TRANSACTIONS OF SECTION F. ()73 



by a few expressions of Hamilton's than by the ordinary equations.' ' This is the 

 spirit in -wliicb the economist should employ Mathematics — ' the ideas as dis- 

 tinguished from the operations and methods.' 



In considering the above-given, and indeed any concrete instances, it is hardly 

 possible to keep to what may be called the .simplest type of Supply and Demand, 

 the ideal market in which we contemplate only two groups of competitors and only- 

 two articles of exchange : say, gold for corn, or any other quid pro quo. In general, 

 and especially when considering what rates of exchange tend to rule in an average 

 of transactions, it is proper to take into account that the dealings in one market 

 will affect tliose in another. If the entrepreneur has less to pay for machinery, 

 caferis paribu-Sjhe will be able to otter more on the labour market. Thus we obtain 

 the idea of a system of markets mutually dependent. In a general view of this 

 correlation it is not necessary to distinguisb whether the state of one part is 

 connected as cause or effect with the other parts of the system. As Professor 

 Marshall says : - ' Just as the motion of every body in the solar .system attects and 

 is affected by the motion of every other, so it is with the elements of the problem 

 of political economy ' (e). 



This conception of mutually dependent positions is one in which minds dis- 

 ciplined in mathematical physics seem peculiarly apt to acquiesce. In other 

 quarters there may be observed a restless anxiety to determine which of the vari- 

 ables in a .system of markets is to be regarded as determining or regulating the 

 others. In one of the principal Economic journals there has lately been a pretty 

 stiff controversy on the question which of the parties in the distribution of the 

 national produce may be regarded as ' residual claimants upon the product of in- 

 dustry ' ; ^ whether it is the working class which occupies this preferential position, 

 or if the 'real key.stone of the arch' is interest. Such questions certainly admit 

 of a meaning, and probably of an answer. But they will probably appear of 

 secondary importance to those who accept, as the first approximation to a correct 

 view of the subject, the principle of mutual dependence — what may be called the 

 Copernican theory of distribution, in which one variable is not more determined 

 by another than the other is by that one (f). 



Among the factors of this economic equilibrium I have not as yet explicitly 

 included cost of production. Rather, the system of markets which so far I have 

 bad in view is that which would arise if all the articles of exchange were periodi- 

 cally rained down like manna upon the .several proprietors, and each individual 

 sought to maximi,«e his advantage according to the law of final utility. But now 

 we must observe that self-interest does not operate only in this fashion. "\Ve must 

 take account of efforts and sacrifices. 



Here again the language of symbol and diagram is better suited than the popular 

 terminology to express the general idea that all things are in Hux, and that the 

 fluxions are inter-dependent. In Professor Marshall's words, 'as a ride, the Cost of 

 production of a thing is not fixed ; the amount produced and its normal value are to 

 be regarded as determined simultaneously under the action of Economic Laws. It, 

 then, is incorrect to say, as Ricardo did, that Cost of production alone determines 

 value ; but it is no less incorrect to make utility alone, as others have done, the basis 

 of value.' '' Among those who may have gone astray in the latter sen.se, who, in tbeii 

 recoil from Scylla, are at least sailing dangerously near Charybdis, may be placed 

 the important A u.strian school who have rediscovered and restated the theory of 

 final utility without the aid of mathematical expression. To amplify a figure 

 suggested by one of them,^ let us figure the hard conditions of industrial life 



' Clerk Maxwell, Electricity and Magnetism, Art. 10. He says in the context, 'As 

 the methods of Descartes are still the most familiar to students of science, and as 

 they arc really the most useful for purposes of calculation, we .shall express all our 

 results in the Cartesian form.' Compare Profe.ssor Marshall's dictum with respect to 

 the use of the vulgar tongue in economic reasonings, cited below, p. 9. 



' In a remarkable review of Jevons's Theory in the Academy of April 1, 1872. 



' Quarterly Jinmwl of Economics, 1887, p. 287 ; 1888, p. 9. 



' Economics of Industry, p. 148. 



' Cf. Professor Bohm Bawerk : ' Es kann ein Erzieher einem Knaben, um ihn gegen 

 Wcheloidigkeit abzuliilrten, fiir die tapfere, freiwillige Erduhhmg von Schmerzen 



1889. X X 



