If I can measure the 'sacrifice,'can I measure the 'utility'which it gains?The 'utility'of an ounce of gold is not something 'objective'like its physical qualities,but varies with the varying wants of the employer,Iron or coal may be used for an infinite variety of purposes and the utility will be different in each.The thing may derive part of its 'utility'from its relation to other things.The utility of my food is not really separate from the utility of my hat;for unless I eat I cannot wear hats,my desire for any object,again,is modified by all my other desires,and even if I could isolate a 'desire'as a psychological unit,it would not give me a fixed measure.Twice the article does not give twice the utility;a double stimulus may only add a small pleasure or convert it into agony.These and other difficulties imply the hopelessness of searching for this chimerical unit of 'utility'when considered as a separate thing.It shifts and escapes from our hands directly we grasp it.Ricardo discusses some of these points in his interesting chapter on 'Value and Riches.'Gold,he says,may cost two thousand times more than iron,but it is certainly not two thousand times as useful.33Suppose,again,that some invention enables you to make more luxuries by the same labour,you increase wealth but not value.There will be,say,twice as many hats,but each hat may have half its former value.There will be more things to enjoy,but they will only exchange for the same quantity of other things.That is,he says,the amount of 'riches'varies,while the amount of value is fixed.This,according to him,proves that value does not vary with 'utility.''Utility,'as he declares in his first chapter,is 'absolutely essential to value,'but it is 'not the measure of exchangeable value.'34A solution of these puzzles may be sought in any modern text-book.Ricardo escapes by an apparently paradoxical conclusion.He is undertaking an impossible problem when he starts from the buyers'desire of an 'utility,'therefore he turns from the buyers to the sellers.The seller has apparently a measurable and definable motive --the desire to make so much per cent on his capital.35Ricardo,unfortunately,speaks as though the two parties to the bargain somehow represented mutually exclusive processes.'Supply and demand'determine the value of 'monopolised articles,'but the cost of other articles depends not 'on the state of demand and supply,'but 'on the increased or diminished cost of their production.'36Why 'not'and 'but'?If supply and demand corresponds to the whole play of motives which determines the bargain,this is like saying,according to the old illustration,that we must attribute the whole effect of a pair of scissors to one blade and not to the other.His view leads to the apparent confusion of taking for the cause of value not our desire for a thing,but the sacrifice we must make to attain it.Bentham 37said,for example,that Ricardo confused 'cost'with 'value.'The denial that utility must in some sense or other determine value perplexes an intelligible and consistent meaning.
It is clearly true,upon his postulates,that the value of goods,other than 'monopolised,'must conform to the cost of production.He speaks as if he confounded a necessary condition with an 'efficient cause,'and as if one of two corrective processes could be explained without the other.
But the fact that there is a conformity,however brought about,was enough for his purpose.The demand of buyers,he would say,determines the particular direction of production:it settles whether hats should be made of silk or beaver;whether we should grow corn or spin cotton.But the ultimate force is the capitalist's desire for profit.So long as he can raise labourers'necessaries by employing part of his capital,he can employ the labour as he chooses.He can always produce wealth;all the wealth produced can be exchanged,and the demand always be equal to the supply,since the demand is merely the other side of the supply.The buyer's tastes decide how the capital shall be applied,but does not settle how much wealth there shall be,only what particular forms it shall take.Somehow or other it must always adjust itself so that the value of each particular kind shall correspond to the 'cost of production.'The cost of production includes the tools and the raw materials,which are themselves products of previous labour.