Thorstein Veblen
Professor Clark's Economics

The Quarterly Journal of Economics, Vol. XXII, Feb., 1908.
(= The Place Of Science in Modern Civilisation and Other Essays, pp. 180-230)
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[180] For some time past economists have been looking with lively anticipation 
for such a comprehensive statement of Mr. Clark's doctrines as is now offered. 
The leading purpose of the present volume(1*) is "to offer a brief and 
provisional statement of the more general laws of progress"; although it also 
comprises a more abridged restatement of the laws of "Economic Statics" already 
set forth in fuller form in his Distribution of Wealth. Though brief, this 
treatise is to be taken as systematically complete, as including in due 
correlation all the "essentials" of Mr. Clark's theoretical system. As such, its 
publication is an event of unusual interest and consequence.
Mr. Clark's position among this generation of economists is a notable and 
commanding one. No serious student of economic theory will, or can afford to, 
forego a pretty full acquaintance with his development of doctrines. Nor will 
any such student avoid being greatly influenced by the position which Mr. Clark 
takes on any point of theory on which he may speak, and many look confidently to 
him for guidance where it is most needed. Very few of those interested in modern 
theory are under no obligations to him. He has, at the same time, in a singular 
degree the gift of engaging the affections as well as the attention of students 
in his field. Yet the critic is [181] required to speak impersonally of Mr. 
Clark's work as a phase of current economic theory.
In more than one respect Mr. Clark's position among economists recalls the great 
figures in the science a hundred years ago. There is the same rigid grasp of the 
principles, the "essentials," out of which the broad theorems of the system 
follow in due sequence and correlation; and like the leaders of the classical 
era, while Mr. Clark is always a theoretician, never to be diverted into an 
inconsistent makeshift, he is moved by an alert and sympathetic interest in 
current practical problems. While his aim is a theoretical one, it is always 
with a view to the theory of current affairs; and his speculations are animated 
with a large sympathy and an aggressive interest in the amelioration of the lot 
of man.
His relation to the ancient adepts of the science, however, is something more 
substantial than a resemblance only. He is, by spiritual consanguinity, a 
representative of that classical school of thought that dominated the science 
through the better part of the nineteenth century. This is peculiarly true of 
Mr. Clark, as contrasted with many of those contemporaries who have fought for 
the marginal-utility doctrines. Unlike these spokesmen of the Austrian wing, he 
has had the insight and courage to see the continuity between the classical 
position and his own, even where he advocates drastic changes in the classical 
body of doctrines. And although his system of theory embodies substantially all 
that the consensus of theorists approves in the Austrian contributions to the 
science, yet he has arrived at his position on these heads not under the 
guidance of the Austrian school, but, avowedly, by an unbroken development out 
of the position given by the older generation of economists.(2*) Again, in [182] 
the matter of the psychological postulates of the science, he accepts a hedonism 
as simple, unaffected, and uncritical as that of Jevons Or of James Mill. In 
this respect his work is as true to the canons of the classical school as the 
best work of the theoreticians of the Austrian observance. There is the like 
unhesitating appeal to the calculus of pleasure and pain as the indefeasible 
ground of action and solvent of perplexities, and there is the like readiness to 
reduce all phenomena to terms of a "normal," or "natural," scheme of life 
constructed on the basis of this hedonistic calculus. Even in the ready recourse 
to "conjectural history," to use Steuart's phrase, Mr. Clark's work is at one 
with both the early classical and the late (Jevons-Austrian) marginal-utility 
school. It has the virtues of both, coupled with the graver shortcomings of 
both. But, as his view exceeds theirs in breadth and generosity, so his system 
of theory is a more competent expression of current economic science than what 
is offered by the spokesmen of the Jevons-Austrian wing. It is as such, as a 
competent and consistent system of current economic theory, that it is here 
intended to discuss Mr. Clark's work, not as a body of doctrines peculiar to Mr. 
Clark or divergent from the main current.

Since hedonism came to rule economic science, the science has been in the main a 
theory of distribution - distribution of ownership and of income. This is true 
both of the classical school and of those theorists who have taken an attitude 
of ostensible antagonism to the classical school. The exceptions to the rule are 
late and comparatively few, and they are not found among the economists who 
accept the hedonistic postulate as their point of departure. And, consistently 
with the spirit of hedonism, this theory of distribution has centered about 
[183] a doctrine of exchange value (or price) and has worked out its scheme of 
(normal) distribution in terms of (normal) price. The normal economic community, 
upon which theoretical interest has converged, is a business community, which 
centers about the market, and whose scheme of life is a scheme of profit and 
loss. Even when some considerable attention is ostensibly devoted to theories of 
consumption and production, in these systems of doctrine the theories are 
constructed in terms of ownership, price, and acquisition, and so reduce 
themselves in substance to doctrines of distributive acquisition.(3*) In this 
respect Mr. Clark's work is true to the received canons. The "Essentials of 
Economic Theory" are the essentials of the hedonistic theory of distribution, 
with sundry reflections on related topics. The scope of Mr. Clark's economics, 
indeed, is even more closely limited by concepts of distribution than many 
others, since he persistently analyses production in terms of value, and value 
is a concept of distribution.

As Mr. Clark justly observes (p. 4), "The primitive and general facts concerning 
industry ... need to be known before the social facts can profitably be 
studied." In these early pages of the treatise, as in other works of its class, 
there is repeated reference to that more primitive and simple scheme of economic 
life out of which the modern complex scheme has developed, and it is repeatedly 
indicated that in order to an understanding of the play of forces in the more 
advanced stages of economic development and complication, it is necessary to 
apprehend these forces in their unsophisticated form as they work out In the 
simple scheme prevalent on the plane of [184] primitive life. Indeed, to a 
reader not well acquainted with Mr. Clark's scope and method of economic 
theorising, these early pages would suggest that he is Preparing for something 
in the way of a genetic study, - a study of economic institutions approached 
from the side of their origins. It looks as if the intended line of approach to 
the modern situation might be such as an evolutionist would choose, who would 
set out with showing what forces are at work in the primitive economic 
community, and then trace the cumulative growth and complication of these 
factors as they presently take form in the institutions of a later phase of the 
development. Such, however, is not Mr. Clark's intention. The effect of his 
recourse to "primitive life" is simply to throw into the foreground, in a highly 
unreal perspective, those features which lend themselves to interpretation in 
terms of the normalised competitive system. The best excuse that can be offered 
for these excursions into "primitive life" is that they have substantially 
nothing to do with the main argument of the book, being of the nature of 
harmless and graceful misinformation.
In the primitive economic situation - that is to say, in savagery and the lower 
barbarism - there is, of course, no "solitary hunter," living either in a cave 
or otherwise, and there is no man who "makes by his own labor all the goods that 
he uses," etc. It is, in effect, a highly meretricious misrepresentation to 
speak in this connection of "the economy of a man who works only for himself," 
and say that "the inherent productive power of labor and capital is of vital 
concern to him," because such a presentation of the matter overlooks the main 
facts in the case in order to put the emphasis on a feature which is of 
negligible consequence. There is no reasonable doubt but that, at least since 
mankind reached the human plane, the eco-[185]nomic unit has been not a 
"solitary hunter," but a community of some kind; in which, by the way, women 
seem in the early stages to have been the most consequential factor instead of 
the man who works for himself. The 4' capital" possessed by such a community - 
as, e.g., a band of California "Digger" Indians - was a negligible quantity, 
more valuable to a collector of curios than to any one else, and the loss of 
which to the "Digger" squaws would mean very little. What was of "vital concern" 
to them, indeed, what the life of the group depended on absolutely, was the 
accumulated wisdom of the squaws, the technology of their economic 
situation.(4*) The loss of the basket, digging-stick, and mortar, simply as 
physical objects, would have signified little, but the conceivable loss of the 
squaw's knowledge of the soil and seasons, of food and fiber plants, and of 
mechanical expedients, would have meant the present dispersal and starvation of 
the community.
This may seem like taking Mr. Clark to task for an inconsequential gap in his 
general information on Digger Indians, Eskimos, and palaeolithic society at 
large. But the point raised is not of negligible consequence for economic 
theory, particularly not for any theory of "economic dynamics" that turns in 
great part about questions of capital and its uses at different stages of 
economic development. In the primitive culture the quantity and the value of 
mechanical appliances is relatively slight; and whether the group is actually 
possessed of more or less of such appliances at a given time is not a question 
of first-rate importance. The loss of these objects - tangible assets - would 
entail a transient inconvenience. But the accumulated, habitual knowledge of the 
ways and [186] means involved in the production and use of these appliances is 
the outcome of long experience and experimentation; and, given this body of 
commonplace technological information, the acquisition and employment of the 
suitable apparatus is easily arranged. The great body of commonplace knowledge 
made use of in industry is the product and heritage of the group. In its 
essentials it is known by common notoriety, and the "capital goods" needed for 
putting this commonplace technological knowledge to use are a slight matter, - 
practically within the reach of every one. Under these circumstances the 
ownership of "capital-goods" has no great significance, and, as a practical 
fact, interest and wages are unknown, and the "earning power of capital" is not 
seen to be "governed by a specific power of productivity which resides in 
capital-goods." But the situation changes, presently, by what is called an 
advance "in the industrial arts." The "capital" required to put the commonplace 
knowledge to effect grows larger, and so its acquisition becomes an increasingly 
difficult matter. Through "difficulty of attainment" in adequate quantities, the 
apparatus and its ownership become a matter of consequence; increasingly so, 
until presently the equipment required for an effective pursuit of industry 
comes to be greater than the common man can hope to acquire in a lifetime. The 
commonplace knowledge of ways and means, the accumulated experience of mankind, 
is still transmitted in and by the body of the community at large; but, for 
practical purposes, the advanced "state of the industrial arts" has enabled the 
owners of goods to corner the wisdom of the ancients and the accumulated 
experience of the race. Hence "capital," as it stands at that phase of the 
institution's growth contemplated by Mr. Clark.
