"The Marxian Theory of Value: Das Kapital: A Criticism" (1884)
Philip Wicksteed, "The Marxian Theory of Value: Das Kapital: A Criticism," contained in ed. Lionel Robbins, The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory by Philip Wicksteed vol. II (London: Routledge & Kegan Paul LTD, 1933, 1957), pp. 795–796; reprinted from To-Day II, no. 93 (New Series, October 1884), pp. 388–409.
- Now the leap by which this reasoning lands us in labour as the sole constituent element of value appears to me so surprising that I am prepared to learn that the yet unpublished portions of Das Kapital contain supplementary or elucidatory matter which may set it in a new light. Meanwhile the analysis appears to be given as complete and adequate, so far as it goes, and I can, therefore, only take it as I find it and try to test its validity. But instead of directly confronting it with what seems to be the true analysis of the phenomenon of exchange, I will follow it out a little further, and we shall see that Marx himself introduces a modification into his result (or develops a half-latent implication in it), in such a way as to vitiate the very analysis on which that result is founded, and to lead us, if we work it out, to what I regard as the true solution of the problem.
- Page 712.
- It is true also that Marx elsewhere virtually defines value so as to make it essentially dependent upon human labour (p. 81 [43a]). But for all that his analysis is based on the bare fact of exchangeability. This fact alone establishes Verschiedenkeit and Ghichheit, heterogeneity and homogeneity. Any two things which normally exchange for each other, whether products of labour or not, whether they have, or have not, what we choose to call value, must have that "common something" in virtue of which things exchange and can be equated with each other; and all legitimate inferences as to wares which are drawn from the bare fact of exchange must be equally legitimate when applied to other exchangeable things.
Now the "common something," which all exchangeable things contain, is neither more nor less than abstract utility, i.e. power of satisfying human desires. The exchanged articles differ from each other in the specific desires which they satisfy, they resemble each other in the degree of satisfaction which they confer. The Verschiedenheit is qualitative, the Gleichheit is quantitative.
It cannot be urged that there is no common measure to which we can reduce the satisfaction derived from such different articles as Bibles and brandy, for instance (to take an illustration suggested by Marx), for as a matter of fact we are all of us making such reductions every day. If I am willing to give the same sum of money for a family Bible and for a dozen of brandy, it is because I have reduced the respective satisfactions their possession will afford me to a common measure, and have found them equivalent. In economic phrase, the two things have equal abstract utility for me. In popular (and highly significant) phrase, each of the two things is worth as much to me as the other.
Marx is, therefore, wrong in saying that when we pass from that in which the exchangeable wares differ (value in use) to that in which they are identical (value in exchange), we must put their utility out of consideration, leaving only jellies of abstract labour. What we really have to do is to put out of consideration the concrete and specific qualitative utilities in which they differ, leaving only the abstract and general quantitative utility in which they are identical.
This formula applies to all exchangeable commodities, whether producible in indefinite quantities, like family Bibles and brandy, or strictly limited in quantity, like the "Raphaels," one of which has just been purchased for the nation. The equation which always holds in the case of a normal exchange is an equation not of labour, but of abstract utility, significantly called worth. … A coat is made specifically useful by the tailor's work, but it is specifically useful (has a value in use) because it protects us. In the same way, it is made valuable by abstractly useful work, but it is valuable because it has abstract utility.
- Pages 713–714.
The Common Sense of Political Economy (1910)
Systematic and Constructive (Book I)
Philip Wicksteed, The Common Sense of Political Economy, Book I, Systematic and Constructive, contained in ed. Lionel Robbins, The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory by Philip Wicksteed vol. I (London: Routledge & Kegan Paul LTD, 1910, 1933, 1957).
"Introductory: Administration of Resources and Choice Between Alternatives. Price and the Relative Scale" (ch. 1)
- If we engraft the current meaning of the word "economy" (the avoiding of waste) upon its etymological meaning (the administration of a household), we shall arrive at "the administration of the affairs and resources of a household in such a manner as to avoid waste and secure efficiency" as our conception of "Economy." "Political" Economy would, by analogy, indicate the administration, in the like manner, of the affairs and resources of a State, regarded as an extended household or community, and regulated by a central authority; and the study of Political Economy would be the study of the principles on which the resources of a community should be so regulated and administered as to secure the communal ends without waste.
