Price everything, monetize everyday life.

The "Aldrich Report" is a milestone in American history, and there are few documents that can compare with it in describing the economic, political, and ideological changes in late 19th-century America.

Significance of the "Aldrich Report"

In 1893, Nelson Aldrich, chairman of the Senate Finance Committee and a senator from Rhode Island, submitted a report to Congress titled "Wholesale Prices, Wages, and Transportation," which became known as the "Aldrich Report." This report is a milestone in American history, and there are few documents that can compare with it in describing the economic, political, and ideological changes in late 19th-century America.

This report has at least four significant aspects:

First, it has statistical significance. In this 658-page report, apart from the introduction, there are various tables that meticulously record the price fluctuations of various major commodities (including labor) in American society from 1840 to 1891. Price fluctuations imply profound social changes, and through subtle changes in commodity prices, one can catch a glimpse of significant social transformations, as the saying goes, "a bud indicates spring, a leaf indicates autumn." For example, the report compiled a 50-year food price table, tracking the price changes of 53 types of food from "Boston crackers" to nutmeg. This report accomplished a highly technical task in an unprecedented manner—pricing the daily lives of Americans.

This report also foreshadowed the birth of modern nationally recognized economic indicators. The comparability of currency allowed a large amount of price data in the report to be aggregated into several basic measurement indicators, giving rise to new statistical indicators such as "cost of living," "purchasing power," "standard of living," and "price level," which had a profound impact on the United States.

Second, it has policy significance. The commodity price time series data in this report could ultimately answer the question of whether trade protectionist policies and high tariffs were most beneficial to the United States. Previously, some people used "resistance to Britain" to defend high tariffs, claiming that supporters of free trade were bought by British capitalists. By the 1890s, the government had abandoned this populist rhetoric because the currency system could accurately measure the progress made by the United States. Using price evaluations of goods, assessing economic prosperity, and evaluating public policies were evidently more persuasive.

Third, it has historical significance. This report revealed that in the 1890s, the U.S. government promoted capitalist values and consumerist values as the barometer for measuring overall social progress, which was a product of a "statistical war." After the Civil War, there was fierce debate between those who held early individualistic ideological beliefs and those who supported consumerism and capitalist principles about how to measure social progress. The former were unwilling to measure progress by comparing labor and consumer goods prices, instead striving to measure inequality, exploitation, and debt. The latter advocated that price statistics should become the barometer for measuring the progress of the United States, believing that promoting this data was to control labor costs, stabilize society, and maintain commercial profits, and that this data also reflected the happiness of laborers.

Finally, it has conceptual significance. The first concept is to view Americans as market consumers and wage laborers. After years of development, Americans accepted wage labor relationships and no longer associated them with subordination, exploitation, lack of ownership freedom, or even slavery. In the 1890s, the contractual wage relationship between employers and employees became a symbol of labor freedom, and wage statistics became a core indicator of people's "living conditions." If one wanted to measure the wealth of the nation, one only needed to compare wages with the cost of living. Calculating the quantity of consumer goods that wages could purchase showed that consumerism replaced the trend of free laborers, and people were more concerned about compensation rather than controlling the pace and output, as well as differences in status, and so on. The second concept is to view laborers as industrial production factors. This report provided merchants with a wealth of information, allowing them to calculate the total cost of maintaining the survival and work of laborers by utilizing the quantity of goods consumed by workers. Just as cost accounting techniques can help manufacturers reduce costs by closely monitoring the input prices of mechanized production processes, cost of living data can help people reduce living costs by closely monitoring the input prices of human survival processes. This applied cost accounting methods to daily life, revealing the commodity attributes of laborers. During this period, mechanization was flourishing, and then-President Grover Cleveland said American workers were beginning to "become like a part on a great machine." Edward Jarvis, who served as chairman of the American Statistical Association for a long time, requested that data be collected in the 1870 census that could calculate the "value of life" of a person, specifically including "the cost of raising a person, or the cost of making a production machine (person), and his value to the nation."

Why did the labor statistics report become a focus?

Before the widespread acceptance of the concept of wage labor, labor statistics became a focal point. On June 23, 1869, Massachusetts passed a resolution to establish the world's first Bureau of Labor Statistics. The impetus came from the surprising electoral success of the newly formed Labor Reform Party in the late 1860s, winning an astonishing 10% of the vote. The state legislature, eager to find ways to appease the anger of the working class, responded by establishing the Bureau of Labor Statistics, proposed by Wendell Phillips. When the bureau was established, Phillips was empowered to appoint the first director and deputy. The managers of the state Bureau of Labor Statistics disagreed with progress based solely on pricing, believing that labor time was one of the main indicators of social progress. This implied that they believed less market output was sometimes better than more output, as more output came at the expense of worker happiness. This viewpoint was similar to that of Karl Marx, who personally requested and read reports from the bureau, finding them "valuable." Additionally, the bureau's reports received praise from writers, professors, and members of the business library association, although many entrepreneurs vehemently opposed or even slandered them, some even calling for the abolition of the Bureau of Labor Statistics. One reason for this was that at the time, Americans had not fully embraced the idea of the United States becoming an industrial nation dominated by wage laborers, as they believed wage labor meant a lack of freedom.