The "natural" system of free competition, or, as it was [187] once called, "the 
obvious and simple system of natural liberty," is accordingly a phase of the 
development of the institution of capital; and its claim to immutable dominion 
is evidently as good as the like claim of any other phase of cultural growth. 
The equity, or "natural justice," claimed for it is evidently just and equitable 
only in so far as the conventions of ownership on which it rests continue to be 
a secure integral part of the institutional furniture of the community; that is 
to say, so long as these conventions are part and parcel of the habits of 
thought of the community; that is to say, so long as these things are currently 
held to be just and equitable. This normalised present, or "natural," state of 
Mr. Clark, is, as near as may be, Senior's "Natural State of Man,"- the 
hypothetically perfect competitive system; and economic theory consists in the 
definition and classification of the phenomena of economic life in terms of this 
hypothetical competitive system.
Taken by itself, Mr. Clark's dealing with the past development might be passed 
over with slight comment, except for its negative significance, since it has no 
theoretical connection with the present, or even with the "natural" state in 
which the phenomena of economic life are assumed to arrange themselves in a 
stable, normal scheme. But his dealings with the future, and with the present in 
so far as the present situation is conceived to comprise "dynamic" factors, is 
of substantially the same kind. With Senior's "natural state of man" as the 
baseline of normality in things economic, questions of present and future 
development are treated as questions of departure from the normal, aberrations 
and excesses which the theory does not aim even to account for. What is offered 
in place of theoretical inquiry when these "positive perversions of the natural 
forces themselves" are [188] taken up (e.g., in chapters xxii.-xxix.) is an 
exposition of the corrections that must be made to bring the situation back to 
the normal static state, and solicitous advice as to what measures are to be 
taken with a view to this beneficent end. The problem presented to Mr. Clark by 
the current phenomena of economic development is: how can it be stopped? or, 
failing that, how can it be guided and minimised? Nowhere is there a sustained 
inquiry into the dynamic character of the changes that have brought the present 
(deplorable) situation to pass, nor into the nature and trend of the forces at 
work in the development that is going forward in this situation. None of this is 
covered by Mr. Clark's use of the word "dynamic." All that it covers in the way 
of theory (chapters xii.-xxi.) is a speculative inquiry as to how the 
equilibrium re-established itself when one or more of the quantities involved 
increases or decreases. Other than quantitative changes are not noticed, except 
as provocations to homiletic discourse. Not even the causes and the scope of the 
quantitative changes that may take place in the variables are allowed to fall 
within the scope of the theory of economic dynamics.
So much of the volume, then, and of the system of doctrines of which the volume 
is an exposition, as is comprised in the later eight chapters (pp. 372-554), is 
an exposition of grievances and remedies, with only sporadic intrusions of 
theoretical matter, and does not properly constitute a part of the theory, 
whether static or dynamic. There is no intention here to take exception to Mr. 
Clark's outspoken attitude of disapproval toward certain features of the current 
business situation or to quarrel with the remedial measures which he thinks 
proper and necessary. This phase of his work is spoken of here rather to call 
attention to the temperate but uncompromising tone of [189] Mr. Clark's writings 
as a spokesman for the competitive system, considered as an element in the Order 
of Nature, and to note the fact that this is not economic theory.(5*)
The theoretical section specifically scheduled as Economic Dynamics (chapters 
xii.-xxi.), on the other hand, is properly to be included under the caption of 
Statics. As already remarked above, it presents a theory of equilibrium between 
variables. Mr. Clark is, indeed, barred out by his premises from any but a 
statical development of theory. To realise the substantially statical character 
of his Dynamics, it is only necessary to turn to his chapter xii. (Economic 
Dynamics). "A highly dynamic condition, then, is one in which the economic 
organism changes rapidly and yet, at any time in the course of its changes, is 
relatively near to a certain static model" (p. 196). "The actual shape of 
society at any one time is not the static model of that time; but it tends to 
conform to it; and in a very dynamic society is more nearly like it than it 
would be in one in which the forces of change are less active" (p. 197). The 
more "dynamic" the society, the nearer it is to the static model; until in an 
ideally dynamic society, with a frictionless competitive system, to use Mr. 
Clark's figure, the static state would be attained, except [190] for an increase 
in size,- that is to say, the ideally perfect "dynamic" state would coincide 
with the "static" state. Mr. Clark's conception of a dynamic state reduces 
itself to a conception of an imperfectly static state, but in such a sense that 
the more highly and truly "dynamic" condition is thereby the nearer to a static 
condition. Neither the static nor the dynamic state, in Mr. Clark's view, it 
should be remarked, is a state of quiescence. Both are states of more or less 
intense activity, the essential difference being that in the static state the 
activity goes on in perfection, without lag, leak, or friction; the movement of 
parts being so perfect as not to disturb the equilibrium. The static state is 
the more "dynamic" of the two. The "dynamic" condition is essentially a deranged 
static condition: whereas the static state is the absolute perfect, "natural" 
taxonomic norm of competitive life. This dynamic-static state may vary in 
respect of the magnitude of the several factors which hold one another in 
equilibrium, but these are none other than quantitative variations. The changes 
which Mr. Clark discusses under the head of dynamics are all of this character,- 
changes in absolute or relative magnitude of the several factors comprised in 
the equation.

But, not to quarrel with Mr. Clark's use of the term "static" and "dynamic," it 
is in place to inquire into the merits of this class of economic science apart 
from any adventitious shortcomings. For such an inquiry Mr. Clark's work offers 
peculiar advantages. It is lucid, concise, and unequivocal, with no temporising 
euphemisms and no politic affectations of sentiment. Mr. Clark's premises, and 
therewith the aim of his inquiry, are the standard ones of the classical English 
school (including the Jevons-Austrian wing). This school of economics [191] 
stands on the pre-evolutionary ground of normality and natural law," which the 
great body of theoretical science occupied in the early nineteenth century. It 
is like the other theoretical sciences that grew out of the rationalistic and 
humanitarian conceptions of the eighteenth century in that its theoretical aim 
is taxonomy - definition and classification - with the purpose of subsuming its 
data under a rational scheme of categories which are presumed to make up the 
Order of Nature. This Order of Nature, or realm of Natural Law, is not the 
actual run of material facts, but the facts so interpreted as to meet the needs 
of the taxonomist in point of taste, logical consistency, and sense of justice. 
The question of the truth and adequacy of the categories is a question as to the 
consensus of taste and predilection among the taxonomists; i.e., they are an 
expression of trained human nature touching the matter of what ought to be. The 
facts so interpreted make up the "normal," or "natural," scheme of things, with 
which the theorist has to do. His task is to bring facts within the framework of 
this scheme of "natural" categories. Coupled with this scientific purpose of the 
taxonomic economist is the pragmatic purpose of finding and advocating the 
expedient course of policy. On this latter head, again, Mr. Clark is true to the 
animus of the school.
The classical school, including Mr. Clark and his contemporary associates in the 
science, is hedonistic and utilitarian - hedonistic in its theory and 
utilitarian in its pragmatic ideals and endeavors. The hedonistic postulates on 
which this line of economic theory is built up are of a statical scope and 
character, and nothing but statical theory (taxonomy) comes out of their 
development.(6*)
[192] These postulates, and the theorems drawn from them, take account of none 
but quantitative variations, and quantitative variation alone does not give rise 
to cumulative change, which proceeds on changes in kind.
Economics of the line represented at its best by Mr. Clark has never entered 
this field of cumulative change. It does not approach questions of the class 
which occupy the modern sciences,- that is to say, questions of genesis, growth, 
variation, process (in short, questions of a dynamic import),- but confines its 
interest to the definition and classification of a mechanically limited range of 
phenomena. Like other taxonomic sciences, hedonistic economics does not, and 
cannot, deal with phenomena of growth except so far as growth is taken in the 
quantitative sense of a variation in magnitude, bulk, mass, number, frequency. 
In its work of taxonomy this economics has consistently bound itself, as Mr. 
Clark does, by distinctions of a mechanical, statistical nature, and has drawn 
its categories of classification on those grounds. Concretely, it is confined, 
in substance, to the determination of and refinements upon the concepts of land, 
labor, and capital, as handed down by the great economists of the classical era, 
and the correlate concepts of rent, wages, interest and profits. Solicitously, 
with a painfully meticulous circumspection, the normal, mechanical metes and 
bounds of these several concepts are worked out, the touchstone of the absolute 
truth aimed at being the hedonistic calculus. The facts of use and wont are not 
of the [193] essence of this mechanical refinement. These several categories are 
mutually exclusive categories, mechanically speaking. The circumstance that the 
phenomena covered by them are not mechanical facts is not allowed to disturb the 
pursuit of mechanical distinctions among them. They nowhere overlap, and at the 
same time between them they cover all the facts with which this economic 
taxonomy is concerned. Indeed, they are in logical consistency, required to 
cover them. They are hedonistically "natural" categories of such taxonomic force 
that their elemental lines of cleavage run through the facts of any given 
economic situation, regardless of use and wont, even where the situation does 
not permit these lines of cleavage to be seen by men and recognised by use and 
wont; so that, e.g., a gang of Aleutian Islanders slushing about in the wrack 
and surf with rakes and magical incantations for the capture of shell-fish are 
held, in point of taxonomic reality, to be engaged on a feat of hedonistic 
equilibration in rent, wages, and interest. And that is all there is to it. 
