ELASTICITY OF SUPPLY AS A DETERMINANT OF DISTRIBUTION 77 
the supply curve of Factor X, i.e., at given prices or returns the 
amount of X which will be offered and (5) the supply curve of Y. 
The final equilibrium will result from the interaction of all these 
forces. To construct a valid theory of distribution, we must then 
build on marginal productivity (and for that economics will be 
forever grateful to Professor Clark); but we must build out 
beyond it to determine the effects of varying sets of supply 
schedules. Ultimately indeed economists should set themselves 
the task of determining inductively the actual supply schedules of 
the factors and if possible of their productivities as well. As 
will be intimated later on, this is by no means the hopeless task 
that most economists have feared it to be. 
3. The Conscious or Unconscious Use of Supply Schedules in 
Economic Theory 
It is the purpose of this paper to draw out some of the theoreti- 
cal consequences in the process of distribution which result from 
differing sets of elasticities of supply of the factors of production 
and to indicate some of the lines of inductive investigation which 
should be followed if we are to determine them quantitatively. 
Before proceeding to this analysis however, it may be worth while 
to point out that in practice virtually every theory of distribution 
which has aimed to explain the long-run tendencies has in fact 
rested its case upon some assumptions of the probable behavior 
of the supply of the factors consequent upon changes in their 
rate of remuneration. 
Thus the mercantilists believed that the real wages of the 
workers should be lowered and not increased. This followed 
from their belief that an increase in wages would cause a corre- 
sponding decrease in the number of hours the laborers would work 
since the latter would now be able to secure the same standard of 
living with fewer hours of work. A decrease in real wages would 
therefore cause the workers to put in more hours of work in order 
to maintain their former position. Thus the public policy 
advocated by this group proceeded from their belief that the 
supply curve of labor was negatively elastic and that this 
elasticity was equal to unity. 
! For a review of mercantilistic doctrine on this point, see E. S. Furniss, 
The Position of the Laborer in a System of Nationalism, and an article 
by T. E. Gregory in Volume I. of Economica.