other side buyers each of which will not go beyond a certain price. The following scheme is given
as an example of such data:65—
|
Buyers. |
Sellers. | ||
|
A1 values a horse at £30 |
B1 values a horse at |
£10 | |
|
(and win buy at any |
(and will sell at any | ||
|
price under) |
price over). | ||
|
A2 |
28 |
B2 |
11 |
|
A3 |
26 |
B3 |
15 |
|
A4 |
24 |
B4 |
17 |
|
A5 |
22 |
B5 |
20 |
|
A6 |
21 |
B6 |
21 10 s. |
|
A7 |
20 |
B7 |
26 |
|
A8 |
18 |
B8 |
26 |
|
A9 |
17 | ||
|
A10 |
15 | ||
From these data it is deduced that the price of a horse must be between £21 and 21 10 5. But, if the
data had been different, the price might not have been thus determinate. “If there are, for instance,
ten buyers who each value the commodity at £10, and ten sellers who each value it subjectively at
£1, obviously all the ten pair can come to terms, and the zone which lies between the valuation of
the last buyer and the last seller represents the wide latitude between £1 and £10.” Of this character,
according to the writer, are the circumstances of the labour market.66 In such a case some further
datum is required to determine price. “That this latitude should be narrowed down, the further cir-
cumstance must be present that the desire of the buyers is directed to an unlimited number of goods,
while at the same time the total amount of means of purchase must be strictly limited, and the buyers
must be determined to spend the whole of this sum in purchase of the commodities in question.”67
This condition is fulfilled, according to Professor Bohm-Bawerk, by the “general subsistence
market.”
This example will hardly be accepted as typical of a market by the mathematical economists
who walk in the way of Gossen. Agreeing with the Austrian leader that value rests at bottom on
subjective estimates, they will accept his scheme, just as they would accept the description of a
common auction, as illustrative of that attribute. But they may complain that the illustration does not
illustrate another attribute which they regard as essential to the determination of value in a
market,—the circumstance that each party on the one side is free, in concert with some party or
parties on the other side, to vary the amounts of those quantities on which depends his
“latitude” (loc. cit. quoted in the text) to the case in which the severs (and likewise the buyers) do
not differ from each other in their subjective valuation of a horse.
65. Positive Theory of Capital (translated), Book IV. chap. iv.
66. Op. cit., Book IV. chap. v. p. 217; Book VI, chap. v. (“On the General Subsistence Market”).
67. Loc. cit.