Indeed, for economic theory of this kind, that is all there is to any economic 
situation. The hedonistic magnitudes vary from one situation to another, but, 
except for variations in the arithmetical details of the hedonistic balance, all 
situations are, in point of economic theory, substantially alike.(7*)
Taking this unfaltering taxonomy on its own recognisances, let us follow the 
trail somewhat more into the [194] arithmetical details, as it leads along the 
narrow ridge of rational calculation, above the tree-tops, on the levels of 
clear sunlight and moonshine. For the purpose in hand - to bring out the 
character of this current economic science as a working theory of current facts, 
and more particularly "as applied to modern problems of industry and public 
policy" (title-page) - the sequence to be observed in questioning the several 
sections into which the theoretical structure falls is not essential. The 
structure of classical theory is familiar to all students, and - Mr. Clark's 
redaction offers no serious departure from the conventional lines. Such 
divergence from conventional lines as may occur is a matter of details, commonly 
of improvements in detail; and the revisions of detail do not stand in such an 
organic relation to one another, nor do they support and strengthen one another 
in such a manner, as to suggest anything like a revolutionary trend or a 
breaking away from the conventional lines.
So as regards Mr. Clark's doctrine of Capital. It does not differ substantially 
from the doctrines which are gaining currency at the hands of such writers as 
Mr. Fisher or Mr. Fetter; although there are certain formal distinctions 
peculiar to Mr. Clark's exposition of the "Capital Concept." But these 
peculiarities are peculiarities of the method of arriving at the concept rather 
than peculiarities substantial to the concept itself. The main discussion of the 
nature of capital is contained in chapter ii. (Varieties of Economic Goods). The 
conception of capital here set forth is of fundamental consequence to the 
system, partly because of the important place assigned capital in this system of 
theory, partly because of the importance which the conception of capital must 
have in any theory that is to deal with problems of the current [195] 
(capitalistic) situation. Several classes of capital-goods are enumerated, but 
it appears that in Mr. Clark's apprehension - at variance with Mr. Fisher's view 
- persons are not to be included among  the items of capital. It is also clear 
from the run of the argument, though not explicitly stated, that only material, 
tangible, mechanically definable articles of wealth go to make up capital. In 
current usage, in the business community, "capital" is a pecuniary concept, of 
course, and is not definable in mechanical terms; but Mr. Clark, true to the 
hedonistic taxonomy, sticks by the test of mechanical demarcation and draws the 
lines of his category on physical grounds; whereby it happens that any pecuniary 
conception of capital is out of the question. Intangible assets, or immaterial 
wealth, have no place in the theory; and Mr. Clark is exceptionally subtle and 
consistent in avoiding such modern notions. One gets the impression that such a 
notion as intangible assets is conceived to be too chimerical to merit 
attention, even by way of protest or refutation.
Here, as elsewhere in Mr. Clark's writings, much is made of the doctrine that 
the two facts of "capital" and "capital-goods" are conceptually distinct, though 
substantially identical. The two terms cover virtually the same facts as would 
be covered by the terms "pecuniary capital" and "industrial equipment." They are 
for all ordinary purposes coincident with Mr. Fisher's terms, "capital value" 
and "capital," although Mr. Clark might enter a technical protest against 
identifying his categories with those employed by Mr. Fisher.(8*) "Capital is 
this permanent fund of productive goods, the identity of whose component 
elements is forever changing. Capital-[196]goods are the shifting component 
parts of this permanent aggregate" (p. 29). Mr. Clark admits (pp. 29-33) that 
capital is colloquially spoken and thought of in terms of value, but he insists 
that in point of substantial fact the working concept of capital is (should be) 
that of "a fund of productive goods," considered as an "abiding entity." The 
phrase itself, "a fund of productive goods," is a curiously confusing mixture of 
pecuniary and mechanical terms, though the pecuniary expression, "a fund," is 
probably to be taken in this connection as a permissible metaphor.
This conception of capital, as a physically "abiding entity" constituted by the 
succession of productive goods that make up the industrial equipment, breaks 
down in Mr. Clark's own use of it when he comes (pp. 37-38) to speak of the 
mobility of capital; that is to say, so soon as he makes use of it. A single 
illustration of this will have to suffice, though there are several points in 
his argument where the frailty of the conception is patent enough. "The transfer 
of capital from one industry to another is a dynamic phenomenon which is later 
to be considered. What is here important is the fact that it is in the main 
accomplished without entailing transfers of capital-goods. An instrument wears 
itself out in one industry, and instead of being succeeded by a like instrument 
in the same industry, it is succeeded by one of a different kind which is used 
in a different branch of production" (p. 38), - illustrated on the preceding 
page by a shifting of investment from a whaling-ship to a cotton-mill. In all 
this it is plain that the "transfer of capital" contemplated is a shifting of 
investment, and that it is, as indeed Mr. Clark indicates, not a matter of the 
mechanical shifting of physical bodies from one industry to the other. To speak 
of a transfer of "capital" which [197] does not involve a transfer of "capital-
goods is a contradiction of the main position, that capital is made up of 
"capital-goods." The continuum in which the "abiding entity" of capital resides 
is a continuity of ownership, not a physical fact. The continuity, in fact, is 
of an immaterial nature, a matter of legal rights, of contract, of purchase and 
sale. just why this patent state of the case is overlooked, as it somewhat 
elaborately is, is not easily seen. But it is plain that, if the concept of 
capital were elaborated from observation of current business practice, it would 
be found that "capital" is a pecuniary fact, not a mechanical one; that it is an 
outcome of a valuation, depending immediately on the state of mind of the 
valuers; and that the specific marks of capital, by which it is distinguishable 
from other facts, are of an immaterial character. This would, of course, lead, 
directly, to the admission of intangible assets; and this, in turn, would upset 
the law of the "natural" remuneration of labor and capital to which Mr. Clark's 
argument looks forward from the start. It would also bring in the "unnatural" 
phenomena of monopoly as a normal outgrowth of business enterprise.
There is a further logical discrepancy avoided by resorting to the alleged facts 
of primitive industry, when there was no capital, for the elements out of which 
to construct a capital concept, instead of going to the current business 
situation. In a hedonistic-utilitarian scheme of economic doctrine, such as Mr. 
Clark's, only physically productive agencies can be admitted as efficient 
factors in production or as legitimate claimants to a share in distribution. 
Hence capital, one of the prime factors in production and the central claimant 
in the current scheme of distribution, must be defined in physical terms and 
delimited by mechanical distinctions. This is [198] necessary for reasons which 
appear in the succeeding chapter, on The Measure of Consumers' Wealth.
On the same page (38), and elsewhere, it is remarked that "business disasters" 
destroy capital in part. The destruction in question is a matter of values; that 
is to say, a lowering of valuation, not in any appreciable degree a destruction 
of material goods. Taken as a physical aggregate, capital does not appreciably 
decrease through business disasters, but, taken as a fact of ownership and 
counted in standard units of value, it decreases; there is a destruction of 
values and a shifting of ownership, a loss of ownership perhaps; but these are 
pecuniary phenomena, of an immaterial character, and so do not directly affect 
the material aggregate of the industrial equipment. Similarly, the discussion 
(pp. 301-314) of how changes of method, as, e.g., labor-saving devices, 
"liberate capital," and at times "destroy" capital, is intelligible only on the 
admission that "capital" here is a matter of values owned by investors and is 
not employed as a synonym for industrial appliances. The appliances in question 
are neither liberated nor destroyed in the changes contemplated. And it will not 
do to say that the aggregate of "productive goods" suffers a diminution by a 
substitution of devices which increases its aggregate productiveness, as is 
implied, e.g., by the passage on page 307,(9*) if Mr. Clark's definition of 
capital [199] is strictly adhered to. This very singular passage (pp. 306-311, 
under the captions, Hardships entailed on Capitalists by Progress, and the 
Offset for Capital destroyed by Changes of Method) implies that the aggregate of 
appliances of production is decreased by a change which increases the aggregate 
of these articles that respect (productivity) by virtue of which they are 
counted in the aggregate. The argument will hold good if "productive goods" are 
rated by bulk, weight, number, or some such irrelevant test, instead of by their 
productivity or by their consequent capitalised value. On such a showing it 
should be proper to say that the polishing of plowshares before they are sent 
out from the factory diminishes the amount of capital embodied in plowshares by 
as much as the weight or bulk of the waste material removed from the shares in 
polishing them.
Several things may be said of the facts discussed in this passage. There is, 
presumably, a decrease, in bulk, weight, or number, of the appliances that make 
up the industrial equipment at the time when such a technological change as is 
contemplated takes place. This change, presumably, increases the productive 
efficiency of the equipment as a whole, and so may be said without hesitation to 
increase the equipment as a factor of production, while it may decrease it, 
considered as a mechanical magnitude. The owners of the obsolete or obsolescent 
appliances presumably suffer a diminution of their capital, whether they discard 
the obsolete appliances or not. The owners of the new appliances, or rather 
those who own and are able to capitalise the new technological expedients, 
presumably gain a corresponding advantage, which may take the form of an 
increase of the effective capitalisation of their outfit, as would then be shown 
by an increased market value of their plant. The largest [200] theoretical 
outcome of the supposed changes, for an economist not bound by Mr. Clark's 
conception of capital, should be the generalisation that industrial capital - 
capital considered as a productive agent - is substantially a capitalisation of 
technological expedients, and that a given capital invested in industrial 
equipment is measured by the portion of technological expedients whose usufruct 
the investment appropriates. It would accordingly appear that the substantial 
core of all capital is immaterial wealth, and that the material objects which 
are formally the subject of the capitalist's ownership are, by comparison, a 
transient and adventitious matter. But if such a view were accepted, even with 
extreme reservations, Mr. Clark's scheme of the "natural" distribution of 
incomes between capital and labor would "go up in the air," as the colloquial 
phrase has it. It would be extremely difficult to determine what share of the 
value of the joint product of capital and labor should, under a rule of 
"natural" equity, go to the capitalist as an equitable return for his 
monopolisation of a given portion of the intangible assets of the community at 
large.(10*) The returns actually accruing to him under competitive conditions 
would be a measure of the differential advantage held by him by virtue of his 
having become legally seized of the material contrivances by which the 
technological achievements Of the community are put into effect.
