competition by which any particular arrangement (as to the average mountain) initiated by custom
and accident could be disturbed. That is, still supposing the service of a guide or porter to be sold
as a whole. For, if the labour of the assistants can be sold by the hour, or other sort of differential
dose, the phenomenon of determinate equilibrium will reappear. There seems no reason to think that
the case of indeterminate equilibrium which has been illustrated is other than exceptional in the
actual labour market, even where the bargain appears to be made for totals as distinguished from
doses of labour,— situations rather than tasks. For there is, in fact, such a variety of situations
attended with different amounts of work61 as probably in practice to realise that divisibility of the
thing supplied—here labour—which, together with the divisibility of the thing demanded,—here
money,—constitutes a condition of a perfect market62 with determinate equilibrium.63 Still, the point
of theory is worth notice. Perhaps the friction in the labour market would be less if labour were sold
freely by the hour (or other small “dose”).
It ought to be mentioned that a different view of Exchange has been taken by a high authority
on Distribution. Professor Bohm-Bawerk presents as the general type of a market that very case
which is here regarded as exceptional. On one side of the markets are put dealers each with a
horse—or it may be a batch of several horses64—which he will not sell under a certain price, on the
61. Cp. Marshall, Principles of Economics, Book VI, chap. ii, §2, note, p. 599, 4th edition. Consider
the case of managers.
62. Though one condition of a perfect market is thus secured, it does not follow that the labour-
market will be perfect. Let us start with any system of bargains between entrepreneurs and work-
people (presumed not to be capable of serving two masters at the same time). Then, there being
supposed a variety of situations and tasks, let the round men in square berths change places with the
square men in round berths with advantage to all (entrepreneurs included). There will thus be
reached a settlement such that it cannot be disturbed with advantage to each and all; except by the
employers competing with each other for workmen. Suppose the settlement to be such and so
favourable to the work-people that it cannot be disturbed by the competition of the employers; then,
the market win be indeterminate, just as if the work-people were all equally efficient. Accordingly,
“There is no determinate and very generally unique arrangement towards which the system tends
under the operation of, may we say, a law of Nature, and which would be predictable if we knew
beforehand the real requirements of each, or of the average, dealer; but there are an indefinite
number a priori possible settlements.”
63. Mathematical Psychics, p. 18.
64. In the criticism of the Positive Theory of Capital, at p. 333 of the Economic Journal, Vol. II,
repeated from the Address to the British Association, Section F. 1889 (reprinted in the Journal of
the Statistical Society, December, 1889), it was too leniently suggested that the author, in a
subsequent note (p. 214, Smart's translation of Positive Theory), brought in the essential
circumstance which his main illustration omits; namely, doses with varying marginal utility. It would
rather seem, however, that the stud of horses permitted in the said note does not differ essentially
from the single horse of the main illustration. It seems to be treated as a mass of commodity which
the seller offers, the buyer takes or leaves, as a whole At any rate, the writer has failed to see the
significance of divisibility in the commodity For, otherwise, he would not have attributed so much