Arguments for social interference developed by Pigou and Graham illustrate common misinterpretations of the meaning of cost and its variation with output, 582. — I. The private owner of a natural opportunity secures maximum return from it by charging that rent which halts the application of investment at the point which is socially most advantageous, 584. — II. The notion of decreasing cost is a fallacy; competitive price fixation under decreasing cost or increasing returns an impossible situation, 592. — III. The law of comparative advantage in international trade is fundamentally sound, 599. — Importation a method of using resources to produce the imported good, and will be employed under competitive conditions only when more efficient than a direct method, 603. — The competitive system has important defects, but they lie outside the mechanical theory of exchange relations, 605.

"Primary" value theory and distributive theory call for the same formulation of the market price concept but for different conceptions of normal price, 66. — Contrast of market price and normal price points of view, equilibrium between amounts vs. between rates of flow, 68. — Limitations; meaning of cost of production, 72. — Clark's "Static State" the same concept as Marshall's long-period normal price of consumption goods, but incorrectly applied to distribution, 73. — This concept applicable in "sub-distribution, " which is practically more important than the theorist's division of income into general shares, 84. — Criticism of Marshall's equilibrium levels of wages and interest, 89. — Conclusion: Marshall's theory a correct logical definition, but applicable to reality only as determining a "tendency" which may be overcome by other tendencies; contrast with Clark; contrast with Mill, 95.

I. The nature of capital. Capital defined pragmatically as that for which interest is paid, 280. — Relation to entrepreneur function, 281. — Capital is value, 282. Relation to "rent, " 283. — II. The supply of capital, 284. — "Discounting the future" an erroneous explanation, 285. — Motives looking beyond the individual life, 286. — Value often produced specifically for capital use, in order to secure social position and power, 288. — The supply curve of capital, 291. — III. The demand for capital, 292. — There is "specific productivity, " 293. — In what sense, 294. — Convertibility of capital into rent-bearers, 295. — Summarized proposition, 298. — IV. The equilibrium of supply and demand, 299. — The conventional equilibrium of supply and demand refers to a unit of time only, 300. — Its application to capital unsound, 301. — Two separate problems, 303. — At a particular moment, no equilibrium, but an equilibrating action, 304. — The long period trend represented in three dimensions, 306. — In what sense the reasoning rests on "static" assumptions, 307. — A normal equilibrium of supply and demand and a normal rate of interest are wholly hypothetical, 309.

In his brilliant and valuable book on The Economics of Overhead Costs,' Professor J. M. Clark gives an arithmetical example to illustrate the theory of distribution by marginal productivity which seems to the writer to involve a slip worth pointing out. By way of background a few observations are necessary. Discussion of that famous theory has strangely neglected the apparently fundamental question of whether distribution in accordance with its principles would actually result in an exhaustive division of the product of industry among the factors of production. That is, if each unit of each factor is paid what any one unit contributes to the total product, will there be enough product to go around, and no more? If this is not true, it is evident that the theory must be abandoned at once or fundamentally modified.