Yet, if in this way capital were apprehended as "an historical category," as 
Rodbertus would say, there is at least the comfort in it all that it should 
leave a free [201] field for Mr. Clark's measures of repression as applied to 
the discretionary management of capital by the makers of trusts. And yet, again, 
this comforting reflection is coupled with the ugly accompaniment that by the 
same move the field would be left equally free of moral obstructions to the 
extreme proposals of the socialists. A safe and sane course for the quietist in 
these premises should apparently be to discard the equivocal doctrines of the 
passage (pp. 306-311) from which this train of questions arises, and hold fast 
to the received dogma, however unworkable, that "capital" is a congeries of 
physical objects with no ramifications or complications of an immaterial kind, 
and to avoid all recourse to the concept of value, or price, in discussing 
matters of modern business.

The center of interest and of theoretical force and validity in Mr. Clark's work 
is his law of "natural" distribution. Upon this law hangs very much of the rest, 
if not substantially the whole structure of theory. To this law of distribution 
the earlier portions of the theoretical development look forward, and this the 
succeeding portions of the treatise take as their point of departure. The law of 
"natural" distribution says that any productive agent "naturally" gets what it 
produces. Under ideally free competitive conditions - such as prevail in the 
"static" state, and to which the current situation approximates - each unit of 
each productive factor unavoidably gets the amount of wealth which it creates, - 
its "virtual product," as it is sometimes expressed. This law rests, for its 
theoretical validity, on the doctrine of "final productivity," set forth in full 
in the Distribution of Wealth, and more concisely in the Essentials(11*) - [202] 
"one of those universal principles which govern economic life in all its stages 
of evolution."(12*)
In combination with a given amount of capital, it is held, each succeeding unit 
of added labor adds a less than proportionate increment to the product. The 
total product created by the labor so engaged is at the same time the 
distributive share received by such labor as wages; and it equals the increment 
of product added by the "final" unit of labor, multiplied by the number of such 
units engaged. The law of "natural" interest is the same as this law of wages, 
with a change of terms. The product of each unit of labor or capital being 
measured by the product of the "final" unit, each gets the amount of its own 
product.
In all of this the argument runs in terms of value; but it is Mr. Clark's view, 
backed by an elaborate exposition of the grounds of his contention,(13*) that 
the use of these terms of value is merely a matter of convenience for the 
argument, and that the conclusions so reached - the equality so established 
between productivity and remuneration - may be converted to terms of goods, or 
"effective utility," without abating their validity.
Without recourse to some such common denominator as value the outcome of the 
argument would, as Mr. Clark indicates, be something resembling the Ricardian 
law of differential rent instead of a law drawn in homogeneous terms of "final 
productivity"; and the law of "natural" distribution would then, at the best, 
fall short of a general formula. But the recourse to terms of value does not, as 
Mr. Clark recognises, dispose of the question without more ado. It smooths the 
way for the argument, but, unaided, it leaves it nugatory. According to Hu-
[203]dibras, "The value of a thing Is just as much as it will bring," and the 
later refinements on the theory of value have not set aside this dictum of the 
ancient authority. It answers no pertinent question of equity to say that the 
wages paid for labor are as much as it will bring. And Mr. Clark's chapter 
(xxiv.) on "The Unit for Measuring Industrial Agents and their Products" is 
designed to show how this tautological statement in terms of market value 
converts itself, under competitive conditions, into a competent formula of 
distributive justice. It does not conduce to intelligibility to say that the 
wages of labor are just and fair because they are all that is paid to labor as 
wages. What further value Mr. Clark's extended discussion of this matter may 
have will lie in his exposition of how competition converts the proposition that 
the value of a thing is just as much as it will bring "into the proposition 
that" the market rate of wages (or interest) gives to labor (or capital) the 
full product of labor (or capital)."
In following up the theory at this critical point, it is necessary to resort to 
the fuller statement of the Distribution of Wealth,(14*) the point being not so 
adequately covered in the Essentials. Consistently hedonistic, Mr. Clark 
recognises that his law of natural justice must be reduced to elementary 
hedonistic terms, if it is to make good its claim to stand as a fundamental 
principle of theory. In hedonistic theory, production of course means the 
production of utilities, and utility is of course utility to the consumer.(15*) 
A product is such by virtue of and to the amount of the utility which it has for 
a consumer. This utility of the goods is measured, as value, by the sacrifice 
(disutility) which the consumer is willing to [204] undergo in order to get the 
utility which the consumption of the goods yields him. The unit and measure of 
productive labor is in the last analysis also a unit of disutility; but it is 
disutility to the productive laborer, not to the consumer. The balance which 
establishes itself under competitive conditions is a compound balance, being a 
balance between the utility of the goods to the consumer and the disutility 
(cost) which he is willing to undergo for it, on the one hand, and, on the other 
hand, a balance between the disutility of the unit of labor and the utility for 
which the laborer is willing to undergo this disutility. It is evident, and 
admitted, that there can be no balance, and no commensurability, between the 
laborer's disutility (pain) in producing the goods and the consumer's utility 
(pleasure) in consuming them, inasmuch as these two hedonistic phenomena lie 
each within the consciousness of a distinct person. There is, in fact, no 
continuity of nervous tissue over the interval between consumer and producer, 
and a direct comparison, equilibrium, equality, or discrepancy in respect of 
pleasure and pain can, of course, not be sought except within each self-balanced 
individual complex of nervous tissue.(16*) The wages of labor (i.e., the utility 
of the goods received by the laborer) is not equal to the disutility undergone 
by him, except in the sense that he is competitively willing to accept it; nor 
are these wages equal to the utility got by the consumer of the goods, except in 
the sense [205] that he is competitively willing to pay them. This point is 
covered by the current diagrammatic arguments of marginal-utility theory as to 
the determination of competitive prices.
But, while the wages are not equal to or directly comparable with the disutility 
of the productive labor engaged, they are, in Mr. Clark's view, equal to the 
"productive efficiency" of that labor.(17*) "Efficiency in a worker is, in 
reality, power to draw out labor on the part of society. It is capacity to offer 
that for which society will work in return." By the mediation of market price, 
under competitive conditions, it is held, the laborer gets, in his wages, a 
valid claim on the labor of other men (society) as large as they are 
competitively willing to allow him for the services for which he is paid his 
wages. The equitable balance between work and pay contemplated by the "natural" 
law is a balance between wages and "efficiency," as above defined; that is to 
say, between the wages of labor and the capacity of labor to get wages. So far, 
the whole matter might evidently have been left as Bastiat left it. It amounts 
to saying that the laborer gets what he is willing to accept and the consumers 
give what they are willing to pay. And this is true, of course, whether 
competition prevails or not.
What makes this arrangement just and right under competitive conditions, in Mr. 
Clark's view, lies in his further doctrine that under such conditions of 
unobstructed competition the prices of goods, and therefore the wages of labor, 
are determined, within the scope of the given market, by a quasi-consensus of 
all the parties in interest. There is of course no formal consensus, but what 
there is of the kind is implied in the fact that bargains are made, and this is 
taken as an appraisement by [206] "society" at large. The (quasi-) consensus of 
buyers is held to embody the righteous (quasi-) appraisement of society in the 
premises, and the resulting rate of wages is therefore a (quasi-) just return to 
the laborer.(18*) "Each man accordingly is paid an amount that equals the total 
product that he personally creates."(19*) If competitive conditions are in any 
degree disturbed, the equitable balance of prices and wages is disturbed by that 
much. All this holds true for the interest of capital, with a change of terms.
The equity and binding force of this finding is evidently bound up with that 
common-sense presumption on which it rests; namely, that it is right and good 
that all men should get what they can without force or fraud and without 
disturbing existing property relations. It springs from this presumption, and, 
whether in point of equity or of expediency, it rises no higher than its source. 
It does not touch questions of equity beyond this, nor does it touch questions 
of the expediency or probable advent of any contemplated change in the existing 
conventions as to rights of ownership and initiative. It affords a basis for 
those who believe in the old order -without which belief this whole structure of 
opinions collapses - to argue questions of wages and profits in a manner 
convincing to themselves, and to confirm in the faith those who already believe 
in the old order. But it is not easy to see that some hundreds of pages of 
apparatus should be required to find one's way back to these time-worn 
commonplaces of Manchester.
In effect, this law of "natural" distribution says that [207] whatever men 
acquire without force or fraud under competitive conditions is their equitable 
due, no more and no less, assuming that the competitive system, with its 
underlying institution of ownership, is equitable and "natural." In point of 
economic theory the law appears on examination to be of slight consequence, but 
it merits further attention for the gravity of its purport. It is offered as a 
definitive law of equitable distribution comprised in a system of hedonistic 
economics which is in the main a theory of distributive acquisition only. It is 
worth while to compare the law with its setting, with a view to seeing how its 
broad declarations of economic justice shows up in contrast with the elements 
out of which it is constructed and among which it lies.
Among the no table chapters of the Essentials is one (vi.) on Value and its 
Relation to Different Incomes, which is not only a very substantial section of 
Mr. Clark's economic theory, but at the same time a type of the achievements of 
the latter-day hedonistic school. Certain features of this chapter alone can be 
taken up here. The rest may be equally worthy the student's attention, but it is 
the intention here not to go into the general substance of the theory of 
marginal utility and value, to which the chapter is devoted, but to confine 
attention to such elements of it as bear somewhat directly on the question of 
equitable distribution already spoken of. Among these latter is the doctrine of 
the "consumer's surplus,"- virtually the same as what is spoken of by other 
writers as "consumer's rent."(20*) "Consumer's surplus" is the surplus of 
utility (pleasure) derived by the consumer of goods above the (pain) cost of the 
goods to him. This is held to be a very generally prevalent phenomenon. Indeed, 
it is held to be all but universally [208] present in the field of consumption. 
