Note 116 — Chapter VII · THE EMPIRICAL THEORY AS DEVELOPED BY MALTHUS.

The claim regarding the subordination of the law of costs is set forth emphatically as follows: “If it appears generally that the cost of production only determines the prices of commodities, as the payment of it is the necessary condition of their supply, and that the component parts of this cost are themselves determined [i. e., as values] by the same causes which determine the whole, it is obvious that we cannot get rid of the principle of demand and supply by referring to the cost of production. Natural and necessary prices appear to be regulated by this principle, as well as market prices, and the only difference is that the former are regulated by the ordinary and average relation of the demand to the supply, and the latter when they differ from the former depend upon the extraordinary and accidental relations of the demand to the supply.” Principles, 1st ed., pp. 84-85.