Supply and Demand | Page 4

economic system are too plain to be ignored; too many people have
harsh personal experience of the wastefulness of its production, the
injustice of its distribution; of its sweating, its unemployment and
slums. And when the attempt is made to plaster over evils, such as
these with obsequious rhetoric about the majesty of economic law, it is
not surprising that the spirit of many men should revolt and that they
should retort by denying the existence of order in the business world,
by declaring that the spectacle which they see is one of discord,
confusion and chaos. And then we are engulfed in a controversy as
stale, flat and unprofitable as that between the "theorist" and the
"practical man."
The truth is that the language of praise and obloquy is quite
inappropriate. In the first place, it may be well to note that the order of
which I have spoken manifests itself not merely in those economic
phenomena which are beneficial to man, but hardly less in those which
work to his hurt. Even in those alternations of good and bad trade,
which spell so much unemployment and misery, there is discernible a
rhythmic regularity like that of the process of the seasons, or the ebb
and flow of the tide. This is not an elegance to be admired. Furthermore,
in so far as the order comprises adjustments and tendencies which are
beneficial (as, indeed, is mainly true), there is no warrant for assuming

that these are either adequate to secure a prosperous community or
dependent upon the social arrangements which happen to exist. Let us,
therefore, refrain from premature polemics and examine in a spirit of
detachment some further aspects of the elaborate, but yet unorganized,
cooperation of which so much has been already said.
§4. Some Reflections upon Joint Products. A quite inadequate idea of
the complexity of this coöperation is obtained by dwelling on the
numbers of people who participate in it, or the immense distances over
which it extends. The deficiency can be partially supplied by referring
to some of the more obvious of the many subtle interconnections which
exist between different commodities and different trades.
There are innumerable groups of commodities (which it is customary to
term "joint products") such that the production of one commodity
belonging to the group necessarily implies or very greatly facilitates the
production of the others. Wool and mutton; beef and hides; cotton and
cotton-seed are a few familiar illustrations. The important feature of
these "joint products" is the fairly precise relation which must exist
between the quantities in which the different products are supplied. If
you plant a certain crop of cotton, it will yield you so much cotton lint
and so much cotton-seed. You can, of course, if you choose, throw
away part of the seed, as indeed at one time planters used to do; but
unless you do this, you cannot vary the proportions of the two things
which you will have for sale. Similarly, if you keep a flock of sheep, or
a herd of cattle, you will obtain wool and mutton in the one case, or
beef and hides in the other, in proportions, which indeed you can vary
within certain limits by choosing a different breed,[1] but which you
cannot radically transform. When, however, we turn to the uses to
which these products are put, no similar relation is to be discovered.
Cotton lint is used chiefly for making articles of clothing; cotton-seed
for crushing into oil, on the one hand, and cake for cattle fodder on the
other. There is no apparent connection of any kind between the
demands for these different things, and still less is there any obvious
reason why these demands should bear to one another the particular
proportions which characterize their respective supplies. It is very
much the same with wool and mutton; with beef and hides; with all

"joint products." Why should we consume mutton on the one hand and
woolen clothing on the other, in a ratio at all commensurate with that in
which they are yielded by the sheep?
[Footnote 1: These possibilities of small variation are of very great
importance as will be shown in Chapter V, but they do not affect the
present argument.]
What, then, might we expect to find if order was nonexistent in the
economic world? Surely that some things such as wool would be
produced in quantities many times in excess of the demand for them,
quite possibly five, ten, or twenty times in excess; while conversely the
supplies of others such as mutton might fall far short of what was
required. But in practice we find nothing of the sort. Somehow it comes
about that an equilibrium is established between the demand for and the
supply of every commodity; and that