by Bart Schultz
in general, not of the total utilities of the amounts purchased of such
articles, but of their final utilities; the utilities, that is, of the last portions purchased.” (PPE ) Sidgwick described himself as a disciple of Jevons
on this point, though he does go on to observe that
It is not, I think, quite convenient to say with Professor Jevons that ‘useful’ is that which gives pleasure; and to measure ‘utility,’ in the Benthamite way, by the balance of pleasurable over painful consequences. For primâ facie there are many valued things – alcohol, opium, &c. – which not only have an actual tendency to produce
a balance of painful consequences to their consumers, but are even known to have
this tendency by many of the persons who nevertheless value and consume them.
And in dealing with the determination of value we are not concerned – except in a
very indirect way – with these painful consequences: what we are concerned with
is the intensity of the desire or demand for the articles in question, as measured
by the amount of other things, or of labour, that their consumers are prepared to
give for them. (PPE )
Sidgwick the economist was evidently content to work with a definition
of utility that was warmer to the notion of revealed preference – that
is, the idea of grounding economic analysis simply on the actual choices
that people make – than Jevons’s account, though again, one carefully
framed so as not to apply to “persons or communities living respectively
P: IJD
cA.xml
CY/Schultz
February ,
:
Henry Sidgwick: Eye of the Universe
at different times or in distant places.” Otherwise, a host of difficulties
arise –
[W]hen we have to compare aggregates of wealth made up of heterogeneous el-
ements, it becomes necessary to reduce the units of quantity of these different
elements to some common standard of measurement; and if we adhere to our
original standard of exchange value, we have to deal with the problem of keep-
ing this measure identical, in spite of the variations in relative value among the
elements measured. (PPE )
Sidgwick was also exceptionally clear in his criticisms of the contribu-
tions of Ricardo and his disciple McCulloch – “all economists – except
those Socialists who have perverted Ricardo’s inconsistency into an ar-
gument against the remuneration of capitalists – would now agree that
in McCulloch’s estimate of cost ‘labour and delay’ (or some correspond-
ing term) must be substituted for ‘labour’ simply.” Although with such
emendations, Ricardo’s notion of “real value” might be tenable as an in-
terpretation of the common notion, there are serious drawbacks to all such
talk:
[W]e see how the exchange value of a permanent instrument of production, such
as land, may be different from what we may fairly call its ‘real’ value in exchange:
for – owing, let us say, to a ‘scare’ as to the prospects of agriculture – the future exchange value of its produce may be underestimated, and the present exchange
value of the land may be proportionally depressed. In this case what we mean
by ‘real’ value, is the hypothetical exchange value which would result from the
substitution of truth for error in the minds of actual and possible purchasers.
This use of the term ‘real value’ is convenient in ordinary discourse. I think,
however, that it should as a rule be avoided in any discussion that aims at scientific precision; and, when the term is used, a careful explanation should be given
of the particular kind of error or ignorance which we seek to eliminate. For in
many cases, we should find various kinds and degrees of error in the minds of
the persons whose judgments determine the price of a commodity; and it would
generally be quite arbitrary to select one of these and regard its elimination as the one thing needful to make the current opinion of value correspond to the reality.
And if, in order to determine the real value of any thing, we were to suppose
knowledge of all facts materially affecting its value, in the estimate of intelligent persons, to be substituted for ignorance and error in the minds of all the persons
concerned, we should often get a hypothesis so remote from reality that it would
be at once impossible to calculate the hypothetical value, and absurd, if we could
calculate it, to call it ‘real.’ For the limitations of knowledge actually existing in
P: IJD
cA.xml
CY/Schultz
February ,
:
Colors
the minds of producers, dealers, and consumers are among the most important
of the facts on which any particular intelligent dealer bases his estimate of value:
the removal of such limitations would be a fundamental alteration of the facts.
