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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Relation of the Theories of Labour and Exchange.

It may tend to give the reader confidence in the preceding theories when he finds that they lead directly to the well-known law, as stated in the ordinary language of economists, that value is proportional to the cost of production. As I prefer to state the same law, it is to the effect that the ratio of exchange of commodities will conform in the long run to the ratio of productiveness, which is the reciprocal of the ratio of the costs of production. The somewhat perplexing relations of these quantities will be fully explained in the next section, but we may now proceed to prove the above result symbolically.

To simplify our expressions, let us substitute for the rate of production the symbol . Then express the relative quantities of two different commodities produced by an increment of labour, and we have the following equation, identical with that on page 184.

Let us suppose that the person to whom it applies is in a position to exchange with other persons. The conditions of production will now, in all probability, be modified. For x the quantity of our commodity may perhaps be increased to x + x¹, and y diminished to y - y¹, by an exchange of the quantities x¹ and y¹. If this be so, we shall, as shown in the Theory of Exchange, have the equation

Our equation of production will now be modified, and become

But this equation has its first member identical with the first member of the equation of exchange given above, so that we may at once deduce the all-important equation

The reader will remember that

expresses the ratio of produce to labour; thus we have proved that commodities will exchange in any market in the ratio of the quantities produced by the same quantity of labour. But as the increment of labour considered is always the final one, our equation also expresses the truth, that articles will exchange in quantities inversely as the costs of production of the most costly portions, i.e. the last portions added. This result will prove of great importance in the theory of Rent.

Let it be observed that, in uniting the theories of exchange and production, a complicated double adjustment takes place in the quantities of commodity involved. Each party adjusts not only its consumption of articles in accordance with their ratio of exchange, but it also adjusts its production of them. The ratio of exchange governs the production as much as the production governs the ratio of exchange. For instance, since the Corn Laws have been abolished in England, the effect has been, not to destroy the culture of wheat, but to lessen it. The land less suitable to the growth of wheat has been turned to grazing or other purposes more profitable comparatively speaking. Similarly the importation of hops or eggs or any other article of food does not even reduce the quantity raised here, but prevents the necessity for resorting to more expensive modes of increasing the supply. It is not easy to express in words how the ratios of exchange are finally determined. They depend upon a general balance of producing power and of demand as measured by the final degree of utility. Every additional supply tends to lower the degree of utility; but whether that supply will be forthcoming from any country depends upon its comparative powers of producing different commodities.

Any very small tract of country cannot appreciably affect the comparative supply of commodities: it must therefore adjust its productions in accordance with the general state of the market. The county of Bedford, for instance, would not appreciably affect the markets for corn, cheese, or cattle, whether it devoted every acre to corn or to grazing. Therefore the agriculture of Bedfordshire will have to be adapted to circumstances, and each field will be employed for arable or grazing land according as prevailing prices render one employment or the other more profitable. But any large country will affect the markets as well as be affected. If the whole habitable surface of Australia, instead of producing wool, could be turned to the cultivation of wine, the wool market would rise, and the wine market fall. If the Southern States of America abandoned cotton in favour of sugar, there would be a revolution in these markets. It would be inevitable for Australia to return to wool and the American States to cotton. These are illustrations of the reciprocal relation of exchange and production.