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102 If men are supposed to know what they are doing there is no occasion for discussing the first and third stages at all. The boundaries of the second stage represent extreme limits where one agency or the other becomes a free good and passes out of consideration altogether. Beyond this point the product is absolutely diminished by increasing one agency or the other, as the case may be, which is an absurdity. The identity in meaning of the first and the third stages is evident; the first stage when passing in one direction is the third when reading the data in the opposite order. It is a mere matter of the arrangement of results, not of the results themselves. Beyond the limits of the stage of “decreasing returns,” therefore, or under circumstances where the law did not hold, there could not exist an “economic” situation. Unless the return per unit of any agency does decrease it is not productive at all; its use adds nothing to the output of the combination. If we imagine increasing returns the agency is negatively productive. This fact has been recognized in the case of land in the common statement that additional land would never be taken up until diminishing returns set in on that already in use.

The facts of variability in the proportions of agencies in the productive organization, and of the variation of the yield relative to the different agencies in accordance with the principle of diminishing returns not merely make