The Ultimate Standard of Value [25]
it now be subjected to an import duty of fifteen dollars. The price must, of course, be high enough to cover this additional cost, and, therefore, will rise to eighty dollars, an amount which exceeds the elementary cost by fifteen dollars. Here we have two typical example of price variations, which will be found to include nearly the entire field of price phenomena, for there are at the present time very few products in which some patented machine or process, or some import duty on raw or auxiliary material does not play a part. It is now time to ask: What has our theory to say about the determination of these price of copper kettle, chemical products, coffee, etc.? It must offer some explanation of these facts, since they are of such frequent and general occurrence. It is also manifest that it cannot explain them in terms of the elementary cost of labor and abstinence, nor in terms of the value of these elementary factors of cost, nor by a reference to the disutility which may be associated with the same. The price of the copper kettle has advanced from fourteen dollars to eighteen dollars, and the price of coffee from sixty-five dollars to eighty dollars, not because, but in spite of the fact, that the elementary costs have remained unchanged at fourteen and sixty-five dollars. Again, in the case of our chemical product, if the price depended upon the elementary cost, it should not stop at six dollars but should sink to four dollars. It is equally clear that all these cases of price variations are subject to the law of cost and are actually effects of this law. It would, indeed, be a very serious sin of omission, on the part of economic science, to attempt an explanation why the present prices of the several commodities mentioned in our frustration are just eighteen, six and eighty dollars, without any reference to the characteristic circumstance that these prices represent the present cost to the entrepreneur, and instead, content itself, with a vague reference to the relation existing between the supply of, and demand for these commodities. The same considerations which in the past have forced us to supplement the general law of supply and demand through the more exact law of cost, make it necessary to so interpret the law of cost that it may include and explain the above variations in price. What now remains to be done? In our opinion, just that which the Austrian economists have endeavored to do. The conception of a historically reckoned cost must be brought face to face with the conception of a synchronously reckoned cost, and due importance must consciously be given to each of the two conceptions. Thee two conceptions may, indeed, be put side by side, but are in no sense interchangeable. For the solution of different problems in our science, both conceptions are necessary. It is even necessary to distinguish between the different varieties of the "historical" cost. For certain explanatory and speculative purposes, it is well to have in mind the disutility of labor. In other cases (as in estimating certain technical advances in production), it is the quantity of labor that we must consider. In still others, it is the value of the labor that we must inquire about. There is not, as Professor Macvane thinks, only one "true conception" of cost. Professor Patten, although his limitations are not entirely satisfactory, come much nearer the truth when he says that the competing concepts really belong to different branches of the theory, the one to the" theory of value" and the other to the "theory of prosperity."(44*) Again, we must not endeavor to find in the law of cost either more or less than the Austrian economists have found in it, namely, a universal law of leveling. And this is an influence which operate not merely upon certain final elements, but also at every stage of the productive process. There is a leveling or equating not merely of the final elements, labor and the disutility of labor, but also of productive goods and of utility with utility. This last takes place independent