The controversial reports of the Massachusetts Bureau of Labor Statistics brought political disaster to its leadership. A year later, the governor appointed Carroll Wright as director of the bureau, and Wright proposed a nonpartisan, objective approach, which earned him support and trust, making him one of the most important government statisticians in American history within a few years, hailed as the "Father of American Labor Statistics." In his early years as director, Wright published many reports on moral statistics, but by the 1880s, the reports had almost entirely shifted to comparative data on wages and living costs. In the 1884 report, which was 468 pages long, 334 pages were dedicated to wage and living cost data, accounting for 71% of the total length.

During this period, political giant and thinker Edward Atkinson had a significant influence on labor bureaus in states like Massachusetts. Atkinson was best known for studying the cost of living for workers. He added a new element to the calculation of living costs: a comprehensive analysis of the protein, carbohydrate, and fat content of every penny's worth of food consumed by workers. He also collaborated with chemistry professor Atwater to obtain professional advice on food rations. Soon, Atkinson's daily dietary schedule spread among middle-class reform organizations, but workers were highly resistant to it. In surveys, many workers refused to answer questions about living costs, and some intentionally ate twice as much food as usual on the day of the survey.

Why Fisher was Central to the Pricing Movement

In the pricing movement, economist Irving Fisher played a central role. He was the first to introduce mathematical models into American economics and actively engaged in social reform movements. Fisher chaired the War Prohibition Committee during wartime, calculating that prohibition could save the United States $2 billion annually. He also served as the first president of the American Eugenics Society, using data to describe the economic value of eugenics. Fisher's bestselling book, "How to Live," was printed 90 times and sold nearly 500,000 copies, yet he was overlooked by historians. Fisher tirelessly promoted the formalization and legal application of price statistics data, teaching people at the time that "if they want to argue about the nature of progress or whether a certain reform is worthwhile, they must first price it."

Fisher's pricing conclusions were intriguing; his statement that a baby's value was $90 at the time left "some people confused and shocked," and even today it seems repulsive. He calculated the net present value of a baby's future income minus the discounted value of future caregiving costs, believing that an American baby's value was $90. By extension, a 5-year-old child's value was $950.

Fisher's ideas were products of capitalist society. At the time, the fate of social reform lay in the hands of budget-conscious legislators or managerial elites who were accustomed to viewing the world as a "balance sheet," where "man" was seen as a factor of production. In this social context, money served as the ultimate equalizer and balancer; exchange value flattened all the hills and valleys of life, transforming them into measurable units of calculation. Only by viewing people as money-making machines could economic statistics be created to persuade the American elite to support federal regulation and social reform policies. If "people" were not priced, then government statistics might overlook those people, potentially repeating the marginalization experienced by Native Americans in the United States.

From various statistical results, we need to understand the economic organization, social relations, and cultural background behind them, which can deepen our understanding of the issues. From an economic organization perspective, the main focus was on upgrading the production organization structure. The dominant local, decentralized self-ownership productionism of the early 19th century was gradually disappearing, replaced by modern corporate bureaucratic and managerial hierarchies, as well as two twin mechanisms: regulatory governments emerging for administrative management and private charitable foundations emerging to mitigate class conflicts. Between 1894 and 1902, thousands of small factory owners sold their self-owned enterprises in exchange for large amounts of company stocks. Management-type companies like railways replaced small producers' market competition.

From a social perspective, with the emergence of large companies with multiple levels and departments, distant and hierarchical social relationships have replaced local informal relationships. For example, the railway company was the first to develop a hierarchical and professional managerial team and modern accounting systems. This has created a new situation where the management power, originally held by productive property owners, has shifted to a new professional class. These experts aim to reshape American society into a mechanized "system" through continuous top-down maintenance, regulation, and social planning to stabilize the social system. Fisher said, "The world is composed of two classes of people, the educated and the ignorant, and the former should be allowed to dominate the latter, which is crucial for progress." In order to transform the chaotic world into an easily understandable social system governed from the top, progressives often seek statistical data. Carefully collected various life data will support bureaucratic systems in private companies, government management, or charitable foundations.

From a cultural perspective, the United States has become a country primarily based on wage labor, and the hierarchical management system and profit-oriented corporate culture have naturally spread throughout society. The accounting and bureaucratic systems of corporate forms have successfully constructed a "statistical state," and it can be said that large companies invented the bureaucratic institutions of the United States. By 1899, two-thirds of manufactured goods were produced by companies, and 65% of wage laborers worked for companies. By 1919, these figures had risen to 87% and 86%, respectively. Companies have become the "primary mechanism of civilized life" and an important source of statistical data. When price statistics entered society, they became very effective carriers of ideology. The cost of living data in the "Aldrich Report" often became a determinant tool for the federal government, and price statistics began to play a new role in policy making.

