924 REPORT—1 890. 
The whole production of a community is regarded as being carried on by a 
number of entrepreneurs hiring land, labour, and capital, the two former being of 
several different qualities. For each entrepreneur there is a production function 
IG19 Jor 93+ + + ly ly 1, ... ©) expressing the amount of commodity produced 
annually by the use of 7,, 9.9, . - . yards of lands of the Ist, 2nd, 3rd . . . quali- 
ties, l,, J,, 4, . . . hours of labour of the Ist, 2nd, 3rd . . . qualities, and ec pounds 
of capital. The form of f depends on the entrepreneur’s skill, ‘opportunity,’ &c., 
and is regarded as known for each entrepreneur. Then if p;, be the rent per annum 
per yard of land of the k-th quality, w; the wages per hour of labour of the j-th 
quality, z the interest per annum per pound, all measured in money; and p,, p,.. - 
the prices of the commodities produced by the Ist, 2nd,3rd . . . entrepreneurs, the 
equations of marginal productivity are— 
d d Lf NOs- ; 
rige =k Poe W; po =? for all values of 7, kh. 
Uy _ Ty _ Ur 
Pad Pk Pri, bey Wj PF yr 
and so on for each entrepreneur. 
For each commodity there is a demand equation of the form p=(f+f'+..-), 
where f, f’, f’’. . . are the amounts produced by the several entrepreneurs who 
produce the same commodity. 
The conditions which remain to be expressed are that the whole available 
amounts of land and labour of each quality and of capital are used. The last gives 
=c=C, where = denotes summation for all entrepreneurs and C the total amount of 
capital. We may roughly assume the amount of land of any quality available at 
any time as known, or more accurately, take into account the quantity y;, used for 
private houses, &c., for which there is a demand equation p;,=wW(y;,); and then 
29x + Ye = Gy, where G;, denotes the existing amount of land of the k-th quality. 
Similarly 2; = Sha where y is an ‘average’ disutility function for labourers of 
the j-th quality. ‘We now have as many equations as unknowns, and the latter are 
therefore determinate. The rate of growth of population and rate of accumulation 
of capital do not enter into the equations. There is no more justification for 
assuming wages to be measured by the produce of a labourer working on the margin 
without capital than for assuming interest to be measured by the produce of an 
amount of capital without labour. 
If land, labour, and capital are perfectly mobile (7.e., can be transferred freely 
‘from entrepreneur to entrepreneur), then p;, w;, 2 are the rates of payment of all the 
land labour and capital, and not merely of the marginal doses. The entrepreneur's 
share is then the surplus pf—Sgp—Slw—ic. If in any business this surplus 
generally exceeds the surplus obtained in another business by entrepreneurs of 
equal skill, &c., entrepreneurs tend to pass from the second business to the first and 
to reduce profits in it by lowering prices. 
If capital is ‘invested,’ interest on it is not necessarily the same as that on the — 
marginal dose, and the capitalist’s share is in general merged in that of landlord or 
entrepreneur, and economically undistinguishable. 
4. A Theory of the Consumption of Wealth. By Professor P. GEDDES. 
The importance of the study of consumption has always been recognised by 
the biologist and anthropologist, the historian and moralist, yet less so by the 
economist, whose attention at the beginning of the industrial age was naturally 
awakened by the rapid transformations of the processes of production and distri- 
bution, and has since been almost restricted to the elaboration of the economic 
theory of these phenomena alone. The theory of consumption is thus not only 
needed for the sake of economic science itself, but would lead to its direct and 
profitable connection with the study of the other sciences, physical and biological - 
on the one hand, historical and ethical upon the other. 
