PART I. THE VALUE OF MONEY AND THE GENERAL THEORY OF VALUE
Reading edition
PART I. THE VALUE OF MONEY AND THE GENERAL THEORY OF VALUE
CHAPTER I ECONOMIC VALUE
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Problem of value of money special case of general theory of value; present chapter concerned with general theory1
Formal and logical aspects of value: value as quality; value as quantity; value and wealth5-6
Absolute vs. relative conceptions of value: value of money vs. "reciprocal of price-level"; value prior to exchange; value and exchangeability; do prices correctly express values?6-12
Doctrine so far in accord with main current of economic opinion12-14
Causal theory of value new: marginal utility, labor theory, etc., rejected14-16
Social explanation required: "individual" a social product, both in history of individual and in history of race16-19
And above individual impersonal psychic forces, law, public opinion, morality, economic values19-20
Three types of theory have dealt with these: theory of extra-human objective forces; extreme individualism; social value theory20-21
Illustrated in jurisprudence, ethics, and economic theory21-26
Law, morals, and economic values generically alike, but have differentiæ26-28
But not differentiated on basis of states of consciousness of individual immediately moved by them, because many minds in organic interplay involved28-33
Economic social value (a) of consumers' goods and services: "utility" and scarcity; "marginal utility"; social explanation of marginal utility; marginal utilities the conscious focus of economic values of consumers' goods; but only minor part of these values; individuals, classes and institutions heavily weighted by legal, moral, and other social values, in power over economic values of consumers' goods33-38
Economic social value (b) of labor, land, stocks, bonds, "good will," etc.; based only in part on values of consumers' goods; partially independent, directly influenced by contagion, and centers of power and prestige38-41
Pragmatic character of theory41-43
Relation of social values to individual values43-45
CHAPTER II SUPPLY AND DEMAND, AND THE VALUE OF MONEY
Hiatus between general theory of value and theory of value of money46-47
Partly because former has been developed by different writers from those who have developed latter47-49
But chiefly because supply and demand, cost of production, etc., assume fixed value of money, and are theories of price, rather than value49
Supply and demand useful but superficial formula, common property of many value theories49-50
Crude and unanalyzed in Smith and Ricardo; first made precise by J. S. Mill, who gives essentials of modern doctrine49-51
Böhm-Bawerk's pseudo-psychology spoils Mill's clean-cut doctrine51-52
Supply and demand assumes fixed value of money-unit, and hence inapplicable to money itself52-56
But supply and demand does not assume fixed price-level56-57
Cairnes vs. Mill57-58
Mill's unsuccessful effort to apply supply and demand to money59-62
Walker's attempt62
Supply and demand in the "money market"62-63
CHAPTER III COST OF PRODUCTION AND THE VALUE OF MONEY
Types of cost theory: modern cost doctrine is "money costs" doctrine, and inapplicable to value of money64
Labor cost: Smith; Ricardo; Ricardo's confession of failure; "real costs" in Senior and Cairnes; Mill's "money-outlay" cost doctrine, and Cairnes' criticism; but "money-cost" has survived64-67
Because "real cost" doctrine does not square with facts67-69
"Money-cost" of producing money-metal69-70
Austrian cost doctrine runs still in money terms, assuming value, money, and fixed value of money70-71
"Negative social values" as "real costs"note, 71
CHAPTER IV THE CAPITALIZATION THEORY AND THE VALUE OF MONEY
Money as "capital good," and "money-rates" as rentals72-73
Capitalization theory; formula; capital value passive resultant of annual income and rate of discount73-74
But in case of money, rental and rate of discount not independent variables74-76
And in case of money, capital value not passive shadow, but active cause of income76
Capitalization theory assumes money, and fixed value of money76-77
Assumed fixed value of money absolute, and not relative77-78
Capitalization theory, in current formulation, inapplicable to value of money78-79
CHAPTER V MARGINAL UTILITY AND THE VALUE OF MONEY
Marginal utility theory usually thinly disguised version of supply and demand, and hence inapplicable to money80
View that money is unique in having no utility per se81-83
Marginal utility and "commodity theory" of money-value81-82
Quantity theorists and marginal utility of money81-82
Money an instrumental good, and marginal utility no less applicable here than elsewhere; marginal utility invalid as general theory of value, hence invalid when applied to money82-120
Wieser's theory of value of money83-88
A circle in reasoning88-90
Schumpeter's similar circle100
But Schumpeter's general utility theory, though inapplicable to value of money, in form avoids a causal circle90-98
Schumpeter's conspectus; different from Böhm-Bawerk and most utility theorists90-92, 113-120
Defects and limitations of Schumpeter's general theory90-98
Schumpeter's substitutes for social value concept98-99
Von Mises sees circle of Wieser and Schumpeter100
Seeks to avoid it by construing utility theory as historical, instead of static, theory101
But this departs from fundamentals of utility theory; other difficulties101-110
Kinley's doctrine110-111
General criticism of utility theory111-115
Davenport, Wicksteed, Fisher, Perry113-120