ing price as a starting point. Given
that, you can see at once the reason for the wages paid and the full
measure of the payment. To pay more is impossible. To pay less is to
invite a competition that will force the payment of more. Or take, if
you like, the wages as the starting point: there you are
again,--simplicity itself: the selling price will exactly and nicely
correspond to cost. True, a part of the cost concerned will be
represented not by wages, but by cost of materials; but these, on
analysis, dissolve into past wages. Hence the whole process and its
explanation revolves around this simple fundamental equation that
selling value equals the cost of production.

This was the central part of the economic structure. It was the keystone
of the arch. If it holds, all holds. Knock it out and the whole edifice
falls into fragments.

A technical student of the schools would digress here, to the great
confusion of the reader, into a discussion of the controversy in the
economic cloister between the rival schools of economists as to whether
cost governs value or value governs cost. The point needs no discussion
here, but just such fleeting passing mention as may indicate that the
writer is well and wearily conversant with it.

The fundamental equation of the economist, then, is that the value of
everything is proportionate to its cost. It requires no little hardihood
to say that this proposition is a fallacy. It lays one open at once,
most illogically, to the charge of being a socialist. In sober truth it
might as well lay one open to the charge of being an ornithologist. I
will not, therefore, say that the proposition that the value of
everything equals the cost of production is false. I will say that it is
_true_; in fact, that is just as true as that two and two make four:
exactly as true as that, but let it be noted most profoundly, _only as
true as that_. In other words, it is a truism, mere equation in terms,
telling nothing whatever. When I say that two and two make four I find,
after deep thought, that I have really said _nothing_, or nothing that
was not already said at the moment I defined two and defined four. The
new statement that two and two make four adds nothing. So with the
majestic equation of the cost of production. It means, as far as social
application goes, as far as any moral significance or bearing on social
reform and the social outlook goes, _absolutely nothing_. It is not in
itself fallacio