44

POLITICAL  ECONOMY

to  a  common  unit  of  expenditure.  It  declares
that  I  shall  so  disburse  my  income  over  a
given  period  on  bread  and  tea  and  milk  and
clothes,  that  the  marginal  shillings  laid  out  in
acquiring  each  class  of  these  things  will  be
productive  of  the  same  utility.  The  truth  of
the  law  is  easily  established.  Its  proof
proceeds  (1)  by  showing  that  when  a  person’s
income  is  expended  according  to  the  law  the
utility  derived  from  it  is  maximised,  and  (2)
by  arguing  that  each  individual  will  try  to
maximise  the  satisfaction  derived  from  his
income.  People  are  not  compelled  to  do  the
best  for  themselves  with  the  means  at  their
disposal,  but  in  the  degree  in  which  they  are
reasonable  will  they  attempt  to  do  so  and
succeed  in  doing  so.
To  demonstrate  that  the  utility  of  income  is
maximised  when  the  law  of  substitution  is
observed  is  a  trifling  task.  Suppose  that  I
so  spend  money  on  milk  and  bread  that
the  last  penny  spent  on  bread  yields  more
utility  than  the  last  penny  spent  on  milk.
In  that  case  it  would  evidently  be  to  my
material  well-being,  other  things  being  equal,
to  reduce  my  outlay  on  milk  and  increase  my
outlay  on  bread,  because  by  so  acting  I  should
secure  a  utility  larger  than  the  one  sacrificed.
Gain  could  be  reaped  in  this  way,  by  transfer-