ent production, and must be sufficient to repay the cost of
production, and, besides, the ordinary expectation of profit. This may
be called the _necessary_ value. When the commodity can be made in
indefinite quantity, this necessary value is also the maximum which the
producers can expect. If it is such that it brings a rate of profit
higher than is customary, capital rushes in to share in this extra gain,
and, by increasing the supply, reduces the value. Accordingly, by the
operation of supply and demand the values of things are made to conform
in the long run to the cost of production.

The introduction of money does not interfere with the operation of any
of the laws of value. Things which by barter would exchange for one
another will, if sold for money, sell for an equal amount of it, and so
will exchange for one another, still through the process of exchanging
them will consist of two operations instead of one. Money is a
commodity, and its value is determined like that of other commodities,
temporarily by demand and supply and permanently by cost of production.

Credit, as a substitute for money, is but a transfer of capital from
hand to hand, generally from persons unable to employ it to hands more
competent to employ it efficiently in production. Credit is not a
productive power in itself, though without it the productive powers
already existing could not be brought into complete employment.

In international trade we find that the law that permanent value is
proportioned to cost of production does not hold good between
commodities produced in distant places as it does in those produced in
adjacent places.

Between distant places, and especially between different countries,
profits may continue different, because persons do not usually remove
themselves or their capital to a distant place without a very strong
motive. If capital removed to remote parts of the world as readily, and
for as small an inducement, as it moves to another quarter of the same
town, profits would be equivalent all over the world, and all things
would be produced in the places where the same labour and capital would
produce them in greatest quantity and of best quality. A tendency may
even now be observed towards such a state of things; capital is becoming
more and more cosmopolitan.

It is not a difference in the _absolute_ cost of production which
determines the interchange between distant places, but a difference in
the _comparati