It might, in fact, be effectively argued that even Mr. Clark's admitted 
exception(21*) is very doubtfully to be allowed, on his own showing. Correlated 
with this element of utility on the consumer's side is a similar volume of 
disutility on the producer's side, which may be called "producer's abatement," 
or "producer's rent": it is the amount of disutility by which the disutility-
cost of a given article to any given producer (laborer) falls short of (or 
conceivably exceeds) the disutility incurred by the marginal producer. Marginal 
buyers or consumers and marginal sellers or producers are relatively few : the 
great body on both sides come in for something in the way of a surplus "of 
utility or disutility.
All this bears on the law of "natural" wages and interest as follows, taking 
that law of just remuneration at Mr. Clark's rating of it. The law works out 
through the mediation of price. Price is determined, competitively, by marginal 
producers or sellers and marginal consumers or purchasers: the latter alone on 
the one side get the precise price-equivalent of the disutility incurred by 
them, and the latter alone on the other side pay the full price-equivalent of 
the utilities derived by them from the goods purchased.(22*) Hence the 
competitive price - covering competitive wages and interest - does not reflect 
the consensus of all parties concerned as to the "effective utility" of the 
goods, on the one hand, or as to their effective (disutility) cost, on the other 
hand. It reflects instead, if anything of this kind, the valuations which the 
marginal unfortunates on each side concede tinder stress of competition; and it 
leaves on each side of the bargain relation an uncovered "surplus," which [209] 
marks the (variable) interval by which price fails to cover "effective utility." 
The excess utility - and the conceivable excess cost - does not appear in the 
market transactions that mediate between consumer and producer.(23*) In the 
balance, therefore, which establishes itself in terms of value between the 
social utility of the product and the remuneration of the producer's 
"efficiency," the margin of utility represented by the aggregate "consumer's 
surplus" and like elements is not accounted for. It follows, when the argument 
is in this way reduced to its hedonistic elements, that no man "is paid an 
amount that equals the amount of the total product that he personally creates."
Supposing the marginal-utility (final-utility) theories of objective value to be 
true, there is no consensus, actual or constructive, as to the "effective 
utility" of the goods produced: there is no "social" decision in the case beyond 
what may be implied in the readiness of buyers to profit as much as may be by 
the necessities of the marginal buyer and seller. It appears that there is 
warrant, within these premises, for the formula: Remuneration >< than Product. 
Only by an infinitesimal chance would it bold true in any given case that, 
hedonistically, Remuneration = Product; and, if it should ever happen to be 
true, there would be no finding it out.
The (hedonistic) discrepancy which so appears between remuneration and product 
affects both wages and interest in the same manner, but there is some 
(hedonistic) ground in Mr. Clark's doctrines for holding that the discrepancy 
does not strike both in the same degree.
[210] There is indeed no warrant for holding that there is anything like an 
equable distribution of this discrepancy among the several industries or the 
several industrial concerns; but there appears to be some warrant, on Mr. 
Clark's argument, for thinking that the discrepancy is perhaps slighter in those 
branches of industry which produce the prime necessaries of life.(24*) This 
point of doctrine throws also a faint (metaphysical) light on a, possibly 
generic, discrepancy between the remuneration of capitalists and that of 
laborers: the latter are, relatively, more addicted to consuming the necessaries 
of life, and it may be that they thereby gain less in the way of a consumer's 
surplus.
All the analysis and reasoning here set forth has an air of undue tenuity; but 
in extenuation of this fault it should be noted that this reasoning is made up 
of such matter as goes to make up the theory under review, and the fault, 
therefore, is not to be charged to the critic. The manner of argument required 
to meet this theory of the "natural law of final productivity" on its own ground 
is itself a sufficiently tedious proof of the futility of the whole matter in 
dispute. Yet it seems necessary to beg further indulgence for more of the same 
kind. As a needed excuse, it may be added that what immediately follows bears on 
'Mr. Clark's application of the law of "natural distribution" to modern problems 
of industry and public policy, in the matter of curbing monopolies.

Accepting, again, Mr. Clark's general postulates - the postulates of current 
hedonistic economics - and applying the fundamental concepts, instead of their 
corollaries, to his scheme of final productivity, it can be shown [211] to fail 
on grounds even more tenuous and hedonistically more fundamental than those 
already passed in review. In all final-utility (marginal-utility) theory it is 
of the essence of the scheme of things that successive increments of a "good" 
have progressively less than proportionate utility. In fact, the coefficient of 
decrease of utility is greater than the coefficient of increase of the stock of 
goods. The solitary "first loaf" is exorbitantly useful. As more loaves are 
successively added to the stock, the utility of each grows small by degrees and 
incontinently less, until, in the end, the state of the "marginal" or "final" 
loaf is, in respect of utility, shameful to relate. So, with a change of phrase, 
it fares with successive increments of a given productive factor - labor or 
capital - in Mr. Clark's scheme of final productivity. And so, of course, it 
also fares with the utility of successive increments of product created by 
successively adding unit after unit to the complement of a given productive 
factor engaged in the case. If we attend to this matter of final productivity in 
consistently hedonistic terms, a curious result appears.
A larger complement of the productive agent, counted by weight and tale, will, 
it is commonly held, create a larger output of goods, counted by weight and 
tale;(25*) but these are not hedonistic terms and should not be allowed to cloud 
the argument. In the hedonistic scheme the magnitude of goods, in all the 
dimensions to be taken [212] account of, is measured in terms of utility, which 
is a different matter from weight and tale. It is by virtue of their utility 
that they are "goods," not by virtue of their physical dimensions, number and 
the like; and utility is a matter of the production of pleasure and the 
prevention of pain. Hedonistically speaking, the amount of the goods, the 
magnitude of the output, is the quantity of utility derivable from their 
consumption; and the utility per unit decreases faster than the number of units 
increases.(26*) It follows that in the typical or undifferentiated case an 
increase of the number of units beyond a certain critical point entails a 
decrease of the "total effective utility" of the supply.(27*) This critical 
point seems ordinarily to be very near the point of departure of the curve of 
declining utility, perhaps it frequently coincides with the latter. On the curve 
of declining final utility, at any point whose tangent cuts the axis of 
ordinates at an angle of less than 45 degrees, an increase of the number of 
units entails a decrease of the "total effective utility of the supply,"(28*) so 
that a gain in physical [213] productivity is a loss as counted in "total 
effective utility." Hedonistically, therefore, the productivity in such a case 
diminishes, not only relatively to the (physical) magnitude of the productive 
agents, but absolutely. This critical point, of maximum "total effective 
utility," is, if the practice of shrewd business men is at all significant, 
commonly somewhat short of the point of maximum physical productivity, at least 
in modern industry and in a modern community.
The "total effective utility" may commonly be increased by decreasing the output 
of goods. The "total effective utility" of wages may often be increased by 
decreasing the amount (value) of the wages per man, particularly if such a 
decrease is accompanied by a rise in the price of articles to be bought with the 
wages. Hedonistically speaking, it is evident that the point of maximum net 
productivity is the point at which a perfectly shrewd business management of a 
perfect monopoly would limit the supply; and the point of maximum (hedonistic) 
remuneration (wages and interest) is the point which such a management would fix 
on in dealing with a wholly free, perfectly competitive supply of labor and 
capital.
Such a monopolistic state of things, it is true, would not answer to Mr. Clark's 
ideal. Each man would not be "paid an amount that equals the amount of the total 
product that he personally creates," but he would commonly be paid an amount 
that (hedonistically, in point of "effective utility ") exceeds what he 
personally creates, because of the high final utility of what he receives.
[214] This is easily proven. Under the monopolistic conditions supposed, the 
laborers would, it is safe to assume, not be fully employed all the time; that 
is to say, they would be willing to work some more in order to get some more 
articles of consumption; that is to say, the articles of consumption which their 
wages offer them have so high a utility as to afford them a consumer's surplus, 
- the articles are worth more than theyy Cost: (29*) Q. E. D.
The initiated may fairly doubt the soundness of the chain of argument by which 
these heterodox theoretical results are derived from Mr. Clark's hedonistic 
postulates, more particularly since the adepts of the school, including Mr. 
Clark, are not accustomed to draw conclusions to this effect from these 
premises. Yet the argument proceeds according to the rules of marginal-utility 
permutations. In view of this scarcely avoidable doubt, it may be permitted, 
even at the risk of some tedium, to show how the facts of every-day life bear 
out this unexpected turn of the law of natural distribution, as briefly traced 
above. The principle involved is well and widely accepted. The familiar 
practical maxim of "charging what the traffic will bear" rests on a principle of 
this kind, and affords one of the readiest practical illustrations of the 
working of the hedonistic calculus. The principle involved is that a larger 
aggregate return (value) may be had by raising the return per unit to such a 
point as to somewhat curtail the demand. In practice it is recognised, in other 
words, that there is a critical point at which the value obtainable per unit, 
multiplied by the number of units that will be taken off at that price, will 
give the largest net aggregate result (in value to the [215] seller) obtainable 
under the given conditions. A calculus involving the same principle is, of 
course, the guiding consideration in all monopolistic buying and selling; but a 
moment's reflection will show that it is, in fact, the ruling principle in all 
commercial transactions and, indeed, in all business. The maxim of "charging 
what the traffic will bear" is only a special formulation of the generic 
principle of business enterprise. Business initiative, the function of the 
entrepreneur (business man) is comprehended under this principle taken in its 
most general sense.(30*) In business the buyer, it is held by the theorists, 
bids up to the point of greatest obtainable advantage to himself under the 
conditions prevailing, and the seller similarly bids down to the point of 
greatest obtainable net aggregate gain. For the trader (business man, 
entrepreneur) doing business in the open (competitive) market or for the 
business concern with a partial or limited monopoly, the critical point above 
referred to is, of course, reached at a lower point on the curve of price than 
would be the case under a perfect and unlimited monopoly, such as was supposed 
above; but the principle of charging what the traffic will bear remains intact, 
although the traffic will not bear the same in the one case as in the other.
