Eugen von Böhm-Bawerk · 1888
Böhm-Bawerk’s German-language review evaluates Sax’s effort to ground public finance in economic theory. It reconstructs the book’s program, endorses its application of subjective value theory to collective expenditure, and distinguishes those achievements from questionable definitions and explanatory claims. Against Sax’s foundational ambitions, Böhm-Bawerk emphasizes earlier advances in public finance: the book constitutes an important milestone, not the discipline’s first foundation.
Sax begins by distinguishing individualism and collectivism as organizing principles of economic activity. Neither is reducible to egoism: individual and collective conduct can serve egoistic, mutualistic, or altruistic purposes. The theoretical imbalance motivating his inquiry is stated succinctly:
Bis jetzt sei die Theorie nur einem der beiden grossen Erscheinungsgebiete gerecht geworden.
English translation: Hitherto, he holds, theory has done justice to only one of the two great domains of phenomena.
The neglected field is collective economic activity. Sax objects both to practical prescriptions lacking theoretical foundations and to explanations that assimilate state activity to household management, exchange, production, or consumption. Public economic activity requires explanation in its own right because it addresses communal needs.
Dieser Ausschnitt der wirtschaftlichen Thätigkeit der Menschen muss nicht bloss vom Standpunkt einer Kunstlehre praktisch beraten, sondern auch — ebenso wie das Gebiet der individualistischen Wirtschaft — theoretisch erklärt werden.
English translation: This portion of men's economic activity must not merely be given practical counsel from the standpoint of an art, but must also — just as much as the domain of individualistic economy — be theoretically explained.
Böhm-Bawerk follows Sax’s progression from general economic categories—needs, goods, value, costs, and capital—to collective purposes and fiscal principles. The methodological premise is that public finance can be understood through the elementary relations governing economic activity generally:
Und zwar ist die Erklärung wirtschaftlicher Thatsachen wieder nicht aus fremden Gebieten herbeizuholen, sondern mit eigenen Mitteln zu leisten: die Staatswirtschaft ist aus den Elementen der Wirtschaft heraus zu erklären.
English translation: And indeed the explanation of economic facts is again not to be fetched in from alien fields, but to be accomplished with means of its own: the public economy is to be explained out of the elements of economy itself.
The review’s principal endorsement concerns Sax’s use of marginal utility and subjective value theory. Böhm-Bawerk acknowledges his own involvement in developing that theory, but points to its explanatory results in taxation according to ability to pay, progression, differentiated needs, and fees. The strongest example is the allocation of resources between private and collective wants. Rational expenditure requires harmony among classes of needs: relatively trivial wants should not absorb resources while more important wants remain unmet elsewhere. Poorer people therefore cannot reasonably devote disproportionately large resources to collective purposes, whereas richer people can sustain larger contributions alongside more extensive private consumption. A fiscal principle usually defended through justice thus also receives an economic justification.
Böhm-Bawerk nevertheless rejects Sax’s supplementary analogy between taxation and differentiated charges for personal services. Sax excludes services from the category of goods and contrasts supposedly uniform prices for material goods with service prices adjusted to customers’ wealth. For the reviewer, both claims are defective. Services are means of well-being over which people must economize, just as they economize over material objects. Price differentiation depends on circumstances rather than an intrinsic division between goods and services; sellers of material goods can also charge wealthy customers differently. Moreover, taxation finances material goods as well as services. Rejecting this analogy leaves intact the stronger argument from harmonious expenditure across competing needs.
The second objection limits the exclusiveness of economic explanation. Böhm-Bawerk accepts that economic phenomena require economic analysis, but insists that state decisions, particularly tax legislation, also reflect ethical and political motives. Justice remains an actual influence on resistance to tax privileges, not merely an imperfect substitute for calculations of economic expediency. The economic justification of ability-to-pay taxation supplements rather than invalidates its ethical justification.
The closing assessment similarly balances praise with criticism. Sax’s uneven abstraction and brusque treatment of predecessors impair the exposition without cancelling the work’s lasting significance. Böhm-Bawerk presents subjective value theory as a productive foundation for understanding collective provision, while resisting the claim that it exhausts the motives governing fiscal and political action.
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