The Paradox of Value Assume that a man owns one good, and that the employment of it gives a utility equal to 10; and suppose that his holding gradually increases up to 11 goods, in the course of which the marginal utility decreases proportionally down to 0. The value of the stock at each point will be as follows: --When he hasThe value is =1 1 x 10 10
2 2 x 918
3 3 x 824
4 4 x 728
5 5 x 630
6 6 x 530
7 7 x 428
8 8 x 324
9 9 x 218
1010 x 110
1111 x 0 0
goods units of value Here a regular decrease of the marginal utility, and, therefore, of the value of the single good, is seen to take place along with an increase of the supply, and further explanation is unnecessary. Each additional good brings with it a diminished increment of utility and must, therefore, bring only a diminished increment of value. It is otherwise when we consider the value of the whole stock, and follow its development from 10 up to 30, and back again from 30 down to 10 and 0. Judged from the standpoint of that aspect of value with which daily economical life impresses us, this scale seems completely paradoxical. Value is commonly regarded by us as a simple and absolutely desirable characteristic of goods, mathematically expressible as a positive amount. It corresponds with this view when the series shows an increase of value along with the first additions to the stock, but it entirely contradicts it when, towards the end of the series, every further addition to the stock is accompanied by a corresponding decrease in value, until, finally, when the point of superfluity is reached, value completely disappears. Whence comes this contradiction? How is it to be explained? The first half of the series appears to confirm the view that value is something desirable, something positive, while the second shows it as a negative quantity, something burdensome or evil. Which then is true? And how can both ever be brought to agree?
Very easily, so soon as one gives up the preconceived notion that value is a simple positive amount. Value (as marginal value)arises from a combination of two elements, the one positive, the other negative. It is a complex amount; or, more exactly, a residual amount. So soon as one distinguishes between these two elements in the formation of value, the series we have just drawn above explains itself in the simplest manner possible; and the semblance of irregularity, which must have proved insuperable for those who expected and sought a simple progression, disappears.
Both elements in the formation of value have been explained by what has already been said.
The positive element is the enjoyment in the use of goods.
Every additional use which is furnished by a newly-acquired good is welcome. The good which is first acquired brings the largest increment of utility because it satisfies the most urgent stage of desire; every one that follows has a lesser utility because it meets a desire which has been already comparatively satisfied.
And should the accretion of goods cross the margin of want, there will be no addition to the positive element in the formation of value. There will now be no employment for additional goods; they will not bring enjoyment to any one.
Taking the former figures, the increment of the positive element in value will be as follows: --Withthere will be 1 1029
38
47
56
65
74
83
92
101
110
goods units of goods And the total amount of this positive element, calculated for the whole stock, will be as under: --WithThe total enjoyment is 1 102 19 (10 + 9)
3 27 (19 + 8)
4 34 (27 + 7)
5 40 (34 + 6)
6 45 (40 + 5)
7 49 (45 + 4)
8 52 (49 + 3)
9 54 (52 + 2)
10 55 (54 + 1)
11 55 (55 + 0)