Now, in the theories based on marginal (or "final") utility, value is an 
expression or measure of "effective utility" - or whatever equivalent term may 
be preferred. In operating on values, therefore, under the rule of charging what 
the traffic will bear, the sellers of a monopolised supply, e.g., must operate 
through the valuations of the buyers; that is to say, they must influence the 
final utility of the goods or services to such effect that the [216] "total 
effective utility" of the limited supply to the consumers will be greater than 
would be the "total effective utility" of a larger supply, which is the point in 
question. The emphasis falls still more strongly on this illustration of the 
hedonistic calculus, if it is called to mind that in the common run of such 
limitations of supply by a monopolistic business management the management would 
be able to increase the supply at a progressively declining cost beyond the 
critical point by virtue of the well-known principle of increasing returns from 
industry. It is also to be added that, since the monopolistic business gets its 
enhanced return from the margin by which the "total effective utility" of the 
limited supply exceeds that of a supply not so limited, and since there is to be 
deducted from this margin the costs of monopolistic management in addition to 
other costs, therefore the enhancement of the "total effective utility" of the 
goods to the consumer in the case must be appreciably larger than the resulting 
net gains to the monopoly.
By a bold metaphor - a metaphor sufficiently bold to take it out of the region 
of legitimate figures of speech - the gains that come to enterprising business 
concerns by such monopolistic enhancement of the "total effective utility" of 
their products are spoken of as "robbery," It extortion," "plunder"; but the 
theoretical complexion of the case should not be overlooked by the hedonistic 
theorist in the heat of outraged sentiment. The monopolist is only pushing the 
principle of all business enterprise (free competition) to its logical 
conclusion; and, in point of hedonistic theory, such monopolistic gains are to 
be accounted the "natural" remuneration of the monopolist for his "productive" 
service to the community in enhancing their enjoyment per unit of consumable 
goods [217] to such point as to swell their net aggregate enjoyment to a 
maximum.
This intricate web of hedonistic calculations might be pursued further, with the 
result of showing that, while the consumers of the monopolised supply of goods 
are gainers by virtue of the enhanced "total effective utility" of the goods, 
the monopolists who bring about this result do so in great part at their own 
cost, counting cost in terms of a reduction of "total effective utility." By 
injudiciously increasing their own share of goods, they lower the marginal and 
effective utility of their wealth to such a point as, probably, to entail a 
considerable (hedonistic) privation in the shrinkage of their enjoyment per 
unit. but it is not the custom of economists, nor does Mr. Clark depart from 
this custom, to dwell on the hardships of the monopolists. This much may be 
added, however, that this hedonistically consistent exposition of the "natural 
law of final productivity" shows it to be It one of those universal principles 
which govern economic life in all its stages of evolution," even when that 
evolution enters the phase of monopolistic business enterprise, - granting 
always the sufficiency of the hedonistic postulates from which the law is 
derived. Further, the considerations reviewed above go to show that, on two 
counts, Mr. Clark's crusade against monopoly in the later portion of his 
treatise is out of touch with the larger theoretical speculations of the earlier 
portions: (a) it runs counter to the hedonistic law of "natural" distribution; 
and (b) the monopolistic business against which Mr. Clark speaks is but the 
higher and more perfect development of that competitive business enterprise 
which he wishes to reinstate, - competitive business, so called, being 
incipiently monopolistic enterprise.
[218] Apart from this theoretical hearing, the measures which Mr. Clark 
advocates for the repression of monopoly, under the head of applications "to 
modern problems of industry and public policy," may be good economic policy or 
they may not, - they are the expression of a sound common sense, an unvitiated 
solicitude for the welfare of mankind, and a wide information as to the facts of 
the situation. The merits of this policy of repression, as such, cannot be 
discussed here. On the other hand, the relation of this policy to the 
theoretical groundwork of the treatise needs also not be discussed here, 
inasmuch as it has substantially no relation to the theory. In this later 
portion of the volume Mr. Clark does not lean on doctrines of "final utility," 
"final productivity," or, indeed, on hedonistic economics at large. He speaks 
eloquently for the material and cultural interests of the community, and the 
references to his law of "natural distribution" might be cut bodily out of the 
discussion without lessening the cogency of his appeal or exposing any weakness 
in his position. Indeed, it is by no means certain that such an excision would 
not strengthen his appeal to men's sense of justice by eliminating irrelevant 
matter.
Certain points in this later portion of the volume, however, where the argument 
is at variance with specific articles of theory professed by Mr. Clark, may be 
taken up, mainly to elucidate the weakness of his theoretical position at the 
points in question. He recognises with more than the current degree of freedom 
that the growth and practicability of monopolies under modern conditions is 
chiefly due to the negotiability of securities representing capital, coupled 
with the joint-stock character of modern business concerns.(31*) These features 
of the modern [219] (capitalistic) business situation enable a sufficiently few 
men to control a section of the community sufficiently large to make an 
effective monopoly. The most effective known form of organisation for purposes 
of monopoly, according to Mr. Clark, is that of the holding company, and the 
ordinary corporation follows it closely in effectiveness in this respect. The 
monopolistic control Is effected by means of the vendible securities covering 
the capital engaged. To meet the specifications of Mr. Clark's theory of 
capital, these vendible securities - as e.g., the securities (common stock) of a 
holding company - should be simply the formal evidence of the ownership of 
certain productive goods and the like. Yet, by his own showing, the ownership of 
a share of productive goods proportionate to the face value, or the market 
value, of the securities is by no means the chief consequence of such an issue 
of securities.(32*) One of the consequences, and for the purposes of Mr. Clark's 
argument the gravest consequence, of the employment of such securities, is the 
dissociation of ownership from the control of the industrial equipment, whereby 
the owners of certain securities, which stand in certain immaterial, technical 
relations to certain other securities, are enabled arbitrarily to control the 
use of the industrial equipment covered by the latter. These are facts of the 
modern organisation of capital, affecting the productivity of the industrial 
equipment and its serviceability both to its owners and to the community. They 
are facts, though not physically tangible objects; and they have an effect on 
the serviceability of industry no less decisive than the effect which any group 
of physically tangible objects of equal market value have. They are, moreover, 
facts which are bought and sold in the purchase and sale of these securities, 
as, [220] e.g., the common stock of a holding company. They have a value, and 
therefore they have a "total effective utility."
In short, these facts are intangible assets, which are the most consequential 
element in modern capital, but which have no existence in the theory of capital 
by which Mr. Clark aims to deal with "modern problems of industry." Yet, when he 
comes to deal with these problems, it is, of necessity, these intangible assets 
that immediately engage his attention. These intangible assets are an outgrowth 
of the freedom of contract under the conditions imposed by the machine industry; 
yet Mr. Clark proposes to suppress this category of intangible assets without 
prejudice to freedom of contract or to the machine industry, apparently without 
having taken thought of the lesson which he rehearses (pp. 390-390 from the 
introduction of the holding company, with its "sinister perfection," to take the 
place of the (less efficient) "trust" when the latter was dealt with somewhat as 
it is now proposed to deal with the holding company. One is tempted to remark 
that a more naive apprehension of the facts of modern capital would have 
afforded a more competent realisation of the problems of monopoly.

It appears from what has just been said of Mr. Clark's "natural" distribution 
and of his dealing with the problems of modern industry that the logic of 
hedonism is of no avail for the theory of business affairs. Yet it is held, 
perhaps justly, that the hedonistic interpretation may be of great avail in 
analysing the industrial functions of the community, in their broad, generic 
character, even if it should not serve so well for the intricate details of the 
modern business situation. It may be at least a serviceable hypothesis for the 
outlines of economic theory, for the first approximations to the "economic laws" 
sought [221] by taxonomists. To be serviceable for this purpose, the hypothesis 
need perhaps not be true to fact, at least not in the final details of the 
community's life or without material qualification;(33*) but it must at least 
have that ghost of actuality that is implied in consistency with its own 
corollaries and ramifications.
As has been suggested in an earlier paragraph, it is characteristic of 
hedonistic economics that the large and central element in its theoretical 
structure is the doctrine of distribution. Consumption being taken for granted 
as a quantitative matter supply, - essentially a matter of an insatiable 
appetite, - economics becomes a theory of acquisition; production is, 
theoretically, a process of acquisition, and distribution a process of 
distributive acquisition. The theory of production is drawn in terms of the 
gains to be acquired by production; and under competitive conditions this means 
necessarily the acquisition of a distributive share of what is available. The 
rest of what the facts of productive industry include, as, e.g., the facts of 
workmanship or the "state of the industrial arts," gets but a scant and 
perfunctory attention. Those matters are not of the theoretical essence of the 
scheme. Mr. Clark's general theory of production does not differ substantially 
from that commonly professed by the marginal-utility school. It is a theory of 
competitive acquisition. An inquiry into the principles of his doctrine, 
therefore, as they appear, e.g., in the early chapters of the Essentials, is, in 
effect, an inquiry into the competence of the main theorems of modern hedonistic 
economics.
"All men seek to get as much net service from material wealth as they can." 
