Page:Popular Science Monthly Volume 77.djvu/516

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ROFESSOR J. PEASE NORTON'S recent article on "The Cause of Social Progress and of the Rate of Interest" contains a notable contribution to economic theory. His analysis of the way in which other factors contribute to the value of the work of the genius is most acute, and his reasoning is, up to a certain point, entirely sound. It is, however, merely a part of the universal law of diminishing returns, and not, as he seems to think, a refutation of that law. Of two factors, $$X$$ and $$Y$$, combined for the production of a given result, if one factor, $$Y$$, increases, that increase adds, within limits, to the effectiveness of each unit of $$X$$, but correspondingly detracts from the effectiveness of each unit of $$Y$$. If, for example, one man, cultivating ten acres of corn, can produce a thousand bushels, he can, ordinarily, if given twenty acres of the same kind of land, produce more than a thousand bushels, say sixteen hundred bushels. Give him the use of still another ten acres, making thirty acres in all, and he can produce still more corn, say two thousand bushels, and so on, until a point is reached when additional land would be of no use at all to him. Up to this point, while every added increment of land adds to the crop produced per unit of labor, at the same time it reduces the crop produced per acre of land. This is a case similar in certain respects to that assumed by Professor Norton, of a genius who makes a labor-saving invention by means of which there is an increase of two dollars per capita in the product of the community. The larger the population the greater the product of this man's labor, or, which amounts to the same thing, the greater the value of the invention. Professor Norton assumes, however, that the product, or the value, of this invention would increase in exact ratio with the population. This he has no right to assume. In fact, inasmuch as the universal opinion of economists is to the contrary, he is under some obligation to support his assumption by definite and positive proofs. It is probably true, at least some economists would agree, that if the population and the land and natural resources, and the capital as well, all increase with the population, this joint increase of all productive agents would bring an exactly proportionate increase to the value of the invention. But if the population alone increases, while the land and capital remain fixed in quantity, then the value of the invention, while it may increase, will certainly not increase as fast as the population increases. The twine binder, for example, undoubtedly increased the productive power of labor. Let us assume that at the time of its invention it added two dollars to the product of every person in the civilized world. If the population doubled and the available