Let us assume, finally, that the galley of the ship has been completely denuded of all its food stores; that the voyagers are also without any food of their own; that the ship is laden with a cargo of several thousand hundred-weight of biscuits; and that the captain of the ship, in consideration of the unfortunate situation of the voyagers as a result of this calamity, authorizes everyone to nourish himself at will with biscuits. The voyagers will, of course, take the biscuits to still their hunger. But no one will doubt that a palatable piece of meat would, in such a case, have considerable value to a voyager whose entire fare for twenty days would otherwise consist of biscuits alone, while a pound of biscuits would have an extraordinarily small value, and
perhaps no value at all.
Why did command of a pound of biscuits have the full importance of maintaining his life to each voyager in the first of these cases, still a very great importance in the second case, but no importance whatsoever, or at any rate only an exceedingly slight importance, in the third case?
The needs of the voyagers remained the same in all three cases, since neither their personalities nor their requirements changed. What did change, however, was the quantity of food standing opposite these requirements in each case. Opposite identical requirements for food on the part of the voyagers, there were ten pounds of food per person in the first case, a larger quantity in the second case, and a still larger quantity in the third case. Hence, from one case to the next, the importance of the satisfactions that were dependent on single units of the food declined progressively. But what we have been able to observe here, at first with an isolated individual, and then in a small group temporarily isolated from the rest of humanity, is equally valid for the more complex interrelationships of a people and of human society in general. The situation of the inhabitants of a country after a crop failure, after an average crop, and finally, in a year following a bumper crop, presents relationships analogous in nature to those described above. Here also, opposite certain definite requirements, there is a smaller available quantity of food in the first case than in the second, and a smaller one in the second case than in the third. Hence, in these cases also, the importance of the satisfactions that depend on single units of the whole supply varies considerably.
If an elevator with 100,000 bushels of wheat burns down in a country that has just had a bumper crop, the effect of the calamity will at most be that less alcohol will be produced, or that the poorer part of the population will at worst be fed somewhat more scantily, without suffering deprivation; if the calamity occurs after an average crop, many people will already have to forgo more important satisfactions; and if the misfortune coincides with a famine, a great many people will die of hunger. In each of the three cases, satisfactions of very different degrees of importance depend on each concrete unit of the grain available to
the people concerned, and for this reason the value of a unit of grain varies greatly in the three cases.
If we summarize what has been said, we obtain the following principles as the result of our investigation thus far:
(1) The importance that goods have for us and which we call value is merely imputed. Basically, only satisfactions have importance for us, because the maintenance of our lives and well-being depend on them. But we logically impute this importance to the goods on whose availability we are conscious
of being dependent for these satisfactions.
(2) The magnitudes of importance that different satisfactions of concrete needs (the separate acts of satisfaction that can be realized by means of individual goods) have for us are unequal, and their measure lies in the degree of their importance for the maintenance of our lives and welfare.
(3) The magnitudes of the importance of our satisfactions that are imputed to goods-that is, the magnitudes of their values- are therefore also unequal, and their measure lies in the degree of importance that the satisfactions dependent on the goods in question have for us.
(4) In each particular case, of all the satisfactions assured by the whole available quantity of a good, only those that have the least importance to an economizing individual are dependent on command of a given portion of the whole quantity.
(5) The value of a particular good or of a given portion of the whole quantity of a good at the disposal of an economizing individual is thus for him equal to the importance of the least important of the satisfactions assured by the whole available quantity and achieved with any equal portion. For it is with respect to these least important satisfactions that the economizing individual concerned is dependent on the availability of the particular good, or given quantity of a good.11
Thus, in our investigation to this point, we have traced the differences in the value of goods back to their ultimate causes, and have also, at the same time, found the ultimate, and original, measure by which the values of all goods are judged by men.
If what has been said is correctly understood, there can be no difficulty in solving any problem involving the explanation of the causes determining the differences between the values of two or more concrete goods or quantities of goods.
If we ask, for example, why a pound of drinking water has no value whatsoever to us under ordinary circumstances, while a minute fraction of a pound of gold or diamonds generally exhibits a very high value, the answer is as follows: Diamonds and gold are so rare that all the diamonds available to mankind could be kept in a chest and all the gold in a single large room, as a simple calculation will show. Drinking water, on the other hand, is found in such large quantities on the earth that a reservoir can hardly be imagined large enough to hold it all. Accordingly, men are able to satisfy only the most important needs that gold and diamonds serve to satisfy, while they are usually in a position not only to satisfy their needs for drinking water fully but, in addition, also to let large quantities of it escape unused, since they are unable to use up the whole available quantity. Under ordinary circumstances, therefore,no human need would have to remain unsatisfied if men were unable to command some particular quantity of drinking water. With gold and diamonds, on the other hand, even the least significant satisfactions assured by the total quantity available still have a relatively high importance to economizing men. Thus concrete quantities of drinking water usually have no value to economizing men but concrete quantities of gold and diamonds a high
value.
All this holds only for the ordinary circumstances of life, when drinking water is available to us in copious quantities and gold and diamonds in very small quantities. In the desert, however, where the life of a traveller is often dependent on a drink of water, it can by all means be imagined that more important satisfactions depend, for an individual, on a pound of water than on even a pound of gold. In such a case, the value of a pound of water would consequently be greater, for the individual concerned, than the value of a pound of gold. And experience teaches us that such a relationship, or one that is similar, actually develops where the economic situation is as I have just described.
Taken From : PRINCIPLES OF ECONOMICS
