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that the production of this commodity, and therefore its supply, will continually dwindle until it corresponds to the demand; and thus its price rises again to the level of the cost of its production; or rather, until the supply has fallen below the demand; that is, until its price has again risen above its cost of production; for the price of any commodity is always either above or below its cost of production.
We see, then, how it is that capital is always immigrating and emigrating, from the province of one industry into that of another. High prices bring about an excessive immigration, and low prices, an excessive emigration.
We might show from another point of view how not only the supply, but also the demand, is determined by the cost of production; but this would lead us too far from our present subject.
We have just seen how the fluctuations of supply and demand always reduce the price of a commodity to its cost of production. It is true that the precise price of a commodity is always either above or below its cost of production; but the rise and fall reciprocally balance each other, so within a certain period, if the ebb and flow of the business are reckoned up together, commodities are exchanged with one another in accordance with their cost of production; and thus their cost of production determines their price.
The determination of price by cost of production is not to be understood in the sense of the economists. The economists declare that the average price of commodities is equal to the cost of production;
