Bernard Shaw's Remarkable Religion: A Faith That Fits the Facts

160 Bernard Shaw’s Remarkable Religion
utility, that is, in this example, if there are between one hundred and two
hundred umbrellas available, the price would be one dollar. He called this
the “law of indifference”: no one will pay more for an item than the lowest
price in the market. In his words, “in the same open market, at any one
moment, there cannot be two prices for the same kind of article” (91). So,
as the economists put it, the Exchange Value is determined by the force of
demand at the margin of utility (sometimes they say “margin of supply”
because the price is where the level of supply meets the final Utility). Another
way of putting it is to say that price is determined by the Utility of
the last item consumed (“Final Utility”).
This is one of the foundations of Shaw’s economic ideas; let us put it
into the perspective of the Shavian religion. The Life Force must take command
of the facts of its existence, which includes the facts of political
economy. The concept of Utility is, to some degree, an attempt to express in
economic terms the needs of the Life Force. It is so only to a degree because
Utility is a measure, strictly, not of how much one desires something but of
how much one is willing to pay, which in turn is controlled by how much
one has. Equal incomes, Shaw realized, would allow the operation of economic
law to reflect human need more closely. The other important point
for Shaw is that the notion of Marginal Utility makes glaringly clear how
arbitrary exchange value really is. Utility merely sets an upper limit on the
exchange value of an item; it can drop from that point all the way to zero as
the supply grows and finally exceeds the demand. Conservative commentators,
who ignore Utility, like to pretend that exchange value, particularly
in the case of labor, is an indication of intrinsic worth. They imagine that
there is natural justice in the difference between the income of a janitor
and that of a physician. But if the supply of physicians expanded beyond
the demand, their incomes would also drop to subsistence. And if the talent
for janitorial work were rare, we would doubtless pay our custodial staffs
far more than we do.
Shaw, like the capitalists, was interested in the laws governing supply
and demand, but for Shaw that meant mastering economics so as to serve
the Life Force better, while for the capitalists it means using economic
theory fallaciously to support their Social Darwinist metaphysics and justify
their predations. Understanding Utility means understanding that
competition in the marketplace, the virtues of which the capitalists are forever
praising, could work as it should only if incomes were equal.