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5. Before commencing the inquiry into the laws of value and price, I have one further observation to make. I must give warning, once for all, that the cases I contemplate are those in which values and prices are determined by competition alone. In so far only as they are thus determined, can they be reduced to any assignable law. The buyers must be supposed as studious to buy cheap, as the sellers to sell dear. The values and prices, therefore, to which our conclusions apply, are mercantile values and prices ; such prices as are quoted in price currents; prices in the wholesale markets, in which buying as well as selling is a matter of business; in which the buyers take pains to know, and generally do know, the lowest price at which an article of a given quality can be obtained ; and in which, therefore, the axiom is true, that there cannot be, for the same article, of the same quality, two prices in the same market. Our propositions will be true in a much more qualified sense, of retail prices; the prices paid in shops, for articles of personal consumption. For such things there often are not merely two, but many prices in different shops, or even in the same shop; habit and accident having as much to do in the matter as general causes. Purchases for private use, even by people in business, are not always made on business principles; the feelings which come into play in the operation of getting and in that of spending their income, are often extremely different. Either from indolence, or insouciance, or because people think it fine to pay and ask no questions, three fourths of those who can afford it, give much higher prices than necessary for the things they consume; while the poor often do the same from ignorance and defect of judgment, want of time for searching and making inquiry, and not unfrequently from coercion, open or disguised. For these reasons, retail prices do not follow, with all the regularity which might be expected, the action of the causes which determine wholesale prices. The influence of those causes is ultimately felt in the retail markets, as is the real source of such variations in retail prices as are of a general or permanent character. But there is no regular or exact correspondence. Shoes of equally good quality are sold in different shops at prices which differ considerably; and the price of leather may fall without causing the richer class of buyers to pay less for shoes. Nevertheless, shoes do sometimes fall in price ; and when they do, the cause is always some such general circumstance as the cheapening of leather; and when leather is cheapened, even if no difference shows itself in shops frequented by rich people, the artisan and the laborer generally get their shoes cheaper, and there is a visible diminution in the contract prices at which shoes are delivered for the supply of a workhouse or of a regiment. In all reasoning about prices, the proviso must be understood, "supposing all parties to take care of their own interest.” Inattention to these distinctions has led to improper applications of the abstract principles of political economy, and still oftener to an undue discrediting of those principles through their being compared with a different sort of facts from those which they contemplate, or which can fairly be expected to accord with them.

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OF DEMAND AND SUPPLY, IN THEIR RELATION TO VALUE.

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§ 1. That a thing may have any value in exchange, two conditions are necessary. It must be of some use; that is, (as already explained,) it must conduce to some purpose, satisfy some desire. No one will pay a price, or part with any thing which serves some of his purposes, to obtain a thing which serves none of them. But, secondly, the thing must not only have some utility, there must also be some difficulty in its attainment. “Any article whatever," says Mr. De Quincey,* “to obtain that artificial sort of value which is meant by exchange value, must begin by offering itself as a means to some desirable purpose ; and secondly, even though possessing incontestably this preliminary advantage, it will never ascend to an exchange value in cases where it can be obtained gratuitously and without effort ; of which last terms both are necessary as limitations. For often it will happen that some desirable object may be obtained gratuitously; stoop, and you gather it at your feet; but still, because the continued iteration of this stooping exacts a laborious effort, very soon it is found, that to gather for yourself virtually is not gratuitous. In the vast forests of the Canadas, at intervals, wild strawberries may be gratuitously gathered by shiploads; yet such is the exhaustion of a stooping posture, and of a labor so monotonous, that everybody is soon glad to resign the service into mercenary hands.”

As was pointed out in the last chapter, the utility of a thing in the estimation of the purchaser, is the extreme

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limit of its exchange value; higher the value cannot ascend; peculiar circumstances are required to raise it so high. This topic is happily illustrated by Mr. De Quincey. “Walk into almost any possible shop, buy the first article you see ; what will determine its price? In ninety-nine cases out of a hundred, simply the element D-difficulty of attainment. The other element, U, or intrinsic utility, will be perfectly inoperative. Let the thing (measured by its uses) be, for your purposes, worth ten guineas, so that you would rather give ten guineas than lose it; yet, if the difficulty of producing it be only worth one guinea, one guinea is the price which it will bear. But still not the less, though U is inoperative, can U be supposed absent? By no possibility ; for, if it had been absent, assuredly you would not have bought the article even at the lowest price. U acts upon you, though it does not act upon the price. On the other hand, in the hundredth case, we will suppose the circumstances reversed; you are on Lake Superior in a steamboat, making your way to an unsettled region eight hundred miles a-head of civilization, and consciously with no chance at all of purchasing any luxury whatsoever, little luxury or big luxury, for the space of ten years to come. One fellowpassenger, whom you will part with before sunset, has a powerful musical snuff box; knowing by experience the power of such a toy over your own feelings, the magic with which at times it lulls your agitations of mind, you are vehemently desirous to purchase it. In the hour of leaving London, you had forgot to do so; here is a final chance. But the owner, aware of your situation not less sweat time than yourself, is determined to operate by a strain pushed to the very uttermost upon U, upon the intrinsic worth of the article in your individual estimate for your individual purposes. He will not hear of D as any controlling power or mitigating agency in the case ; and finally, although at six . VOL. I.

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guineas a-piece in London or Paris you might have loaded a wagon with such boxes, you pay sixty rather than lose it when the last knell of the clock has sounded, which summons you to buy now or to forfeit forever. Here, as before, only one element is operative; before it was D, now it is U. But after all, D was not absent, though inoperative. The inertness of D allowed U to put forth its total effect. The practical compression of D being withdrawn, U springs up like water in a pump, when released from the pressure of air. Yet still that D was present to your thoughts, though the price was otherwise regulated, is evident; both because U and D must coëxist in order to found any case of exchange value whatever, and because undeniably you take into very particular consideration this D, the extreme difficulty of attainment (which here is the greatest possible, viz., an impossibility) before you consent to have the price racked up to U. The special D has vanished; but it is replaced in your thoughts by an unlimited D. Undoubtedly you have submitted to U in extremity as the regulating force of the price; but it was under a sense of D's latent presence. Yet D is so far from exerting any positive force, that the retirement of D from all agency whatever on the price—this it is which creates as it were a perfect vacuum, and through that vacuum U rushes up to its highest and ultimate gradation."

This case, in which the value is wholly regulated by the necessities or desires of the purchaser, is the case of strict and absolute monopoly; in which, the article desired being only attainable from one person, he can exact any equivalent, short of the point at which no purchaser could be found. But it is not a necessary consequence, even of complete monopoly, that the value should be forced up to this ultimate limit; as will be seen when we have considered the law of value in so far as depending on the other element, difficulty of attainment.

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