568 TRANSACTIONS OF SECTION F. 
(1) The tastes, desires, and resources of the individuals constituting the society. 
When objectively measured and expressed these individual desires for any one 
commodity can be represented by curves capable of being summed; and the 
resultant curve, objectively homogeneous but covering undefined differences of 
vital or subjective significance, is usually called, so far as it is understood and 
realised, the ‘curve of demand.’ ‘This is one of the determinants we are 
examining, and it represents a series of hypothetically co-existing relations 
between given hypothetical supplies and corresponding differential significances. 
It is a functional curve. (2) The amount of the actual supply existing in the 
community. ‘This is not a curve at all, but an actual quantity. It is not a 
series of co-existing relations, but one single fact, and it determines which of 
the series of hypothetical or potential relations represented by the curve shall 
be actually realised. 
But what about the ‘supply curve’ that usually figures as a determinant 
of price co-ordinate with the demand curve? I say it boldly and_baldly : 
There is no such thing. What usually figures as such is merely a disguised 
and therefore unrecognised portion of the ‘demand curve ’; for it is the register 
of a series of hypothetical relations between supply and differential significance, 
and therefore it is included in its entirety in our (1). 
But neither our (1) nor our (2) is, generally speaking, accurately known by 
anyone when the market opens, and the ‘higgling of the market,’ though not 
theoretically a force that determines, is a machinery that discovers the character 
of the relevant portion of the curve and the exact point of it that the supply 
determines. 
Diagrams of intersecting curves (and corresponding tables) of demand prices 
and supply prices are therefore profoundly misleading. ‘They concentrate the 
attention of the student upon distinctions which have no theoretical relevancy ; 
they co-ordinate as two determinants what are really only two arbitrarily and 
irrelevantly separated portions of one; and they conceal altogether the existence 
and functions of what really is the second determinant. For it will be found 
on a careful analysis that the construction ot a diagram of intersecting demand 
and supply curves always involves, but never reveals, a definite assumption as 
to the amount of the total supply possessed by the supposed buyers and the 
supposed sellers taken together as a single homogeneous body, and that if this 
total is changed the emerging price changes too; whereas a change in its dis- 
tribution (if the preferences of the parties concerned remain the same, so that 
the collective curve is unaffected, while the component or intersecting curves 
change) will affect the extent of the transfer consequent on the opening of the 
market, but not the market, or equilibrating price itself, which will come out 
exactly the same. Naturally, for neither the one curve nor the one quantity 
which determine the price has been changed." 
The curve of supply prices, then, is an impostor. It is a fraudulent alias 
of a portion of the demand curve. But so far we have only dealt with the 
market in the narrower sense. Our investigations throw sufficient light on the 
distribution of the hay harvest, for instance, or on the ‘catch’ of a fishing 
fleet. But where the production is continuous, as in mining and in ironworks, 
will the same theory still suffice to guide us? Here again we encounter the 
attempt to establish two co-ordinate principles, diagrammatically represented 
by two intersecting curves. Though the ‘cost of production’ theory of value 
is generally repudiated, we are still too often taught to look for the forces that 
determine the stream of supply along two lines, the value of the product, 
regulated by the law of the market, and the cost of production. But what 
is cost of production? In the market of commodities I am ready to give as 
much as the article is worth to me, and I cannot get it unless I give as much 
as it is worth to others. In the same way, if I employ land or labour or tools 
to produce something, I shall be ready to give as much as they are worth to 
me and I shall have to give as much as they are worth to others—always, of 
course, differentially. Their worth to me is determined by their differential 
effect upon my product, their worth to others by the like effect upon their 
* See my ‘Common Sense of Political Economy,’ Book II., ch. iv., 
Macmillan. 1910. . 1p, ie Wb p. Seca hen ee 
