VALUE THEORY AND SOCIAL WELFARE 1. Epoch of the dismal science. 2. Communism and value theory.
3. The single-tax doctrine. 4. Optimistic theories of wages. 5. An organic theory of value. 6. Labor and its environment 7. Aspects of wealth. 8. Welfare. 9. The paradox of value in practice. f 10. Conflict of individual and general interests. f 11. Business economy and social economy.
§ 1. Epoch of the dismal science. A preliminary word. The foregoing survey of the dynamic forces and changes in economic society (Part VI), incomplete as it is, may yet serve in some measure to broaden and to extend our understanding of the study that preceded (Parts I to V). This chapter con cluding the outline of economic principles will give: first (sec tions 1-4), a suggestion of some of the far-reaching conclu sions which economic students have in the past drawn from their theories of value in respect to the trend of popular wel fare; secondly (sections 5-6), a general summary of the posi tive theory of value that has been developed in its details throughout this volume ; and thirdly (sections 7-11), a brief outline of the relations between wealth and welfare, value and utility, individual advantage and the general good.
The value-theory one holds is sure to affect one's view of economic progress and one's attitude toward projects of social reform. The theories from the middle of the eighteenth to the middle of the nineteenth century, however varied they were in other respects, nearly all gave a gloomy view of the condition of the masses. Such were the theories of the physio 500 cratic school in France, consisting of a small group of highly educated and aristocratic men of liberal sympathies in the generation preceding the French Revolution of 1789; of the so-called "orthodox" or "classical" economists in England composed of the writers from about 1800 to 1850 that were in sympathy either with the landholding or with the commercial classes; and of the socialistic or laboring-class theorists, from 1789 to the present. It was the prevalence of such a view which caused Carlyle to characterize political economy by the term still sometimes heard, "the dismal science." However greatly these various groups of thinkers differed in other respects, they united in the belief that the labor in comes of the masses must remain near the starvation point. Indeed, this was little more than a generalization of the ob served conditions of the time. The population of Europe was increasing, the pressure for food was strong, and the culti vated area was not increasing proportionately. While all the
forms of industry most common in cities were increasing, while the wealth of the cities and the rents of rural landlords were increasing, poverty was growing among the peasantry. Owing to exceptional conditions this was especially true in England during the Napoleonic wars, 1793-1815. (See Chap ter 34, section 8.) In this situation the thinkers of that period confused the truth of the limited powers of agricultural land with the false inference and prophecy of a necessarily decreasing relative food supply and decreasing wages. The economic theory of the "classical" economics centered around this fact and the false inference from it. The condition of the masses was be lieved to change rhythmically, rising from time to time, only to return, through the pressure of population, to its former level. Their pessimism was all due to their view of the food problem. They doubtless underrated the forces operating for volitional control. In another regard they were too optimistic, for they had no thought that timber, mineral, and other nat ural stores might be exhausted, with the result of decreasing prosperity. The things made from these materials were thought to be the "product of labor," and capable of unlim ited increase. It is just these materials whose increasing scar city is one of the greatest economic problems that society has now to face. (See Chapter 35.) § 2. Communism and value theory. The "orthodox" economists gave currency to two erroneous doctrines: (a) that labor is the sole source of value; and (b) that the laboring classes must forever be reduced to a bare subsistence. They were quite heedless of the use that would be made of these doctrines in political discussion to attack the existing order of society. They did, it is true, modify and qualify both these doctrines, sacrificing thus the consistency of their reasoning, while gaining in common sense and in harmony with the facts. The communists, however, accepted these doctrines in their most unqualified form, and drew from false premises the false conclusion most natural for the human mind, that the existing order was fundamentally unjust and hopeless for the masses. For if wages were always to be forced to a bare minimum of subsistence, it followed that the other shares (incomes of land lords and of other owners) must absorb all the benefits of im proved machinery, better methods, and general industrial progress.