DEMAND

43

economics  is  that  which  is  known  as  the  law  of
substitution,  indifference,  or  equi-marginal
returns.  It  is  simple—so  simple,  indeed,  that
one  might  at  first  feel  inclined  to  refuse  it  the
dignified  title  of  “  law  ”—but  its  recognition,
nevertheless,  has  led  to  the  most  far-reaching
consequences  in  economic  analysis.  In  a
spirit  of  some  exaggeration,  one  might  liken
its  role  to  that  of  the  law  of  the  survival
of  the  fittest  in  biology—another  absurdly
obvious  generalisation.  In  fact,  the  two  laws
are  not  merely  alike  but  akin  ;  as  is  apparent
when  we  take  any  example  of  substitution,
say,  substitution  in  consumption,  which  means
the  survival  in  choice  of  the  things  fittest  to
satisfy  some  direct  or  indirect  demand.  It
frequently  happens  in  science  that  the  profoundest
  truths  at  first  strike  one  as  selfevident
  and  unimportant.
The  law  of  substitution,  indifference,  or
equi-marginal  returns,  applies  not  merely  to
consumption  but  to  every  branch  of  economics.
For  the  present,  however,  I  shall  define  it  in
its  application  merely  to  consumption.  With
reference  to  consumption,  the  law  points  out
that  income  will  be  expended  in  such  a  way
that  the  marginal  utilities  of  different  things
to  any  person  will  be  made  the  same,  when
marginal  utilities  are  reckoned  with  respect