ABSTRACT
This chapter discusses that, apart from divergences between private and social net product, State interference, designed to modify in any way the working of free competition, is bound to injure the national dividend; for this competition left to itself will continually push resources from points of lower productivity to points of higher productivity, thus tending always away from less favourable, and towards more favourable, arrangements of the community’s resources. It describes this general presumption with the extensive policy of price regulation which was followed by the British, as by most other Governments, during the course of the great European War. The values of the marginal net products of resources, which it is to the interest of the national dividend to make equal everywhere, consist in the marginal physical net products multiplied by the demand prices.
