§4.It is no concern of ours to criticise this attitude in the sense of condemnation.But it is important to realise that no progress of psychological analysis will enable economic science to supply a human valuation of industry so long as all the human functions involved in economic processes are measured, assessed, and valued, according to their bearing upon the production of a 'wealth' which has no directly assignable relation to human welfare, but is estimated by a purely monetary measure.The net effect of this conception of the economic system as an elaborate arrangement of material and spiritual factors, contributing to the production and distribution of a stream of various goods valued by a monetary standard, is to leave upon the mind the impress of a distinctively mechanical apparatus.No one, for example, can read the masterly work of Mr.Wicksteed3 without recognising that his delicate, elaborate measurements and balances of motives and preferences, while involving and implying actions that no one but man can perform, treat not only industry, but humanity itself as a psychological mechanism.
This distinctively mechanical character is inherent in the structure of an economic science based upon the subserviency of all human activities to a purely quantitative conception of wealth, and a purely monetary standard of value.This character of economic science is, of course, by no means disabling for all purposes.On the contrary, it furnishes valid instruments for the interpretation of many important groups of phenomena in the business world, and for the solution of certain problems where purely quantitative standards and methods are applicable.Indeed, the increasing devotion of economists to problems of money, price, and other definitely monetary questions, may be taken as a half-instinctive recognition of the real inadequacy of current economics for any very useful solution of those more vital problems into which closely human considerations enter as governing factors.As we proceed, we shall realise in more detail the nature of the incapacity of current economics to furnish any rules for settling issues that relate to wages, hours of labour, State interference with private industry, private property, and other human problems which are in first appearance 'economic.'
Three defects appear, then, to disqualify current economic science for the work of human valuation.First, an exaggerated stress upon production, reflected in the terminology and method of the science, with a corresponding neglect of consumption.Secondly, a standard of values which has no consistent relation to human welfare.Thirdly, a mechanical conception of the economic system, due to the treatment of every human action as a means to the production of non-humanly valued wealth.
§5.These warning-posts may help us to discover and to formulate an intellectual procedure more suited to our needs.A human valuation of industry will give equal attention to Production and Consumption, will express Cost and Utility in terms of human effort and satisfaction, and will substitute for the monetary standard of wealth a standard of human well-being.This assertion of vital value as the standard and criterion is, of course, no novelty.It has underlain all the more comprehensive criticisms of orthodox political economy by moralists and social reformers.
By far the most brilliant and effective of these criticisms, that of John Ruskin, was expressly formulated in terms of vital value.The defects which he found in the current economic science were substantially the same as those which we have noted.His famous declaration that 'There is no wealth but life,' and his insistence that all concrete wealth or money income must be estimated in relation to the vital cost of its production and the vital utility of its consumption, is the evidently accurate standpoint for a human valuation of industry.This vital criterion he brought to bear with great skill, alike upon the processes of production and consumption, disposing the immense discrepancies between monetary costs and human costs, monetary wealth and vital wealth.No one ever had a more vivid and comprehensive view of the essentially organic nature of the harmony of various productive activities needed for a wholesome life, and of the related harmony of uses and satisfactions on the consumptive side.His mind seized with incomparable force of vision the cardinal truth of human economics, viz., that every piece of concrete wealth must be valued in terms of the vital costs of its production and the vital uses of its consumption, and his most effective assault upon current economic theory was based upon its complete inadequacy to afford such information.But, though most of his later writings were suffused with this conception of wealth and with the double process of analysis which it involved, nowhere was that analysis systematically applied.
There were brilliant excursions into the domain of labour, distinguishing the nobler and the baser sorts, those which are truly 'recreative' and those which degrade and impoverish life.There was the famous distinction between 'wealth' and 'illth,' according to the essential qualities of the goods and the sorts of persons into whose hands they pass for consumption.