"Do watered stocks really have water?"

Since the 1840s, with the gradual rise of large companies in the United States, the changes in corporate organizational structure have completely changed the way middle and upper-class Americans perceive and quantify the world. In the early 19th century, Americans firmly believed that only tangible, touchable objects had value. They considered property from the perspective of small individual producers, equating value with labor and property with tangible items that improved or promoted labor productivity. Although there was some progress in the mid-19th century, they still remained at the level of only tangible items having value, but during this period, tangible capital that helped improve productivity, such as railway tracks and blast furnaces, expanded. If at this time the stock price of a railway company was higher than the value of physical factories and productive property, the American people would denounce it as corrupt, as in their view, such "watered stocks" did not reflect the "true" capital amount of the company and were a form of fraud.

From a deeper perspective, these phenomena are closely related to the economic theories of the time. The traditional labor theory of value denied the value of services. The physiocrats of the 17th century believed that only agriculture was productive and that agricultural products had value. Adam Smith, the father of modern economics, distinguished between "productive labor" and "unproductive labor" in his 1776 work "The Wealth of Nations," with services falling into the latter category, not creating value. This idea had a profound impact, and in 1867, Karl Marx, in the first volume of "Capital," also held this view. In the 1870s, economists such as Jevons in Britain, Menger in Austria, and Walras in France independently discovered the principle of diminishing marginal utility, proposing theories different from the labor theory of value. They believed that classical economists like Ricardo had a fatal misunderstanding, that the price of a commodity depended on the amount of labor required to produce it. These economists believed that value was subjective, and prices were determined based on the marginal utility people could obtain. Since then, services, previously considered to have no value, gained value due to the emergence of subjective value theory. Alfred Marshall, the founder of neoclassical economics, acknowledged in his 1890 work "Principles of Economics" that services were productive and created value. He pointed out, "Wealth includes not only material wealth but also spiritual or non-material wealth." This completed the transition from a restrictive production view to a comprehensive production view, determining the scope of national income accounting.

At the same time, people's understanding of the market gradually deepened. Early markets were primarily for the exchange of tangible goods, and it was only later that they expanded to include stock markets. The market mainly referred to the stock market as discussed by financial professionals. The indicator reflecting market performance was the Dow Jones Industrial Average, which appeared in the Wall Street Journal on May 26, 1896, invented by the newspaper's financial editor Charles Dow. Dow's successor, William Peter Hamilton, believed that the "market" was not only a resource allocation mechanism but also the nest of corporate capitalism. According to Smith and his followers, the wonder of the free market lay in combining market prices with the intrinsic natural value of things. However, Dow and Hamilton believed that there was no intrinsic natural value, only market prices, and "watered stocks" logically did not hold up.

As the corporate merger movement transformed production workshops and factories into corporatized and financialized entities, company assets became bonds and stocks, and ideas about how to value them began to change. The concept of "true" value also changed. In the early 20th century, three cigar companies merged to form the American Tobacco Company, and they encountered trouble when issuing bonds. Unlike railway and steel companies, this company did not have many physical assets to use as collateral. At this time, Goldman Sachs successfully convinced investors that the impressive income stream of the American Tobacco Company meant it was a safe and profitable investment, unrelated to its book assets. This case made people believe that value was no longer confined to tangible objects in the physical world; subjective intangibles such as future expected earnings and "reputation" also had value. More and more middle-class individuals gave up direct control of productive property and instead chose to receive stock dividends and bond returns. In this process, property was seen as an abstract right, and value came from future income streams, no longer from tangible items derived from productive labor. In the 1890s, this new approach was being institutionalized in the American court system. In the 1890 Minnesota Rate Cases, the Supreme Court stated, "Not only tangible things can be considered property, but also the anticipated income-generating capacity of these things."

Historically, national income, GNP, and GDP were not treated and quantified based on market goods or consumer goods, but based on production factors or capital goods for the country and its residents. Therefore, they could only be measured by calculating their annual monetary income or cash flow. From this perspective, GDP is the final step in pricing progress and the final step in capitalizing life. Based on the perspective of capital accumulation, Tucker proposed the concept of the "national enterprise," viewing the country as a company and believing that when national income (market output) exceeds expenditure (market consumption), it generates income, which can increase "national wealth." This idea gradually gained acceptance among Americans, and to this day, Americans seem accustomed to viewing the country as a large enterprise. In 2018, the unexpected election of real estate businessman Trump as President of the United States was largely due to the idea of viewing the country as a business. People hoped that Trump, with successful business management experience, could steer the American economy.

(This text is mainly based on the book "Pricing Progress: A Brief History of American Economic Indicators.")