Economic Theory of the Leisure Class. Nikolai Bukharin 1927

Chapter II
The Theory of Value

1. The Importance of the Problem of Value.
2. Subjective and Objective Value; Definitions.
3. Utility and Value (Subjective).
4. The Measure of Value and the Unit Value.

1. The Importance of the Problem of Value.

The problem of value has constituted a fundamental question of political economy since the earliest days of the science. All other questions, such as wage-labour, capital, rent, accumulation of capital, the struggle between large-scale and petty operation, crises, etc., are directly or indirectly involved in this fundamental question.

“The theory of value stands, as it were, in the centre of the entire doctrine of political economy,” Böhm-Bawerk rightly observes. (Grundzüge der Theorie des wirtschaftlichen Güterwerts, p.8.) This is not hard to understand; price, and therefore the standard determining price — which is value — is the fundamental all-embracing category in the production of commodities in general and in the capitalist production of commodities in particular, whose child is political economy. The prices of commodities regulate the distribution of the production forces of capitalist society; the form of exchange, whose presupposition is the category of price, is the form of distribution of the social product among the various classes.

The movement of prices leads to an adaptation of the supply of goods to demand, since the rise and fall of the rate of profit causes capital to flow from one branch of production to another. Low prices are the weapon by which capitalism cuts its path and finally conquers the world: it is low prices that enable capital to eliminate artisan production, to supplant petty operation with large-scale operation.

The contract between the capitalist and the worker — the first condition for the enrichment of the capitalist — assumes the form of a purchase of labour power, i.e., the form of a price relation. Profit the expression in terms of money-value, but not the natural expression of surplus product, is the driving motive of modern society: on this precisely rests the entire process, of the accumulation of capital, which destroys the old forms of economy and is distinguished sharply from them in its evolution as an entirely specific historical phase of the economic evolution. etc. Therefore the problem of value has again and again attracted the attention of economic theorists in far higher measure than any other problem of political economy. Adam Smith, David Ricardo. Karl Marx — all took the analysis of value as the basis of their investigations.[62] The Austrian school also made the theory of value the corner-stone of its system, having undertaken to oppose the classics and Marx and to create their own theoretical system, they necessarily concerned themselves chiefly with the problem of value.

It follows that the theory of value in reality still occupies the central position in present day theoretical discussions, although John Stuart Mill already considered this question disposed of. (John Stuart Mill, ibid., p.209.) As opposed to Mill, Böhm-Bawerk believes that the theory of value has still remained “one of the most unclear, most confused, and most disputed sections of our science”; (Böhm-Bawerk, Grundzüge, etc., p.8), yet he hopes that the studies of the Austrian School will put an end to this confused state. “It seems to me that certain labours performed in recent and very recent days,” he says, “have introduced the creative thought into this confused ferment, from a fruitful development of which we may expect complete clearness.” (Ibid., p.8.)

We shall attempt below to subject this “creative thought” to the necessary examination; but let us state at the outset that the critics of the Austrian School often point out that the latter has confused value with use-value; however, that its theory belongs rather to the domain of psychology than to that of political economy, etc. No doubt this objection is fundamentally correct. Yet we do not think our judgment should end here. We must rather proceed from the point of view of the representatives of the Austrian School, we must grasp the whole system in its internal relations, and only then reveal its contradictions and insufficiencies, the products of its fundamental fallacies. For instance, value has been variously defined. Böhm-Bawerk’s definition will necessarily differ from that of Karl Marx. But it is not sufficient to declare simply that Böhm-Bawerk does not touch the essence of the matter, i.e., that he does not treat that which should be treated; rather, we must show why his treatment is wrong. Furthermore, it must be shown that the presuppositions from which the theory in question proceeds lead either to contradictory constructions or fail both to include and explain a number of important economic phenomena.

But where is there any point of departure for criticism in this case? If the conception of value is completely different even in the most varied tendencies, i.e., if, according to Marx, it has no points of contact at all with that of Böhm-Bawerk, how will it be possible to formulate a criticism at all? In this situation, however, we are aided by the following circumstance: great as are the differences between the definitions of value, though they may even contradict each other in places, they nevertheless have something in common, namely, in conceiving value as a standard of exchange, in that the conception of value serves to explain price.[63] Of course, the explanation of prices alone is not sufficient, or, more properly, we have no right to limit ourselves to an explanation of prices; yet the theory of value is the direct basis for the theory of price. If the corresponding theory of value solves the question of price without internal contradictions, it is a correct theory; if not, it must be rejected.

