Page:The Economic Journal Volume 1.djvu/137

 Rh the value of an item by marginal utility. A wealthier purchaser therefore, whose need is equally insistent, will be able to afford a higher price, since he in his pecuniary estimates will equate with the same value in use a larger sum of money. In practice, however, even the wealthiest of purchasers will consent to this higher price only if he must do so in order to keep off less wealthy bidders, who else could take the goods out of the market. Yet if so much of the commodity is offered, that even for lower bidders something is left over, the price must be adjusted to their estimates, in order that everything may find a sale; and then, since the price in the same market is the same for all buyers, the bidders of greater purchasing power pay less than what they by their estimates of money and goods were ready to give. The more goods there are, the deeper must be the strata of population having lower money-estimates of goods, who are thereby admitted to purchase. That money-equivalent, which obtains with the last group of buyers thus admitted for the last item bought (viz., of a commodity of which a number is always bought), and which determines the price, we may call the marginal equivalent.

Thus we see exchange value and price following the law of margins like value in use, with this qualification, that they are determined directly, not by marginal utility but by marginal equivalence, in which, not only supply and demand, but also the wealth of the purchasers is taken into account. Rare articles of luxury, e.g., precious stones, fetch very high prices, because the rich contend for them with the poor and the richest with the rich. Stock goods supplied for imperative needs command very low prices, corresponding to the purchasing power of the lowest strata of the population. According to the economic stratification of any given nation, we may reproduce in terms of money the marginal utility of stock commodities by a very low equivalent, and that of articles of luxury by a very high equivalent. Hence from prices as such we can draw no inference whatever as to the national economic significance implied by commodities, in virtue of the relation of their supply to need as such; the picture they reveal is distorted, because it is unequally projected. Prices cannot be taken without qualification as the social expression of the valuation of commodities; they are the results of a conflict waged over those commodities, in which power besides need, and more than need, has decided the issue. Production follows prices.

That which can be sold dear is produced more eagerly at greater cost in larger quantities. To this extent is our production diverted from its purely economic