value on the value of the bread of the day after
to-morrow. Sometimes the differential between goods at two consecutive
steps in the productive process is pretty constant. Wheat and flour vary
pretty closely together. The differential is not strictly fixed even
there. But bread and wheat land have a much looser connection in their
variations. If land could produce no wheat or corn or other good that
would satisfy human wants, and if it could not itself satisfy human
wants, it would ordinarily have no value.[40] But the connection
between the value of the bread and the value of the land is loose and
uncertain, while the connection between the value of the land and the
intensity of the wants actually satisfied by the bread produced from it,
is absolutely _nil_. Whether the bread saves a starving man or feeds the
pet pigeons of a millionaire, is a matter of indifference so far as the
value of the land (or of the bread) is concerned.
Public-domain text, read in full here on John Shaqi.
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