These are the considerations from which we shall proceed in our criticism of Böhm-Bawerk’s theory.

We have seen in the preceding section that price is considered by Böhm-Bawerk to be the resultant of individual evaluations. His “theory” therefore is divided into two parts: the first part investigates the laws of the formation of individual evaluations — “the theory of subjective value” — the second part investigates the laws of the origin of their resultant — “the theory of objective value.”

2. Subjective and Objective Value; Definitions.

We already know that according to the views of the subjectivist school, we must seek the basis of social-economic phenomena in the individual psychology of men. In the case of price, this demand requires us to begin our analysis of price with the individual evaluations. Comparing the Böhm-Bawerk mode of treatment of the question of value with that of Karl Marx, the difference in principle between them at once becomes clear: in Marx the value concept is an expression of the social connection between two social phenomena, between the productivity of labour and price; in capitalist society (as opposed to a simple commodities society) this connection is very complicated.[64]

In Böhm-Bawerk, the value concept is an expression of the relation between the social phenomenon of price and the individual-psychological phenomenon of the various evaluations.

The individual evaluation presupposes an evaluating subject and an object to be evaluated; the resultant of the relations between these is subjective value. For the Austrian School, subjective value is therefore not a specific character inherent in commodities as such, but rather a specific psychological state of the evaluating subject itself. When we speak of an object, we mean its significance for a given subject. Therefore “value in the subjective sense is the significance possessed by a commodity or group of commodities for the purposes of the well-being of a subject.” [65] This is the definition of subjective value.

Quite different is Böhm-Bawerk’s concept of objective value: “Value in the objective sense, on the other hand, is the virtue or capacity of a commodity to bring about a certain objective result. In this sense there are as many kinds of value as there are external consequences to be brought about. We may speak of the nutritive value of foods, of the fuel value of wood and coal, of the fertilizing value of various fertilizers, of the ballistic value of explosives. In all these expressions we have eliminated any relation to the weal or woe of a subject from the concept of value!"[66] [The last italics are mine.- N.B.]

Among these objective values, thus declared neutral as to “weal or woe of the subject,” Böhm-Bawerk also enumerates the values of economic character, such as, “exchange value,” “the yield value,” “production value,” “rent value,” and the like. The greatest importance is assigned to objective exchange value. Böhm-Bawerk defines the latter as follows: “.... The objective validity of commodities in exchange, or in other words, the possibility of acquiring in exchange for them a quantity of other economic commodities, viewing this possibility as a function or quality of the former commodities."[67] This is the definition of objective exchange value. The last definition is neither correct in its essence, nor would it be correct if Böhm-Bawerk had applied his point of view consistently. The exchange value of commodities is here enumerated as “their objective quality” similar to their physical and chemical qualities. In other words, “the utility effect,” in the technical sense of the word, is made identical with the economic concept of exchange value. This evidently is the point of view of crass commodities fetishism so characteristic of the vulgar political economy. As a matter of fact, “the existence of the things qua commodities, and the value relation between the products of labour which stamps them as commodities, have absolutely no connection with their physical properties and with the material relations arising therefrom.” (Karl Marx: Capital, vol I, p.83.)

Even from the point of view of Böhm-Bawerk, his assertion could not be defended, at bottom. If the objective value is nothing more or less than a resultant of the subjective evaluations, it must not be grouped with the chemical and physical properties of commodities. On the other hand, it differs from them in principle: it contains not an “atom of matter,” being descended from and shaped by immaterial factors, namely, the individual evaluations of the various “economic subjects.” However peculiar this may sound, we must nevertheless point out that the pure psychologism so characteristic of the Austrian School and of Böhm-Bawerk is perfectly compatible with a vulgar, excessively materialistic fetishism, in other words, with a point of view essentially naive and uncritical. Böhm-Bawerk of course protests against an understanding of subjective value, which would ascribe the latter to commodities as such, without any relation between the commodities and the evaluating subject, but Böhm-Bawerk himself, when he defines the concept of objective value, enumerates it altogether with the technical properties of objects independent or neutral as to “weal or woe of the subject,” forgetting that he has thus destroyed the genetic relation between the subjective and the objective value which is after all the basis of his theory.[68]

We are therefore dealing with two categories of value; one represents a basic quantity, the other a derived quantity. It is therefore necessary first to test the theory of subjective value. Besides, it is in this portion of the Austrian theory that the most originality is displayed in the attempt to lay a new foundation for the theory of value.

