And thus, as representing, however humbly, the modern Austrian school, I may close with the words written by our own Jevons twenty years ago. “Repeated reflection and inquiry have led me to the somewhat novel opinion, that _value depends entirely upon utility_. Prevailing opinions make labour rather than utility the origin of value; and there are even those who distinctly assert that labour is the _cause_ of value. I show, on the contrary, that we have only to trace out carefully the natural laws of the variation of utility, as depending upon the quantity of commodity in our possession, in order to arrive at a satisfactory theory of exchange, of which the ordinary laws of supply and demand are a necessary consequence. This theory is in harmony with facts; and, whenever there is any apparent reason for the belief that labour is the cause of value, we obtain an explanation of the reason. Labour is found often to determine value, but only in an indirect manner, by varying the degree of utility of the commodity through an increase or limitation of the supply.” APPENDIX I Wieser’s chapter on the paradox of value (_Natürlicher Werth_, i. §§ 7 and 10) deserves more space than could appropriately be given it in the text. I therefore give the substance of it here. Suppose, he says, that I have a certain good the employment of which yields me a utility represented by 10, and that I add successively 10 similar goods to my stock, the marginal utility, at each addition diminishing by 1. The value of the stock will stand successively at 10, 18 (9 × 2), 24 (8 × 3), 28 (7 × 4), 30 (6 × 5), 30 (5 × 6), 28 (4 × 7), 24 (3 × 8), 18 (2 × 9), 10 (1 × 10), 0 (0 × 11). Here, obviously, each added good brings a smaller utility than the last, and at each addition the marginal utility, and with it the value, of the unit of goods falls. But while the value of the single good thus steadily falls, the value of the whole stock describes a peculiar course: it rises from 10 to 30, pauses there a moment, and then falls from 30 to zero. This phenomenon of increasing wealth accompanied by decreasing value is a paradox from which we shall not escape so long as we consider value a simple and positive amount. Value arises in the combination of two elements, a positive and a negative. It is a combined amount, or, more accurately, a residual amount. The positive element in value is the gratification from the use of goods. This gratification is subject to a natural law of “diminishing returns”: as the first draught of any pleasure is the most grateful, and as the gratification weakens at every repetition, so a single good stands highest in our estimation, and each addition to the stock occupies a lower place. The value of the stock successively may be represented thus— When the stock consists of 1 2 3 4 5 6 7 8 9 10 11 goods, —— —— —— —— —— —— —— —— —— —— —— the total gratification is 10 19 27 34 40 45 49 52 54 55 55 units.