These four relations of Joint Demand, Joint Supply, Composite Demand and Composite Supply are well worth remembering and distinguishing from one another.  They are of immense importance in every branch of economic affairs.  There are hardly any economic problems upon which we are fitted to express an opinion, unless we have a lively sense of the far-reaching ramifications of cause and consequence, of the subtle and often unexpected interconnections between different industries and different markets.  To gape at these complexities in a confused stupor is as foolish as it is to ignore them.  But confusion and stupor are only too likely to represent our final state of mind, if we attempt to deal with these complications, one by one as they occur to us, in a piecemeal and haphazard fashion.  We need a clear method, a systematic plan by which we may search them out, and fit them into place.  The four relations which we have enumerated supply us with such a plan and method.  For they represent something more than a series of pompous names for familiar notions.  They constitute a classification of the various ways in which the demand and supply of one thing can affect the demand and supply of others; a classification which is exhaustive when we add the relation of derived demand, and an analogous relation on the supply side which we must now notice.

Sec.8. Ultimate Real Costs.  Just as the utility of “producers’ goods” is derived from that of the “consumers’ goods” which they help to make; so the cost of any commodity is derived from the cost of the things which help to make it.  Moreover, just as we recognize that the utility of “consumers’ goods” lies at the back of all demand, and constitutes the ultimate end of all production; so we cannot but feel, however obscurely, that behind the phenomena of money costs, there must lie certain ultimate costs, of which all money costs are but the measure.  But when we try to explain what the nature of these real costs may be, we are plunged in difficulty.  Wages, it may indeed seem at first sight, present no trouble.  There is the effort and the fatigue, the unpleasantness of human labor, to represent real costs.  But can we suppose that these things are measured with any approach to accuracy by the wages which are paid in actual fact?  Is it true, even as a broad general rule, that the services which are most arduous and most disagreeable command the highest price?  And wages are not the only ingredient of money costs.  There are profits:  to what real costs do profits correspond?  More difficult still, to what does rent correspond?  These plainly are not questions upon which he who runs may read.  It will be necessary to devote the next four chapters to their elucidation.

CHAPTER VI

LAND