210

POLITICAL  ECONOMY

we  know,  from  wliat  we  have  learnt  of  the  law
of  decreasing  returns,  that  sooner  or  later
the  addition  made  to  the  returns  obtained  from
a  field  by  adding  to  the  doses  of  labour  and
capital  devoted  to  its  cultivation  will  become
less  and  less.  This  being  so,  it  is  apparent
that  in  the  disposal  of  labour  and  capital
the  farmer  will  devote  so  much  to  each  kind
of  land  that  the  additions  made  to  the  returns
of  each  kind  of  land,  as  a  result  of  the  application ­
  of  the  last  dose  of  labour  and  capital,
will  be  the  same.  In  saying  this  we  are
merely  saying  that  the  law  of  substitution,
indifference  or  equi-marginal  returns,  holds
in  production.  The  proof  is  identical  with
the  proof  already  furnished  of  the  proposition
that  people  will  tend  so  to  spend  their  incomes
that  the  marginal  utilities  derived  from  different ­
  lines  of  expenditure  will  be  equal.  The
additions  made  to  the  returns  of  the  fields
are  known  technically  as  the  marginal  returns,
as  the  reader  knows.
Continuing  our  argument,  we  observe  next
that  each  farmer  will  go  on  applying  doses
of  labour  and  capital  to  each  tract  of  land
each  season  until  the  marginal  return,  in
view  of  the  price  of  the  produce,  is  just
sufficient  to  afford  normal  remuneration  for
a  dose  of  labour  and  capital.  Normal  pay-