The Ultimate Standard of Value [7]
scale or standards. If we attempt to verify the law of cost, with reference to these other methods of measuring costs, we soon come to grief. It is very clear, for example, that the "law of cost," in the sense that the price tends to conform to the quantity or duration of the labor expended, will not hold good. To prove this, we need only advert to the simple fact that the product of a day's labor of a machinist or cabinetmaker is much higher in value than the product of a day's labor of an ordinary ditch-digger. This holds good, not only for the difference between skilled and unskilled labor, but also for the less pronounced differences that exist between the various groups or grade of common labor. The well-known doctrine of the socialists, which bases all value upon the quantity of labor expended, must either do violence to the facts or be untrue to itself; and this entirely independent of the fact that it ignore the cost element-abstinence. When, for example, Marx concedes that skilled labor must be translated into terms of common average labor, and so, for the purposes of estimating cost, must be regarded as some multiple of this common average labor, he is only verbally faithful to the proposition that the duration of labor is the true measure of cost. As a matter of fact, he makes, the value of the labor expended the measure of the cost. Our investigation becomes far more difficult when we come to consider the fourth of the above enumerated meanings of the word cost; this meaning understands by the word cost, the sum of the pains or disutilities which the laborer must endure in production. This brings us to the cardinal point of the whole question, a point, however, which require the most careful investigation. It is quite conceivable that the correspondence which we have already noted between the value of freely reproducible goods and their synchronously reckoned cost, and again between that value and the value of the labor expended, may extend to a third member. In this case the law of cost would be true in a threefold sense. To establish this it would be only necessary to show, that the value of the labor corresponds with reasonable accuracy to the amount of pain that the laborer endure. Such a correspondence actually occurs under a certain definite assumption. This assumption depends upon the facts, first, that the pain of labor increases with its duration, and second, that the labor is continued until the pain of the last increment of labor (Arbeitstheilchen), say the last quarter of an hour, is in exact equilibrium with the marginal utility of the product of that final increment of labor. In this event we have here a common rendezvous for our several items -- the utility of the product, the pain endured by the laborer, the value of the labor, and finally the value of the product. Let us illustrate this by an example. We will take a man engaged in one of the ordinary trades, say a cabinetmaker or a locksmith. A certain amount of money, say five cents, which he obtains for a quarter of an hour's labor, has for him a definite value. This is determined by its marginal utility, or by the importance of the last need which he is in a position to satisfy through the outlay of five cents. Now, according to well-known principle, about which my English and American colleague and myself are in entire agreement,(16*) this marginal utility will be smaller, as the daily pay of the laborer increases. It will, for instance, be smaller when the laborer receive two dollars and forty cents for twelve hours of work, than when he receives one dollar and sixty cents for eight hours of work. Again, according to equally well-known principles, about which there is a no less complete agreement among all parties to the controversy, the fatigue and strain of the laborer grows with the increase in the duration of labor. Other thing being equal, the tenth hour of labor is unquestionably more fatiguing than the third or sixth, and a fourteenth or an eighteenth would certainly be still more fatiguing. Now, since