LAWS OF SUPPLY AND DEMAND 99 



cost of production ; so that their opinion of the utility of the 

 article does not ultimately affect the price. Applying this to 

 labour, the capitalist, if willing only to pay low wages, can 

 neither force men to enter his workshop, nor to marry and pro- 

 duce children ; and if willing to pay high wages he will attract 

 crowds, and produce such welfare as results in many marriages. 

 The competition among labourers will bring down the wages to 

 something which is equivalent to the cost of production. So far 

 the parallels run on all fours. 



The value set on any article by the mind of the seller, who 

 only holds it with the object of obtaining money for it, depends 

 on simple motives as compared with those which may actuate 

 the buyer. The seller does not think of the utility of the 

 article, but he will remember the past, guess at the present, and 

 estimate the future demand, and he will compare these with 

 the cost of production which he has borne. He will be loth to sell 

 below the cost price, reckoning in that a given profit to himself. 

 Nevertheless, if he thinks that the future demand will be less 

 than the present he will sell : but if he estimates that the demand 

 will presently rise, he will hold back his ware. The different 

 estimates of the present and future demand determine the 

 differences in the supplies at various prices in any given market ; 

 but if the market price be below cost price, he will refrain from 

 producing the article in future ; and thus supply will be dimi- 

 nished until the market price rise up to or above cost price, then 

 production will continue at a diminished rate. If the market 

 price is much above cost price, more will be produced, until 

 cost price and market price again agree. 



Now, how far do similar motives affect the production of 

 labour ? The labourer is precisely in the position of the seller 

 who attaches no value to his goods in themselves. The cost of 

 production of his labour may be defined as the cost of maintain- 

 ing the labourer from his birth to his death ; and if our law is 

 to hold good, his average wages must simply be such as will 

 enable him so to maintain himself; but in what style? Goods 

 will not be produced unless they pay the producer, besides his 

 outlay, such a profit as makes it in his opinion worth while to 

 produce them. Similarly, labourers do not produce and keep 

 a family until their wages equal the cost of maintenance 



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