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.Going even further, Jevons arguedthat each consumer would alter his purchases so that they reach astate where no further spending could increase total utility.86WILLIAM STANLEY JEVONS (1835 82)This doctrine forms the foundation of laissez-faire policies that keepthe government from regulating or taxing the goods and services thatconsumers buy.For example, if cigarettes or alcohol or drugs arefreely available, consumers will buy only the amount of these goodsthat maximize their utility.If governments prevent the sales of thesegoods, or make their purchase difficult by imposing onerous regula-tions on producers or taxes on their sale, consumer satisfaction willfall because consumers will buy other goods, goods that they desireless.What is true of cigarettes and alcohol and drugs is true of allgoods.The unrestricted availability of goods, without taxes andwithout any government regulations, raises the utility of each con-sumer and increases national well-being.Jevons next applied the notion of utility to labor.By so doing, hehelped show how wages are determined and how labor marketswork.Jevons assumed that labor was disagreeable and thereforeinvolved negative utility or disutility for the worker.On the otherhand, labor also yields positive utility, since workers are paid for theirefforts and can use this income to buy goods.Individuals have tobalance the disutility of work against the utility of the goods thatcould be bought with the fruits of one s labor.As long as the utilityof consumption exceeded the disutility of work, people would con-tinue to work (Jevons 1957, ch.5).At the point where the disutilityof work exceeded the utility of consumption, people would stopworking and enjoy leisure time instead.This application of utility analysis to the labor market had severalimportant consequences.First, the distinction between productiveand unproductive labor, as originally set forth by Quesnay, wasshown to be mistaken.All labor was productive in the sense that ityielded utility to individual workers, who could take their pay packetand buy goods with it.Second, employing utility theory to studylabor casts doubt on the classical theory of wages (see Malthus).Humans were not at the mercy of a subsistence wage; rather, the laborsupply depended upon the going wage.If wages got too low, workerswould withdraw from the market and enjoy leisure.Third, in con-trast to Ricardo and Marx, for Jevons there is no opposition betweenlabor and capital.Labor makes its own decisions about whether ornot to work, carefully balancing the gains and the losses fromemployment.Capitalists also make similar decisions when decidingwhether or not to invest and hire more workers.Finally, no accounting of the economic thought of Jevons wouldbe complete without mentioning his theory of the business cycle.While doing extensive research on economic growth, Jevons (1884)87WILLIAM STANLEY JEVONS (1835 82)noted a close relationship between sunspot activity and economicactivity.Between 1721 and 1878 business cycles had an averageduration of 10.46 years, while sunspot activity showed a periodicityof 10.45 years.Jevons felt that this relationship was too close to beaccidental.He even set forth a few creative explanations for thissimilarity.If sunspot activity affected the weather, and the weatheraffected British harvests, then sunspot activity should be correlatedwith grain prices.A good harvest would increase the supply of grainand lower its price, while bad harvests would lead to higher grainprices.Jevons also looked to foreign trade to explain the similar solarand economic cycles.A more active sun, according to Jevons, influ-enced the rice harvest in India.A good harvest in India led to highdemand for British manufactured goods.This, in turn, caused theBritish economy to expand.In contrast, less sunspot activity meantpoor Indian harvests, little demand by India for British goods, and aslumping British economy.Few contemporaries of Jevons, and few subsequent economists,have taken the sunspot theory of business cycles seriously.In addition,more recent data cast doubt on the figures Jevons used; astronomershave increased the solar sunspot cycle to 11.1 years, while economistshave reduced the length of the business cycle to 7 or 8 years (Keynes1951, p.279).And, in contrast to Jevons, most contemporary econ-omists look towards the economy itself, rather than outside forces, asthe cause of periodic turns in prosperity and depression.Never-theless, Jevons deserves recognition as one of the originators of busi-ness cycle theory.Despite his linkages to the future through worries about thedepletion of energy resources, and despite his linkages to the past as abusiness cycle historian, the major contribution of Jevons to eco-nomics remains his development of marginal utility theory and hisuse of this theory to explain consumption and work decisions.In allhis work, Jevons was a pioneer, and the many advances due to Jevonsmake him one of the three or four most important nineteenth cen-tury economists [ Pobierz całość w formacie PDF ]