54 ECONOMIC PRINCIPLES

it is of importance to conceive of the direction in which such
adjustment is taking place for the moment, the momentary
goal, which is to be shortly replaced by another, and so on
seriatim. Many of the changes, which recent history records,
are in the direction of economising productive effort, and
making enlarged supplies of numerous important commodities
 easy of attainment. The improvement of industrial
and commercial organisation, of appliances, of means of
transport, all tend to reduce expenses over wide fields of
productive effort. Thus the new positions of equilibrium
are characterised by larger supplies and lower prices than
prevailed formerly. But this is not inconsistent with the
prevalence of diminishing returns at each stage of change;
and hence this reduction of cost, as the growth of bodies of
consumers leads to corresponding growth in the scale of
productive industry, introduces us to no new problem of
equilibrium. It merely describes the sequence of the series
of stages of equilibria corresponding to the series of conditions
 of production and demand conceived of separately
and consecutively.
A new problem is, however, presented by some of the
conditions of modern industry, namely, those of the third of
the classes of conditions of supply, known as that of increasing
 returns or decreasing costs. In some industries it is
undoubtedly true that considerable increase of output could
take place without a proportionate increase of expenses,
Within wide limits the enlargement of the scale of production,
not merely of the industry as a whole, but, in addition to or
apart from this, in any particular producing establishment,
would realise economies such as to enable satisfactory profits
to be maintained even at reduced prices for the product.
Where these conditions prevail, and the market for the product
is not expanding, the enlargement of the scale of production
of an establishment improves, pro tanto, its power of capturing
a larger share of the existing market in competition with
rivals who do not so expand their businesses. But, in a
limited market, all cannot expand at once, and hence the
expansion of some must imply the reduction of the number
of competitors. If we conceive this process to be continued,