The Service of Individual Economic Value in National Economy (1*)The supreme principle of economic action being utility, value presents a means by which to grasp the utility of goods in a simplified and comprehensive manner, and so to control the employment of goods. Thus we have described the service of value in economy generally, in doing which we have assumed that value is estimated according to natural laws, and that we are concerned with the valuation of goods in stocks, or marginal valuation.
The return value of production goods and the cost value of products are likewise phenomena of natural marginal value. They afford us a simplified and widely comprehensive estimate of utility in the most complicated circumstances of production. The most heterogeneous kinds of production goods obtain a common measure of valuation through their common products: their return values are multiples of the value of the common marginal products. The most heterogeneous products receive a common measure of valuation through their common elements of cost; their cost values are multiples of the value of the common cost goods.
Different return values, or different cost values, bear the same relation to one another as amounts of goods which are multiples of the same unit. In this way it becomes possible to estimate these value relations in figures, although the value and the amounts of value have their origin in the incalculable intensities of want.
And yet, it is not this consideration that attracts our attention at this point. Now when we have pursued the main threads of the much-tangled web of productive combinations, first from the return up to the co-operating production goods, and then back again from the cost goods to the products, another consideration forces itself to the front: namely, that in any larger economy whatever, particularly in such a one as has the compass of a national economy, and is based upon a complicated system of production, it is quite impossible to dispense with value if we wish to have any clear notion of the utility of goods. A Robinson Crusoe does not require the aid of value; he can arrive at a right decision in every instance by simply testing what manner of treatment is likely to secure him the greatest amount of utility on the whole. In a national economy, on the other hand, with a complicated system of production, it is impossible in any way to make the necessary economic decisions by testing the utility of goods on the whole. No one can take in the total result of a community's production at a glance. There are too many goods, and too many possible employments of goods, to permit of making one survey of the whole, and one comparison on the whole. Things must be gone into individually; utility must be divided up, and every good have measured out to it its share in the total result; then only is it possible to recognise individually which are the poorer, which the more profitable, and which the best. But how otherwise is utility to be measured out to individual goods than by applying to them the methods of marginal valuation, the principle of which is, to give them that utility which is dependent on the smallest quantity of goods that is yet practically taken into consideration?
And, further, the economical employments of goods result from the relations of supply and demand. It appears then that it would be impossible to discover these economical employments if the amounts of supply and demand were not known numerically. But who knows the amounts of supply and demand in the widely-extended economy of a nation, or, indeed, in the world economy, the relations of which make themselves felt everywhere? Wholesale merchants of course try to make themselves acquainted with them, and do as a fact succeed in obtaining certain figures representing what comes from production, which are tolerably exact, especially as regards large production. But, on the other hand, it is almost impossible for them to obtain, with any measure of exactitude, the equally important figures of demand.
