Supply and Demand | Page 5

this applies to wool and mutton,
to beef and hides, as surely as to commodities which are produced quite
independently. It is true that this equilibrium is a rough, imperfect one;
and it may happen that what is called a "glut" of wool may co-exist for
a short period with what is called a scarcity of mutton. But
qualifications of this nature are in the strictest sense of the phrase, the
exceptions which prove the rule. For the departures from equilibrium
which gluts and scarcities represent are always transient and are usually
confined within narrow limits. A strong prevailing trend towards an
adjustment of demand and supply is unmistakably manifest amid all the
vagaries of changing circumstance. Let me carry the argument a step
further for the benefit of any reader who is restrained by a repugnance
too deep and instinctive to be readily overcome, from admitting fairly
to his mind that conception of order which I am endeavoring to
emphasize. He will in all probability be one who, cherishing ideals of a
better and fairer system of society, looks forward to a time when an
organized coöperation will be substituted for what he regards as the
existing chaos. Let us suppose that his visions were fulfilled as
completely as he could desire; and that an immense system of
Socialism were in existence, embracing not one country only, but the
whole world. Suppose all the difficulties of human perversity and
administrative technique to have been surmounted and a wise,

disinterested executive to be in supreme control of our business life.
Let us suppose all this, and ask only the question: How would this
executive treat the humdrum case of wool and mutton? How would it
decide the number of sheep it would maintain?
Shall we suppose that it is inspired by the ideal "to each according to
his need," and that it resolves accordingly that the commodities which
people require for a decent standard of life shall be supplied to them as
a matter of course? How, then, would it proceed? It might estimate the
amount of woolen clothing which a normal family requires, allowing
for differences in climate, and possibly indulging somewhat the
caprices of human taste. On this basis, a certain number of sheep would
be indicated. It might perform a similar calculation for mutton, and
again a certain number of sheep would be indicated. But it would be an
extraordinary coincidence if the numbers which resulted from these
independent calculations were nearly equal to one another, or were
even of the same order of magnitude; and, if they differed widely, what
number would our world executive select? Would it decide to waste an
immense quantity of either wool or mutton; or would it decide that it
could not, after all, supply the full human needs for one or other of the
commodities?
Of course, if the executive were sensible it could solve the problem
satisfactorily enough. It could retain the monetary system we know
to-day and it could supply the commodities to the consumers, not as a
matter of right, but by selling them to them at a price. This price it
could then move upwards or downwards, raising, say, the price of
mutton and reducing that of wool, until it found that the consumption
of the two things was adjusted in the required ratio. But if it acted in
this manner, what essentially would it be doing? It would be seeking by
deliberate contrivance to reproduce, in respect of this particular
problem, the very conditions which occur to-day without aim or effort
on the part of anyone at all.
The moral of this illustration must not be misinterpreted. It does not
show the folly of Socialism or the superiority of Laissez-faire. What it
does show is the existence in the economic world of an order more

profound and more permanent than any of our social schemes, and
equally applicable to them all.
§5. Some Reflections upon Capital. Another aspect of the great
cooperation is of even greater significance. It embraces not only a
multitude of living men, but it links the present together with the future
and the past. The goods and services which we enjoy to-day we owe
only in part to the labors of the week, the month, or the year, only in
part even to the efforts of our contemporaries. The men, long since
dead and forgotten, who built our railways, or sunk our coal mines, or
engaged in any of a great variety of tasks, are still contributing to the
satisfaction of our daily wants. The expression is not altogether fanciful;
for, had it not been reasonable to expect that those labors would be of
use to us to-day, many of them in all probability would never have been
undertaken. It was to meet