That the fixed value of the money unit assumed is an absolute value, and not a mere "reciprocal of the price level," may be proved by some further considerations regarding relations among these same factors. Assume a fall in the rate of interest. Then, on the capitalization theory, prices of lands, stocks and bonds, houses, horses, and all items of wealth which give forth their services through an appreciable period of time, will rise, and with them the average of prices, or the general price level, will rise.[60] If one hold the _relative_ conception of value, according to which the value of money necessarily falls when prices rise, because the two are merely obverse phases of the same thing, then this rise in the price level is, _ipso facto_, a fall in the value of money. But we have seen that a fall in the value of money means, on the "principle of appreciation and interest," a rise in the interest rate! Hence, we would have proved that a fall in the interest rate causes a rise in the interest rate--which is absurd. If, however, we recognize that prices can rise without a fall in the value of money, if, _i. e._, we use the absolute conception of value, this difficulty disappears. The capitalization theory and the theory of appreciation and interest can be reconciled only on the basis of the absolute conception of value. The capitalization theory, then, in its present formulation, assumes money, and a fixed absolute value of money. It is, therefore, inapplicable to the problem of the value of money itself. In general, none of the polished tools of the economic analysis,--neither cost of production, the capitalization theory,[61] nor the law of supply and demand,--is applicable to the problem of the value of money. The reason is that they get their edge from money itself. The razor does not easily cut the hone. It is to this fact, I think, that we owe the widespread and long continued vogue of a theory so crude and mechanical as the quantity theory. In the next chapter we shall show that the utility theory of value--which we shall not recognize as a polished tool!--has also failed to give us help in explaining the value of money. CHAPTER V MARGINAL UTILITY AND THE VALUE OF MONEY A good many writers have attempted to apply the marginal utility theory to the value of money. Among these, I may particularly mention Friedrich Wieser, Ludwig von Mises, Joseph Schumpeter, and, in America, David Kinley, and H. J. Davenport.