3. Utility and Value (Subjective).

“The central conception (of the Austrian School) ..... is utility.” (Werner Sombart: Zur Kritik des Ökonomischen Systems von Karl Marx, in Braun’s Archiv, vol. VII, p.592.) While with Marx utility is only the condition for the origin of value, without determining the degree of value, Böhm-Bawerk derives value from utility entirely and makes it the direct expression of the latter.[69]

Böhm-Bawerk distinguishes, however (differing, he thinks, with the old terminology, which made utility and consumption value always synonymous), between usefulness in general and value, which is, as it were, of certificated usefulness. “The relation to human welfare,” says Böhm-Bawerk, “expresses itself in two essentially different forms; the lower form is present whenever a commodity in general has the capacity of serving human welfare. The higher form, on the other hand, requires a commodity to be not only an efficient cause but simultaneously an indispensable condition of a resultant well-being... . The lower stage is termed (by language) usefulness; the higher one, value."[70] Two examples are given by Böhm-Bawerk to clarify this difference: the first example is a “man,” sitting by “a spring that affords an abundant supply of good drinking water”; the second example, “another man, a traveller in the desert.” It is obvious that a cup of water is of quite different significance for the “welfare” of these two persons. In the former case, the cup of water may not be regarded as an indispensable condition; but in the latter case, its utility is of “extreme” degree, since the loss of a single cup of water may have serious consequences for our traveller.

From this, Böhm-Bawerk derives the following formulation of the origin of value: “Commodities achieve value when the available total supply of commodities of this type is so slight as to suffice not at all to cover the demands made for them, or to cover them so insufficiently as to make necessary absolutely the utilization of the specific commodities mentioned, in order that there may be any hope of fulfilling the demand at all."[71]

In other words, the “certified” utility of commodities is taken as the point of departure for an analysis of the prices of commodities since any theory of value serves chiefly to explain prices, i.e., Böhm-Bawerk takes as his point of departure what Marx excludes from his analysis as an irrelevant quantity.

Let us now consider this question in more detail. We must not forget that the point of departure of the Austrian School is the motives of the economic subjects in their “pure,” i.e simplest, form. “It will now be our task to hold the mirror before the casuistic selecting practice of life, as it were, and to formulate the rules which are applied so surely and instinctively by the common man in action, to formulate them as principles of equal certainty and with the added quality of being conscious.” (Böhm-Bawerk: Grundzüge, etc., p.21.) Now let us see how the theoretical “mirror” manipulated by the head of the Austrian School reflects this “practice of life.”

It is characteristic of the modern mode of production above all, that it does not produce for the producer’s own needs, but for the market. The market is the last link in a chain of varied forms of production, in which the evolution of the productive forces, and the corresponding evolution of the exchange relations have destroyed the old system of natural economy and called forth new economic phenomena. We may distinguish three stages in this process of transformation from a natural economy to a capitalist commodities economy.

At the first stage, the centre of gravity lies in production for one’s own consumption; the market receives only the surplus of products. This stage is characteristic of the initial forms of exchange. Gradually the evolution of the productive forces and the threatening of competition leads to a shifting of the centre of gravity in the direction of production for the market. But a small number of the products turned out are consumed in the producer’s establishment (such conditions may still be observed frequently in agriculture, particularly in peasant agriculture). Yet this does not involve a cessation of the process of evolution. The social division of labour continues to advance, finally achieving a level at which mass production for the market becomes a typical phenomenon, none of the products turned out being consumed within the establishment producing them.

What are the alterations in the motives and in the “practice of life” of the economic subjects, alterations that must parallel the process of evolution described above?

We may answer this question briefly; the importance of the subjective evaluations based on utility lessens: “One sets up (to retain our present-day terminology) no exchange values as yet (determined in a purely quantitative manner), but merely consumption commodities, in other words, objects with qualitative differences.” (Werner Sombart, Der Bourgeois, p.19.) But for the higher stages of evaluation we may set up the rule: “A good family head should be concerned more with the profit and the durability of objects than with momentary satisfaction or with immediate utility.” [Ibid., p.50; italics mine. — N.B.]

