In conclusion, it is true, speaking in very loose and general terms, we may say the exchange value of a good depends both upon its utility and its costliness to mankind. But it would not be proper to say that cost and utility are equal and coördinate regulators of value. Therefore, Professor Marshall’s shears simile is not to be commended. The most noteworthy changes in exchange values have been produced by discoveries which reduced the labor cost of goods. But the amount of the reduction thus produced in the exchange value of a particular commodity could have only the roughest correspondence with the amount by which its relative pain cost was reduced. Also, for reasons already shown, we know that neither before or after these changes was it possible for exchange values to be in proportion to relative pain costs, whether total or marginal costs be taken. Furthermore, all alterations of exchange values produced by cost changes are effected solely by alteration of the value-determining utility itself. Utility has a much more direct and intimate relation with value in either form than cost. Value may exist without cost and cost may be expended without occasioning value. Value never exists without utility and utility (not in the sense of Smith’s “use-value,” but the effectual utility, the utility which measures the satisfaction conditioned by a good) never exists without value. Cost affects value solely by influencing utility itself. From this comes the all-important conclusion that whenever any of the numerous and permanent forces are active which interfere with the influence of cost, value follows the utility and not the cost. FOOTNOTES [1] Chap. xiv of book v, 4th ed., 1898, pp. 554-570. [2] Value was in this connection used in another sense than pure exchange value, but the difference of significance was never satisfactorily explained. [3] _Natural Value_, edited by Wm. Smart (London, 1893), pp. xxvii-xxix. Von Wieser gives but three pages of the preface of _Natural Value_ to the writings of Adam Smith and Ricardo on value. But in this brief though profound passage, he has not only suggested what I believe to be the true interpretation of the theories of Smith and Ricardo, but he has also made the greatest single contribution to our understanding of the subsequent course of English thought on the subject. [4] Rent of land was excluded by Ricardo, but included by Smith and Malthus, and also by J. B. Say. [5] The Austrian writers are accustomed to call this the “empirical law of costs.” [6] The detailed history given in the following chapters will, it is believed, substantiate this view. The development of the law of entrepreneur’s costs will be traced only so far as is necessary in order to understand the history of the labor theory, but it is indispensable to follow the general lines of its progress if we are to perceive the “setting” of the labor theory.