Front Page Titles (by Subject) CHAPTER IX: the cost theories ( continued ). labour as an element in cost - Natural Value
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CHAPTER IX: the cost theories ( continued ). labour as an element in cost - Friedrich von Wieser, Natural Value 
Natural Value, edited with a Preface and Analysis by William Smart (London: Macmillan, 1893).
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the cost theories (continued). labour as an element in cost
It cannot well be questioned that, among the costs of any product, the labour necessary for its making comes first. Every product withdraws the labour-power that is devoted to it from other products to which it might have been devoted. There would be nothing further to say on the subject, were it not that labour calls for economic deliberation as to its employment on a second ground besides that of its utility. Labour carried too far becomes a burden, and brings a succession of serious personal evils in its train. Where labour brings pain, strain, or danger, there is good reason to think seriously over these consequences; and, on their account alone, to regard every act of labour as a sacrifice which should be made only if it is certain to be adequately recompensed by its result. It is in this sense that it is commonly said that production “costs” labour, and it is in this sense that most economists conceive of labour as a cost good. Not the utility but the personal sacrifice of the labourer is to determine the economic valuation of labour, and its influence upon the value of commodities.
To decide how much is right in this conception is one of the most difficult tasks of political economy, and, as the theory has developed, one of the most important. Beginning with the idea that labour is valued according to the personal sacrifice it involves, and going on to the wider idea that labour is the only production good, that all products are directly products of labour, and that all costs are labour costs, the conclusion has been reached that the sacrifice of labour necessary for the production of a good is the exclusive source of its cost value, indeed, of its value pure and simple. From its relation to the labour sacrifice the conception of value receives its content, the amount of value its standard. In Adam Smith we find, as was said in the preface, this “philosophical” conception of value coming into collision with a second “empirical” conception. Ricardo's system aims at proving that this “philosophical” conception is almost realised in the empirical formation of value. Finally the socialists roundly demand its complete realisation, and condemn the empirical deviations as disturbances. In connection with this conception of value, a second conclusion, which relates to the origin and aim of human economy, is drawn from the same premises. Human economy derives its origin, in the last resort, from the fact that goods must be obtained at the price of the sacrifice of labour, and the aim of all economy is ultimately to make the sacrifice of labour necessary for the production of goods as small as possible. And thus, when we endeavour to examine the position of labour as a cost good, we find ourselves plunged into the quarrel of theory as to the fundamental questions of political economy.
The opponents of the Labour Theory do not in my opinion give it full justice. They try to overturn it completely, whereas it is by no means entirely false. It is conceivable, only it does not fit in with facts; it is, if the expression may be allowed, philosophically right, but it is not empirically realised.
It is possible to conceive of a condition of economic life under which the single consideration of the sacrifice involved in labour would determine the value, both of labour itself and of all products. The widespread recognition which Ricardo's theory has obtained can only be explained by the fact that it is founded upon a conceivable and attractive fundamental idea. Men learned the meaning of “value” as a whole—not as a philosophical conception, but as applied to the circumstances of everyday life—for the first time, and then overlooked the fact that the “value” of actual life was not completely explained.
I shall endeavour to formulate with all possible distinctness those conditions under which the labour theory would apply. This is the best means of enabling us to recognise how far these fall short of realisation in existing economic circumstances.
Suppose that a community—already abundantly provided with all the material auxiliaries for labour—had at their disposal so great a supply of labour power, and so few wants, that they were able to satisfy completely and without delay any desire that they might happen to feel, simply by putting forth the exertion necessary to produce the means of satisfaction. In this case the means of satisfaction so produced would have no value from the consideration of their utility, because—as assumed—they were to be had immediately at all times and in superfluity. On the other hand, the consideration of the exertion of labour required to produce them must give them value. Every product made and possessed would save an effort; the effort, namely, involved in its reproduction. And, so far, one would have a lively interest in holding on to any possession once obtained. The amount of this interest would depend upon the exertion saved by the possession. A product with a utility expressed by the intensity of 100, and necessitating labour equal to 10, would have a value of 10, and would have no value at all if its reproduction cost no effort.
The conceptions of value and wealth evolved from the assumed circumstances would, formally considered, be such as should arise if value and wealth were derived from consideration of the utility which the goods assure, while, all the time, materially, they would be completely different. Value would be the importance which goods would then have in virtue of the interest every one would feel in securing exemption from the undesirable pain of labour. Wealth would be equivalent to great possessions of goods securing immunity from the pain of labour. The advantage of wealth would be rest. Poverty would not mean want, but only unrest, pain. By a little increase of exertion any advantage of prior possession could soon be overtaken.
That this is not the poverty which the poor man knows: that this is not wealth as men really estimate it: that this is not the value or the economy of which we have any experience:—requires no proving. If merely by pain men could be rich, the very people who are to-day the poorest would long ere this have become the richest. Nothing in reality is as assumed by the labour theory. Our desires are too great, the material resources at our disposal too limited, our labour power too small. No economical possession can be lost without some enjoyment being lost. The idea of utility cannot possibly be separated from the purposes of economy and the conception of value.
