CHAPTER I.

UTILITY.

§ 1. Meaning of Utility. In the introductory chapter it was pointed out that even material wealth cannot be regarded simply as consisting of things,' but must always be considered with an expressed or implied reference to human wants. A term is needed to call attention to this ever-present human element in economic phenomena, and the practice of economists has fixed upon utility as best conveying the meaning. Utility in this sense indicates "the capacity to satisfy a desire or serve a purpose.' It is thus the widest conception in political economy, and as it will be constantly referred to, requires careful investigation at the outset.

It will be observed that the definition as given is much more extensive than the popular signification would suggest.

In common thought, useful is often opposed to ornamental, and thus utility, the corresponding substantive, might be supposed to be only applied to things which are instrumental in rendering the more solid and important services. But in political economy a thing, which in ordinary language might be spoken of as useless in itself,1 possesses utility if it serves any purpose whatever.

The definition of utility here adopted requires also to be distinguished from that which is the basis of the utilitarian system of ethics. It is true that many economists under the influence of this system have assumed that the satis

1 Cf. Mill, p. 5.

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faction afforded by utility will always consist in increasing pleasure or alleviating pain. But in the view taken in the present work of the relation of political economy to ethics this assumption is unwarranted and misleading. It is worth recalling that Bentham himself admitted that utility, in this narrow sense, was an unfortunately chosen word, and it certainly ought not to bear this restricted and peculiar meaning in economic reasoning; for it cannot be said, without begging the answer to a most difficult and disputed psychological question, that even in the production and consumption of wealth men are actuated simply by considerations of pleasure and pain. What is called, for example, the effective desire of accumulation consists of a group of motives which we have no right to assume - are purely hedonistic, just as we ought not to suppose that people are honest merely because it is the best policy. Still less in the distribution of wealth amongst the different classes and members of a society are we justified in taking for granted a particular system of moral philosophy. The institution of private property may or may not afford the greatest happiness to the greatest number, but it is certainly not necessary in political economy to treat private property only from that point of view. Mill, for example, in comparing the relative merits of Socialism and Individualism says that "if a conjecture may be hazarded, the decision will probably depend mainly on one consideration; viz., which of the two systems is consistent with the greatest amount of human liberty and spontaneity." 2 Whether maximum liberty would necessarily lead to maximum happiness, it is beyond the domain of political economy to determine; from the economic standpoint utility must be regarded as morally colourless.

1 "Utility was an unfortunately chosen word. The idea it gives is a vague one. Dumont insists on retaining the word. He is bigoted, old, and indisposed to adopt what is new, even though it should be better.". Bentham's Conversations, Works, Vol. X., p. 582.

2 Principles, Bk. II., Ch. I., § 3.

The danger involved in restricting the meaning of utility to pleasure and pain is well illustrated by the following passage from Jevons, who more than any one professes to make utility the basis of economics. "My present purpose," he writes at the conclusion of his chapter on the relation of political economy to moral philosophy, "is accomplished in pointing out this hierarchy of feeling and assigning a proper place to the pleasures and pains with which economy deals. It is the lowest rank of feelings which we here treat. The calculus of utility aims at supplying the ordinary wants of man at the least cost of labour." 1

On this view not only is utility reduced to a balance of pleasure and pain, but economic utility is confined to the lowest rank.

A little reflection, however, will show that this division into higher and lower is purely arbitrary, and receives no sanction from the writings of the most eminent economists. Adam Smith, for example, discussed the economy of supplying the wants of a nation in defence, justice, education, and religion.2 Mill again observes: "After the means of subsistence are assured, the next in strength of the personal wants of human beings is liberty; and unlike the physical wants which as civilisation advances become more moderate and more amenable to control, it increases instead of diminishing in intensity as the intelligence and the moral faculties are more developed."

The popular hostility to political economy and the prevailing notion, as exemplified in the writings of Mr. Ruskin, that it is essentially immoral are largely due to the assumption that economists only deal with motives of the lowest rank. Take, for example, Mr. Ruskin's description of the teaching of the modern political economist: "As no laws but those of the devil are practicable in the world,

1 Similarly Professor Marshall speaks of political economy as dealing with the ordinary business of life.'

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2 Wealth of Nations, Bk. V.

so no impulses but those of the brute (says the modern political economist) are applicable in the world. Faith, generosity, honesty, zeal, and self-sacrifice are poetical phrases. None of these things can, in reality, be counted upon; there is no truth in man which can be used as a moving or productive power. All motive force in him is essentially brutish, covetous, or contentious. His power is only power of prey: otherwise than as the spider he cannot design; otherwise than as the tiger he cannot feed." It is needless to say that this opinion is not supported by quotations from any economist of repute.

§ 2. Economic Utility. If, however, the term utility is to be used in the wide sense indicated by the definition just given, it is plain that political economy can only deal either with certain kinds of utilities, or with utility in general in certain aspects. Now economic utilities, it is generally admitted, are distinguished by three characteristics: they are the result of labour, they are appropriated, and they are exchangeable. Labour, property, value, are in succession of fundamental importance in production, distribution, and exchange respectively, and will require careful analysis subsequently. In the meantime, however, a sufficient account must be given to throw light on the nature of economic utility. Labour, then, may be simply muscular and almost automatic, or it may involve the highest strain on the intellectual and moral faculties; the distinction turns not on the quality of the labour (whether higher or lower), but upon its association in general with the other two characteristics noted. Thus many forms of sport require severe muscular exertion and considerable technical skill; but labour of this kind is not economic (except indirectly), because the results are in general capable neither of appropriation nor of exchange.

1 Selections from the Writings of John Ruskin, p. 372. Contrast with this passage the treatment of Economic Motives by Dr. Keynes (Scope and Method of Political Economy). See, also, Professor Marshall's Principles (2d edition), p. 147.

Again, to go to the other extreme, many strivings after self-culture and religious and moral ideals involve labour of the highest kind; but in this case also political economy has in general little to say except indirectly. In other words, there are various personal qualities of the highest utility to the possessor which lie beyond the domain of political economy.

On the other hand, there are certain gifts of nature (notably land) which, although not the result of labour, form part of the economic foundations of society. In this case, however, there is scope for appropriation and exchange, and in general these natural sources require labour for their exploitation. If the gifts of nature, either owing to their abundance or their character, are exempt from appropriation and cannot be exchanged, they also claim little attention from the economist except indirectly. They are not, however, altogether excluded, because, as, for example, in the case of climatic influences, they are often closely associated with economic utilities proper.

Of appropriation, as characteristic of economic utilities, it is not necessary at this stage to say more than is implied ⚫ in common thought. It may, however, be well to observe that the conception is not limited to the private property of individuals. In all communities many important economic utilities, or forms of wealth, have been appropriated by the state or by various local bodies. Again, from the economic standpoint, it is often convenient to regard skill and other qualities of labour, even when labour is free, as capable of appropriation.1

The third characteristic of economic utilities, namely, value, is encrusted with difficulties. Most English economists, since Adam Smith, have abandoned the expressions "value in use" and "intrinsic value" as meaning on

1 Just as rent may be regarded as the sale of the use of land for a time, the payment being by instalments, -so of labour and wages. Cf. Maine's Village Communities, pp. 189, 190.