by Gene Callahan
I happened to be reading R. G. Collingwood’s famous essay (at least famous in my circles!) with the above title. While similar in some ways to Mises’s philosophical analysis of the concept of action, there are some quite significant differences present as well, and I thought that Think Markets readers might enjoy a brief discussion of one of them.
Perhaps the most notable difference between Mises and Collingwood is that the latter denies the possibility of interpersonal exchange! Exchange, he contends, is always with one’s self. His analysis proceeds as follows: Let’s say you have a slab of bacon and I have a loaf of bread, and apparently what is going on is that we are exchanging the two items. But, Collingwood notes, what I am really giving up is not a loaf of bread, but my eating of the loaf of bread. And what I really want is not a slab of bacon, but my eating of the slab of bacon. (Consider how little I would value inedible bacon!) But I cannot possibly give you my eating of the bread, and you cannot give me my eating of the bacon. No, in this event, each person exchanges with himself — I exchange my eating the bread for my eating the bacon, and you do the reverse — and each of us, in terms of these intrapersonal exchanges, acts as a facilitator — by my dropping my claim to be the rightful eater of the bread, you are allowed to “pick it up,” and vice versa.
Now, this may seem like a verbal quibble, until you see where Collingwood goes next. Since, as he believes he has demonstrated, all exchange is really with oneself, and is always trying to exchange more for less — that is what makes the action economic — then the idea of a ‘just price’ other than the market price is logically vacuous — when one complains that a price one is offered is “too high,” one is complaining that someone else is doing the same thing one is one’s self — exchanging with himself in the most advantageous way possible.
Any comments on Collingwood’s analysis?