§ 3. The principle of substitution. Substitution of goods in the simplest case occurs where an individual is distributing two or more goods or kinds of goods to different uses. His object is to gratify his desires to the maximum, by economiz ing the more valuable goods and making the less valuable goods serve some of the same purposes. This may be ex pressed as a general principle of substitution as follows: goods of kinds and of grades the most valuable are applied to the more urgent uses they are capable of meeting, and less valu able goods are brought in to take their place (substituted) up to the point where the value of each use and the value of the good applied to it are equal.
No grade can be said to be the cause of the value of the others. There is an independent reason for the attaching of value to each grade of goods. Each grade would have value if there were none of the other. But they mutually affect each other's value when they exist side by side. The value of each is lessened by the presence of the other. And thus two or many grades constitute for many purposes a single group of goods which shade gradually into each other by the shifting of choice.
§ 4. Substitution of like and of unlike goods. The cases of substitution most easily called to mind are between goods very nearly alike in physical nature and used for the same general purpose : cotton and wool for clothing; fish and ven ison, or peaches and pears, for food; candles and petroleum for light; stone, brick, and wood for house building; horses, mules, and oxen for hauling. But cases may be found which range in almost unbroken series in either direction—towards the substitution of practically like goods on the one hand and towards the substitution of most unlike goods on the other. One may go without overshoes to get books, without candy to go to the theater, without adequate food to get an educa tion.
problems of valuation. A group of complementary goods is valued as a whole; but if one part is missing the rest may be worth nothing, and a part may for the moment be worth as much as the whole. If a good in one of its possible uses is highly complementary, perhaps indispensable to another good, it will be valued for that use, and a substitute found in other uses. Economics is full of problems of complementary goods.
Some of these occur in the use of enjoyable goods, and still more occur in production by means of complementary agents, the consideration of which must be postponed till later in our study.
§ 6. Changes of desires and of valuations. Choice is con stantly being affected by changes within men (subjective) as well as by changes in the objective conditions. Desire is con stantly shifting; different kinds of goods are at every moment being revalued according to the new conditions. The use of one unit of a good causes the valuation of the remaining por tions to drop down the scale for the next moment. When we rise in the morning, we desire breakfast; the breakfast eaten, another breakfast does not appeal to us. Our tasks done, we take a boat ride or go golfing; then, appetite returning, we are tempted to our dinner. And thus from hour to hour de sires are gratified, are altered, and are shifted, until, wearied with the day's labors and pastimes, we go to rest. No impres sion on the nerves or on the senses is lasting. The "con sciousness" is not a state; it is a ceaseless process. Man's senses were evolved for the purpose of bringing him into rela tion with the outer world, of enabling him to survive in his struggle with the forces of nature. When a choice occurs, the corresponding desire falls for that particular moment, it may be even to zero. To keep desires satisfied is impossible. De sires recur for the same reason that they first arose. If they did not there would be no motive for action. We can not do next week's reading or next week's eating now. The best re sults in reading or eating come from taking the right amount day by day. In a well-ordered life, in an advanced, economic society, the means for gratifying desires as they arise are pro vided in advance. The changing series of desires is met by a changing series of goods. Life has been defined as a constant adjustment of inner relations to outer conditions. Economic life is therefore like physical life, a constant adjustment; and this adjustment of goods but reflects the shifting and adjust ment of feelings.