ABSTRACT
This chapter deals with one very special set of circumstances in which, although there are a number of different products, there is conceptually no great difficulty in assuming that citizens have perfect foresight about the future course of prices. This would be the case if, although there were many products and many instruments of production, yet we were in a stationary state. Population has been growing and capital has been being accumulated. But the pressure of labour and capital on the fixed and limited amount of land has caused a continuous decline in the marginal and the average products of labour and of capital. The consequential fall in output per head and so in the standard of living continues so long as population pressure on the land increases. The chapter examines more closely the nature of the stationary state with man-made instruments of production.