- Page 14.
"Money and Exchange" (ch. 4)
- In a great and complex industrial society direct reciprocity of services will not be the rule. I, Robinson, may (as before) want to have my old potatoes preserved and may not have the conveniences and capacities which give me exceptional qualifications for the task; whereas you, Jones, may have what I want; but I may have no relatively superior opportunities for rendering any corresponding service to you. I may, however, know Brown, who is good at growing the new potatoes you like, but has no special taste for them; and he may want nets mending or making, to put over his fruit-trees. I may, through physical constitution, acquired skill, or any other circumstance, be relatively better qualified, or in a better position, for making or mending nets than for either growing new potatoes or preserving old ones, and so I may do netting for Brown and get new potatoes, not because I want them myself, but because I know you want them, and I can barter them with you for the old potatoes you have preserved. Here I make nets which (relatively to the trouble of making them) I do not want, and I give them to Brown for new potatoes that I do not (relatively) want either, because I know that you who want new potatoes will give old potatoes for them, to which old potatoes I do attach a value that compensates me for the work I put into the nets. Or if you know about Brown and his tastes, you may give me old potatoes for my nets, not because you want nets, but because you want new potatoes and know that Brown, who has them, will give them to you in exchange for nets. Thus each is making what some one else wants in order to get what he wants himself. Further, if it is a fruit-growing and market-gardening country, you, without knowing any specific Brown who has new potatoes and wants nets, and without indeed there being any such person at all, may be willing to give me old potatoes for nets because you are pretty certain of finding a Smith somewhere who has new potatoes and will give them to you on suitable terms in exchange for nets, not because he wants nets either, but because he, in his turn, will by-and-by want cherries, which he does not grow, but expects to be able to get in exchange for nets from Williams. We need not carry the illustration any further to see that any article which is well known to be valued by a large and easily accessible class of persons may be taken habitually in exchange for valued commodities, although those who take it do not want it for their own use, and it does not, on its own merits, occupy such a place on their relative scale as would justify the exchange. All that is necessary is that there should be a confident expectation of finding some one on whose relative scale it does take such a place. The derivative value that such an article will possess in the mind of a man who has no direct use for it will depend on the direct value which it is conjectured to have in the mind of some accessible though not definitely identified individual or individuals. If there is some article of very generally recognised value which actually takes its place, as directly significant, on the scales of a great number of people, it may come to be generally accepted, without any special calculation or consideration, by people who are not thinking of any use they may have for it themselves, but are aware that it occupies a sufficiently high relative place on the scales of others to recoup them for what they give in exchange for it. As soon as this custom begins to be well established it will automatically extend and confirm itself, and the commodity in question will become a "currency" or "medium of exchange," the special characteristic of a medium of exchange being that it is accepted by a man who does not want it, or does not want it as much as what he gives for it, in order that he may exchange it for something he wants more. If I have some potatoes and should prefer some cherries, and give my potatoes for some nets, which I do not want as much, because I know that some one else has the cherries and will prefer nets to them, then the nets are a "medium" by the intervention of which I can, at two removes, exchange my potatoes for the cherries, though I cannot find any one who has the cherries and will give them to me for the potatoes. Postage stamps often serve as a medium of exchange, because a large and easily accessible class of persons are constantly wanting the services that the stamps will command. Tram tickets, when issued in books, might and to a limited extent do serve as a medium of exchange in the same manner. Cook's coupons might easily pass as a medium of exchange amongst travellers on the Continent; and if the railway companies issued their dividends in the shape of claims for such and such a mileage of travelling on their lines the certificates would be readily accepted in exchange by people who had no intention of travelling themselves, if they could make sure of finding people who did want to travel and would give them valuables in exchange for the claims. It is a matter of common knowledge that cattle still perform this function of a medium of exchange in South Africa, and books tell us that furs were long used as currency by the traders on Hudson Bay, and tobacco by the planters in Virginia.
