Book III

Chapter 10

Menger's Conception of Use


    Up till now my analyses have gone to prove that there is no
independent use of goods of the kind conceived of by the
Say-Hermann side of the Use theory, and by nearly all the
economists of the present day in their train. It still remains to
be proved that there cannot be an independent use even in that
essentially different shape that Menger sought to give the
conception.
    While the Say-Hermann school represented the "net use" as an
objective element of use, separating itself from goods, Menger
explains it as a disposal; indeed, as " a disposal over quantities of economical goods within a definite period of time."(1*) This disposal being for economic subjects a means to better and more complete satisfaction of their wants, it acquires, according to Menger, the character of an independent good, which, on account of its relative scarcity, will usually be at the same time an economical good.(2*)
    Now, to go no farther, it seems to be putting a very daring construction on things to say that the disposal over goods, that is, a relation to a good, is itself a good. I have on another occasion (3*) stated at length the reasons for which I consider it theoretically inadmissible to recognise relations as real Goods, in the sense given to that term by economic theory. These reasons, I believe, have the same validity as regards this "disposal" over goods.
    To maintain its position in face of these weighty deductive objections Menger's hypothesis must have some very strong and positive support. I doubt if it has sufficient support of this kind. The special character of my present contention prevents us from the first from obtaining any direct evidence, such as might be given by the senses, that "disposal" really is a good. The only thing we have to consider is whether the hypothesis is accredited by a consensus of sufficiently numerous and significant indirect supports. And this I must doubt.
    It appears to me that there is, distinctively, only one indirect support for it, and that is, the existence of a surplus value which is unexplained otherwise. As astronomers, from certain otherwise unexplained disturbances in the orbits of known planets, have concluded for the existence of disturbing and as yet unknown planetary bodies, so does Menger postulate the existence of a "bearer" of the surplus value which otherwise is unexplained. And since the disposal over quantities of goods for definite periods of time appears to him to stand in a regular connection with the emergence and the amount of surplus value, he does not hesitate to put forward the hypothesis that this disposal is the "bearer" sought for, and, as such, an independent good of independent nature. If the possibility of any other explanation had ever occurred to this distinguished thinker, I am persuaded that he would have withdrawn his hypothesis at once.
    Now is this one indirect point of support sufficient to prove that "disposal" is an independent good?
    There are two reasons for answering this in the negative. The one is that the phenomena of surplus value can be explained in an entirely satisfactory way without this hypothesis, and indeed can be explained on lines that Menger himself has laid down in his now classical theory of value; the proof of this I hope to give in my next volume. But the following consideration is of itself, in my opinion, quite convincing.
    According to Menger's theory the loan is looked upon as a transference of disposal over goods. The longer then the period of the loan, the greater of course is the quantity of the transferred good, the disposal. In a loan for two years more disposal is transferred than in a loan for one year; in a three years' loan more disposal than in a two years' loan; in a hundred years' loan almost an unlimited amount of disposal is transferred. Finally, if the replacement of the capital is not only postponed for a very long time, but is altogether dispensed with, surely a quite infinite amount of disposal is transferred to the borrower. This, for instance, will be the case if goods are not lent, but given.
    We now ask in such a case, How much value is received by the one to whom the gift is made? There can be no doubt that he receives as much value in capital as is possessed by the thing given. And the value of the permanent disposal that inheres in the thing, and is presented along with it? -- Is evidently contained in the capital value of the thing itself. From which I draw the conclusion -- and I do not think I am perpetrating any fallacy in so concluding -- that if the plus, viz. the value of the permanently inhering disposal, is contained in the capital value of the good itself, the minus contained in it, the temporary disposal over a good, must be contained in the value of the good itself. The temporary disposal, therefore, cannot be, as Menger assumes, an independent bearer of value alongside the value of the good in itself.(4*)


NOTES:

1. Grundsätze, p. 132, etc.

2. Ibid. p. 132, etc.

3. See my Rechte und Verhältnusse, particularly p. 124. See also the acute remarks of H. Dietzel in the tract Der Ausgangspunkt der Sozialwirthscaftslehre und ihr Grundbegriff (Tübinger Zeitschrift für die gesammte Staatswissenschaft, Jahrgang, 39), p. 78, etc. On the other hand, I cannot agree with Dietzel in some further criticisms that he makes on Menger on p. 52, etc. He has two objections to Menger's fundamental definition of economical goods as "those goods the available quantity of which is less than human need." First, he says, in trade generally we must recognise "the tendency to assimilate need and available quantity," on account of which "in every normal case" a number of the most important economical objects must fall out of the circle of economical goods. And second, he says, Menger's definition of his conception is not definite enough, and leaves room for all sort of things that have not the character of economical goods, such, for instance, as useful "technical knowledge." I consider that both objections are based on a misunderstanding. As a matter of fact trade can never quite assimilate the available quantity of economical goods to the need for them; it can of course meet the demand that has power to pay, but never the need. However commerce may flood a market with exchangeable goods, while it will very soon succeed in supplying the amount that people can buy, it will never supply all they wish to possess for the purpose of supplying their wants to the saturation point -- that point where the last and most insignificant wish is gratified. As to the second objection, Menger's definition seems to me to mark out the circle of economic goods both correctly and sufficiently. We must not overlook the fact that what determines the conception of the "good" has a share in determining the conception of the "economical good." Things like qualities, skill, rights, relations, cannot, I admit, be economical goods, even if they are only to be had in insufficient quantity; but that is because they are not true goods -- that is to say, they are not really effectual means of satisfying human wants, and at best can only be called so by a metaphor. But where we have true goods, such of them as are insufficient in quantity are at the same time economical goods. If, therefore, Menger, in some individual cases, does come into collision with truth -- as I maintain he does in regard to the economical good "disposal" -- it is not because he has made a mistake in defining the attribute "economical," but only because he has occasionally treated the conception of the "good" a little too loosely.

4. If we put the illustration a little differently it may show more forcibly that the value of the disposal is contained in the value of the good. Suppose that A first lends B a thing for twenty years without interest -- presents him therefore with the good called "disposal for twenty years," and then, a couple of days after the loan contract is concluded, presents him with the thing itself. Here he has in two actions given away the twenty years' disposal and the thing itself. If the "disposal" were a thing of independent value in addition to the thing itself, the total value of the gift would obviously be greater than the value of the thing itself, which just as obviously is not the case.