138

A TREATISE ON MONEY

BK. Ill

Then

Q^P.R-g.R

= E-S-(E-F)= I'-S; . .

(vii.)

and, since

Q»=i-r,

Q = Qi + Q2

= I-S.

. (viii.)

Thus the profits on the production and sale ofconsumption-goods are equal to the difference betweenthe cost of new investment and savings, being negativewhen savings exceed the cost of new investment; andthe total profits on output as a whole are equal to thedifference between the value of new investment andsavings, being negative when savings exceed the valueof new investment.

It follows from the above that we can re-writeEquations (ii.) and (v.) :

These equations tell us that the price of consump-tion-goods is equal to the rate of earnings of thefactors of production plus the rate of profits perunit of output of consumption-goods ; and corre-spondingly with output as a whole.

These conclusions are, of course, obvious and mayserve to remind us that all these equations are purelyformal; they are mere identities ; truisms which tellus nothing in themselves. In this respect they re-semble all other versions of the Quantity Theory ofMoney. Their only point is to analyse and arrangeour material in what will turn out to be a useful wayfor tracing cause and effect, when we have vitalisedthem by the introduction of extraneous facts fromthe actual world.

p=w 1+ !|,n-W 1 + 9.

(ix.)

(x.)