(PPE )
At any rate, when Sidgwick turns his attention to the “Art” of political
economy, as opposed to the science, all of these historicist considerations
and more figure prominently. Here again, true to form, he finds all of the
going definitions wanting in clarity, such that it is not really enough to talk
about this subject as involving the practical policies by which governments
might maximize production and rightly distribute the produce among
members of the community. Thus, “for completeness,” this “Art” would
also consider “the actions of private persons for the same end, so far as it is
not prompted by the ordinary motives of pecuniary self-interest or regu-
lated on commercial principles.” This is especially important concerning
distribution, “where gratuitous labour and expenditure have, especially in
modern times, largely supplemented the efforts of governments to miti-
gate the distressing inequalities in the distribution of produce.” (PPE )
Hence, the importance of charity or philanthropy.
Now, in his usual fashion, Sidgwick again gives a fair-minded account
of the case for laissez-faire, which he allows “has much force,” only to
follow up with an altogether damning list of “important qualifications and
exceptions.” In fact, the theoretical logic of economic individualism is
belied even in the simple case of bequest:
The free play of self-interest can only be supposed to lead to a socially advantageous employment of wealth in old age, if we assume that the old are keenly interested
in the utilities that their wealth may furnish to those who succeed them: but if
they have this keen interest, they will probably wish to regulate the employment of
their wealth; while again in proportion as they attempt this regulation by will, they will diminish the freedom of their successors in dealing with the wealth that they
bequeath; and, therefore, according to the fundamental assumption of the system
of natural liberty, will diminish the utility of this wealth to those successors. Of
this difficulty there is, I think, no theoretical solution; it can only be settled by a rough practical compromise. (PPE )
<
br /> A similar paradox holds in the case of contract, where absolute freedom
of contract would allow people to sell themselves into slavery.
In a more empirical vein, Sidgwick reviews at length all the familiar
cases of market failure – monopoly, public goods and collective action
P: IJD
cA.xml
CY/Schultz
February ,
:
Henry Sidgwick: Eye of the Universe
problems generally, negative externalities. He is particularly sensitive to
issues involving time and future generations – especially, as in the Methods, as concerns questions of optimal population growth. Also covered in detail
are the cases where government intervention promotes production (every-
thing from railways to education are dealt with here) and the advantages
of temporary protective measures (for example, to foster a new industry
or promote a nation’s development). There is perhaps the most extended
discussion in any of Sidgwick’s writings of the nature of distributive jus-
tice, a discussion that, as usual, culminates in a treatment of communism
and socialism. Here again he has no doubt at all that laissez-faire does not
reward workers according to desert, which is an unattainable ideal for both
free marketers and their opponents. But, on the other side, he is equally
insistent that
The proposal to organise society on a communistic plan, so as to distribute the
annual produce of the labour and capital of the community either in equal shares,
or in shares varying not according to the deserts but according to the needs of
the recipient, is one of which the serious interest has now passed away; though
a generation ago it had not a few adherents, and was supported with earnestness
and ability by more than one competent writer. And, notwithstanding what has
been urged in the preceding section, the proposition that a communistic distri-
bution would produce more happiness than the present system, if it could be
realised without materially affecting production, or removing needful checks to
population, is at any rate a very plausible one. But even if it were completely true, I cannot doubt that the removal of the normal stimulus to labour (bodily and
intellectual) and to care, which the present individualistic system supplies, would
so much reduce the whole produce to be divided, that any advantage derived from
greater economy of distribution would be decidedly outweighed – even supposing
that no material change took place in population. Probably few of my readers will
dispute this; but I may suggest to any one who is inclined to doubt it, to compare
the average energy and perseverance in labour displayed by even respectable and
conscientious rich persons, even when they select their own work, with the average
energy and perseverance of professional men. (PPE –)
Furthermore, Sidgwick thinks that the problem of population growth,
under communism, would be serious; although he does not regard it as
insoluble, he cannot see “how the difficulties in which it is involved are
to be overcome without such a revolution in the traditional habits and
sentiments regulating the relations of the sexes as no thoughtful person
could contemplate without alarm and disquiet” (PPE ). And he also
P: IJD
cA.xml
CY/Schultz
February ,
:
Colors
appreciates the “serious danger that a thoroughgoing equalisation of
wealth among the members of a modern civilised community would have
a tendency to check the growth of culture in the community.” This, of
course, is an especially contentious matter, and he recognizes that many
of the champions of cultural advance would not think it any compensation
if a loss in culture were counterbalanced by a gain in general happiness.