And indeed, a natural economy presupposes that the commodities produced by it will have use value for this economy. At the next stage in evolution, the surplus loses its significance as use-value; furthermore, the greater portion of the products turned out are not evaluated by the economic subject in accordance with utility, the latter being non-existent for the economic subject; finally, and this is the last stage, the entire product turned out within the individual establishment has no “utility” for this establishment. It is therefore precisely the complete absence of evaluations based on the utility of commodities which is characteristic of the economies producing them.[72] Yet it must not be assumed that the state of affairs is thus for the seller alone; the buyer’s case is no different. This is particularly manifest in the analysis of evaluation on the part of tradesmen. No business man, from wholesaler down to peddler, ever has the slightest thought of the “utility” or “use-value” of his commodity. In his mind, the content so vainly sought by Böhm-Bawerk is simply non-existent. In the case of purchasers who buy the products for their own use, the matter is a little more complicated; we shall speak below of the purchase of means of production. Here again the path pursued by Böhm-Bawerk leads nowhere. For any “housewife,” in her daily “practice,” begins both with the existing prices and with the sum of money at her disposal. It is only within these limits that a certain evaluation based on utility can be practiced. If for a certain sum of money, x, we may obtain commodity A, or, for the sum of money y, commodity B, or, for money z, commodity C, each purchaser will prefer the commodity having the greater utility for him. Yet such an evaluation presupposes the existence of market prices. Furthermore, the evaluation of each individual commodity is by no means conditioned by its utility. A plain example is that afforded by objects in daily use; no housewife who must shop in the market estimates the value of bread by its immense subjective worth, on the contrary, her evaluation fluctuates about the market prices already established; the same holds good for any other commodity.

Böhm-Bawerk’s isolated man (and it matters very little whether he be seated by a spring or travel over the burning sands) can no longer be compared — from the point of view of “economic motives” — either with the capitalist bringing his wares to market, or with the merchant acquiring these wares to sell them again, or even with the plain purchaser who lives under the conditions of a money commodities economy, whether he be a capitalist or a trader. It follows that neither the concept of “use-value” (Karl Marx) nor that of “subjective use-value” (Böhm-Bawerk) may be taken as the basis of an analysis of price. Böhm-Bawerk’s point of view is in sharp contradiction with reality, and yet he had made it his task to explain reality.

The result at which we have arrived, namely, that use-value is not a possible basis for an analysis of prices, also applies to that stage of commodities production in which not all of the product is brought to market, but only the “surplus of the product,” since we are dealing not with the value of the product consumed in the original establishment but precisely with the value of this surplus part. Prices originate not on the basis of evaluations of products as such, but of commodities; the subjective evaluations of the products consumed in the establishment itself are without effect on the formation of commodities prices. But insofar as the product becomes a commodity, the use-value ceases to play its former role.[73] “The fact that this commodity is useful for others is the necessary condition for its exchangeability: but being useless for me, the use-value of my commodity is not a measure even for my own individual evaluation, not to mention any objective value level.” (R. Hilferding: Böhm-Bawerk’s Marx-Kritik, p.5)

On the other hand, when exchange conditions have been sufficiently developed, the evaluation of products according to their exchange value extends even to that group of products which covers the needs of the producer himself. As W. Lexis very appropriately observed, “in a money commodities exchange system, all goods are regarded and reckoned as commodities, even though they be intended for the consumption of the producer.” (W. Lexis: Allgemeine Volkswirtschaftslehre, 1910, p.8.)

This is the explanation for Böhm-Bawerk’s efforts to represent the modern social-economic organization as an undeveloped commodities production; “ ... under the domination of the production based on division of labour and exchange, chiefly surplus products are put on sale.” (Böhm-Bawerk: Grundzüge, etc., p.35); in the case of the modern organisation of labour, “each producer produces only a few articles, but far more of these than he needs for his personal uses.” (Ibid., p.491.)

Such is Böhm-Bawerk’s presentation of the capitalist “political economy.” Of course, it will not hold water; yet it appears again and again in the authors that base their theory of value on the foundation of utility. We may therefore apply literally to Böhm-Bawerk the words Marx uttered on Condillac: “We see in this passage, how Condillac not only confuses use-value with exchange value, but in a really childish manner assumes that in a society, in which the production of commodities is well developed, each producer produces his own means of subsistence, and throws into circulation only the excess over his own requirements."[74]

Marx is therefore perfectly right in refusing to accept use-value as the foundation of his analysis of prices. On the other hand, it is a fundamental error of the Austrian School that “the central principle” of their theory has nothing in common with the capitalist reality of the present day.[75] As will be seen later, this circumstance inevitably influences the entire structure of the theory.

4. The measure of Value and the Unit of Value.

Whereby can we determine the level of the subjective value? In other words; on what does the level of the individual evaluation of “the commodity” depend? It is in their answer to this question that the “newness” of the doctrine advanced by the representatives of the Austrian School, as well as their adherents in other countries, chiefly consists.

