Note 176 — Chapter XIV

It may be objected that instead of "breaking the circle," we have simply widened it—that economic values, working through other forms of value, affect other economic values still. In a sense, of course, this is true. In any truly organic situation, we have the phenomenon of reciprocal causation. An organic situation must be circular in this sense. The parts are interdependent. And our objection to the theories criticized is based on the fact that they are essentially efforts to describe a process in rectilinear causation—in the case of the Austrians, e.g., the process is from subjective utility, to objective value of consumption goods, then to the values of the production goods of the nearest rank, and then on and on to goods of remoter ranks, etc. Böhm-Bawerk recognizes very well that the charge of circular reasoning, if it could be brought home to the Austrians, would vitiate their system. Vide "Grundzüge," Conrad's Jahrbücher, 1886, p. 516. And Professor Clark likewise recognizes that value theory of the sort he is treating is spoiled by circular reasoning, as indicated by his criticism of a certain form of the labor theory in his Distribution of Wealth, p. 397. Whenever a small set of abstractions is picked out, as the source and cause of the rest of a movement, such a process of rectilinear causation is implied. And a rectilinear process has no right to get into a circle!