The reader is informed, for example, in carefully expressed phrases, of the considerations which decide a farmer to sow oats instead of wheat; as to whether he shall concentrate his operations on the cultivation of superior soils by intensive methods, or extend them to inferior ones by extensive ones; of whether on a balance of considerations a manufacturer or builder should add another story to his manufactory or dwelling-house, and so save his rent charges, or extend it laterally by taking in fresh ground, and so increase his rent costs rather than his capital costs; or of whether a farmer should hire a reaper and employ fewer men, or more men without the reaper; or whether it would be more profitable to use horses instead of men on a particular job or not; and so on. Even the ordinary fact that business men will substitute one instrument of production for another if it will do the work more cheaply, - as when, for example, they substitute horse-power for human labour, or steam-power for horse-power, and so on, - is, as we have seen, dignified by the name of the 'law of substitution'! It is expressed by von Thunen, its discoverer, as follows; - "So far as the knowledge and business enterprise of the producers reach, they will in each case choose those factors of production which are best for their purpose.

The sum of the supply-prices of those factors which are used, is as a rule less than the sum of the supply-prices of any other set of factors which could be substituted for them. Whenever it appears to the producers that this is not the case, they will, as a rule, set to work to substitute the less expensive method"; and this ponderous platitude is illustrated by Marshall from the fact that there are certain kinds of field-work for which horse-power is more suitable than steam-power, and vice versa, and that there is a narrow margin on which either could be indifferently applied, which margin, again, also is elevated into importance by being characterised as the 'margin of indifference'; and then comes the sage reflection that "on that margin the net efficiency of either horse or steam power will be proportioned to the cost of applying it." In the same way, too, on this "margin of indifference" the wages of skilled and unskilled labour "will bear to one another the same ratio that their efficiencies do at this margin of indifference." And again in reference to hand power and horse power, the reader is informed that "their prices on this margin of indifference must be proportionate to their efficiency"; and so, as the upshot of it all, it is claimed by Marshall that "the Law of Substitution will have established directly a relation between the wages of labour and the price that has to be paid for horse power." But in order that there may be no mistake about it, he lets Von Thunen himself sum the matter up in his own words; - "the efficiency of capital must be the measure of its earnings, since if the labour of capital were cheaper than that of men, the undertaker would dismiss some of his workmen, and in the opposite case he would increase their number." Now although it must be admitted that these are the veriest platitudes, it may be said that the conclusion drawn from them is of prime importance, inasmuch as it establishes a real Law of Distribution. For that conclusion is, that "free competition tends to make each man's wages equal to the net product of his own labour, or the discounted value of the produce of his labour"; to which Marshall adds that "this is not an independent theory of wages, but only a particular way of wording the familiar doctrine that the value of everything tends to be equal to its expenses of production"; and taking as an illustration an additional shepherd employed on a grazing farm, who just earns his wages and nothing more, - that is to say, a shepherd on the ' margin of indifference,' - he concludes that this ' marginal shepherd ' adds to the total produce a net value just equal to his own wages, and therefore that "the wages of every class of labour tend to be equal to the produce due to the additional labour of the marginal labourer of that class"; or, in other words, that the value of the produce of his labour, and his wages, are identical.

Now I have introduced these quotations here as instances to prove that out of the statical method of the academical political economy, no scientific 'law,' in the proper sense of that term, can possibly emerge. For in these quotations we see as in a mirror all the fallacies which I have attempted to expose in the last chapter. In the first place, no capitalist employs a marginal labourer at all, - that is to say a labourer who only earns his bare wages, - or if he does, it is either from miscalculation or as a charity, neither of which considerations can be used to establish a law of political economy; and so Marshall's marginal labourer must be cut off. In the second place, there is no such thing as absolutely free competition, or even a tendency to it, among the capitalists who are supposed to employ these 'marginal labourers'; inasmuch as the aim of each capitalist is to seize the power which comes from combination, in order to extinguish competition; - whether, as in the giant Trusts, by a union of capitalists to produce on a large scale, and so extinguish the smaller isolated ones; or by using the superior instruments of production which they may chance to have in their own hands, - whether of larger capital, better patents, better situation for transport, better reputation, or what not, - for the same purpose.

And this, in turn, will not only whip off the ' marginal labourer,' but whole batches and establishments of labourers in the employ of those smaller defeated capitalists who are forced by the competition of the larger firms to close down their works. In the third place, the triumphant capitalists in thus cutting off whole regiments of 'marginal' men, have by that very act cut off the head of the "Law of Substitution" itself at a stroke; inasmuch as it is only on these margins between Capital and Labour, where cranes or horses or steam power can be employed instead of men, or men instead of them, that, by the admission of these Economists themselves, the law is held to operate. And hence, to conclude as we began, We may say that just as in Astronomy you must have two different points on the earth's circumference from which to get a law of measurement for the distance of a planet or a star; so in Political Economy you must get two different and opposite points on the circumference of the wheel, if you are to get any economic 'law' whatever.

But the academical Economists by ruling out Consumption at the start as one of these necessary points, made it impossible for them (with their one factor only, of Production) ever to get a 'law'; and so, with their endless refinings and useless distinctions, could only end in Saharas of sand merely.

I am aware, of course, that Professor Marshall has hedged himself against the imputation of not having the two factors of Production and Consumption necessary to get a 'law' of Political Economy, by a pronouncement like the following, which he repeats in several parts of his volume; - that "the amount of the commodity and its price, the amounts of the several factors of production used in making it and their prices, mutually determine one another, as balls lying in a bowl determine each other's position." Now this looks as if he had found at least the two factors which I claim are necessary for the establishment of a true scientific law; but on inspection it will be seen that he is only dealing with one after all. For the 'amount of the commodity and its price ' is only one of the divisions of the single factor Production, and is quite a different matter from what it would have been had he said "the amount of the commodity sold and its price," for that would have definitely pledged him to the admission into his proposition of the factor of Consumption as a distinct and separate factor in the Science, the variations of which, by affecting Production at every point, make it a necessary constituent not only in this or that law, but in every 'law' of the Science whatever.