§ 5. The theory of “non-competing groups” 119 § 6. Consequent limitation of law of costs 120 § 7. And resort to a principle of “reciprocal demand,” which fails to replace the law of costs 121 § 8. Cairnes’ theory of non-competing groups signifies that the existence of skilled labor is fatal to the Ricardian labor theory 123 § 9. Ricardo’s assumption of perfect competition does not foreguard against the difficulty of skilled labor 124 CHAPTER XI THE ULTIMATE RELATION OF COST TO VALUE § 1. Net result of English discussion from Smith to Cairnes 127 § 2. Classification of cost concepts 135 § 3. Necessary preliminaries concerning the concepts of value and utility 140 § 4. Essential features of the pure utility theory; the supply of goods taken for granted 146 § 5. Explanation of the law of entrepreneur’s cost in the light of the utility theory 155 § 6. The modern refined labor theory—the marginal equivalence of utility and disutility—considered first in the isolated economy 165 § 7. The relation of marginal subjective cost to exchange value in the developed social economy 177 § 8. Summary 191 CHAPTER I GENERAL OUTLINES OF THE HISTORY OF THE LABOR THEORY OF VALUE 1. The following history of the labor theory of value begins with Adam Smith, not because it is supposed that Political Economy was born with the _Wealth of Nations_, but because no other work written affords so convenient a starting-point to the historian who has no desire to press his investigations into regions too remote from modern interests.