The Individual Factors of Imputation. I. -- Supply Those things which are always adduced as causing the changes in the value of production goods, effect this change, in the first instance, by altering the amount of contribution imputed to the production goods. We shall now discuss these in turn, and this may possibly prove the most wearisome part of our task.
In the first place we have to notice the available supply.
The larger the available supply of any definite kind of productive instruments, the less important may and must be the goods produced -- always supposing that in other respects no disturbing change of circumstance takes place. If more iron be raised, iron products of smaller marginal utility may and must be made. It is inevitable that this result should be attributed to the material, the iron, and expressed in a lower valuation of its marginal productive service. It cannot be imputed to any other factor, such as the labour that cooperates in the production, as no change has taken place in the circumstances of any other factor. Of all the equations of return, only those in which iron occurs have been reduced, those in which labour occurs, expended on other materials, remaining unaltered; consequently the calculation is lower for the former, not for the latter. To iron, therefore, and not to labour, is imputed a smaller share of the return. If one were to calculate everything as before, or were to impute to labour the diminished return, the calculation would defeat its own purpose; one would be calculating as if everything could be spent as before, or as if labour could be employed with greater freedom. Neither of these could be allowed.
Of all production goods, the smallest contributions must be imputed to those the supplies of which are most abundant in comparison with the demand for them. These may be spent most freely, down to their most insignificant uses. So far as productive exploitation is concerned, it is desirable that those goods which are most needed should also be the most abundant, and should have the smallest contributions imputed to them.(1*)NOTES:
1. It may be of use to the English reader to note how our representative English economist expresses similar ideas: --"Other things being equal, the larger the supply of any agent of production, the farther will it have to push its way into uses for which it is not specially fitted, and the lower will be the demand price with which it will have to be contented in those uses in which its employment is on the verge or margin of not being found profitable; and, in so far as competition equalises the price which it gets in all uses, this price will be its price for all uses. The extra production resulting from the increase in that agent of production will go to swell the national dividend, and other agents of production will benefit thereby; but that agent itself will have to submit to a lower rate of pay." --Marshall, Principles of Economics, 2nd edit., p. 565. -- W.S.
