66 Economic Cycles: Their Law and Cause 



Statistical Laws of Demand 



Two fundamental defects in the current theoretical 

 method of treating economic questions are exemplified 

 in the case of the theory of demand: first, the assump- 

 tion is made that all other things being equal (the old 

 cwteris paribus), an increase in the supply of the com- 

 modity will lead to a corresponding fall in the price; 

 secondly, it is assumed that the concrete problem of 

 the relation of price and supply of commodity will be 

 simplified by attacking first the constituent elements 

 of the question rather than by attacking directly the 

 problem in its full concreteness. Neither assumption 

 is satisfactory nor indeed admissible. The " other 

 things" that are supposed to remain equal are seldom 

 mentioned and are never completely enumerated; and 

 consequently the assumption that, other unmentioned 

 and unenumerated factors remaining constant, the law 

 of demand will be of a certain type, is really tantamount 

 to saying that under conditions which are unanalyzed 

 and unknown, the law of demand will take the supposed 

 definite form. The burden of proof is upon anyone 

 using this method to show that the assumption does not 

 at least involve a physical impossibility. 



The second of the above two assumptions is not more 

 satisfactory than the first. It reproduces the defects 

 of the first assumption with others superadded. The 

 movement of prices results from changes in many 

 factors: According to the statical method, the method 

 of cwteris paribus, the proper course to follow in the 



