It will be interesting to notice what happens if the settler by some accident loses one of his three cribs. He is no longer in position to supply all of the wants for which the three cribs would have provided, and he will natu rally decide to do without the chickens and pigs, utilizing the two cribs for family use and as feed for his team. The initial utility is io as before ; the final utility is now 5. The total utility is 15. Since neither of the two cribs will be used to satisfy a less want than 5, and since neither of the two can be valued at more than 5 so long as they are interchangeable, the value or effective utility of each crib is 5, and the value of both is 2 x 5, or io. In this case a diminution of the supply has actually increased its value, though it has diminished the utility by 3. Value is derived from utility, but it does not equal it save in the exceptional case where initial and final utility are identical. If the settler had but one crib, or if the two wants satisfied by the two cribs were of equal intensity, the final utility would be equal to the initial utility, and the sum of utilities would be the value of the stock. Wherever utilities follow the ordinary law of a diminishing scale, it is final utility, or the utility of the last incre ment which the consumer is in position to enjoy, that is significant in determining value.
In the illustration we have thought of a single consumer and of a single commodity. We may transfer this conception of final utility to the entire consumption of a typical consumer. There are many goods which he is in position to enjoy, and he will consume them in very di verse quantities. Each good will begin with an initial utility somewhat higher than the margin of consumption,' and will fall as its supply is increased until its final utility is similar to that of other commodities consumed. The last incre ment of any article which the consumer thinks it worth while to possess has a utility lower than that of any previous increment, and this is known as the final utility of that particular commodity. At this point utility and value are equal. The utility of this particular increment determines the value of the entire supply of that commodity. Each of the earlier increments has a value equal to the final utility, and the value of the entire stock is found as before by multiplying the final 1 See Chapter V.
utility by the number of units in the supply of the consumer.
If in this way the value of all the commodities which fall within the margin of consumption is ascertained, their sum will express the aggregate effective utility of all the goods which at the given time the consumer has at his disposal. This would fall far short of the total pleasure or bene fit which he will derive from their consumption. It will express only the extent to which his wel fare is affected by the possession of these par ticular goods — their cost to him as a consumer, their final utility, or their value.
There is no reason why this summation could not be extended to cover the - aggregate con sumption of the entire community. Value is not merely a ratio, as has sometimes been said ; it is a sum of final utilities. The fact that final utilities are often compared for purposes of ex change, and their relation expressed in price, which is a ratio, should not blind us to the fact that value is primarily a mental estimate of the importance of goods to human welfare ; and that we may think of, if not accurately calculate, the total importance of all the goods at the disposal of society. Values, like utilities or costs, may rise and fall. Whether they will do either is determined by all the varying influences which affect either the wants of man, or the extent to which at any given time those wants are sup plied.
If consumers have but few wants, and those are satisfied almost to satiety, the goods which they consume will have little value as a whole, notwithstanding their abundance. The final utility, which is the multiplicand in determining the value of the supply of each article, is small, and the number of articles whose joint value is in question is also small. If a community has a great diversity of wants and is in position to satisfy each, even to a very limited extent, it will be in a more favorable position. The final utility of each article will be nearly as great as its initial utility, and the number of articles will be large. It is probable that the absolute amount of several of the articles which entered earliest into the consumption would also be great, as there is always considerable difference in the initial utility of different elements of the consumption, and large quantities of some of the more generally coveted commodities will be desired before any beginning is made on others.
Industrial progress extends the productive power of society, enabling it to satisfy existing wants more fully. This process constantly lowers the final utility of the articles demanded, and the decrease in cost is roughly followed by a decrease in value. Social progress of the kind that elevates and diversifies human desires affects final utility in an opposite direction. It diverts the productive energies into new directions. The multitude of new desires crowd upon the older wants which were so fully satisfied, and will often prove to be of so great intensity that the consumer will sacrifice a portion of the older enjoyments to obtain the new satisfactions. Thus the scholar will go hungry or naked to secure a precious book or manuscript. This brings about a readjustment of the margin of consumption at a point which gives higher final utility to all commodities, and adds to the num ber of commodities included. The value of each may be increased by the rise in its final utility, and their individual value is no greater than before the total values are increased by the addition of new commodities.