The Ultimate Standard of Value [21]
through the money price which the public puts upon the finished product. This competition (Werben) is extended over as many parts of the general market as there are different kinds of products. But this competition, though widely diffused and indirect, eventually results in the establishing of a certain market price for the productive power. This market price of the productive power appears in each single branch of production as the cost of the same. It operate like a speaking trumpet through which the supply price in other and distant parts of the general market is made audible in the part where we are situated. Those interested in one part are notified of the conditions which obtain in the general market and are thus enabled to govern their actions according to these more general conditions. Let us now return to our example. We will assume that, in the general field of production or employment, the market price of the product of a day of common labor, and thus the wages for a day of such labor is eighty cents. We will also assume that in some special departments, as cotton manufacturing, because of some unfavorable combination, the value of the product of a day's labor has fallen to sixty cents, while at the same time, the wages of labor being eighty cents, the cost of production is eighty cents. What is the meaning and effect of this rate of cost of eighty cents? It does not mean that the laborer cannot live on less than eighty cents; or that the labor involves a degree of disutility which he will not endure for less than eighty cents. It means, and that quite clearly, that there are enough people in the world who will give eighty cents for a day's labor, or for the product of the same, to keep all the productive power active, and therefore that it would be foolish to ignore this offer, and employ the productive power in the service of people who are able and willing to pay only sixty cents for a day's work. Let us now assume, that in the woolen industry the product of a day's labor, through some favorable combination, is worth one dollar and twenty cents, while the cost is only eighty cents. This is clearly nothing else than advice to those interested, that in the general field of employment a day's labor cannot obtain more than eighty cents, and therefore that it is wise to listen to the favorable offer that we have been ignoring, namely, the offer of those people who are willing and able to pay for the product of a day's labor in the woolen industry, not indeed all of one dollar and twenty cents, but something more than eighty cents. This advice bears fruit through the action of the watchful self-interest of the entrepreneurs. In obedience to the law of cost it levels the abnormal price of sixty cents and one dollar and twenty cents, that prevail in different parts of the general market, to the normal price of eighty cents. This means nothing more than the bringing about of that disposition of the productive power, which insure that the best paying wants shall always be satisfied first. At the outset, according to our illustration, those needs whose money marginal utility was between eighty cents and sixty cents were satisfied, while those whose money marginal utility was between eighty cents and one dollar and twenty cents remained unsatisfied. Eventually a readjustment is effected so that everywhere and in all branches of production, the productive power is employed in the service of the best paying wants. This take place successively from the highest down to those whose money marginal utility is eighty cents. We may conclude then, that in this and in all similar case the law of cost has no other function than to bring all products of equal origin into line with each other. The self-evident proposition that the same product, on the same market, at the same time, must have the same value or price, is extended by the law of cost a step further, and gives us the proposition that products of like origin must have the same value or price. But how high this value or price will be, neither proposition informs