COMMODITIES, PRICES, PROFITS
POLITICAL ECONOMY deals with the economic supply to mankind of the commodities needed by the latter in order to live. In modern capitalist States this process is accomplished exclusively by means of the sale and purchase of commodities, of which human beings become the proprietors by buying such commodities for the money that constitutes their income. There are various categories of income, which, however, can be divided into three main groups: every year capital brings in profit for the capitalist; the soil brings in ground rents for the landowner; and labour power--under normal conditions, and as long as such labour power can be utilized-- earns wages for the worker. Thus capital appears to the capitalist, the soil to the landowner, and his labour power --or rather, his labour itself--to the labourer, as the three different sources of their respective incomes, i. e., of profits, ground rents, and wages. All such incomes would seem to resemble the fruit of a tree that never withers, fruit which is consumed every year--or, to be precise, of three trees which furnish the annual income of three social classes: of the capitalist class, the landowning class, and the labouring class. The wealth which constitutes all categories of income appears to be derived from three distinct and independent sources: namely, capital, ground rents, and labour.
But the amount of income possessed by each class is not the only decisive factor in the supply of economic commodities. The price of such commodities is likewise a decisive element of the process; and the question as to what causes determine prices has, consequently, always formed the subject of searching inquiry on the part of economists.
At first sight this question does not appear to present any difficulty. If we take any product of industry, its price is determined by the manufacturer adding to the cost of pro-