Concurrently with these developments, or perhaps in advance of them, the custom will grow up of estimating the marginal significance of things in terms of the generally accepted article even when the article does not pass from hand to hand in exchanges. There is more evidence in the Homeric poems of the valuation of female slaves, of tripods, or of gold or brass armour, in terms of so many head of cattle, than there is of any direct transfer of cattle in payment for other goods. The convenience of such a standardising of values is obvious. If everything is scheduled in terms of one selected commodity it is indefinitely easier than it would otherwise be to realise the terms on which alternatives are open to us; and if any man defines his marginal estimate of anything he possesses in terms of this standard commodity any other member of the community will at once know whether or not it stands higher on his own scale than on the other's, and therefore whether or not the conditions for a mutually advantageous exchange exist.
In England the functions of a standardising commodity and of a medium of exchange are both alike performed by gold. Gold is applied to a vast number of purposes in the arts and sciences, and were it more abundant it would replace other metals in many more. Consequently a great number of easily accessible persons actually give a relatively high place to gold on their scales of preference, in virtue of its direct significance to them. It is established by custom (and, so far as that is possible, by law) as the universally accepted commodity; and at the same time it is used as the common measure in terms of which our estimates of all exchangeable things may be stated.
- Pages 135–138.
- But neither can anything we desire be got without money, or what money represents, i.e. without the command of exchangeable things. All the things that we so often say "cannot be had for money" we might with equal truth say cannot be had or enjoyed without it. Friendship cannot be had for money, but how often do the things that money commands enable us to form and develop our friendships! … But even "waiting" requires money, if not so much as marrying does. In fact, a man can be neither a saint, nor a lover, nor a poet, unless he has comparatively recently had something to eat. The things that money commands are strictly necessary to the realisation on earth of any programme whatsoever. The range of things, then, that money can command in no case secures any of those experiences or states of consciousness which make up the whole body of ultimately desired things, and yet none of the things that we ultimately desire can be had except on the basis of the things that money can command. Hence nothing that we really want can infallibly be secured by things that can be exchanged, but neither can it under any circumstances be enjoyed without them.
- Pages 153–154.
"The Scope and Method of Political Economy in the Light of the 'Marginal' Theory of Value and Distribution" (1914)
Philip Wicksteed, "The Scope and Method of Political Economy in the Light of the 'Marginal' Theory of Value and Distribution," contained in ed. Lionel Robbins, The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory by Philip Wicksteed vol. II (London: Routledge & Kegan Paul LTD, 1933, 1957), pp. 795–796; reprinted from The Economic Journal XXIV, no. 93 (London, March 1914).
- Social reformers and legislators will never be economists, and they will always work on economic theory of one kind or another. They will quote and apply such dicta as they can assimilate, and such acknowledged principles as seem to serve their turn. Let us suppose there were a recognised body of economic doctrine the truth and relevancy of which perpetually revealed itself to all who looked below the surface, which taught men what to expect and how to analyse their experience; which insisted at every turn on the illuminating relation between our conduct in life and our conduct in business; which drove the analysis of our daily administration of our individual resources deeper, and thereby dissipated the mist that hangs about our economic relations, and concentrated attention upon the uniting and all-penetrating principles of our study. Economics might even then be no more than a feeble barrier against passion, and might afford but a feeble light to guide honest enthusiasm, but it would exert a steady and a cumulative pressure, making for the truth. While the experts worked on severer methods than ever, popularisers would be found to drive homely illustrations and analogies into the general consciousness; and the roughly understood dicta bandied about in the name of Political Economy would at any rate stand in some relation to truth and to experience, instead of being, as they too often are at present, a mere armoury of consecrated paradoxes that cannot be understood because they are not true, that every one uses as weapons while no one grasps them as principles.
- Pages 22–23.
Quotes about Wicksteed
- Somehow the discussion got around to Gary Becker, and I opined that Gary was also quite a good economist. However, Cordemí began to shake his head in a doleful manner, and I sensed, first, that he did not approve of Becker and, second, that I was losing his respect because of my own good opinion of Becker. Then Cordemí said that Becker’s problem was his lack of originality. This was really a surprise—many people object to Gary because he is outrageous, not because he is unoriginal. Then Cordemí dropped his bombshell: all of Becker’s ideas are in Philip Wicksteed’s book, The Common Sense of Political Economy.
After this revelation, I was pretty eager to get home to consult my copy of The Common Sense, which I owned but had not studied. When I read the book, I discovered quickly what Cordemí was referring to. Wicksteed urged his fellow economists to apply economics broadly to a variety of social interactions, not just to usual business matters. However, as far as I could tell, he had not gone anywhere with this idea. Therefore, Gary’s originality seemed to be intact. Nevertheless, I filed away this incident and figured I could use it against Gary at some future time.
