Leaders of liberty must sometimes take a step back and reflect on the best ways to use their limited resources and local knowledge to reach their ultimate goals. Students For Liberty’s mission is “… to educate, develop, and empower the next generation of leaders of liberty.” To strive for this goal as efficiently as possible requires applying certain economic concepts, specifically marginalism.
The Law of Diminishing Marginal Utility states that every additional unit of a good consumed yields less utility to the consumer than the unit before it (assuming all other factors are held constant). This is important when considering the nature of value and helps to resolve apparent paradoxes.
Why does water, which is necessary for survival, cost so much less than diamonds, which only are only valued for their aesthetic appeal? Given the option of a single bottle of water or a diamond, a human being would choose the water since they could not live without it, but by thinking on the margin it’s obvious that eventually, if you keep giving them the same option, they will have enough water to survive and be healthy, at which point they will choose to take the diamond since the the utility of the diamonds outweighs the utility of that unit of water at the point of that decision.
Water isn’t very expensive because most of us have plenty of it. The vital role it plays in our lives has already been filled, and then some, by previous units of water. However, we don’t have many diamonds so an additional diamond will provide us with more satisfaction because the satisfactory functions of a diamond have not yet been fulfilled by previous diamonds. This law is crucial to understanding and explaining economic decision making because it means that individuals consider the utility of the marginal unit of a good when making trade-offs, not the utility that type of good provides them in general.
This principle is important to activists because just as there are decreasing marginal returns from goods consumed, there are decreasing marginal returns from activism. If we think of activism as a market, in which the public and future leaders consume education, development and empowerment in the ideas of liberty (utility), and activists supply materials, events and information (goods and services) which yield that education, development and empowerment, then we can see how marginal thinking matters when trying to accomplish our ends. The public and future leaders gain less education, development and empowerment from each additional unit of a type of activism they “consume” than they did from the last unit. (more…)