The perfectionists of this type
have a conviction, for which they could not give an empirical justification, that a
diffusion of culture may be expected in the future which has no parallel in the past: and that any social changes which cripple its development, however beneficent
they may be in other respects, may involve a loss to humanity in the aggregate
which, if we look sufficiently far forward, seems quite immeasurable in extent.
(PPE –)
There are, Sidgwick recognizes, several issues at stake here – the hap-
piness of the few, cultivated rich as against “the additional happiness that
might be enjoyed by the poor if wealth were more equally distributed,”
the extent to which “whatever happiness is derived from culture by the
many poor depends at any given time on the maintenance of a higher
kind of culture among the few rich,” and “the prospective addition to
happiness when culture shall have become more diffused,” which might
be endangered by hampering the existing cultured elite. Any estimate of
these developments would be, he admits, “necessarily vague,” but he does
urge that one point seems clear: “they apply far more strongly against any
sudden sweeping equalisation than they do against a more slow and grad-
ual movement towards this result, – accompanied (as it naturally would
be) by an improvement in the average intellectual condition of the classes
who would benefit pecuniarily by the equalisation.” (PPE ) Here, in a
nutshell, is his educational program.
The wider or more comprehensive terms “Socialism” and “Socialistic”
are harder to define than “Communism,” but also suggestive of these more
acceptable possibilities, and it is in connection with them that Sidgwick
actually dares to advance a bit of imaginative speculation on one possible
course for the future:
Suppose that, in civilised countries generally, governmental administration of all
kinds of business were shewn to be economically superior, in a marked degree, to
the present competitive management: it is obvious that the State might gradually
buy up the land and fixed capital of different industries, paying for them out of
P: IJD
cA.xml
CY/Schultz
February ,
:
Henry Sidgwick: Eye of the Universe
the increased proceeds of its superior management; and the process, when once
commenced, would go forward with continually increasing rapidity. The field of
investment thus becoming gradually more and more limited, the return to private
capital – supposing saving to continue as at present – would probably begin to
fall. ‘Spending’ would then increase at the expense of saving, and private capital
would gradually diminish from being eaten up. It would be important that the State
should purchase the land of the community, and other permanent instruments of
production tending to rise in value – if there be any –
at any early stage of this
process: not merely to gain the unearned increment, but because, as interest sinks
towards zero, the selling value of land at a given rent tends to rise proportionally.
The process might conceivably go on until the payment for the use of capital, as
distinct from insurance against risk, became nearly evanescent; so that only such
an amount of private capital would be kept up as men would be willing to keep
for security of future use and enjoyment, without any view to profit. And finally
when the instruments and materials of all industries had become the property of
the government, the aggregate of private savings – leaving out of account the non-
usurious lending and borrowing among private persons that might still go on –
could only be in the form of “consumers’ capital,” i.e., houses, gardens, furniture,
jewels, pictures, &c. Suppose further that, at the same time, by a comprehensive
system of free education, elementary, technical, and professional, the present
scarcity values of the higher grades of labour had been reduced, so that all such skill as average persons can acquire by training was remunerated by merely a fair return
for the additonal outlay on sustenance during the period of education. We should
thus have arrived at something very like the ideal of economic distribution which
German socialists have put forward, without any sudden shock to the expectations
formed by the present system of private property. Society would voluntarily have
converted its private capital into consumers’ wealth; and, through the agency of
its government, would have produced for itself the public capital used in its place.
The income of all individual members of the community would be entirely derived
from labour of some kind, – or, in the current phrase of the socialists, labour would obtain its ‘full product’ of consumable commodities (subtracting only whatever
additional public capital had to be provided for the increase of its future produce).
(PPE –)
As one would suspect, Sidgwick has some trouble sustaining such an
imaginative exercise, and immediately goes on to caution that he need
hardly say “that any such increase in social production through govern-
mental administration as we have above imagined is beyond the limits of
any rational forecast of the future development of society,” and perhaps
