ORGANIZATION OF THE AGRICULTURAL ENTERPRISE 327 



we might go on indefinitely without ever reaching the state of dimin- 

 ishing returns? May not the advantages derivable from greater 

 specialization or from an increased resort to large-scale methods for- 

 ever save us from falling into that dread condition? The answer 

 must surely be a negative one. There certainly is a limit to the 

 advantages derivable from specialization and large-scale production. 

 Every industry whatsoever, if called upon to increase its output 

 indefinitely, would ultimately pass into a stage of diminishing effi- 

 ciency or increasing cost. 



But, not only would every industry, under the conditions of our 

 experiment, inevitably be at some time or other in the condition of 

 diminishing cost and at another in that of increasing cost, in many 

 cases, anyhow, it would at some time or other be in the condition of 

 substantially constant cost. This merely means that the transition 

 from the condition of diminishing cost to that of increasing cost is not 

 a mere point, but may extend over a considerable change in the volume 

 of output. When we remember that, in this case of industries as 

 wholes, we are at liberty to increase all the factors so long as more of 

 the stock of each is available, the possibility of such a condition of 

 constant cost seems plain enough. Land, of course, is the factor 

 which is most likely to fail us. Yet it surely must be admitted that 

 there are many pieces of ground of substantially the same grade of 

 efficiency, counting location, fertility, etc.; and, until all of the best 

 grade had been put to use, the particular industry involved would be 

 getting out its product at unchanging cost supposing no change in 

 technical conditions. But the case is still clearer with industries 

 which do not need so large a proportion of land. Just because of this 

 fact, the number of sites which are of substantially equal efficiency for 

 the industry in question is in excess of the need, and so production 

 can expand without being checked by the scarcity of the only factor 

 which is strictly limited. 



We have argued that any industry, taken as a whole, may be in 

 any one of the three stages as respects the relation of cost to increasing 

 output. It should be added that these stages may alternate with one 

 another in any order. An industry may be at one time in the con- 

 dition of constant cost, then in that of diminishing cost, then in that 

 of constant cost again, then in that of diminishing cost, and so on. 

 More particularly, for every change there will be a period of constant 

 cost. If the enlarged demand for copper causes marginal cost to rise 

 to 20 cents, and if, at this marginal cost, output can be expanded, let 

 us suppose, to any figure between 700 million pounds and 900 million; 



