§ 11. The economic demands which make up the budget of a particular person at a particular time are clearly interdependent. A man's income or the greater part of it is usually distributed among various channels of expenditure in a certain fairly constant way. In proportion to the definiteness of this distribution and the resoluteness with which it is maintained does the impression gain strength that the man is carrying out a consistent plan of some sort. Such a regular plan of expenditure may be drawn out into a schedule, setting forth the amounts required at a certain price for the unit of each kind. And such a schedule is an expression in detail, in terms of ways and means, of the type of life one has elected to lead. For virtually any income above the level of bare physical subsistence, there will be an indefinite number of alternative budgets possible. A little less may be spent for household conveniences and adornments and a little more for food. Some recreations may be sacrificed for an occasional book or magazine. One may build a house or purchase a motor-car instead of going abroad. And whichever choice is made, related expenditures must be made in consequence for which, on the assumption of a definite amount of income, compensation must be made by curtailment of outlay at other points. What seems clear in general is that one's total budget is relative to the general plan and manner of life one deems for him the best possible and that this plan, more or less definitely formulated, more or less steadily operative, is what really determines how far expenditure shall go in this direction and in that. The budget as a whole will define for the individual an equilibrium among his various recognized wants; if the work of calculating it has been carefully done there will be for the time being no tendency to change in any item.
If, then, we choose to say in such a case that the individual carries his expenditure along each line to the precise point at which the last or marginal utility enjoyed is precisely equal to the marginal utility on every other line, it seems not difficult to grasp what such a statement means. Quite harmlessly, all that it can mean is that the individual has planned precisely what he has planned and is not sorry for it, and for the time being does not think he can improve upon it. As there is one earth drawing toward its center each billiard ball of the dozen in equilibrium in a bowl, so there is behind the budget of the individual one complex personal conception of a way of life that fixes more or less certainly and clearly the kinds and intensities of his wants and assigns to each its share of purchasing power. That the units or elements in equilibrium hold their positions with reference to each other for reasons capable of separate statement for each unit seems a supposition no less impossible in the one case than in the other. To think of each kind of want in the individual's nature as holding separately in fee simple and clamoring for full and separate "satisfaction" in its separate kind, is the characteristic illusion of a purely formal type of analysis. The permanence of a budget and its carrying out no doubt require the due and precise realization of each plotted marginal utility—to go further than this along any one line would inevitably mean getting not so far along certain others, and thus a distorted and disappointing total attainment in the end. But to say that one actually plans and controls his expenditures along various lines by the ultimate aim of attaining equivalent terminal utilities on each is quite another story. It is much like saying that the square inches of canvas assigned in a picture to sky and sea and crannied wall are arranged upon the principle of identical and equal effects for artist or beholder from the last inches painted of each kind. The formula of the equality of marginal effects is no constructive principle; it is only a concise if indeed somewhat grotesque way of phrasing the essential fact that no change of the qualitative whole is going to be made, because no imperfection in it as a whole is felt.[52]
§ 12. We come, then, to the problem of the individual's encounter with a new commodity. In general, a purchase in such a case must amount to more or less of a departure from the scheme of life in force and a transition over to a different one. And a new commodity (in the sense in which the term has been used above) is apt to be initially more tempting than an addition along some line of expenditure already represented in the budget. The latter, supposing there has been no change of price and no increase of income, is usually a mere irregularity, an insurgent departure from some one specification of a total plan without preliminary compensating adjustment or appropriate change at other points. The erratic outlay, if considerable, will result in sheer disorder and extravagance—indefensible and self-condemned on the principles of the individual's own economy. But with a new commodity the case stands differently. It is more interesting to consider a really new proposal than to reopen a case once closed when no evidence distinctly new is offered. A sheer "temptation" or an isolated impulse toward new outlay along a line already measured in one's scheme has the force of habit and a presumption of un-wisdom to overcome. If the case is one not of temptation but of "being urged" one is apt to answer, "No, I can make no use of any more of that." But a new commodity has the charm of its novelty, a charm consisting in the promise, in positive fashion, of new qualitative values about which a new entire schedule will have to be organized. Partly its strength of appeal lies in its radicalism; it gains ready attention not only by its promise but by its boldness. "Preparedness" gains a more ready acclaim than better schools or the extirpation of disease. The automobile and the "moving picture" probably have a vogue today far surpassing any use of earlier "equivalents" that a mere general augmentation of incomes could have brought about. Indeed, the economic danger of the middle classes in present-day society lies not in mere occasional excess at certain points but in heedless commitment to a showy and thinned-out scheme of life in which the elements are ill-chosen and ill-proportioned and from which, as a whole, abiding satisfaction cannot be drawn. It is where real and thoroughgoing change in the manner of life is hopeless that irregular intemperance of various sorts appears to bulk relatively largest as an economic evil.
