Note 26 — Chapter II

Principles of Economics, p. 183. Professor Seligman in the Q. J. E. article (supra, p. 6, note i) indicates that Pantaleoni expresses a similar thought (Pure Economics, London, 1898, p. 127). This idea is elaborated by Professor Georg Simmel, Philosophie des Geldes, Erster Teil, Kap. 2. (A translation of this chapter, under the title, "A Chapter in the Philosophy of Value," appears in the American Journal of Sociology, vol. v, pp. 577-603. The translation was made from the author's manuscript, before the publication of the book, and does not exactly correspond with the chapter as published by Simmel.) Simmel's contention is that, even for an isolated economy, value arises from exchange, and that exchange is essential to it. Every value is relative to some other value. But to develop this conception, "exchange" is distorted into a variety of meanings. In one place, exchange takes place between an isolated man and his environment. It makes no difference to him whether he is exchanging with other men or with the order of nature (Phil. des Geldes, p. 34). But later, exchange is declared to be "a sociological structure sui generis" (ibid., p. 56). Again, only in the vaguest sort of sense is exchange used in this expression, "wo wir Liebe um Liebe tauschen" (ibid., p. 33). Yet all these meanings are forced in to fit the exigencies of the argument. The doctrine of cost is brought in, and the exchange is between individual cost and individual utility, and an equality between them is insisted upon, despite the well-known phenomenon of "consumer's surplus." This emphasis on equality in exchanges is stressed especially on p. 31, and economic activity is said to derive its peculiar character from a consideration of these equalities in abstraction.

The gist of Simmel's argument comes out in the following: "The object is not for us a thing of value so long as it is dissolved in the subjective process as an immediate stimulator of feelings." Desire must encounter obstacles before a value can appear. "It is only the postponement of an object through obstacles, the anxiety lest the object escape [italics mine], the tension of struggle for it, which brings into existence that aggregate of desire elements which may be designated as intensity or passion of volition." Value is conditioned upon a "distance between subject and object" (A. J. S., 589-90).—I waive for the moment Simmel's apparent insistence upon the element of conscious desire as essential to value, though I shall attack that doctrine in a later chapter on the psychology of value. It is enough to point out here that this "distance between subject and object" is adequately present, that there is surely "anxiety lest the object escape," if only the object be sufficiently limited in supply, independently of the existence of other objects so limited.—Simmel undertakes to meet this objection by holding that "scarcity, purely as such, is only a negative quantity, an existence characterized by a non-existence. The non-existent, however, cannot be operative" (Phil. des G., p. 57).—But the scarcity, I would reply, is not, as he holds, "the quantitative relation in which the object stands to the aggregate of its kind" (A. J. S., p. 592), but is rather a relation between the object and our wants. A bushel of wheat would be a scarcity, a bushel of diamonds a superabundance, for a man. There is a positive thing here, not a mere "non-existence," and that positive thing is the unsatisfied want. Cf. Pareto, Cours d'Économie Politique, vol. i, p. 34.

See further, on the psychology of value, chapter x, and on Professor Seligman's theory of the relativity of value, chapter xvi, of the present volume.