Since the utility of a commodity is its capacity of satisfying some need, it is obviously necessary to analyse these needs. According to the doctrine of the Austrian School, we must observe: first, the variety of needs; second, the urgency of the needs for a specific object of a specific type. The various needs may be classified according to the order of their increasing or decreasing importance for the “welfare of the subject.” On the other hand, the urgency of the needs of a particular kind is dependent on the degree in which the satisfaction takes place. The more the need has been satisfied, the less “urgent” is the need itself.[76] It was on the basis of these considerations that Menger set up his famous “scale of needs,” which appears in some form or other in all the works on value issued by the Austrian School. We reprint this scale in the form in which Böhm-Bawerk communicates it,


The vertical series, those headed by Roman numerals, represent the various kinds of needs, beginning with the most basic ones. The numbers in each vertical series indicate the decreasing urgency of a need in accordance with the degree of satisfaction.

The table shows, among other things, that the concrete need of an important category may be less in volume than the concrete need of a less important category, according as the need has been satisfied. “Satiation in the vertical series [77] may depress the level of need in the first series down to 3, 2, or 1, while a lower degree of satiation in the series VI may cause this requirement, theoretically less important, to be actually raised to the degrees 4 or 5."[78]

In order to determine what concrete need is fulfilled by a specific commodity (it is this condition which determines its subjective utility value), we must learn “what need would remain unfulfilled if the commodity to be evaluated were not available; the need is in this case obviously a dependent variable.” (Böhm-Bawerk: Grundzüge, etc., p.27.)

On the basis of this method, Böhm-Bawerk arrives at the following result: since all persons prefer to permit less important needs to remain unsatisfied, a commodity will be evaluated in accordance with the least need that it may satisfy. “The value of a commodity is measured by the importance of that concrete requirement or partial requirement which is the least important among the requirements capable of fulfillment by the available stock of commodities of this type.” Or, to put it more simply: “the value of a commodity is determined by the degree of its marginal utility.” (Ibid., pp. 28, 29.). This is the famous doctrine of the entire School, from which this theory has received its designation, “the Theory of Marginal Utility”;[79] it is the general principle from which all other “laws” are derived.

The above-indicated method of determining value presupposes a definite measure of value. As a matter of fact, the value figure is a result of measurement; but this presupposes a fixed unit of measure. What is Böhm-Bawerk’s unit of measure?

It is here that the Austrian School encounters a serious difficulty; one it has not yet surmounted and will never surmount. We must first point out how enormously important is the selection of a unit value from the point of view of Böhm-Bawerk. “The fact is that our judgment of value may, with regard to one and the same type of commodities, at the same epoch, and under the same conditions, be of varying degree, depending on whether only a few specimens or great quantities of the commodity as a unit bulk are subjected to evaluation.” (Böhm-Bawerk: Grundzüge, etc., p.15.) Not only does the degree of value depend on the selection of the unit of measure, but it may be questioned whether value exist at all. If (to use Böhm-Bawerk’s example) a farmer consumes ten gallons of water per day and has twenty gallons available, the water has no value for him. But if we choose as our unit a greater bulk than a ten-gallon quantity, the water will have value. Thus, value as such seems to depend on the choice of a unit. Another phenomenon is connected with the above. Let us assume that we possess a number of commodities whose marginal utility declines with the increase in their numbers. Let us assume that this declining value is expressed in the series 6, 5, 4, 3, 2, 1. If we own six specimens of a certain commodity, the value of each specimen is determined by the marginal utility of this specimen itself, i.e., it will be equivalent to 1. If we take as our unit a combination of two of the former units, the marginal utility of these two units will not be 1 x 2, but 1 + 2, i.e., not 2, but 3; and the value of three units will no longer be 1 x 3, but 1 + 2 + 3, i.e., not 3, but 6, etc. In other words, the value of a greater number of commodities does not vary directly with the value of a specific example of these material commodities.[80] The unit of measure plays an important part. But what is the unit of measure? Böhm-Bawerk gives us no definite answer to this question, nor do the rest of the Austrians.[81] Böhm-Bawerk’s answer is this: “This objection is not reasonable. For men cannot choose arbitrarily their unit of evaluation. Since external circumstances that are otherwise uniform ... may imperatively demand that one quantum rather than another be considered as a unit in the evaluation.” (Böhm-Bawerk: Grundzüge, etc., p.16.) Yet it is clear that this unit of measure may be present particularly in the cases in which the exchange of commodities is an accidental phenomenon of economic life, and not its typical phenomenon. On the contrary, the mediators in the exchange of commodities in a developed commodities production do not feel themselves bound to imperative standards in the selection of their “unit value.” The manufacturer selling linen, the wholesaler buying and selling linen, a great number of middlemen — all these may measure their goods by the metre and centimetre, or by the piece (a certain large number of metres taken as a unit), but in all these cases there is no difference in evaluation. They dispose of their goods (the modern form of sale is a regular process of disposing of goods by the producer or by any of his confederates); they are indifferent as to the physical unit of measure by which the goods sold are measured. We encounter the same phenomenon in an analysis of the motives of purchasers buying for their own consumption. The matter is quite simple. Present-day “economic subjects” evaluate commodities according to their market prices, but the market prices by no means depend on the selection of the unit of measurement.

