The Ultimate Standard of Value [26]
of, and ofttimes in direct opposition to the influence of the final elements. Why, in our example of the copper kettle, does the price rise from fourteen to eighteen dollars? Simply because through the common cost it can and must be leveled to the price of the other commodities produced from copper, i.e., in this case to the price of the strongly demanded copper wire. But why have prices in the entire copper business advanced? Because, and in so far as, through the increased demand for copper, the marginal utility of this material has been raised. It is, therefore, an increase in utility and not in disutility, that here in the guise of cost dictate the advance of the price. The numerous instances of this kind which at once suggest themselves to the reader, confirm our earlier judgment of the important part which, under modern economic conditions, utility plays in the determination of cost. It is a curious fact that the objection has been more than once advanced, that the Austrian economists have closed their eye to the rich treasure of insight and knowledge which the great law of cost affords;(45*) and that they have disdained to avail themselves of its help in the explanation of the phenomena of value. In reality as we have endeavored to show, the reverse of this is true. So anxious are we to coin the whole of this treasure, so strong is our desire not to neglect or discard one particle of the help which it offers us, that we object to a misleading interpretation of this law, an interpretation which would compel us to ignore the greater part of its influence. The character of the facts as well as the necessities of the science force upon us, as we believe, with equal imperativeness, the other universal concept, the concept which the Austrian economists have made their own, and whose essential feature I will in conclusion recapitulate. The variety of meanings that have attached themselves to the word cost have been the source of much confusion. There is, for instance, the cost, which, in the sense of the great empirical law of cost, operates as the determinant or regulator of price. To identify this either directly or indirectly with the personal sacrifice, laboriousness, pain or disutility that is imposed upon us by labor or abstinence, is an actual misunderstanding. The "cost" of the law of cost is not the name of an elementary factor. It is a designation applied indifferently, according to the special circumstance of the case, either to sacrifice utilities embodied in goods, or to personal discomfort or pains, i.e., either to utilities or to disutilities. The law of cost is always in the first instance a simple leveling principle. In order to determine what elementary forces are included under this title, we must inquire what it is, that under the name of cost, brings about this leveling. We then find that at first the marginal utility of one product is leveled to the marginal utility of other products, that are produced from the same cost good (raw material, machine, etc.), or it is a leveling of utility with utility. In most cases this leveling process not only begins but ends here. Only occasionally, under quite definite casuistic assumptions, is the leveling process carried a step further, and the utility of the good itself brought into equilibrium with the disutility endured by the producers. In this limited number of cases the general law of cost become a special law of disutility. The independent character of this law is shown by the fact, that while its domain is very limited, yet in one direction it extends beyond that of the classical law of cost.(46*) What then is the "ultimate standard" for the determination of the value of goods, in the search for which, men have been as indefatigable during the last one hundred years, as they formerly were in their endeavors to square the circle. If we wish to answer this question in a single phrase, then we cannot choose any less general expression than "human well-being." The ultimate standard for the value of all goods is the degree of well-being which