PRESIDENTIAL ADDRESS. 573 
from the value of the product. Neither rent, wages, nor interest properly 
enter into exchange value, for they all come out of it. Cost of production, as 
we have seen, means estimated productivity of agents in other industries; and 
to say that rent does not enter into the cost of production is to say that land 
cannot be employed and is not desired for any purpose except the one we are 
considering. Nay, on closer examination we shall find that it further implies 
that land has no incremental or differential significance at all, z7.e., that no one 
would cultivate more than he does if he could get it rent free. 
Again, the fallacious argument, such as it is, will apply equally well to any 
other factor of production. If rent does not enter into the cost of production 
because wheat grown on land that bears a high rent, in consideration of its 
fertility, sells at the same price as that grown on land that bears a low rent, 
inasmuch as it is barren, then wages do not enter into the cost of production 
either, for wheat raised by labour that is well paid because it is efficient sells 
at the same price as wheat raised by labour that is ill paid because it is 
inefficient. 
The whole conception depends upon the cost-of-production theory of value, 
and the ‘marginal’ theory of distribution, in the sense of the term which I 
have rejected. I am not attempting, at the moment, to refute either of those 
theories, but I am trying to show that if we reject them we must give up 
speaking as if we still held them. 
These are but feeble, almost random, indications of some of the directions 
in which I think that convinced apostles of the differential economics should 
revise the methods of economic exposition. For myself I cannot but believe 
that if this were accomplished all serious opposition would cease, there would 
once again be a body of accepted economic doctrine, Jevons’ dream would 
be accomplished, and economic science would be re-established ‘on a sensible 
basis.’ 
It is impossible to exaggerate the importance of such a consummation. 
Social reformers and legislators will never be economists, and they will always 
work on economic theory of one kind or another. They will quote and apply 
such dicta as they can assimilate and such acknowledged principles as seem 
to serve their turn. Let us suppose there were a recognised body of economic 
doctrine the truth and relevancy of which perpetually revealed itself to all who 
looked below the surface, which taught men what to expect and how to analyse 
their experience; which insisted at every turn on the illuminating relation 
between our conduct in life and our conduct in business; which drove the 
analysis of our daily administration of our individual resources deeper, and 
thereby dissipated the mist that hangs about our economic relations, and con- 
centrated attention upon the uniting and all-penetrating principles of our study. 
Economics might even then be no more than a feeble barrier against passion 
and might afford but a feeble light to guide honest enthusiasm, but it would 
exert a steady and a cumulative pressure, making for the truth. While the 
experts worked on severer methods than ever, popularisers would be found to 
drive homely illustrations and analogies into the general consciousness; and the 
roughly understood dicta bandied about in the name of Political Economy 
would at any rate stand in some relation to truth and to experiénce, instead 
of being, as they too often are at present, a mere armoury of consecrated 
paradoxes that cannot be understood because they are not true, that everyone 
uses as weapons while no one grasps as principles. 
The following Papers were then read :— 
1. Trade Unions and Copartnership. By Dr. CHARLES CARPENTER. 
2. Trade Unions and Copartnership. By Joun B. C. Kersuaw. 
The author in this paper discussed the statistics of the copartnership 
movement in the light of the facts and figures given in the latest Government 
report on profit-sharing and labour copartnership in the United Kingdom,? 
1 Cd. 6496, 1912. 
