In general, men do not exert themselves more than necessary to meet wants, and in any exchange with others estimate the value of what they have produced by the exertion expended. Yet, as products of the same kind exchange in the same market without regard to their individual cost, it is evident that some other principle must be discovered. Nevertheless, no farmer will continue indefinitely the raising of a crop which brings in the market less than a fair average return for his labor in raising it. In a series of years he expects his wheat to return a fair compensation for labor expended. In the same way every manufacturer expects a full return for all cost of all his efforts, and would not continue his work from year to year without such expectation. Moreover, when for any reason the market value of anything is much above its cost, somebody is ready to increase the supply of that particular article, and more will add their efforts in the same direction until its value approaches nearly the general cost of production as compared with the cost of other products selling in the same market.
_Normal value._--In this way the cost of production is said to fix the normal value of any article of commerce capable of production in indefinite quantity and within limited time. For this reason farmers are interested in finding the average cost of production of wheat, corn, etc., within a region supplying their market. They are even interested in knowing the conditions for wheat raising in India, South Africa and Australia, since the cost of production there may influence the value of wheat throughout the world. The normal value of products capable of indefinite multiplication tends always toward the value of the least costly. This is shown in the effect of labor-saving machinery upon the value of cloths and other goods. It is equally true in agriculture that wheat raising upon cheap land with extensive use of machinery and economical methods of culture and harvesting brings down the normal value. So long as more land can be applied to wheat raising with these advantages, the less productive methods may be too costly for the market.
On the other hand, if any production cannot be largely extended so that the supply in market barely meets the requirements of purchasers, the tendency of normal values is toward the cost of the most costly part of the product required to meet wants. This is because the supply is kept up only by the exertion of the greater amount of labor as well as the less. If farmers in western prairie country can raise corn at an expense of 15 cents per bushel, as they can upon an average, so long as that region can raise all the corn required no less productive region can force the normal price above what will keep western farmers raising corn. When the western crop fails, the price is far above normal value, and may even go above the cost of the most costly corn in market, under a principle called the law of supply and demand.