The Problem of Imputation No productive instrument, be it ever so efficient, yields a return by its unaided agency; it always requires the assistance of others. And the more the art of production is developed, the more numerous will be the productive instruments which co-operate. The very ******st products often require the most complicated methods of production, because they, more than any others, allow of the application of machinery and, therefore, of power in the mass. The proposition that production goods obtain their value from the value of their returns, suffices only for the valuation of the co-operating productive factors as a whole;not for their valuation individually. To obtain this also, we need a rule which will make it possible to divide up the whole return into single parts.
When land, capital, and labour work together, we must be able to separate out the quota of land, the quota of capital, and the quota of labour from the joint product. More than that, we must be able to measure the services of each separate piece of land, of each separate quantity of capital, and of each separate labourer. Of what use is it to know the return which falls to machinery, coal, and raw material together? It is necessary to distinguish what each has contributed to the total result, just as the contribution of the stone-cutter who hews the block must be distinguished from that of the artist who chisels it into the statue.
If we may form a judgment from economic practice, we should say there is such a rule of division. No one, practically, is limited to saying that return is due to all the producing factors together; every one understands and practises, more or less perfectly, the art of division of return. A good business man must know, and does know, what a day labourer and what a skilled worker would yield him; what profit a machine will bring in; how much has to be ascribed to the raw material; what return this and what return that piece of land will produce. If he did not know this; if he could only compare his outlay and his results as a whole and in the lump, he would not know what to do in case the return proved less than the outlay. Must he give up the production altogether? Must he alter the management? Must he be more saving with labour or capital, with machinery or raw material; or, on the contrary, must he employ more of these? Only if there is some adequate means of following out individually the working of each productive element, can he judge clearly upon these points That there is such a means is testified by the fact that economic decisions of the nature we have just mentioned are made, and made with as much confidence and as favourable results as are any other decisions in matters of value generally. The existence of this means of calculation is still more certainly proved by the fact that decisions of this nature are so often made in the same way by many people, -- in fact, by all persons who find themselves in the same circumstances. Why at a certain point of time does the entire body of undertakers, in some particular branch of manufacture, suddenly replace hand labour by machinery, when previously they had not found machinery profitable? Why is agriculture in one country so much more "intensive" than in another? Chance and caprice are here out of the question. It is calculations of production that effect these alterations. They give arithmetical proof that it is advantageous to eliminate the one element of production, with its accompanying share in the return, and substitute for it the other. The more perfect the production, the more exact will be its calculations, and the more highly will the art of distributing the return be developed. A "model economy" calculates everything. But the rudest peasant, and the wildest savage, make calculations, inexact and hasty though they be. They, too, make use of their experience, though very imperfectly of course, in regard to matters where the impulse and the confidence are given by nature.
The peasant, dwelling in some cleft of the mountain, says to himself that this field is more valuable than that; and this he could not do unless he understood the art of separating the return of the field from the return of the co-operating labourers, tools, and materials. These are rules which arise naturally, from the very nature of man, when he finds himself confronted with the problems of economic life. In applying them, the attempt would undoubtedly be made even by a communistic state, to calculate the result of each individual productive element. And in a highly cultivated state these calculations would be made with great exactitude, in order to lay down that plan of production which, for the time being, was most effective.
It is singular how few of those writers who have attempted to grasp economic procedures into the unity of theory have tried to discover this rule, -- which is certainly one of the most important followed in practical economic dealings. Of the many difficulties which have to be overcome if we are to get, apart from actual transactions, a purely theoretical and scientific account of what people actually do when impelled by circumstances, probably the first and most difficult of all is to put before ourselves what are the problems really put in business transactions. Every theory begins with the least important of the things it has to do, and only in the end arrives at its true vocation.
