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Show 74 ON THE NATURE AND (cH. II. the n1arket, and differ \lvidely in different years and at different times, while the labour and capital etnployecl upon the1n n1ay have been very nearly the same. This is so obvious, that probably very fe,v would hesitate to believe what is certainly true, that, if in the next year we could by any process exeinpt the farmers from all cost in the production of their corn and cattle, provided no change were made in the quantity brought to n1arket, and the society had the same \vants and the san1e powers of purchasing, the prices of ra \V products \Vould be the san1e as if they had cost the usual labour and expense to procure therrl. With regard, therefore, to a class of co1nn1odities of the greatest extent, it is ackno\vledged that the existing market prices are, at the 1no1nent they are fixed, determined upon a principle quite distinct fron1 the cost of production, and that these prices are in reality almost al\vays different from \vhat they \Vould have been, if this cost had reo·ulated b them. There is indeed another class of co1nmodities ' such as n1anufactures, particularly those in \vhich the raw material is cheap, \vhere the existing market prices much more frequently coincide \Vith the cost of production, and n1ay appear, therefore, to be exclusively determined by it. Even here, ho\vever, our familiar experience she\vs us that any alteration in the den1and and supply quite overcotnes for a titne the influence of this cost ; and further, when \Ve cotne to examine the subject n1ore closely, \Ve find that the cost of production SEC. III.] MEASURES OF VALUE. 75 itself only influences the prices of these conlmodities as the pay1nent of this cost is the necessary condition of their continued supply. But if this be true, it follows that the great principle of demand and supply is called into action to detern1ine "'hat Adan1 Smith calls natural prices as well as n1arket prices. It 'vill be allovved without hesitation that 110 change can take place in the n1arket prices of comnlodities \vithout some previous change in therelation of demand and supply. And the question is, vvhether the san1e position is true in reference to natural prices? This question n1ust of course be detertnined by attending carefully to the nature of the change vvhich an alteration in the cost of production occasions in the state of the demand and supply, and particularly to the specific and imnlediate cause by V\rhich the change of price that takes place is effected. We all allovv, that \vhen the cost of production din1inishes, a fall of price is generally the consequence; but what is it, specifically, \vhich forces down the price of the comtnodity? It has been shewn in the preceding section that it is an actual or contingent excess of supply. We all allow that, when the cost of production increases, the prices of commodities generally rise .. But what is it \vhich specifically forces up the price? It has been , she\vn that it is a contingent failure of supply. Ren1ove these contingencies,. that is, let the extent of the supply ren1ain exactly the sarne, 'vithout contingent failure or excess, vvhether the price of production rises or falls, and |
