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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Acquired Utility of Commodities.

The Theory of Exchange, as explained above, rests entirely on the consideration of quantities of utility, and no reference to labour or cost of production has been made. The value of a divisible commodity, if I may for a moment use the dangerous term, is measured, not, indeed, by its total utility, but by its final degree of utility, that is by the intensity of the need we have for more of it. But the power of exchanging one commodity for another greatly extends the range of utility. We are no longer limited to considering the degree of utility of a commodity as regards the wants of its immediate possessor; for it may have a higher usefulness to some other person, and can be transferred to that person in exchange for some commodity of a higher degree of utility to the purchaser. The general result of exchange is, that all commodities sink, as it were, to the same level of utility in respect of the last portions consumed.

In the Theory of Exchange we find that the possessor of any divisible commodity will exchange such a portion of it, that the next increment would have exactly equal utility with the increment of other produce which he would receive for it. This will hold good however various may be the kinds of commodity he requires. Suppose that a person possesses one single kind of commodity, which we may consider to be money, or income, and that p,q,r,s,t, etc., are quantities of other commodities which he purchases with portions of his income. Let x be the uncertain quantity of money which he will desire not to exchange; what relation will exist between these quantities x,p,q,r, etc.? This relation will partly depend upon the ratio of exchange, partly on the final degree of utility of these commodities. Let us assume, for a moment, that all the ratios of exchange are equalities, or that a unit of one is always to be purchased with a unit of another. Then, plainly, we must have the degrees of utility equal, otherwise there would be advantage in acquiring more of that possessing the higher degree of utility. Let the sign f denote the function of utility, which will be different in each case; then we have simply the equations—

f¹x = f²p = f³q = f⁴r = f⁵s = etc.

But, as a matter of fact, the ratio of exchange is seldom or never that of unit for unit; and when the quantities exchanged are unequal, the degrees of utility will not be equal. If for one pound of silk I can have three of cotton, then the degree of utility of cotton must be a third that of silk, otherwise I should gain by exchange. Thus the general result of the facility of exchange prevailing in a civilised country is, that a person procures such quantities of commodities that the final degrees of utility of any pair of commodities are inversely as the ratios of exchange of the commodities.

Let x¹, x², x³, x⁴, etc., be the portions of his income given for p,q,r,s, etc., respectively, then we must have

and so on. The theory thus represents the fact, that a person distributes his income in such a way as to equalise the utility of the final increments of all commodities consumed. As water runs into hollows until it fills them up to the same level, so wealth runs into all the branches of expenditure. This distribution will vary greatly with different individuals, but it is self-evident that the want which an individual feels most acutely at the moment will be that upon which he will expend the next increment of his income. It obviously follows that in expending a person's income to the greatest advantage, the algebraic sum of the quantities of commodity received or parted with, each multiplied by its final degree of utility, will be zero.

We can now conceive, in an accurate manner, the utility of money, or of that supply of commodity which forms a person's income. Its final degree of utility is measured by that of any of the other commodities which he consumes. What, for instance, is the utility of one penny to a poor family earning fifty pounds a year? As a penny is an inconsiderable portion of their income, it may represent one of the infinitely small increments, and its utility is equal to the utility of the quantity of bread, tea, sugar, or other articles which they could purchase with it, this utility depending upon the extent to which they were already provided with those articles. To a family possessing one thousand pounds a year, the utility of a penny may be measured in an exactly similar manner; but it will be much less, because their want of any given commodity will be satiated or satisfied to a much greater extent, so that the urgency of need for a pennyworth more of any article is much reduced.

The general result of exchange is thus to produce a certain equality of utility between different commodities, as regards the same individual; but between different individuals no such equality will tend to be produced. In Economics we regard only commercial transactions, and no equalisation of wealth from charitable motives is considered. The degree of utility of wealth to a very rich man will be governed by its degree of utility in that branch of expenditure in which he continues to feel the most need of further possessions. His primary wants will long since have been fully satisfied; he could find food, if requisite, for a thousand persons, and so, of course, he will have supplied himself with as much as he in the least desires. But so far as is consistent with the inequality of wealth in every community, all commodities are distributed by exchange so as to produce the maximum of benefit. Every person whose wish for a certain thing exceeds his wish for other things, acquires what he wants provided he can make a sufficient sacrifice in other respects. No one is ever required to give what he more desires for what he less desires, so that perfect freedom of exchange must be to the advantage of all.