IN TERMS OF FORMULAS

The contention often met with that the mathematicalformulation of economic problems gives a picture of the-oretical exactitude untrue to actual life is absolutelycorrect. But, to my mind, this is not an objection but avery definite advantage, for it brings out the principlesin such sharp relief that it enables us to put our fingerdefinitely on the points where the picture is untrue tolife.

The object of any theory is not to reproduce concretefacts but to show the chief underlying principles as ten-dencies. There is, for instance, the very real tendencyfor all marginal rates of time preference and all margi-nal rates of return over cost to equal the market rates ofinterest. Yet this is only a tendency, an ideal never at-tained . 7

’ For brief comparison of Chapters XII and XIII with other mathe-matical formulations see Appendix to this chapter (Chapter XIII).

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