292 PRINCIPLES OF RURAL ECONOMICS 



this may seem, it is the sum and substance of the whole theory 

 of value, in so far as it applies to consumers' goods. It is the 

 basis also of all our moral and aesthetic values. 



With respect to producers' goods, or productive agents, how- 

 ever, the case is not quite so simple. Since the desire for a 

 productive agent is based on the desire for the thing which it 

 helps to produce, it would follow that if the thing produced 

 becomes more abundant and the desire for it less intense, then 

 the desire for the thing which produced it would also become 

 correspondingly less intense. Since one result of an increase 

 of the supply of a productive agent would be to increase the 

 supply of its products, we have one very good explanation of 

 the reason why the desire for each unit of it diminishes as 

 the supply increases. But there is another reason more impor- 

 tant than that one, which may be found in the law of diminish- 

 ing returns. Under this law, if the supply of one factor of 

 production increases relatively to the other factors, each unit 

 of this one factor becomes less productive. 



Let us see how this principle applies to the price of such an 

 agent of production as farm labor. If the number of laborers in- 

 creases while the land and the tools remain the same, or if the 

 number of laborers should increase more rapidly than the land 

 and the tools, then there would be less land and fewer tools for 

 each laborer to work with. Unless, at the same time, the laborers 

 have learned something new about farming, they will, ordinarily, 

 not be able to produce so much per man with less land and cap- 

 ital as they could with more. Since the product of each unit of 

 labor is cut down by this relative increase in the number of units, 

 and since the employer's desire for labor is based upon its prod- 

 uct, it follows as a matter of course that the employer's desire 

 for each unit of labor diminishes as the number of units increases 

 relatively to the other factors of production. When the employer's 

 desire for each unit diminishes, the price which he is willing to 



