The Ultimate Standard of Value [8]
the marginal utility of every five cents added to the pay of the laborer is, less than the utility of the last preceding five cents, and since with each additional quarter of an hour of labor the pain increases, there must come a point where the two will meet or be in equilibrium with each other, it is also undoubtedly true that when the laborer is entirely free to determine the length of his labor day, he will continue his labor until this point of equilibrium is reached. He will work nine and one-half hours when and because to his mind five cents is just sufficient indemnification for the disutility of the thirty-eighth quarter-hour of labor, but not sufficient for the somewhat greater disutility of the thirty-ninth quarter hour. This point of equilibrium will, of course, vary for different laborers. A laborer, for instance, who must provide for a large family, and to whom the addition of five cents means the satisfaction of a quite important want, will be inclined to work longer, as will also a strong, vigorous laborer, who feels less fatigue from this labor. On the other hand, the sickly or lazy laborer, or the one who has fewer, or less pressing wants, will stop at an earlier point. He will prefer a longer period of leisure to the increased amount of wages, which he would have obtained had he continued to work. It is just as manifest that, other things being equal, the point of equilibrium will vary for one and the same laborer, according to the amount of the wages which he will receive for the additional quarter hour. A laborer who would work thirty-eight quarter hours, for five cents per quarter hour, would perhaps work forty-two quarter hours, if he could obtain seven and a half cents per quarter hour, while if he received only two and a half cents, he might only work thirty quarter hours.(17*) Or the number of hours of labor and the degree of fatigue, which the laborer will endure, will vary with the rate of wages. Upon what then, under the above assumption, will the rate of wages (in other words the value of the labor) and the value of the created products depend? For the simple conditions of a Robinson Crusoe this question is already answered. The value of the goods produced, which for a Crusoe have no price, but merely a objective value, will equal their marginal utilities to him. Since the product constitute his wages or the recompense for his labor, the rate of wages or the value of his labor is identical with the value of the product. Finally, Crusoe, as a reasonable being, will continue his labor to that quarter of an hour, the disutility of which will be exactly counterbalanced by the utility of the goods produced in this quarter of an hour. All four of the items which we have been considering would then be equal. Value of product-value of labor-marginal utility-pain of labor. If it is asked: What, in this case, are the factors that determine the value of the product? We must reply that "utility" and "disutility" are here of equal importance. The utility of the goods produced and the pain of the labor undergone. This point of equilibrium by which the marginal utility, and therefore the value, is determined, is in reality the marginal point for both utility and disutility. We might therefore, in this case, say with Professor Marshall, that, in the determination of value, utility and disutility, or pleasure and pain, work together like the two blade of a pair of shears. Though essentially the same thing, the matter take a somewhat more complicated form, when we turn to the consideration of a laborer in our actual economic world; still assuming of course that the laborer is free to continue, or to terminate his labor when he please. Here also, the value of the product will equal the value or wages of labor. This will be true, even though the laborer does not receive his reward directly in the form of the created product, but receives a certain money consideration, in lieu of his share of the product. When competition has done its work, and forced the value of the product down, until