Page talk:The Economic Journal Volume 1.djvu/691
text of page edit
At the time this was uploaded, there was apparently some kind of problem with the scan. Going to the Google Books link given as the source on the Commons page shows a scan that includes this page. The text of page 669 from there is:
arrives in the form of new investments of capital in the profitable Industry, more labour employed, larger outputs obtained and also a lessened demand, due to various causes, high prices intensifying foreign competition, deficient purchasing power abroad, financial irregularities, or otherwise. Then, with a fall in the aggregate of the demand below the powers of production, keen competition sets in, prices go down, also profits and wages, and the competition is continued until the cost of producing the particular article in question, whether it is coal, iron, steel, cotton fabrics, woollen goods, or any other large product, is reduced to about, or below the rate at which the cheapest and most economically worked mines or manufactories can be carried on, with profits at zero, and wages and other charges at the lowest possible limit. Then, if that cost of production is sufficiently low to admit of the article being sold and exported to recover ground lost during high prices and defy foreign competition, and if the output be reduced to some extent by irregular working, the demand begins to again increase, owing to the low prices promoting the acquisition of more wide and extensive markets for the article, and, the pressure of foreign competition in distant markets being relieved, and the markets extended, in time this operation, if the cost of production is sufficiently low, has the effect of again increasing the demand, and paving the way for a return of the high prices and profits. It is the amount of profits averaged over the good and bad cycles which is necessary to justify the application of capital to the particular industry in question.
It would appear, therefore, that without a period during which the products of Great Britain can be produced at rates which defy competition, we should have no periods of recurring prosperity, which enable the community not only to replace past losses, but to lay by and accumulate capital readily applicable to further development. And if this be so, a condition of things may arise which, from natural and unalterable causes, will add to the cost of production of coal, a contingency from every point of view alarming, whether from the point of view of its use for our steam navigation, or for foreign export, and, as such, cheapening the cost of the importation of raw material for our manufactures; or from the aspect of its widespread use in our manufacturing industries; because such an increased cost, operating so widely in enhancing the cost of our raw and manufactured cheap products, will undoubtedly damage our power of holding so largely the markets of the world, and will still more prevent our extension of those markets.