156 BOOT MATTERS IN SOCIAL AND ECONOMIC PROBLEMS. 



correct index of conditions most favourable for the attainment 

 of the greatest amount of satisfactions, with the smallest 

 expenditure of time and "human energy : for it often happens 

 that low prices may be caused by excessive expenditure of 

 human energy forced upon a struggling producer ; or by 

 poverty due to forced idleness on the part of a large body of 

 consumers. While it may often happen — as in young 

 colonies — that a high price is no index of a lower supply of 

 satisfactions ; but rather of the smaller amount of obstacles 

 intervening iDetween consume and producer, and gratuitous 

 sources of nature ; the smaller amount of enforced idleness 

 on the part of consumer, giving him a greater purchasing 

 power; and the greater advantage of the producer, due to 

 similar causes, enabling him to obtain all the most necessary 

 round of satisfactions with a smaller expenditure of time and 

 labour. Mere cheapness of satisfactions, therefore, is not a 

 reliable index of individual welfare. Purchasing power, as 

 indicated by expenditure of time and labour, is the only true 

 index as between countries differently circumstanced, and 

 this purchasing power of the consumer — unlike the unreliable 

 nominal cost or wage — is always in harmony with the amount 

 of obstacles intervening between the actual producers of 

 satisfactions and the actual consumers. 



This method of determining the condition of different 

 communities will be better understood if we carefully 

 investigate the effect of obstacles more closely. As the 

 factors are variable and numerous, the only way to arrive at 

 true conclusions is to approach the question by the 

 mathematical method : thus : — 



Let N=!N'atural agents and products ; or the gratuitous 

 forces of nature. 



P=Productive power of human agencies, including 

 skill and energy, and skilled appliances. 



0=Obstacles intervening between NP or producer 

 and consumers. 



C=Producers, dependants, distributors, etc., repre- 

 senting the living population ; or consumers. 



Then NP O 



^ — =Eepresents the amount of the average satis- 



factions provided for each individual. 



And NP+0 ^ , ,, . , „ . „ . 



— p — =liepresents the nommal cost of satisfactions 



for each individual on the average — or it 



may fairly represent the amount of exertion 



or energy expended by human energy. 



Having stated the general effect of obstacles between direct 

 producer and consumer as minimising the actual supply of 



