I do not find that I am usually disposed to sacrifice a greater future pleasure for a less present pleasure; and I find among my acquaintances others who believe themselves equally free from improvidence. We all discount "future goods" in some sense, of course; for example, we all frequently give up $1.02 next year in favor of $1 this year; but that is not to be identified with discounting future pleasure and pain unless it be shown that $1.02 of next year means more pleasure or more relief from pain than $1 of this year. Note that I do not say that nobody discounts future pleasures and pains constantly or that the most provident of us discount them never: I say only that many people do not discount them usually, and that therefore it is hard to believe that the true conception of the principal is two lots of goods or services on which are dependent equal amounts of pleasure or relief from pain on the part of any particular person or group of persons. Finally, then, are the two lots constituting the principal to be conceived as equal in value? After our examination of the other two conceptions, this one seems more like the truth. Yet it is not without its difficulties. It is, indeed, contrary to a principle generally accepted as fundamental for all economic thinking and expressed as a definition of value by many writers, including J. S. Mill, Walker,1 Carver,1 and 1 1 T. N. Carver: The Distribution of Wealth, Macmillan & Co., N.Y., 1904, p. 2: "In Walker's brief but excellent phrase, 'Value is power in exchange'; and as Mill defines it, the value of a thing is 'its general power of exchanging; the command which its possession gives over purchasable commodities in general.' Either definition expresses the whole meaning of the word value." The quotation from Walker Davenport.1 I mean the principle that "value is power in exchange." The lot of today and the lot of ten years hence that would constitute the principal of a loan for that time are obviously very unequal in "power in exchange," for the latter cannot be exchanged for the former unless a good deal of what we call interest is thrown in to boot. We must therefore give up either the idea that the two lots of goods or services constituting the principal are equal in value or the principle that value is always power in exchange; for the two are flatly inconsistent. § 9. This short analysis suffices, perhaps, to show that interest does present a difficult problem and that the problem involves a fundamental aspect of the conception of value itself, the heart of all economic theory. Of this problem I shall offer now what seems to me an essentially correct, though doubtless very imperfectly developed, solution. is from his Political Economy, Part I, § 8; that from Mill, from his Principles of Political Economy, Book III, Ch. 1, § 2. 1 H. J. Davenport: Value and Distribution, Univ. of Chicago Press, 1908, p. 569. Davenport there defines value as "a ratio of exchange between two goods, quantitatively specified." CHAPTER II SOME DEFINITIONS AND FUNDAMENTAL CONCEPTIONS § 10. The object of all economic acts is increase of pleasure or decrease of pain. Its opposite is decrease of pleasure or increase of pain. The first group of alternatives I shall call in this book simply pleasure, the second group simply pain. on Pleasure is dependent primarily on nature, but it is dependent also — and this is what concerns men practically, and therefore what concerns economics human efforts and on an interval of time1 between these efforts and the enjoyment of the pleasure dependent upon them. Up to a certain point efforts may be pleasant in themselves. This point is soon reached, however, and beyond it efforts are painful. To work in my orchard half an hour a day in good weather and when my interests do not call me elsewhere may be distinctly pleasant; but to work in it nine hours a day every working day of the year, or even every day when it urgently needs attention, is certainly somewhat painful. By the words pain and painful here I mean to cover not only the positive pain which must begin and increase as efforts 1 This point about an "interval of time" anticipates part of my theory which I cannot conveniently develop in the present chapter. The point will be duly supported in Chapter IV, § 37. are continued beyond a certain point, but also the negative pain, as we might call it, involved in the cutting down, by such continuance of efforts, of the time 1 available for positive enjoyments. Efforts painful in themselves may be the cause of pleasure later. The ninth hour of the day in my orchard is painful in itself, yet it may be the cause of increasing or improving my crop of apples; and the extra size or number or quality of the apples may give me pleasure when I come to eat them or to consume what they bring me in exchange at the market. At what point, then, will men naturally discontinue their efforts? In so far as men are rational they will discontinue their efforts where their total pleasure dependent on continuing ceases to be greater than their total pain on which continuing is dependent. & II. Efforts painful in themselves on which pleasure depends we call labor. I say "efforts painful in themselves" because we must exclude efforts exerted in sport or play we must not make the definition too broad. But, on the other hand, we must not make it too narrow : we must not exclude efforts which, though pleasant in 1 This bearing of time for enjoyment on pain was pointed out by H. H. Gossen in his Entwickelung der Gesetze des Menschlichen Verkehrs und der daraus fliessenden Regeln für menschliches Handeln, Brunswick, 1854. It is covered by this theorem of his: "Given the option of several pleasures, and a time so limited as not to suffice for enjoying them all to the point of extinction, we obtain a hedonic maximum by enjoying each pleasure in such measure that its intensity at the moment when the period of fruition expires is equal to that of every other pleasure." This note is based on p. 28 and p. 32 of M. Pantaleoni's Pure Economics, translated by T. B. Bruce, Macmillan & Co., London, 1898. themselves in some cases, are not forthcoming in sufficient quantity to meet the demand unless they are paid for. Examples of efforts of this sort are those of the first hours of the day in the case of many a professional man who enjoys his work. Extending our definition to include such efforts as these, we may put it thus: efforts on which pleasure depends that are painful in themselves or command a market price are called labor. § 12. In some cases the pleasure dependent on efforts or on the interval of time mentioned in § 10 results directly, that is, without the intervention of any intermediate product. The results in these cases are called services. In other cases the pleasure results indirectly, the direct or immediate result being a good or commodity which in turn furnishes the pleasure itself. As an example of the services of a person take those of a violinist as he plays before an audience. An example of a good or commodity is the violin itself, which stands between the efforts of its maker and the pleasure that comes to the audience. Besides the services of persons we have also, of course, the services of goods: what the violin does towards making the music is its services. § 13. We often think of goods or services as being such, that is, as being capable of affording pleasure, by virtue solely of an attribute due to properties physiinherent in themselves. cal, chemical, and the like Further analysis, however, reveals the fact that pleasure depends quite as much on the person pleased - on whether he exists, for example, and can avail himself of the good or service, and if he can, on his capacity for enjoying as on the objec |