THE PRINCIPLE OF PROPORTIONALITY 1 1. The principle of proportionality; its general nature. f 2. Cost and sacrifice defined. f 3. Sacrifice of effort a matter of proportion.
4. Sacrifice involved in common use by several users. I 5. Gross and net uses. # 6. The doctrine of separable uses. f 7. More intensive utilization. I 8. More extensive utilization. f 9. Application of comple mentary agents at the two margins. f 10. The principle of proportional ity in agriculture. f 11. Intensive use of ground space. 1 12. Intensive use of tools and machinery. § 13. Intensive development of water power. f 14. Bearings of the principle.
§ 1. The principle of proportionality; its general nature. In what has been said in regard to scarcity as an element in value (Chapter 2) it was implied that value invol es, in the simplest case of direct or immediately enjoyable go ds, a cer tain proportionality between goods and the desir of men. The more abundant are goods, relative to the desire for them, the less is their value. Similarly, in connection with the prin ciple of evaluation (Chapter 4), we encountered, in the rela tions between the stimuli and the reactions of the nervous system, a certain quantitative relation, or principle of pro portionality. In the whole process of trade, also (Chapter 5, Trade by Barter), which is the adjusting of a ratio between two or more goods in a group of traders seeking to buy and sell, an element of proportionality is plainly involved. And still later (in the last three chapters, 9-11) in discussing the improvement of productive processes we have touched upon the important problem of proportionality in the use and de velopment of indirect agents. We saw that the development of new inventions, new processes, etc., was largely a matter 122 of bringing things together in the most effective way—that is, in the best proportions for the accomplishment of certain physical, mechanical, chemical, or other desired technical results.
§ 2. Cost and sacrifice defined. In our evaluations there are usually certain negative items variously referred to as cost or as sacrifice. In its broadest sense cost may be defined as that which must be given up to get another thing. This is its original, and still general, meaning. This would in clude, on the one hand, sacrifices of a purely psychic nature —disappointments, regrets, etc., caused by doing or by giving
up a thing; and, on the other hand, the prices of things— whether expressed in money or in other goods. Usually, however, in business the word cost is given a more specialized meaning, and we shall take this in order to distinguish it from price in general on the one hand, and from sacrifice on .1 the other. In this narrower connotation co t means the out lay (considered as a business expense and ex reseed in money terms) which a person must make in orde to obtain a cer tain product from goods. Sacrifice may be defined as that less definitely measured, psychic, alternative good (whether of enjoyment or of freedom from effort) which must be given up to get another good. Finally, price is the good surren dered in a trade with another person.
Sacrifice is involved in every choice and in every price in barter or sale; but cost, in this business man's sense, only when the outlay for a good up to date is compared with its value or with its selling price.
§ 3. Sacrifice of effort a matter of proportion. In the case of complementary agents (see Chapter 4, section 5) the valuation of each in any particular use is constantly affected by the valuation of the other. This always involves a prob lem of proportionality. The simplest case is presented by the use of one's time and labor in getting enjoyment from a direct good. The sacrifice of time and labor are outlays which have to be balanced against the gross or total advantage af forded by the good. It is a sort of offset or deduction, and the real or net service or psychic income is the resultant of the action of the two complementary goods, the man's effort and the material object. A piano is capable of being played upon steadily for twenty-four hours a day, but the player be comes weary after two or three hours, and values the uses of the piano for the rest of the day at zero. These uses must go for nothing if the piano is not played, but they are to be realized at too great a sacrifice. A case of this kind is pre sented whenever any durable agent in the owner's hands is capable of affording additional uses which as a matter of fact are not availed of. Such uses lie beyond the boundary of economic utilization, for the owner has not the time to use them—or the energy, or the present desire.