Shall we not say, however, that the superior attraction of the new in competition with established lines of expenditure only indicates the greater "satiation" of the wants the latter represent and the comparative freshness of the wants the novelty will satisfy? On the contrary the latter wants are in the full sense not yet existent, the new satisfactions are untried and unmeasured; the older wants have the advantage of position, and if satiated today, will reassert themselves with a predictable strength tomorrow. The new wants, it is true, if they are acquired, will be part of a new system, but the present fact remains that their full meaning cannot be known in advance of trial and the further outlines of the new scheme of uses and values cannot be drawn up until this meaning has been learned. If, then, the new commodity is taken, it is not because the promised satisfaction and the sum of known utilities to be sacrificed are found equal, nor again because the new commodity will fit neatly into a place in the existing schedule that can be vacated for it. This latter is the case of substitution. Such an interpretation of the facts is retrospective only; it is a formal declaration that the exchange has been deemed on the whole worth while, but the reasons for this outcome such a formula is powerless to suggest.
In general the new commodity and the habits it engenders could not remain without effect upon a system into which they might be mechanically introduced. Certain items in the schedule, associated in use with those dispensed with for the new, must be rendered obsolete by the change. The new interests called into play will draw to themselves and to their further development attention which may be in large measure diverted from the interests of older standing. And in the new system all interests remaining over from the old will accordingly stand in a new light and their objects will be valued, will be held important, for reasons that will need fresh statement.[53]
In similar fashion it might be argued that the commodities or uses which one sacrifices for the sake of a new venture are inevitably more than a simple deduction that curtails one's schedule in a certain kind and amount. Such a deduction or excision must leave the remaining lines of the original complex hanging at loose ends. The catching-up of these and their coördination with the new interest must in any event amount, as has been contended, to a thoroughgoing reorganization. What must really happen then, in the event of action, is in principle nothing less than the disappearance of the whole from which the sacrificed uses are dissevered. These latter, therefore, stand in the process of decision as a symbol for the existing personal economy as a whole. The old order and the new confront each other as an accepted view of fact and a plausible hypothesis everywhere confront each other and the issue for the individual is the practical issue of making the transition to a new working level. To declare that the salient elements of the confronting complexes are quantitatively equivalent is only to announce in symbolic terms that the transition has been effected, the die cast.[54]
§ 13. The statement thus given has been purposely made, for many transactions of the sort referred to, something of an over-statement. If I contemplate purchasing a typewriter or a book on an unfamiliar but inviting subject it may well seem somewhat extravagant to describe the situation as an opposition between two schemes of life. Is the issue so momentous; is the act so revolutionary? But the purpose of our over-statement was simply to make clear the type of situation without regard to the magnitudes involved. No novelty that carries one in any respect beyond the range of existing habits can be wholly without its collateral effects nor can its proximate and proper significance be measured in advance. This is in principle as true of a relatively slight innovation as of a considerable one. And our present conscious exaggeration departs less widely from the truth than the alternative usual preoccupation of economic theory with the logic of routine desire and demand. For the phenomena of routine and habit are thereby made a standard by which all others, if indeed recognized as real at all, must be judged "exceptional." And, as we shall see, to do this introduces difficulty into certain parts of substantive economic theory.
Again, objection may attach to the view that equivalence of the "salient members" of the opposing systems is only another name for the comprehensive fact of the novelty's acceptance. For if we hesitate in such a case, is this not because we judge the price too high? What can this signify but that the service or satisfaction we expect from the novelty falls short of sufficing to convince us? And unless we are dealing with measured quantities, how can we come to this conclusion? Moreover, if the novel commodity is divided into units we may take a smaller quantity when the price demanded is "high" than if the price were lower. And does this not suggest predetermined value-magnitudes as data? But if one takes thus a smaller amount, as the argument contends, it is because there is a presumption of being able to make some important total use of it and there is no general reason apparent for supposing that this will be merely a fractional part of a larger but like significance that might be hoped for from a larger quantity. And on the other hand, the prospect simply may not tempt at all; the smaller quantity may be deemed an improbable support for a really promising total program and the present program will hold its ground, not seriously shaken. The total demand of a market for a given commodity is no doubt in some sort a mathematical function of the price. The lower the price the greater in some ratio will be the number of persons who will buy and in general the greater the number of units taken by those who are already buyers. But that such a proposition admits of statistical proof from the observation of a series of price changes in a market affords no presumption concerning the nature of the reasons that move any individual person to his action. The theoretical temptation is strong, here as elsewhere, in passing from the study of markets to the personal economy of the individual forthwith to find this also a trafficking in unit-quantities and marginal satisfactions to which the concepts and notation of market analysis will readily apply.
It remains to consider certain implications of this view of economic desire and demand.