Another point. We have already seen that the total value of the units according to Böhm-Bawerk is not at all equivalent to the value of a single unit multiplied by the number of units. In the case of series 6, 5, 4, 3, 2, 1, the value of these six units (the value of the entire “supply”) is equivalent to 1 + 2 + 3 + 4 + 5 + 6. This is a perfectly logical conclusion from the fundamental assumptions of the theory of marginal utility: yet it is entirely fallacious. The blame lies with the point of departure of the Böhm-Bawerk theory, its ignoring the social-historical character of economic phenomena. As a matter of fact, no one concerned in present-day production and exchange, either as a buyer or a seller, calculates the value of the “supply,” i.e., the aggregate of commodities, according to the Böhm-Bawerk method. Not only does the theoretical mirror manipulated by the head of the new school distort the “practice of life,” but its image presents no corresponding facts at all. Every seller of n units regards the sum of these units as is n times as much as a single unit. The same may be said of the purchaser. “A manufacturer regards the fiftieth spinning machine in his factory as having the same importance and the same value as the first, and the whole value of all fifty is not 50 + 49 + 48 ... + 2 + 1 = 1275; but, quite simply, 50 x 50 = 2500."[82]

This contradiction between Böhm-Bawerk’s “theory” and actual “practice” is so striking that even Böhm-Bawerk was unable to ignore the difficulty. He has this to say on the subject: “In our ordinary practical economic life, we do not frequently have occasion to observe the above-described casuistic phenomenon [i.e., the absence of a proportional relation between the value of the sum and that of the unit. — N.B.]. This is due to the fact that under the system of production of division of labour, commercial sales are drawn chiefly [!] from a surplus [!] which was originally not intended for the personal needs of the owner ..... “ (Böhm-Bawerk: Grundzüge, etc., p. 35). This is very well, but the question is precisely this: if this “casuistic phenomenon” cannot be ascertained in the present-day economic life, it is obvious that the theory of marginal utility may be whatever you like, but it cannot be a law of capitalist reality, because precisely this “phenomenon” is a logical consequence of the theory of marginal utility in which it takes its logical birth and with which it falls.

We thus see that the absence of proportion between the value of the sum, and the number of added units is, as far as present-day economic conditions are concerned, a pure fiction. It is so emphatically in contradiction with reality that Böhm-Bawerk himself is unable to pursue his own point of view to a logical conclusion, Referring to the great number of indirect evaluations, he states: “But if we are capable of judging that an apple has for us precisely the value of eight plums, while a pear has precisely the value of six plums, we are also capable of judging, after making a conclusion from these two premises, as our third judgment, that an apple is precisely one-third more valuable to us than a pear.” (Ibid., p.50) (Böhm-Bawerk is discussing subjective (evaluations.) This observation is essentially quite correct, but it is not a correct application of Böhm-Bawerk’s point of view. For, how do we arrive in this case at the “third judgment” that an apple is one-third “dearer” than a pear? Merely because eight plums are evidently one-third more than six plums. We are here presupposing a proportion to exist between the value of the sum and the number of units; the value of eight plums can only be one-third greater than the value of six plums, if the value of eight plums is eight times the value of one plum, and the value of six plums, six times the value of one plum. This example again shows us how slight is the agreement between Böhm-Bawerk’s theory and the economic phenomena of reality. His presentation is perhaps acceptable as an explanation of the psychology of the “wanderer in the desert,” the “colonist,” the “man” sitting “by the spring,” and in these cases only insofar as these “individuals” have no opportunity to produce. In a modern economy motives like those postulated by Böhm-Bawerk are psychologically impossible and absurd.