"Some of the benefit received is neutralised by the sacrifice incurred; but 
there is a net surplus of gains not thus canceled by sacrifices, and the [222] 
generic motive which may properly be called economic is the desire to make this 
surplus large."(34*). It is of the essence of the scheme that the acquisitive 
activities of mankind afford a net balance of pleasure. It is out of this net 
balance, presumably, that "the consumer's surpluses" arise, or it is in this 
that they merge. This optimistic conviction is a matter of presumption, of 
course; but it is universally held to be true by hedonistic economists, 
particularly by those who cultivate the doctrines of marginal utility. It is not 
questioned and not proven. It seems to be a surviving remnant of the eighteenth-
century faith in a benevolent Order of Nature; that is to say, it is a 
rationalistic metaphysical postulate. It may be true or not, as matter of fact; 
but it is a postulate of the school, and its optimistic bias runs like a red 
thread through all the web of argument that envelops the "normal" competitive 
system. A surplus of gain is normal to the theoretical scheme.
The next great theorem of this theory of acquisition is at cross-purposes with 
this one. Men get useful goods only at the cost of producing them, and 
production is irksome, painful, as has been recounted above. They go on 
producing utilities until, at the margin, the last increment of utility in the 
product is balanced by the concomitant increment of disutility in the way of 
irksome productive effort, - labor or abstinence. At the margin, pleasure-gain 
is balanced by pain-cost. But the "effective utility" of the total product is 
measured by that of the final unit; the effective utility of the whole is given 
by the number of units of product multiplied by the effective utility of the 
final unit; while the effective disutility (pain-cost) of the whole is similarly 
measured by the pain-cost of the final unit. The "total effective [223] utility" 
of the producer's product equals the "total effective disutility" of his pains 
of acquisition. Hence there is no net surplus of utility in the outcome.
The corrective objection is ready to hand,(35*) that, while the balance of 
utility and disutility holds at the margin, it does not hold for the earlier 
units of the product, these earlier units having a larger utility and a lower 
cost, and so leaving a large net surplus of utility, which gradually declines as 
the margin is approached. But this attempted correction evades the hedonistic 
test. It shifts the ground from the calculus to the objects which provoke the 
calculation. Utility is a psychological matter, a matter of pleasurable 
appreciation, just as disutility, conversely, is a matter of painful 
appreciation. The individual who is held to count the costs and the gain in this 
hedonistic calculus is, by supposition, a highly reasonable person. He counts 
the cost to him as an individual against the gain to him as an individual. He 
looks before and after, and sizes the whole thing up in a reasonable course of 
conduct. The "absolute utility" would exceed the "effective utility" only on the 
supposition that the "producer" is an unreflecting sensory apparatus, such as 
the beasts of the field are supposed to be, devoid of that gift of appraisement 
and calculation which is the hypothetical hedonist's only human trait. There 
might on such a supposition - if the producer were an intelligent sensitive 
organism simply - emerge an excess of total pleasure over total pain, but there 
could then be no talk of utility or of disutility, since these terms imply 
intelligent reflection, and they are employed because they do so. The hedonistic 
producer looks to his own cost and gain, as an intelligent pleasure-seeker whose 
consciousness compasses the contrasted elements as wholes. He does not contrast 
[224] the balance of pain and pleasure in the morning with the balance of pain 
and pleasure in the afternoon, and say that there is so much to the good because 
he was not so tired in the morning. Indeed, by hypothesis, the pleasure to be 
derived from the consumption of the product is a future, or expected, pleasure, 
and can be said to be present, at the point of time at which a given unit of 
pain-cost is incurred, only in anticipation; and it cannot be said that the 
anticipated pleasure attaching to a unit of product which emerges from the 
effort of the producer during the relatively painless first hour's work exceeds 
the anticipated pleasure attaching to a similar unit emerging from the second 
hour's work. Mr. Clark has, in effect, explained this matter in substantially 
the same way in another connection (e.g., p. 42), where he shows that the 
magnitude on which the question of utility and cost hinges is the "total 
effective utility," and that the "total absolute utility" is a matter not of 
what hedonistically is, in respect of utility as an outcome of production, but 
of what might have been under different circumstances.
An equally unprofitable result may be reached from the same point of departure 
along a different line of argument. Granting that increments of product should 
be measured, in respect of utility, by comparison with the disutility of the 
concomitant increment of cost, then the diagrammatic arguments commonly employed 
are inadequate, in that the diagrams are necessarily drawn in two dimensions 
only, - length and breadth: whereas they should be drawn in three dimensions, so 
as to take account of the intensity of application as well as of its 
duration.(36*)
[225] Apparently, the exigencies of graphic representation, fortified by the 
presumption that there always emerges a surplus of utility, have led marginal-
utility theorists, in effect, to overlook this matter of intensity of 
application.
When this element is brought in with the same freedom as the other two 
dimensions engaged, the argument will, in hedonistic consistency, run somewhat 
as follows,- the run of the facts being what it may. The producer, setting out 
on this irksome business, and beginning with the production of the exorbitantly 
useful initial unit of product, will, by hedonistic necessity, apply himself to 
the task with a correspondingly extravagant intensity, the irksomeness 
(disutility) of which necessarily rises to such a pitch as to leave no excess of 
utility in this initial unit of product above the concomitant disutility of the 
initial unit of productive effort.(37*) As the utility of subsequent units of 
product progressively declines, so will the producer's intensity of irksome 
application concomitantly decline, maintaining a nice balance between utility 
and disutility throughout. There is, therefore, no excess of "absolute utility" 
above "effective utility" at any point on the curve, and no excess of "total 
absolute utility" above "total effective utility" of the product as a whole, nor 
above the "total absolute disutility" or the "total effective disutility" of the 
pain-cost.
A transient evasion of this outcome may perhaps be sought by saying that the 
producer will act wisely, as a [226] good hedonist should, and save his energies 
during the earlier moments of the productive period in order to get the best 
aggregate result from his day's labor, instead of spending himself in ill-
advised excesses at the outset. Such seems to be the fact of the matter, so far 
as the facts wear a hedonistic complexion; but this correction simply throws the 
argument back on the previous position and concedes the force of what was there 
claimed. It amounts to saying that, instead of appreciating each successive unit 
of product in isolated contrast with its concomitant unit of irksome productive 
effort, the producer, being human, wisely looks forward to his total product and 
rates it by contrast with his total pain-cost. Whereupon, as before, no net 
surplus of utility emerges, under the rule which says that irksome production of 
utilities goes on until utility and disutility balance.
But this revision of "final productivity" has further consequences for the 
optimistic doctrines of hedonism. Evidently, by a somewhat similar line of 
argument the "consumer's surplus" will be made to disappear, even as this that 
may be called the "producer's surplus" has disappeared. Production being 
acquisition, and the consumer's cost being cost of acquisition, the argument 
above should apply to the consumer's case without abatement. On considering this 
matter in terms of the hedonistically responsive individual concerned, with a 
view to determining whether there is, in his calculus of utilities and costs, 
any margin of uncovered utilities left over after be has incurred all the 
disutilities that are worth while to him, - instead of proceeding on a 
comparison between the pleasure-giving capacity of a given article and the 
market price of the article, all such alleged differential advantages within the 
scope of a single sensory [227] are seen to be nothing better than an illusory 
diffractive effect due to a faulty instrument.
But the trouble does not end here. The equality: pain-cost = pleasure-gain, is 
not a competent formula. It should be: pain-cost incurred = pleasure-gain 
anticipated. And between these two formulas lies the old adage, "there's many a 
slip 'twixt the cup and the lip." In an appreciable proportion of ventures, 
endeavors, and enterprises, men's expectations of pleasure-gain are in some 
degree disappointed, - through miscalculation, through disserviceable secondary 
effects of their productive efforts, by "the act of God," by fire, flood, and 
pestilence." In the nature of things these discrepancies fall out on the side of 
loss more frequently than on that of gain. After all allowance has been made for 
what may be called serviceable errors, there remains a margin of disserviceable 
error, so that pain-cost > eventual pleasure-gain = anticipated pleasure-gain - 
n. Hence, in general, pain-cost > pleasure-gain. Hence it appears that, in the 
nature of things, men's pains of production are underpaid by that much; although 
it may, of course, be held that the nature of things at this point is not 
"natural" or normal."
To this it may be objected that the risk is discounted. Insurance is a practical 
discounting of risk; but insurance is resorted to only to cover risk that is 
appreciated by the person exposed to it, and it is such risks as are not 
appreciated by those who incur them that are chiefly in question here. And it 
may be added that insurance has hitherto not availed to equalise and distribute 
the chances of success and failure. Business gains - enterpreneur's gains, the 
rewards of initiative and enterprise - come out of this uncovered margin of 
adventure, and the losses [228] of initiative and enterprise are to be set down 
to the same account. In some measure this element of initiative and enterprise 
enters into all economic endeavor. And it is not unusual for economists to 
remark that the volume of unsuccessful or only partly successful enterprise is 
very large. There are some lines of enterprise that are, as one might say, extra 
hazardous, in which the average falls out habitually on the wrong side of the 
account. Typical of this class is the production of the precious metals, 
particularly as conducted under that régime of free competition for which Mr. 
Clark speaks. It has been the opinion, quite advisedly, of such economists of 
the classic age of competition as J. S. Mill and Cairnes, e.g., that the world's 
supply of the precious metals has been got at an average or total cost exceeding 
their value by several fold. The producers, under free competition at least, are 
over-sanguine of results.
But, in strict consistency, the hedonistic theory of human conduct does not 
allow men to be guided in their calculation of cost and gain, when they have to 
do with the precious metals, by different norms from those which rule their 
conduct in the general quest of gain. The visible difference in this respect 
between the production of the precious metals and production generally should be 
due to the larger proportions and greater notoriety of the risks in this field 
rather than to a difference in the manner of response to the stimulus of 
expected gain. The canons of hedonistic calculus permit none but a quantitative 
difference in the response. What happens in the production of the precious 
metals is typical of what happens in a measure and more obscurely throughout the 
field of productive effort.
