The scarcity which we are now discussing is such a limita tion in the number or quantity of objects that not all desires can be met then and there by the amount of goods available. In the numberless cases where some desires are not met or are only partially met, we are under the necessity of mak ing a choice as to which desires shall be met. This involves a choice—and therefore a comparison—among things.' § 4. Valuation. If we choose one thing rather than an other it is plain that for us the first thing has the greater importance. For one cause or another (instinct, training, ex perience, imagination, judgment) it weighs more in the scale of our choice than the thing which is rejected. Now in our daily life we are constantly making comparisons of this sort 1 See note on Aspects of things chosen, at end of chapter.
2 See note at end of chapter on Various meanings of scarcity.
between things. Few of us—if any—are able to secure all the things which we desire. We are under the necessity of choosing among the various possibilities. We are, therefore, under the recurring necessity of comparing one thing with another, and in so doing, we assess or estimate one thing in terms of the quantity of the other thing. Such an expression of the importance of one object of choice in terms of another we may call a valuation.
A comparison of this sort between things may take the form of a mere vague prefer ence without any exact quantitative expression of the degree to which the one thing is more important to us than the other. (Fig. 1.) We prefer one object, X, to another object, Y, with out attempting to express even to ourselves the exact strength of the preference. On the other hand, our valuations may and usually do take the form of definite mathematical ratios. In the early American fur trade, for example, a beaver skin came by convention to be used as a unit in terms of which the relative importance of other things (e.g., other furs, food sup plies, etc.) was expressed. The other things were measured as multiples (or fractions) of the unit.
Suppose, now, that in a similar way, we were to take a num ber of things, X, Y, M, N, 0, P, and Q (taking, of course, a definite amount and grade of each) and were to make an exact estimate of their respective degrees of importance. The accompanying diagram may be used to express in a griphic way the mathematical relations of the impor tance of any one expressed in terms • The dotted valuation line ab drawn through and above y indicates that the valuation of x is greater than that of y, but the degree of the difference is left indefinite.
of any one of the others. As a matter of convenience we may settle upon a particular one, Q, as a common unit for express ing or measuring the importance of each of the others in turn. This, in fact, is exactly what the fur-traders did. And we do the same in our use of a monetary unit as our standard for the expression and comparison of the relative importance of things.
Viewed as the reflection of an act of choice, a valuation of goods appears to be a very simple fact. Yet underlying this simplicity would be found ordinarily a number of complex motives. Each valuation is a focus of many influences, a re sultant of many conditions, some in the environment, and some in the nature and in the feeling of man. According as there is more or less of the various things to choose, and ac cording as the person is more or less hungry or tired or cold or elated or downcast, any particular object may appear to be more or less important, may thus have a greater or less valuation.
§ 5. One's own labor as a valuation unit. A valuation involves more than a comparison between external objects. Often one's own labor is brought into the comparison. Choice frequently has to be made with reference to the lim ited strength and time of the subject, his laboring force. Here there is a twofold comparison ; a good is compared with the labor required to secure it as well as with another good. When we are face to face with nature, and goods are to be secured only through our own labor applied to various materials, we are likely to estimate things habitually in terms of our own labor. Labor may under these circumstances become a com mon unit for the valuation of external things.
§ 6. Crusoe 's scale of valuations. The economy of Rob inson Crusoe serves to illustrate the problems which the indi vidual has to solve when the relation is between man and na ture, and not between man and man.
The unfailing interest which old and young find in the story of Crusoe is largely due to the convincing naturalness of the tale. Each reader feels that he would have done just the same things in just the same order, if he were in the same plight and had been cast ashore as the story relates.