76 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
rate of interest were to be one-half of its present figure, can we 
assume that the supply of capital would be the same? If the 
change in the remuneration of labor and capital altered the 
supplies of these two factors, then would not their marginal 
productivities also be altered? Furthermore, the marginal pro- 
ductivities in the original situation may well have been such as 
to cause either more or less of a given factor to be supplied and 
this very alteration in the quantity offered would alter the 
marginal productivities. 
The truth of the matter is that the theory of marginal pro- 
ductivity as advanced by Professor Clark explains the processes 
of distribution under the condition of fixed supplies and of atom- 
istic competition. It does not fully explain the permanent long- 
run processes of distribution nor tell us whether the prices of the 
factors at any one moment are such as to constitute an equili- 
brium or whether they are not. Fundamentally therefore the 
contribution of Professor Clark to the theory of distribution was 
very similar to that of the Austrian school to the theory of value. 
To both the prices, of goods in the one case and of factors in the 
other, were fixed by demand schedules; the units of desire 
expressed and weighted by monetary units constituting the 
demand curve for commodities and the curves of imputed mar- 
oinal productivity constituting the demand schedules for labor 
and capital respectively. 
But in real life, and for the purposes of a complete theory, we 
also need to know what determines the supply since this is also 
an essential factor in price determination. The supply of a com- 
modity is not a purely plastic affair in which any quantity will 
be offered irrespective of price. It is on the contrary a function 
of price just as is demand. But since it is the factors of produc- 
tion, %.e., labor, land, capital and management which produce 
commodities, the prices paid for the latter are really analyzable 
into prices for the factors. The supplies of the factors can in a 
similar sense be conceived of as functions of price or of return. 
The fixation of the equilibrium in a simplified economic state and 
the unit return to each factor will therefore depend not only on 
(1) the curve of imputed productivity of Factor X when Y is 
constant and (2) the curve of imputed productivity of Factor Y 
when X is constant but also (3) the curve of the advance in total 
productivity when X and Y are increased proportionately (4) 
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