As the ultimate goal of economic effort is not the obtaining of goods but the satisfaction of human want, we are not finished with our subject till we have traced the finished good to its end and raison d’être in affording this satisfaction. In the present chapter, we have to consider cases where several goods contribute to one satisfaction, and to find what influence this satisfaction has upon their separate values. In such cases the “good” we have to value is, properly speaking, a group, and in the various forms taken by these groups, we meet with some puzzling and far-reaching peculiarities.
The class of Complementary goods, to use Menger’s term, is much wider than we are apt to suppose. In consumption goods, it tends to increase with the variety of modern wealth and the development of new tastes. Many of our enjoyments depend on the co-operation of a great many factors, of which usually one is prominent, and the others only assert themselves on rare occasions. Thus the part played by that insignificant commodity, salt, in most of the pleasures of the table, is never appreciated till the want of it—say, at a pic-nic—suggests how indispensable a complement it is. Among productive goods, again, where the division of labour is constantly adding to the number of factors which work together in the making of any good, the complementary character becomes even more apparent. The first thing to be noticed here is that the value of a group, as a group, is determined by the marginal utility of the group, not of the separate members. But, as each group may on occasion be broken up, the interesting question is as to the distribution of value among the members, the difference in value between goods as complements and goods as isolated articles.
The simplest case is where the single members of a group are all useless in any other form but that of the group, and are at the same time economically irreplaceable. In valuing boots, for instance, the “good” is the pair; if I lose one, I lose the entire utility. In such cases—which are, of course, comparatively rare—if I have had the pair and lose one, I lose the entire value of the pair: if I have one and obtain another, I gain the entire value of the pair. Here, then, the value of one single member of the group is the same as the value of the whole group.
This case, however, is really of importance only as introducing the others which follow; under the assumed conditions we are dealing with a good similar, say, to a pair of compasses or a pair of spectacles, which we can divide into two only at the cost of the whole; that is to say, it is only externally a group.
A more common form is where the group can afford one utility, and the individual members of it in isolation can afford another but a less utility. Thus the utility of a well-matched pair of roans will be valued at a figure much higher than would be realised by selling the horses separately. Suppose that the utility of the pair is represented by 100, and that of A roan and B roan separately by 50 and 40: what is the value of A? To calculate it from the side of the owner: if he has A and B, he has a value of 100; if he lose A, he has only B, and B separately has a value of only 40. What he has lost is the difference between 40 and 100. Or, from the side of the buyer: if he gets B he obtains 40; if he gets A in addition he obtains 100; the value of A, as before, is the difference between 40 and 100. Here, then, A has a different value as complement and as isolated good: in the one case it is worth 60, in the other 50. If we take the case of a well-matched four-in-hand team, we have a more complicated instance of the same; the whole team makes the most highly valued group, but each pair within that again has a higher group value than the sum of the isolated values which would be attached to each single horse. This case of valuation holds in the very numerous cases where goods are in sets: if we “break the set,” the separate members have a less value than they had as complements.
A third case is, where, as before, the group can afford one utility, and the individual members of it separately can afford a less utility, but where some members are replaceable and some are not. In this case, the replaceable members can never obtain any other than the one value: however indispensable they may be to the making of the group, goods that can be easily replaced cannot rise higher than the competition of all other uses allows. Although a load of bricks, for example, were absolutely indispensable to finish the building of a house, the load could never obtain any higher value than that determined by the marginal utility of bricks generally: that is, as determined by all the uses to which bricks generally are put. To the irreplaceable member, on the other hand, falls the remainder of the value of the group. Thus suppose a group A, B, and C, with a group value of 100, and isolated values of 10, 20, 30. If A and B are articles of large manufacture and great demand, while C is a monopoly good, A and B will get 30% of the value, and C the other 70%, although, if the other members were not present in the group, the only value C could realise would be 30.[13]