Collective needs and public goods
Sax’s treatment of the theoretical foundations is not particularly surprising (with the exemption of services) and more interesting is his thinking as regards the public sphere. Sax acknowledges collective needs that spring from the common living of men in relation to their environment, and he criticizes Wagner’s proposition that purposes of power and law, on the one hand, and purposes of culture and welfare, on the other are essential functions of the state.
‘It is not the abstractum state that can put up purposes, and that is able to feel and act, but only the concrete inspired individuals, its elements, that are able to do that’ (Sax, 1887, pp. 191f.). But collective needs cannot be dissolved into individual needs. Individuals sense these needs only as members of a community and, incidentally, not all citizens at all times sense these needs. Therefore collective needs are an expression of individual feelings, but these feelings have their origins in collective ties and aim at collective purposes. Individuals may not be conscious of collective needs, and sometimes their implementation must be coerced, but if they are conscious of them, they order them according to their intensity, alternatingly and together with individual needs, and they get their satisfaction from them as in the private sphere. More complicated is the process with collective goods proper from which no tangible benefits for individuals can be derived: the valuation of these goods is done collectively, but Sax is not quite clear about how the process works. It is obvious that individuals usually have stronger feelings for their individual needs, but sometimes they are also prepared to sacrifice blood and property for national honour and dignity (ibid., p. 195). Mutualistic and altruistic elements are always present in economic assessments.Collective or public goods are in the possession of the collectivity: Sax prefers the legal to the economic definition, while the latter was to dominate the discussion in modern theory (ibid., pp.
26 and 36). The value of goods is determined by the individuals’ preferences, by their equating the marginal utilities of different goods. But a kind of average value emerges from the social context: the evaluation is not a completely individual decision. In the public sphere, taxes are an expression of collective values. Executive bodies of collective life carry out the assessment in their function as representatives of single economic units. Expenditures are justified when individuals appreciate the collective goods produced with their money or their private goods more than the goods they would have possessed or acquired if they had used their resources for private purposes. It must be the aim of politics to realize an equilibrium between individual and collective needs. Public revenues are a phenomenon of valuation: ‘A Robinson and a 100-million Empire obey in their actions the same law: the law of value’ (ibid., p. 308).There is a valuation of share (‘Antheilswertung') - one assesses the amount which individuals get from the collectivity, and the percentages of single purposes - and a valuation of costs ('Kostenwertung ): one assesses the amount which is necessary for satisfying collective needs and which has to be collected for goods, services and altruistic actions. Revenues and expenditures have to be mutually adapted. By consenting to the whole amount of collected resources the individual decides on his own share, and by having a certain imagination about his contribution to the community he influences the whole amount collected. Sax is not specific about how the process can be imagined in detail, but he objects to the solutions proposed by Wicksell (1896) or Lindahl (1919). The valuation of collective goods proper is shaped by influential political groups and elites. Actually the decisions are reached by the political representatives, but they have also to adapt to the wishes of their voters. By this process, we can consider the valuation of costs a collective, societal assessment of value.
Sax rejects the formula, well known in his time, that in the private household income determines expenditures, while in the public sphere expenditures determine revenues: the process of mutual adaptation of revenues and expenditures describes a different procedure. And he modifies the rule of thumb that public investment, durable consumption goods and irregular expenditures have to be covered by the extraordinary budget, that is, by public credit. This depends, as in private decisions, on the valuation of present necessities and future possibilities, therefore irregular expenditures could well be covered by current revenues which can be increased ad hoc for this purpose. Sax is fascinated by the simple explanation that unveils the nature of the public financial world. It is a solemn phenomenon that we observe in the collectivist household ‘a living together not only of millions of contemporaries that have little in common but also the communication of different generations that are often far from each other. Thereby, the equilibrium of numerous collective and individual needs in such large dimensions of space and time is maintained with the highest level of human perfectibility. And that happens by the same psychological forces that guide the smallest, inconspicuous economic unit' (Sax, 1887, p. 380).