in the theory of value and prices.
105
§9-
The “ fundamental symmetry of supply and demand worked outby Auspitz und Lieben should not bind us to the fundamentalasymmetry. The symmetry enables Us to investigate the generaldependence of consumption and production but special investigationof production, e. g.-of railroad rates should be independently pur-sued.
(1.) Production of a commodity always precedes its consumption.
(2.) The maximum advantage in production involves few com-modities for each individual, in consumption many.
(3.) Increasing social organization intensifies the former fact notthe latter.
(4.) There are .more successive steps in production than consump-tion.
(5) Social organization intensifies this distinction.
(6) Owing to (4) and (5) service rather than commodity becomesincreasingly the unit in production.
(7.) Freedom to leave off consuming at any point is greater thanfor producing.
(8.) Social organization intensifies this.
(9.) Combination and monopoly are more feasible and frequent inproduction than in consumption.
(10.) In production the distinction of fixed charges and runningexpenses often plays an important r61e. This deserves a separatetreatment. The transportation charges on a steamship are not whatit costs to transport an extra ton but it is this quantity plus the pro-portionate share of that ton in the fixed charges (interest, insurance,etc). That is, the marginal cost of service involves the margin ofcapital invested as well as the marginal cost of running the ship)(which is purely nominal). This is so in theory of railroad ratesbut the railroad investor cannot foresee the results of his enterpriseas well nor can he change his road when built from one route toanother as a steamship can do. To apply the theory to railroadsassumes that railroad projectors know what the traffic will be. Con-sequently the proper discussion of railroad rates, assuming that therailroads are already built, takes no account of fixed charges butbecomes formulated as “ what the traffic will bear.”*
A complete theory of the relation of cost of production to pricein its varying and peculiar ramifications is too vast a subject to betreated here.