This study undertakes to explain the prices of goods and the earnings of the productive factors, which are viewed as resultants of a common process. The conventional practice of analyzing value before the problems of distribution have been considered is therefore abandoned, and the argument is built up by examining the effect of the successive introduction of land and capital into a simple labor system of production. An important role is assigned to costs of various kinds, in the sense of opportunities foregone. Though the emphasis is primarily upon conditions in contemporary capitalistic societies, considerable attention is given to the influence of various cultural and technological factors which have undergone significant changes in the course of time.