This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
Suppose, now, that in a similar way, we were to take a number of things, X, Y, M, N, O, P, and Q (taking, of course, a definite amount and grade of each) and were to make an exact estimate of their respective degrees of importance. The accompanying diagram may be used to express in a graphic way the mathematical relations of the importance of any one expressed in terms of any one of the others. As a matter of convenience we may settle upon a particular one, Q, as a common unit for expressing or measuring the importance of each of the others in turn. This, in fact, is exactly what the fur-traders did. And we do the same in our use of a monetary unit as our standard for the expression and comparison of the relative importance of things.
* The dotted valuation line ab drawn through x and above y indicates that the valuation of x is greater than that of y, but the degree of the difference is left indefinite.
FIG. 1. ChoicE Between Two Objects.*
FIG. 2. Order or ChoicE Among Several Objects.
Viewed as the reflection of an act of choice, a valuation of goods appears to be a very simple fact. Yet underlying this simplicity would be found ordinarily a number of complex motives. Each valuation is a focus of many influences, a resultant of many conditions, some in the environment, and some in the nature and in the feeling of man. According as there is more or less of the various things to choose, and according as the person is more or less hungry or tired or cold or elated or downcast, any particular object may appear to be more or less important, may thus have a greater or less valuation.
§ 5. One's own labor as a valuation unit. A valuation involves more than a comparison between external objects. Often one's own labor is brought into the comparison. Choice frequently has to be made with reference to the limited strength and time of the subject, his laboring force. Here there is a twofold comparison; a good is compared with the labor required to secure it as well as with another good. When we are face to face with nature, and goods are to be secured only through our own labor applied to various materials, we are likely to estimate things habitually in terms of our own labor. Labor may under these circumstances become a common unit for the valuation of external things.
§ 6. Crusoe's scale of valuations. The economy of Robinson Crusoe serves to illustrate the problems which the individual has to solve when the relation is between man and nature, and not between man and man.
The unfailing interest which old and young find in the story of Crusoe is largely due to the convincing naturalness of the tale. Each reader feels that he would have done just the same things in just the same order, if he were in the same plight and had been cast ashore as the story relates.
I was wet and cold, and had no dry clothes to put on, no food to eat, not a friend to help me. ... I had but a knife and a pipe. . . . Where was I to go for the night? ... I went to a tree and made a kind of nest to sleep in. Then I cut a stick to keep off the beasts of prey in case they should come. . . . The next day ... I swam up to the wreck which was in a sand bank. My first thought was to look around for some food . . . and I ate some of it as I went to and fro, as there was no time to lose. There was, too, some rum, of which I took a good draught, and this gave me heart. ... I fell to work to make a raft. I found some bread and rice, a Dutch cheese, and some dried goat's flesh, . . . some fresh clothes and four guns, . . . with these I put to sea . . . and brought the raft safe to land with all her freight. . . .
The next day, as there was still a great store of things left in the ship, which would be of use to me, I thought I ought to bring them to land at once, for I knew that the first storm would break up the ship. . . . The first thing I sought was the tool-chest; and in it were some bags of nails, spikes, saws, knives, and such things; but best of all I found a stone to grind my tools on. There were two or three flasks, some large bags of shot, and a roll of lead. There were some spare sails too, which I brought to the shore.
Now that I had two freight of goods on hand, I made a tent with the ship's sails, to stow them in, and cut the poles for it from the wood.
The next day I had no great wish for work, but there was too much to be done for me to dwell long on my sad lot. Each day, as it came, I went off to the wreck to fetch more things and I brought back as much as the raft would hold. . . .
The last time I swam to the wreck I found some tea and some gold coin; but as to the gold it made me laugh to look at it. " O drug," said I; " thou art no use to me! I care not to save thee. Stay where thou art till the ship goes down; then go thou with it." Still I thought I might as well just take it. . . .
I have said not a word of my pets. You may guess how fond I was of them, as they were all the friends left to me. I brought a dog and two cats from the ship. - (Adapted from the abridged edition, published by H. Altemus, Philadelphia.)
Crusoe knew not at what moment the waves would sweep into the sea whatever was left. He had scant strength and time for the task. His labor was to be so distributed that he might save from the wrecked ship the most valuable contents. Did he choose well? First, to preserve his life he found a tree to sleep in, and a stick to ward off wild beasts. Then at the ship he took food, clothing, weapons and tools, and made a place to store them safe; and finally came gold and pets. We see how he ranks them then and there, and how different is the scale from that he. had before. His remark about the gold is whimsically suggestive of the old lingering standards of choice, and of the dim hope that he might return to live among men, and thus resume his old scale of values.
§ 7. Choice before and after valuation. It is usual to speak of the valuation which a person has (or holds or makes) of an object as preceding choice; but evidently this is not so in the case of instinctive choice, and many choices have in a measure this impulsive character. In case of a choice of a thing by a person for his own use the valuation is simply the resultant of choice; it is the arithmetic expression necessarily involved in the action and reveals to the person himself what he has done, how he values the object, rather than determines his action.
In a great many business transactions, however, one is not choosing for his own desires, but is trying to forecast the valuations of others to whom he will sell. There is often, in such cases, a long and careful attempt to express in exact figures the relative importance of different objects before a choice is finally made. In other cases the valuations precede the choice, when a conscious calculation is made of the relative effectiveness of things (heating power, food-value, etc.) and the relative difficulty of getting them (cost in money, distance to carry, etc.). In this sense of a careful estimate of the importance of a thing for business purposes, we speak of an assessor's valuation of property for purposes of taxation, an appraiser's valuation of imports, and a merchant's valuation of his stock-in-trade. This kind of commercial valuation usu-ally precedes choice by merchants.3