Instead of a surplus of utility of product above the disutility of acquisition, 
therefore, there emerges an [229] average or aggregate net hedonistic deficit. 
On a consistent marginal-utility theory, all production is a losing game. The 
fact that Nature keeps the bank, it appears, does not take the hedonistic game 
of production out of the general category known of old to that class of sanguine 
hedonistic calculators whose day-dreams are filled with safe and sane schemes 
for breaking the bank. "Hope springs eternal in the human breast." Men are 
congenitally over-sanguine, it appears; and the production of utilities is, 
mathematically speaking, a function of the pig-headed optimism of mankind. It 
turns out that the laws of (human) nature malevolently grind out vexation for 
men instead of benevolently furthering the greatest happiness of the greatest 
number. The sooner the whole traffic ceases, the better, - the smaller will be 
the net balance of pain. The great hedonistic Law of Nature turns out to be 
simply the curse of Adam, backed by the even more sinister curse of Eve.

The remark was made in an earlier paragraph that Mr. Clark's theories have 
substantially no relation to his practical proposals. This broad declaration 
requires an equally broad qualification. While the positions reached in his 
theoretical development count for nothing in making or fortifying the positions 
taken on "problems of modern industry and public policy," the two phases of the 
discussion - the theoretical and the pragmatic - are the outgrowth of the same 
range of preconceptions and run back to the same metaphysical ground. The 
present canvass of items in the doctrinal system has already far overpassed 
reasonable limits, and it is out of the question here to pursue the exfoliation 
of ideas through Mr. Clark's discussion of public questions, even in the 
fragmentary fashion in which scattered items of the [230] theoretical portion of 
his treatise have been passed in review. Put a broad and rudely drawn 
characterisation may yet be permissible. This latter portion of the volume has 
the general complexion of a Bill of Rights. This is said, of course, with no 
intention of imputing a fault. It implies that the scope and method of the 
discussion is governed by the preconception that there is one right and 
beautiful definitive scheme of economic life, "to which the whole creation 
tends." Whenever and in so far as current phenomena depart or diverge from this 
definitive "natural" scheme or from the straight and narrow path that leads to 
its consummation, there is a grievance to be remedied by putting the wheels back 
into the rut. The future, such as it ought to be the only normally possible, 
natural future scheme of life, - is known by the light of this preconception; 
and men have an indefeasible right to the installation and maintenance of those 
specific economic relations, expedients, institutions, which this "natural" 
scheme comprises, and to no others. The consummation is presumed to dominate the 
course of things which is presumed to lead up to the consummation. The measures 
of redress whereby the economic Order of Nature is to renew its youth are 
simple, direct, and short-sighted, as becomes the proposals of pre-Darwinian 
hedonism, which is not troubled about the exuberant uncertainties of cumulative 
change. No doubt presents itself but that the community's code of right and 
equity in economic matters will remain unchanged under changing conditions of 
economic life.

NOTES:
1) The Essentials of Economic Theory, as Applied to Modern Problems of Industry 
and Public Policy. By John Bates Clark. New York: The Macmillan Company, 1907.
2) Cf., e.g. The Distribution of Wealth, p. 376, note.
3) See, e.g., J. S. Mill, Political Economy, Book I; Marshall, Principles of 
Economics, Vol. I, Books II-V.
4) Cf., e.g., such an account as Barrows, Ethno-botany of the Coahuilla Indians.
5) What would be the scientific rating of the work of a botanist who should 
spend his energy in devising ways and means to neutralize the ecological 
variability of plants, or of a physiologist who conceived it the end of his 
scientific endeavors to rehabilitate the vermiform appendix or the pineal eye, 
or to denounce and penalize the imitative coloring of the Viceroy butterfly? 
What scientific interest would attach to the matter if Mr. Loeb, e.g., should 
devote a few score pages to canvassing the moral responsibilities incurred by 
him in his parental relation to his partheno-genetically developed sea-urchin 
eggs?
Those phenomena which Mr. Clark characterizes as "positive perversions" may be 
distasteful and troublesome, perhaps, but "the economic necessity of doing what 
is legally difficult" is not of the "essentials of theory."
6) It is a notable fact that even the genius of Herbert Spencer could extract 
nothing but taxonomy from his hedonistic postulates; e.g., his Social Statics. 
Spencer is both evolutionist and hedonist, but it is only by recourse to other 
factors, alien to the rational hedonistic scheme, such as habit, delusions, use 
and disuse, sporadic variation, environmental forces, that he is able to achieve 
anything in the way of genetic science, since it is only by this recourse that 
lie is enabled to enter the field of cumulative change within which the modern 
post-Darwinian sciences live and move and have their being.
7) "The capital-goods have to be taken unit by unit if their value for 
productive purposes is to be rightly gauged. A part of a supply of potatoes is 
traceable to the hoes that dig them. ... We endeavor simply to ascertain how 
badly the loss of one hoe would affect us or how much good the restoration of it 
would do us. This truth, like the foregoing ones, has a universal application in 
economics; for primitive men as well as civilized ones must estimate the 
specific productivity of the tools that they use," etc, Page 43.
8) Cf. a criticism of Mr. Fisher's conception in the Political Science Quarterly 
for February, 1908.
9) "The machine itself is often a hopeless specialist. It can do one minute 
thing and that only, and when a new and better device appears for doing that one 
thing, the machine has to go, and not to some new employment, but to the junk 
heap. There is thus taking place a considerable waste of capital in consequence 
of mechanical and other progress." "Indeed, a quick throwing away of instruments 
which have barely begun to do their work is often the secret of the success of 
an enterprising manager, but it entails a destruction of capital."
10) The position of the laborer and his wages, in this light, would not be 
substantially different from that of the capitalist and his interest. Labor is 
no more possible, as a fact of industry, without the community's accumulated 
technological knowledge than is the use of "productive goods."
11) Cf. Distribution of Wealth, chaps. xii, xiii, vii, viii; Essentials, chaps. 
v-x.
12) Essentials, p. 158.
13) Distribution, chap. xxiv.
14) Chap. xxiv.
15) Essentials, p. 40.
16) Among modern economic hedonists, including Mr. Clark, there stands over from 
the better days of the order of nature a presumption, disavowed, but often 
decisive, that the sensational response to the like mechanical impact of the 
stimulating body is the same in different individuals. But, while this 
presumption stands ever in the background, and helps to many important 
conclusions, as in the case under discussion, few modern hedonists would 
question the statement in the text.
17) Distribution. p. 394.
18) In Mr. Clark's discussion, elsewhere, the "quasi"-character of the 
productive share of the laborer is indicated by saying that it is the product 
"imputed" or "imputable" to him.
19) Essentials, p. 92. Et si sensus deficit, ad firmandum cor sincerum sola 
fides sufficit.
20) See pp. 102-113; also p, 172, note.
21) "The cheapest and poorest grades of articles." Page 113
22) See p. 113.
23) The disappearance, and the method of disappearance, of such elements of 
differential utility and disutility occupies a very important place in all 
marginal-utility ("final-utility") theories of market value, or "objective 
value."
24) Only the simplest and cheapest things that are sold in the market at all 
bring just what they are worth to the buyers," Page 113.
25) it is, e.g., open to serious question whether Mr. Clark's curves of final 
productivity (pp. 139, 148), showing a declining output per unit in response to 
an increase of one of the complementary agents of production, will fit the 
common run of industry in case the output be counted by weight and tale. In many 
cases they will, no doubt; in many other cases they will not. But this is no 
criticism of the curves in question, since they do not, or at least should not, 
purport to represent the product in such terms, but in terms of utility.
26) To resort to an approximation after the manner of Malthus, if the supply of 
goods be supposed to increase by arithmetical progression, their final utility 
may be said concomitantly to decrease by geometrical progression.
27) Cf. Essentials, chap. iii, especially pp. 40-41.
28) The current marginal-utility diagrams are not of much use in this 
connection, because the angle of the tangent with the axis of ordinates, at any 
point, is largely a matter of the draftsman's taste. The abscissa and the 
ordinate do not measure commensurable units. The units on the abscissa are units 
of frequency, while those on the ordinate are units of amplitude; and the 
greater or less segment of line allowed per unit on either axis is a matter of 
independently arbitrary choice. Yet the proposition in the text remains true,- 
as true as hedonistic propositions commonly are. The magnitude of the angle of 
the tangent with the axis of ordinates decides whether the total (hedonistic) 
productivity at a given point in the curve increases or decreases with a 
(mechanical) increase of the productive agent,- no student at [213] all familiar 
with marginal-utility arguments will question that patent fact. But the angle of 
the tangent depends on the fancy of the draftsman,- no one possessed of the 
elemental mathematical notions will question that equally patent fact.
29) A similar line of argument has been followed up by Mr. Clark for capital and 
interest, in a different connection. See Essentials, pp. 340-345, 356.
30) Cf. Essentials, pp. 83-90, 118-120.
31) Cf. chap. xxii, especially pp. 378-392.
32) Cf. p. 391.
33) Cf. Essentials, p. 39.
34) Essentials, p. 39.
35) Cf. Essentials, chap. iii, especially pp. 51-56.
36) This difficulty is recognized by the current marginal-utility arguments, and 
an allowance for intensity is made or presumed. But the allowance admitted is 
invariably insufficient. It might be said to be insufficient by hypothesis, 
since it is by hypothesis too small to offset the factor which it is admitted to 
modify.
37) The limit to which the intensity rises is a margin of the same kind as that 
which limits the duration. This supposition, that the intensity of application 
necessarily rises to such a pitch that its disutility overtakes and offsets the 
utility of the product, may be objected to as a bit of puerile absurdity; but it 
is a long time since puerility or absurdity has been a bar to any supposition in 
arguments on marginal utility.
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