*

3. Komorzynski takes a peculiar position in his criticism of Thünen. Thünen tells us he considers his isolating method the most valuable part of his work; but Komorzynski insists that the isolated state, with all its appurtenances, is an unnecessary part of Thünen's work, and serves merely to obscure his investigations and confuse his critics. Thünen believes that the formula for natural wages can be found only in one way; namely, by means of the conditions placed upon the isolated state.† But Komorzynski claims that Thünen unwittingly develops the formula in two ways: that the second method of obtaining the formula has nothing to do with the isolated state, but is based upon actual conditions; and, when the two methods are divested of all unnecessary suppositions, the the point made above should be understood. Thünen's purpose is merely to investigate, under the favorable conditions of the isolated state, the influence of free land upon wages. His position is that, at the margin of cultivation in the isolated state, the determination of the rate of wages and the rate of interest will be in accord with the best interests of the laborer, and that the rate of wages and the rate of interest at the margin determine the rates throughout the state. If Thünen attempted to show anything, it was that wages at the margin equal Vap, where p equals " product of labor " in agriculture; and his claim is that the same wages will exist throughout the isolated state. "Wir behaupten, dass der an der Grenze des isolirten Staats sich bildende Arbeitslohn und Zinsfuss normirend für den ganzen Staat ist " (p. 142).

Thünen's assumption that the mines of the isolated state are situated near the city (Part I., p. 1) confirms the idea that it was his purpose to investigate under favorable conditions the influence of free land upon wages; for, if the mines had been so placed that the one whose product just covered its cost of production was situated at the margin of the state, and that a number of equally fertile mines were left untouched in the wilderness, then, instead of the laborers combining to lay out a farm on the margin, they would unite to work a mine. We might then make suppositions concerning the latter combination similar to those that Thünen made concerning the former combination; and, if we should use capital letters where Thünen used small ones, we should find, by following Thünen's method, that the wages of each miner would be VAP. But Aa, and P is greater in value than p, because more capital is used in the production of P than is used in the production of p. Hence VAP is greater than Vap; and, consequently, it would be more profitable for the laborers to engage in mining than in agriculture. Thünen saw what the difficulty would be if he supposed the mines to be placed in this way; and for this reason he was careful, in making the illustration I have given in the text, to state that his supposition concerning the position of the mines was only temporary.

ascertainment of the formula is found to rest upon two conditions which are common to the two methods.

9 q(a + y)

The second method of obtaining the formula Vap is, according to Komorzynski, as follows: In the part of his work based upon actual conditions Thünen develops the formula z = p-(a+y), and states that it expresses the rate of interest. In another part of his work he states that it is to the advantage of the laborer to have wages and interest bear such relation to each other that the laborer will receive the maximum income from his surplus when that surplus is placed at interest. Now, Komorzynski argues, since the surplus is y, and the rate of interest z= p-(a+y), the interests of the laborer will be subserved q (a + y) when yz, which is equal to [p-(a+y), obtains a maximum

y

q (a + y)

when (a+y)

=

value. This takes place Vap. He therefore concludes that Thünen's suppositions concerning the isolated state are all unnecessary, and all that is needed to prove that Vap represents the best rate of wages for the laborer is to prove :

A. That z= p-(a+y)

q (a + y) interest.

expresses a general formula for

B. That it is to the advantage of the laborer to have wages and interest bear such relation to each other that the laborer will receive a maximum income from his surplus when that surplus is placed at interest.

Why Thünen did not proceed in the manner indicated I shall consider later on. At present we shall consider Komorzynski's attempt to prove an error in the development of the formula Vap on the ground that the conditions A and B are unsustainable.

To fulfil the

A. He claims that the subtle error which vitiates the formula for natural wages is that z= p-(a+y) is not a q (a+y) general formula for the rate of interest. conditions of a general formula for the rate of interest, it must express the same rate of interest for all industries.

q(a+y)

But Komorzynski says the above formula is not capable of doing this; for "wages (a+y) and interest z are by means of Thünen's formula z=-(+) brought into a relation which, in turn, varies with the changing quantities p and q. The quantity p, the surplus value of the product over the value of the capital consumed in production, and likewise the quantity q,... are different in different forms of production. From this it follows that the relation which, according to the formula, exists between the rate of interest z and the rate of wages (a+y), will be different in different forms of production." * In other words, since the quantities p and q are different in different forms of production, he infers that the relation of (ay) and z expressed by z = p-(a+y) will be different in different forms of production; and therefore, since the formula does not express the same rate of interest for all industries, it is not a general formula for the rate of interest.

q(a+y)

The error in the argument can best be exposed by means of the example that Komorzynski gives to illustrate his argument. The illustration is intended to show why the formula does not represent the general rate of interest. He says: "If the rate of interest is 5 per cent. and the rate of wages 400 florins, then, in three different forms of production, these equations may exist:

100

where p=2,500 and q = 105;

where

I.

