ings). We are thus tempted to conclude that, provided a
commodity possesses some utility, its price will be determined by the
cost of production, the degree of utility being unimportant. This was
exactly how the position was gummed up for many years in systematic
treatises upon Political Economy; and it was not until fully half a
century after the _Wealth of Nations_ that a discovery was made which
threw a fresh light on the whole matter.

First of all, let it be clearly observed how very unsatisfactory is
the above account. In Chapter II where we were treading surely, with a
sense of solid ground beneath us, we drew no such invidious
distinction between supply and demand. They seemed then to possess an
equal status. But cost of production is the chief factor which, in the
case of commodities, ultimately determines the conditions of
supply. Utility, similarly, is the chief factor which ultimately
determines the conditions of demand. Must not then the symmetrical
relations between demand and supply be reflected in a corresponding
symmetry between the utility and the costs which underlie them? Demand
springs obviously from utility; the only motive for buying anything is
that it will serve some real or fancied use. Can we then accord to
demand so dignified and to utility so subordinate a place? There is
here an inconsistency which we must somehow reconcile. It will not
serve as a solution to distinguish between different periods of time,
and to say, as economists used to say not very long ago, that price is
governed over a short period by demand and supply, but in the long run
by the cost of production. This still leaves our sense of symmetry
unsatisfied. Moreover, the conception of cost of production, when we
consider it as ruling over a long period, frequently seems to lose any
precision, as an independent factor, which it may otherwise
possess. Motor-cars, we have agreed, are more costly to produce than
loaves of bread; but, as we know well, the cost of producing
motor-cars varies enormously, accordingly as they are produced on a
small or a large scale. By the methods of mass production they can be
turned out at a relatively low cost per car. But this requires that
they should be purchased in large numbers and this in turn throws us
back to the demand for motor-cars, and plainly enough, to people's
judgment as to their utility. In some cases, the opposite phenomenon
occurs. In the case of British coal, for instance, the