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While economists attend to the so-called Theory of Cost, they usually
Learn that the prices are defined by conditions of a supply and demand and that, in
Particulars, a special role play changes in production incremental costs
And elasticity of the offer in short-term aspect. But when they then in
The second volume or more often in the separate treatise we pass to the Monetary theory and the Prices,
It is not heard more anything about these simple and accessible concepts, and we leave with
Head in the world where the prices are defined by quantity of money, velocity of circulation
Money in relation to incomes, velocity of circulation in relation to volume
Commercial transactions, cash storage, forced savings, inflation
And a deflation et hoc genus omne*. Thus it is not done any or nearly so
Any attempts to connect these indistinct expressions with former ours
Concepts of elasticity of the offer and demand. If we consider to what us
Learnt, and we will try to result it in system, at first sight
It is represented that elasticity of the offer should become equal to zero,
And demand - proportional to quantity of money. At attempt to penetrate more deeply
In merits of case we get to a fog where it is not known for certain and all
Probably. All of us have got used to that we appear that on one party of the Moon,
That on other, without having submission about what road connects both these
The parties as among themselves the life in reality and in the sleep usually is not connected.
One of problems of previous heads was to find a way out from this
Dual position and closely to connect the theory of the prices with the cost theory. I
I consider wrong division of the Economic Science into the Theory of Cost and
Distributions, on the one hand, and the Monetary theory - with other. True border,
In my opinion, should lie between the Individual industry or Firm Theory,
Where compensations of factors and distribution a resource are considered between
In the various methods of use of their given quantity, and the Theory
Production and Employment as a whole. While we are limited to research
Individual industry or firm, assuming constants total
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