There is only one question that may still be asked. It is whether consideration of the sacrifice of labour does not always enter into the valuation of labour as a cost-good, and thus into the cost value of all products, alongside of and bound up with the consideration of the utility of labour. But neither is this the case. It could not be so. Such a possibility is excluded, not empirically but logically. Productive labour can never have value on account of the utility which is dependent upon its success or non-success, and also on account of the personal effort which it involves. In what circumstances does an act of labour have use value ? When, in event of its failure, the utility has to be given up, because the labour cannot be put forth a second time; or when, in the same case, the repetition of the service demands that another use of the labour be abandoned, and its expected utility with it; in other words, when there is not sufficient labour available to meet the demand, when labour power is not available in superfluity. And in what circumstances would a service be estimated according to the sacrifice involved ? When, in event of failure, one would not need to give up the utility, because it could always be obtained again at no greater expense than the repeated effort; in other words, when all the available labour power had not a predetermined and distinct destination, but when there was always free labour power available in superfluity. Labour could only be estimated at once by its utility and by personal effort, if it were at once capable and incapable of repetition; if there were at once a deficiency and superfluity of labour Powers. Where the available labour Power is less than the demand, labour value will be estimated exclusively according to utility. Where the available labour Power is in excess of the demand, it will be valued exclusively with reference to the labour sacrifice.1
Even where labour value is estimated by utility, naturally one does not cease to consider the toils and dangers of labour. And although the consideration of these does not directly enter into the value of labour, it will continue to be a consideration so long as toil is felt to be toil, and danger danger. It may even obtain an indirect influence upon valuation, as it must continue to receive economic consideration in several connections.
These connections may be exactly enumerated.
First, before undertaking any labour a man has to consider whether the utility outweighs the effort. Only those acts of labour whose result outweighs the hardship entailed can be reasonably performed. Herein, moreover, is contained the reason why labour, estimated by amount of hardship alone, is less highly valued than when it receives its value from its return. This also gives rise to another important issue. The circumstance that expenditure of labour is felt to be a burden, must somewhat affect the selection of employments to which it is devoted. It may occur, as Sax (see note) has forcibly shown, that a less useful employment of labour is chosen before a more useful one, because the latter requires comparatively a greater amount of exertion.
Second, when labour is once decided on, its performance must always be ordered in such a way that the toil and danger are made as light as possible.
Third, the fact that labour is felt to be a burden has the effect of curtailing somewhat the supply of labour as a whole. If labour were not burdensome and exhausting, more labour would be expended than is. And thus the use value of labour is, as we have already suggested, indirectly affected, by being placed at a slightly higher level on account of the diminished supply. Services of equal utility, but of different degrees of hardship, are so regulated in regard to value that the more troublesome labour is more highly appraised. But this result can only ensue when the supply is really diminished. Wherever the fear of toil and danger does not have an actively deterrent effect, or where it is overcome by the presence of other motives to such an extent that the supply remains un-diminished, the value of labour does not increase. Experience shows that the most wearisome, wearing, and least healthy of employments are valued least highly, because they are the most easily accessible to the great majority, and are consequently the most amply supplied. In the communistic state it would not, in all probability, be in any wise different. The great majority of the citizens will always be suited for the coarsest kind of work only, and those kinds of work are at once the most burdensome and the simplest. And while the communistic state would be plentifully supplied with this sort of labour, so that it could be employed down to the smallest possible return in utility, the better labour powers, in virtue of their more limited number, would require to be economised and have careful consideration given to their employment, just as happens today. Utility and not toil would, in general, afford the standard for the valuation of personal services.
But we are not finished with our consideration of the labour theory. Its greatest errors relate to the valuation which it gives to capital as an element in cost.1
It is not at all impossible that, at one and the same place, there may be a lack of labour in certain department—e.g. skilled labour—while there is superfluity in the available supply in other—e.g. common hand labour. In such a case the services of the former are estimated by utility, and the latter by amount of hardship. Under primitive economic conditions the “supply of labour power” is frequently too large; not until there has been a considerable advance in civilisation does it become the rule that labour is insufficient. Further, even the labour power of one and the same individual may be too small as regards certain requirements of labour, and at the same time too great as regards others. It happens almost invariably that labourers whose capacity for performing some particular form of service is not sufficient to meet the economic demand for such services, have always sufficient capacity remaining to meet the trifling necessity for labour in their own private lives. With this is connected the fact that labour power is never entirely worn out; after performing the labour of his particular vocation, man refreshes and restores his energy best by light and distracting employments. Even in a country where the economic demand for labour is entirely insufficient, there are not lacking occasions in which labour may be estimated according to the amount of hardship involved. Every individual is continually finding such occasions; and every one thus learns from his own experience the fundamental motif of the labour theory.
See Ursprung des Werthes, p. 103, and also Böhm-Bawerk's Werth, p. 42, and, on the opposite side, Sax, chapter 45. Sax, starting from the correct proposition that only those goods should be produced whose utility outweighs the burden of labour they involve, appears to me to go rather far in the conclusions he draws, when he says: “If the Unlust connected with the want in question (i.e. the unlust which originates from the want not being satisfied) is less than that of the burden of labour, then the desire for the good will be a passive one. The want itself ceases to be felt.” Only in so far as the desire is “active” does the expected product receive a value in thought. That, as I have said, seems to me to go too far. In considering whether a thing should be made or not, the value, as derived from the expected utility, will be estimated undiminished; and, at the same time, the expected toil will be weighed as a thing by itself. If I hunger but am too lazy to work, I still continue to feel the hunger, and thus estimate the value of food according to the measure of my hunger; only it may happen that the presentation of this value is not sufficient to overcome my laziness.