[…] I figured that I needed to create something of a psychological edge, and I arranged for my younger son, Josh (then eight years old), to be on the tennis court prior to the big match. He was set up to be reading the Common Sense of Political Economy. I figured that Gary would ask Josh what he was reading, and I told Josh to report the author and title and then say, “I understand that you got all your ideas from this fellow.”[…] Gary quickly responded, “Oh, yes, I copied all his work.”
- Robert Barro, Nothing Is Sacred (2002), Ch. 1 : Thoughts on Friends and Other Noteworthy Persons
- PHILIP HENRY WICKSTEED, the author of the Common Sense of Political Economy and the other works collected in these volumes, was one of the most remarkable intellectual figures of the half-century which has just past. He was a leading member of the Unitarian ministry. He was one of the foremost mediæval scholars of his time. He was an economist of international reputation. He was a savant who made contributions of permanent value to highly technical branches of knowledge. He was a teacher who, without vulgarisation, succeeded in making intelligible to many the main significance of the various fields of learning in which he moved. There can be few men who have so successfully combined such a wide range of intellectual pursuits with such conspicuous excellence in each of them.
- Wicksteed's first contribution to theoretical Economics was an application of the Jevonian analysis to the criticism of the Marxian theory of value—an article on Das Kapital which appeared in the socialist journal, To-Day, in October, 1884. The article is not merely a criticism; it is an independent exposition of the new theory which carries it further forward and, on more than one point, adds important new corollaries, The Labour Theory is shown to be false. The cases which it appears to explain are explained more convincingly as special instances of a more comprehensive theory. … It was the first scientific criticism of Marx's theory—written years before Böhm-Bawerk's or Pareto's—and in some respects it remains the most decisive. The argument is developed with the ease and certainty of a man who is completely sure of himself, not because of any self-deception or premature synthesis, but because he has mastered the essential material. Mr. George Bernard Shaw, at that time a Marxian Socialist, made a controversial reply; but as Mr. Shaw, who, as he has subsequently related,1 was eventually persuaded by Wicksteed that he was wrong, would be the first to admit, the significance of his reply lay not so much in what it itself contained, but rather in the fact that it elicited further elucidations of Jevons.2 It is, perhaps, worth noting that Wicksteed's rejoinder contains one of the earliest recognitions of the relative nature of the concepts invoked by the utility theory of value.
- One of the unhappy casualties of World War I, it seems, was the old-fashioned treatise on economic "principles." … Since the brilliant burst that gave us the works of Wicksteed (1910), Taussig (1911), and Fetter (1915), this type of treatise has disappeared from economic thought, and economics has become appallingly fragmented, dissociated to such a degree that there hardly is an economics any more; instead, we find myriad bits and pieces of uncoordinated analysis.
- Murray N. Rothbard, "Preface to Revised Edition," Man, Economy, and State: A Treatise on Economic Principles (1962, 1993), contained in Man, Economy, and State with Power and Market, Scholar's Edition (2nd ed.) (Auburn, AL: Ludwig von Mises Institute, 2004, 2009), pp. li–lii.
- In a proto-Austrian manner, Donisthorpe also distinguished between directly useful and indirectly useful goods, and showed how the latter had varying degrees of remoteness from the pleasure-giving stage of goods; in short, Donisthorpe engaged in a sophisticated analysis of the time-structure of production. He also had a pioneering analysis of the influence of substitutes and complements ('co-elements') upon values. While Donisthorpe's discussion of demand curves (i.e. schedules), supply, and price was interesting but hopelessly confused (e.g. he denied that an increased desire of consumers for a product would raise their demand for the product), he did present a remarkably clear foreshadowing of Philip Wicksteed's insight of four decades later that witholding [sic] the stock of a product by suppliers really amounts to the suppliers' 'reservation demand' for that product.
- Murray N. Rothbard, "Plutology: Hearn and Donisthorpe," §14.8 of "After Mill: Bastiat and the French laissez-faire tradition," ch. 14 of An Austrian Perspective on the History of Economic Thought Volume 2: Classical Economics (Edward Elgar Publishing Ltd., 1995), p. 465.