Emil Sax, Die neuesten Fortschritte der nationalökonomischen Theorie (1889)

Emil Sax’s text is a published public lecture, delivered for the Gehe-Stiftung in Dresden on 10 March 1888 and printed in 1889 as a compact theoretical pamphlet. Its scope is programmatic: it explains what Sax regards as the newest advance in economics, namely the reconstruction of “pure theory” against both old doctrinaire abstraction and a German scholarly climate absorbed chiefly by economic history and practical social policy.

Immerhin aber darf für Erörterungen dieser Art verständnisvolles Interesse überall dort erwartet werden, wo die Überzeugung lebendig ist, daß die Wissenschaft und das Leben in befruchtender Wechselwirkung stehen; daß die Theorie, wie sie einerseits in dem nimmer rastenden praktischen Leben ihre Basis und ihr Object hat, auf der andern Seite wieder der Leitstern zielbewußter Praxis wird.

English translation: Nevertheless, understanding interest may be expected for discussions of this kind everywhere the conviction is alive that science and life stand in fruitful reciprocal interaction; that theory, as it has its basis and its object on the one hand in ever-restless practical life, becomes on the other hand the guiding star of purposeful practice.

The lecture first honors German achievements in historical and realist economic research, then insists that these do not exhaust economic science. History supplies material; applied policy offers practical guidance; but both require a general theory capable of identifying the elementary causes behind economic phenomena. Sax’s central methodological move is to separate economics from technology, law, ethics, and politics. Ploughing, sowing, and manufacturing are technically describable acts; they become economic only when viewed under the condition that human wants confront limited external means.

Abhängigkeit des Menschen in seinen instinctiven und vernünftigen Lebensäußerungen von dem beschränkten Stoffe der Außenwelt: wir können dies das ökonomische Grundverhältnis nennen, und aus demselben leitet sich die Erkenntnis des Wesens der Oekonomie unschwer ab.

English translation: Man's dependence, in his instinctive and rational expressions of life, upon the limited stuff of the external world: this we may call the fundamental economic relation, and from it the recognition of the essence of economy is readily derived.

From this “economic ground-relation” Sax derives the subject matter of theory: the mental processes through which scarcity directs conduct. Needs are felt uneasinesses ordered by intensity; goods are objects imagined as means of relief; labor matters economically as effort or disutility. Economics therefore becomes a science of regular psychic responses to scarcity.

Also — die Erklärung der Seelenvorgänge, welche in Folge des ökonomischen Grundverhältnisses im Menschen sich abspinnen: das ist der Inhalt der nationalökonomischen Theorie. Sie ist in diesem Sinne angewandte Psychologie.

English translation: Thus—the explanation of the mental processes which unfold within man in consequence of the fundamental economic relation: that is the content of economic theory. In this sense it is applied psychology.

The decisive part of the lecture is Sax’s value theory. He rejects three older explanations: value as usefulness, since very useful goods may have no value when abundant; value as embodied labor, since labor is expended because value is expected, not the reverse; and value as an objective exchange ratio, since exchange ratios are effects of valuation rather than its essence.

Der Werth ist insbesondere weder irgend eine objective Eigenschaft der Güter, noch ein objectives Quantitätsverhältnis der Güter, sondern etwas durchaus Subjektives und zwar, wie bereits bemerkt wurde, ein seelischer Vorgang.

English translation: Value in particular is neither any objective property of goods nor an objective quantitative relation of goods, but something thoroughly subjective—and indeed, as has already been noted, a mental process.

Value arises through association: the mind connects a particular good with the satisfaction dependent on possessing it. Sax thus develops a subjective, marginal account of value in the Austrian orbit of Jevons, Menger, and Wieser, but gives it an explicitly psychological formulation as a “Werthgefühl.” The magnitude of value depends on both the intensity of the need and the available stock of goods.

Die Werthgröße ist umgekehrt proportional dem Güterbefiße, direct proportional der Stärke der fraglichen Bedürfnisse eines Individuums.

English translation: The magnitude of value is inversely proportional to the possession of goods, and directly proportional to the intensity of the individual's needs in question.

This formula lets Sax claim broader theoretical consequences. Price, capital, interest, fees, and taxes can all be analyzed as cases in which valuation governs the transfer or use of goods. His most distinctive extension is to public finance: taxation and public charges are not merely ethical or juridical questions, but value-phenomena within the relation between private households and collective needs.

The work’s relevance lies in this effort to make economics an exact theoretical discipline without abandoning practical application. Its structure moves from apology for theory, through conceptual demarcation, to the psychology of need, labor, and goods, then to subjective value and its consequences for market and state economy. Sax’s main thesis is that modern economic science advances when it discovers the simple psychic laws by which scarcity is transformed into valuation and coordinated action.