204 ECONOMIC PRINCIPLES

ment of the productive energies of the country which
procures the greatest possible return. Wherever a greater
return in value can be secured by a transfer of energy to
some point other than that where it is applied, the transfer
is effected under the stimulus of the competitive struggle.
Though we have already given reasons for the lack of
coincidence of actual fact with this description, it is not too
much to say that the adjustment is proceeding which shall
lead to the application of productive forces where they give
the greatest return of value. It is, therefore, permissible to
frame the argument in which we are engaged as if the
adjustment were complete, especially as any other course
would involve us in the making of estimates of the degree
of its incompleteness, and we cannot encumber the general
outline of the theory we are developing with such estimates.
Assuming, then, that the productive energies of the
community are applied where they yield most value, the
replacement of the foreign part of the supply of goods, by
the enlargement of the domestic supply of the same goods,
would involve a reduction in the marginal productivity of
the productive machinery of the community making such
a readjustment. We may extend our statement to embrace
some facts of the situation hitherto ignored. Many of the
imported goods are able to be supplied, at prices at which
they compete with domestic supplies, in spite of heavy
expenses of transportation and the payment of import dues.
If the cost of transport could be reduced and the tax
on import removed, how would the matter stand? The
reduced expenses of importation would enable the goods to
be offered more cheaply, thus partly replacing some of the
domestic product, partly leading to an increased demand for
this line of goods. The domestic product would remain in
the market, ultimately, to the extent to which the facilities
for its production enabled an output at the lowered price,
resulting from the reduction of the burdens on the imported
goods. Part of the productive energy of the community
would thus be released from this industry, and that part
would be the part which is the least productive in that
industry, since only the more productive part could hold its