72 POLITICAL ECONOMY 
to decreasing returns would pass into 
actuality 
The realistic laws of increasing and de 
creasing returns are derived from observation 
of actual economic conditions ; in short, they 
are inductively established ; but at the same 
time, as in the case of other inductive general 
isations, for their complete explanation deduc 
tion must be enlisted. The realistic law of 
increasing returns declares that an enlarge 
ment of a manufacture is usually accom 
panied by increasing returns. The law holds 
generally because manufacture is seldom 
confronted with a dearth of any essential 
agents which play a part in settling the cost 
of production. The new labour, the new 
machines, the new employers are not likely to 
prove inferior in any marked degree to those 
already incorporated in the industry. Material 
may be an exception, but in most manufactur 
ing the cost of material forms a small part of 
the cost of production. It is not probable, 
therefore, that in manufacture the economies 
of specialism associated with expansion will 
meet with any serious counteracting influences. 
The realistic law of decreasing returns pro 
claims that efforts to obtain larger supplies of 
natural products are usually accompanied by 
decreasing returns. Obviously, in the deter-