We desire to obtain, if possible, a series of prices at which different amounts of a commodity can find purchasers during a given time in a market.A perfect market is a district, small or large, in which there are many buyers and many sellers all so keenly on the alert and so well acquainted with one another's affairs that the price of a commodity is always practically the same for the whole of the district.But independently of the fact that those who buy for their own consumption, and not for the purposes of trade, are not always on the look out for every change in the market, there is no means of ascertaining exactly what prices are paid in many transactions.Again, the geographical limits of a market are seldom clearly drawn, except when they are marked out by the sea or by custom-house barriers;and no country has accurate statistics of commodities produced in it for home consumption.
Again, there is generally some ambiguity even in such statistics as are to be had.They commonly show goods as entered for consumption as soon as they pass into the hands of dealers;and consequently an increase of dealers' stocks cannot easily be distinguished from an increase of consumption.But the two are governed by different causes.A rise of prices tends to check consumption; but if the rise is expected to continue, it will probably, as has already been noticed, lead dealers to increase their stocks.(10*)Next it is difficult to insure that the commodities referred to are always of the same quality.After a dry summer what wheat there is, is exceptionally good; and the prices for the next harvest year appear to be higher than they really are.It is possible to make allowance for this, particularly now that dry Californian wheat affords a standard.But it is almost impossible to allow properly for the changes in quality of many kinds of manufactured goods.This difficulty occurs even in the case of such a thing as tea: the substitution in recent years of the stronger Indian tea for the weaker Chinese tea has made the real increase of consumption greater than that which is shown by the statistics.
NOTE ON STATISTICS OF CONSUMPTION
8.General Statistics of consumption are published by many Governments with regard to certain classes of commodities.But partly for the reasons just indicated they are of very little service in helping us to trace either a causal connection between variations in prices and variations in the amounts which people will buy, or in the distribution of different kinds of consumption among the different classes of the community.
As regards the first of these objects, viz.the discovery of the laws connecting variations in consumption consequent on variations in price, there seems much to be gained by working out a hint given by Jevons (Theory, pp.11, 12) with regard to shopkeepers' books.A shopkeeper, or the manager of a co-operative store, in the working man's quarter of a manufacturing town has often the means of ascertaining with tolerable accuracy the financial position of the great body of his customers.He can find out how many factories are at work, and for how many hours in the week, and he can hear about all the important changes in the rate of wages: in fact he makes it his business to do so.And as a rule his customers are quick in finding out changes in the price of things which they commonly use.He will therefore often find cases in which an increased consumption of a commodity is brought about by a fall in its price, the cause acting quickly, and acting alone without any admixture of disturbing causes.Even where disturbing causes are present, he will often be able to allow for their influence.For instance, he will know that as the winter comes on, the prices of butter and vegetables rise; but the cold weather makes people desire butter more and vegetables less than before: and therefore when the prices of both vegetables and butter rise towards the winter, he will expect a greater falling off of consumption in the case of vegetables than should properly be attributed to the rise in price taken alone, but a less falling off in the case of butter.If however in two neighbouring winters his customers have been about equally numerous, and in receipt of about the same rate of wages; and if in the one the price of butter was a good deal higher than in the other, then a comparison of his books for the two winters will afford a very accurate indication of the influence of changes in price on consumption.Shopkeepers who supply other classes of society must occasionally be in a position to furnish similar facts relating to the consumption of their customers.
If a sufficient number of tables of demand by different sections of society could be obtained, they would afford the means of estimating indirectly the variations in total demand that would result from extreme variations in price, and thus attaining an end which is inaccessible by any other route.For, as a general rule, the price of a commodity fluctuates within but narrow limits; and therefore statistics afford us no direct means of guessing what the consumption of it would be, if its price were either fivefold or a fifth part of what it actually is.But we know that its consumption would be confined almost entirely to the rich if its price were very high; and that, if its price were very low, the great body of its consumption would in most cases be among the working classes.If then the present price is very high relatively to the middle or to the working classes, we may be able to infer from the laws of their demand at the present prices what would be the demand of the rich if the price were so raised so as to be very high relatively even to their means.On the other hand, if the present price is moderate relatively to the means of the rich, we may be able to infer from their demand what would be the demand of the working classes if the price were to fall to a level which is moderate relatively to their means.
