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value if the musician plays it or records himself playing it and sells the recording. If, however, purchased by a musically illiterate person, the same guitar will be idle and not generate that value.

Refutation 8: Argument from Diminishing Marginal Utility: Two otherwise identical goods, within the possession of the same person, can have dramatically different economic values. For instance, a person possessing two units of the same water might use the first to prevent himself from dying of thirst, while using the second to wash himself. The former bottle saved his life, while the latter only preserved his cleanliness. If both units of water required identical labor to be created, their economic valueeven to the same personis not identical. If he were asked to sell the water, he might charge a substantial price for the second unit, and would likely refuse to sell the first at any priceunless he were compensated sufficiently to be assured of his life's continuance. This illustrates the law of diminishing marginal utility: that the value to an individual of each subsequent use of an identical good in his possession will be less than the value of the previous useassuming that the individual puts the first goods in his possession to his most highly-valued uses and devotes subsequent goods to meet his priorities in descending order.

The Utility Theory of Value

Having refuted the labor theory, I propose a superior explanation for economic value: the utility theory, which states that "the value of economic goods and services is identical to the benefits it confers on the individuals employing them." Rather than equating value with individuals' costs, i.e., what they lost in producing the goods and services, we can more accurately equate it with what they gain from the existence of those goods and servicesfor it is the gains that the goods and services are produced to achieve.

I shall show that the utility theory is immune to the above refutations of the labor theory of value:

Immunity to Refutation 1: A naturally found good requiring little labor to produce it can still confer benefits on the individuals who find it and use it; those benefits are the root of the economic value of such goods and justify their sometimes substantial market prices.

Immunity to Refutation 2: Useless laborlike digging a hole and filling it in againconfers no benefits on anyone and therefore is not a source of economic value, according to the utility theory.

Immunity to Refutation 3: Excessive

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