5

2,500-400
105 X 400

1,200-400
40 X 400
460 -400
3 X 400

where

p= 460 and

=

3;

But, if (a+y) should rise from 400 to 450, then the following unequal rates of interest would result:

†Ibid., p. 59, note. There is a slight error in the original which I

.741

have corrected in the quotation given above. Where occurs above,
100
is found in the original.

7.41 100

This example, he claims, illustrates that the formula is not a general formula for the rate of interest, or, better, a formula for the general rate of interest, but that it represents the relation between wages and interest in specific industries.

The fallacy in the argument may be readily shown. Komorzynski has overlooked Thünen's definition of p. In his illustration Komorzynski makes p represent, in each of the three cases, a definite number of florins. This is evident from the fact that in each case he subtracts wages, expressed in terms or florins, from p. Furthermore, when he supposes wages to rise from 400 to 450 florins, he assumes that in each of the three cases p retains its value in terms of florins. In his illustration and throughout his whole article he assumes that p represents a definite value. But Thünen distinctly defines p as "product of labor"; that is, "product of labor" in kind (pp. 80, 167). When laborers are employed in silver mining, p is expressed in terms of silver (p. 131); and, when they are employed in agriculture, p is expressed in terms of grain (p. 131). If, then, p means "product of labor" in kind, Komorzynski cannot assume that the value of p, or the price of pressed in florins, remains constant when the rate of wages changes. This error renders his objections useless; for if, after the rise of wages, the demands of the community require the continuance of production in groups I., II., III., the formula z=-(+) (provided there is no other objection to the formula than that which Komorzynski offers) may still represent equal rates of interest for the three groups if p, remaining constant in quantity as "product of labor" in kind, may change its value or change its price in terms of florins.

p-(a+y)

q (a + y)

P, ex

B. Komorzynski also attempts to prove defective Thünen's supposition that it is to the advantage of the laborer

*For example, p. 58, "Die Grösse p, der Wertüberschuss des Productes," etc.; p. 55, "Hier bedeutet p den Tauschwert (erlangbaren Verkaufspreis) des Productes," etc.

to have wages and interest bear such a relation to each other that the laborer will receive a maximum income from his surplus when that surplus is placed at interest.* In brief, he claims that it is not to the interest of the laborer that yz should attain a maximum value.

His objection may be thus stated: The interests of laborers as to the relation of wages and interest vary according as they have saved during many or during few years. If they have saved during many years, they desire to have wages low and interest high. If, on the other hand, they are just beginning to save, they desire a higher rate of wages and a lower rate of interest. Hence there is no definite relation of wages and interest that, under all circumstances, is the best relation for the laborers. Concerning Thünen's supposition that it is to the advantage of the laborer to have yz attain a maximum value, Komorzynski says that it is based on the arbitrary assumption that the laborers save only during one year, and that all laborers have only an amount of capital equal to y.

This objection has much in its favor; but, before considering it, we must put Thünen in the right light. In introducing Komorzynski's criticism, it was stated that his position is peculiar, since he holds that, while Thünen believed he could obtain his formula for natural wages only in one way,- by means of the conditions of the isolated state,- he unwittingly develops it in two ways; that, when the two methods are disembarrassed of all superfluous suppositions, the ascertainment of the formula is found to rest upon two conditions, which are common to the two methods; and that the ascertainment of the formula by the second method is based, not upon the hypothetical conditions of the isolated state, but upon actual conditions. By the logic of his position, therefore,

*This question is also discussed by Knapp, G. F., Zur Prüfung der Untersuchungen Thünen's über Lohn und Zinsfuss im isolirten Staate, pp. 18-26; Roscher, Geschichte, etc., p. 896; Schmidt, C., Der natürliche Arbeitslohn, pp. 34-37.