76

POLITICAL  ECONOMY

foregoing  that  the  way  to  get  larger  supplies
when  increasing  returns  rules  is  to  offer  lower
prices—which  seems  absurd  and  is  absurd.
Larger  outputs  are  always  induced  by  higher
and  never  by  lower  prices.  The  explanation
of  the  seeming  absurdity  is  this,  that  when
price  has  risen,  and  a  larger  output  is  got,
price  will  begin  to  subside  until  a  level  lower
than  the  old  is  reached.  Our  generalisations
relate,  not  to  immediate  consequences,  nor
to  such  as  appear  soon,  but  to  the  consequences ­
  which,  other  things  being  equal,
must  be  brought  about  in  the  long  period.
The  exact  scientific  implications  of  the  long
period  have  been  laid  bare  in  our  first  chapter.
This  will  be  the  most  suitable  break  in  our
exposition  to  introduce  a  qualifying  idea,
relating  to  all  the  foregoing  and  much  that
follows,  an  idea  which  has  hitherto  been
reserved  in  order  to  avoid,  in  the  first  instance,
a  certain  complication  in  the  theory  of  price.
The  idea,  which  needs  only  to  be  stated  to  be
admitted,  is  that  cost  of  selling,  as  well  as
cost  of  producing  proper,  governs  price.
When  therefore  I  speak  of  cost  of  production,
in  relation  to  the  settlement  of  supply  prices,
I  must  be  taken  to  include  in  production
all  those  processes,  whether  industrial  or  commercial, ­
  which  are  antecedent  to  the  receipt