LAWS OF SUPPLY AND DEMAND 93 



quantity produced depends mainly on demand, which itself is 

 subject to no law. 



The cost of production is fixed by no immutable law, but 

 depends on the profit (including in this word all forms of ad- 

 vantage) expected by the producer (including in this word the 

 labourer as well as the capitalist). 



Enough has now been said to show how much the value of 

 all things depends on simple mental phenomena, and not on laws 

 having mere quantity of materials for their subject. 



The application of these laws to wages requires much care. 

 The difficulty here will be found in determining the meaning of 

 cost of production as applied to human beings, and in ascertain- 

 ing how far the production of human beings is determined by 

 the same or similar motives to those which regulate the supply 

 of other produce. The first and second laws of demand and 

 supply find their application in limited districts and for short 

 periods, but these are of infinitely small importance compared 

 with the third law, in which we must seek the solution of that 

 great problem : On what does the general level of wages depend ? 

 The laws of price are as immutable as the laws of mechanics, but 

 to assume that the rate of wages is not under man's control 

 would be as absurd as to suppose that men cannot improve the 

 construction of machinery. A knowledge of the laws of me- 

 chanics allows us to improve machines ; a knowledge of the laws 

 of wages may equally lead to improvement in the lot of men. 



II. 



APPLICATION or THE LAWS OF DEMAND AND SUPPLY TO THE 

 SPECIAL PROBLEM OF WAGES. 



The rate of wages paid to a certain class of workmen is simply 

 the market price of their labour, and this price will be deter- 

 mined by the same laws as determine the price of other commo- 

 dities. This truism is often interpreted as though it meant that 

 no efforts on the part of the masters could lower wages, and no 

 action on the part of men raise wages, the price of labour being, 



