Law of supply and demand

“ In doing this it acts directly as a circulating medium, and the demand for it for this purpose, relative to the supply, determines its value; for money, whether of coin or paper or both combined in one circulation to meet one need, is subject to the same law of supply and demand which governs all commodities, and which indeed is as universal in the economic world as the law of gravitation is in the physical world. ”

“ Fair exchange above laws.—Under perfect freedom of exchange, the general law of supply and demand already illustrated is more effective than any laws can be in adjusting wages or profit to efforts in production, and in adjusting interest or rent or both to the capital employed or to other means of production controlled. ”

“ In other words, the farmer, who is subject directly to the law of supply and demand, may get greatly diminished prices for what he has to sell and be required to pay undiminished prices for what he has to buy. ”

“ The real law of demand and supply, the equation between them, still holds good: if a value different from the natural value be necessary to make the demand equal to the supply, the market value will deviate from the natural value; but only for a time; for the permanent tendency of supply is to conform itself to the demand which is found by experience to exist for the commodity when selling at its natural value. If the supply is either more or less than this, it is so accidentally, and affords either more or less than the ordinary rate of profit ”

“ Amid all this there was one great basic law universally recognized, namely the law of supply and demand, which ranks with the law of gravitation and the law of the conservation of energy among the great fundamental laws of nature. The law of supply and demand is the one thing in economics upon which we may fix our eyes as upon the lode star. ”

“ The law of supply and demand is inexorable. What he may do is to improve quality, diminish cost, reduce area, find the best market and the products most sought, and increase the [30] production from a given area. If he raises the yield from 20 to 35 bushels, while the yield of his neighbor remains at 10 bushels and prices remain low, we shall soon see a fine illustration of “the survival of the fittest.” The 35 bushels will yield a fair remuneration for the work expended in production when prices are at the lowest. ”

“ The Professor ventured (he says) to suggest that possibly I with others "believe that economists confused existing demand with wise and beneficial demand, and existing supply with wise and beneficial supply."
I do believe this. I have written all my books on political economy in such belief. And the entire gist of them is the assertion that a real law of relation holds between the non-existent wise demand and the non-existent beneficial supply, but that no real law of relation holds between the existent foolish demand and the existent mischievous supply. ”

“ We have already shown the bad results of the system upon the interests of the people, and do not intend to repeat it here. Ordinarily, the laws of trade, of demand and supply, will regulate and equalize the distribution of the circulating medium over the country. ”

“ If there is 305an iota of truth in the so-called law of demand and supply, it follows that just as the farmer increases his output of crops, there must follow a corresponding decrease in price or purchasing power. ”

“ Criteria of Policy. The point has now been reached at which we must take into account the very important fact which was mentioned at the close of Chapter III. The maximum utility which the laws of supply and demand tend to bring about is a maximum total utility indeed, but one still measured in terms of money. An unequal distribution of wealth destroys any necessary correspondence between that and the maximum real utility. ”

“ It is simply commodities. Each person's means of paying for the productions of other people consists of those which he himself possesses. All sellers are inevitably and ex vi termini buyers. Could we suddenly double the productive powers of the country, we should double the supply of commodities in every market; but we should, by the same stroke, double the purchasing power. Everybody would bring a double demand as well as supply: everybody would be able to buy twice as much, because every one would have twice as much to offer in exchange. ”

“ Because this phenomenon of over-supply, and consequent inconvenience or loss to the producer or dealer, may exist in the case of any one commodity whatever, many persons, including some distinguished political economists, have thought that it may exist with regard to all commodities; that there may be a general over-production of wealth; a supply of commodities in the aggregate, surpassing the demand; and a consequent depressed condition of all classes of producers. ”

“ The economists who discovered that demand created supply soon had to limit the proposition to "effective demand," which turned out, in the final analysis, to mean nothing more than supply itself; and this holds good in politics, morals, and all other departments as well: the actual supply is the measure of the effective demand; and the mere aspirations and professions produce nothing. ”

“ It is not clear that an increase of duty is necessary; and in regard to the prohibition desired there is no evidence of any considerable exportation hitherto, and it is most probable that, whatever augmentation of price may have taken place, is to be attributed to an extension of the home demand, from the increase of manufactures, and to a decrease of the supply, in consequence of the progress of settlement, rather than to the quantities which have been exported. ”

“ If, however, he should fall into error by importing an excess above the public wants, he could readily correct its evils by availing himself of the benefits and advantages of the system thus established. In the storehouse the goods imported would await the demand of the market and their issues would be governed by the fixed principles of demand and supply. ”

“ If the portion of produce raised in the most unfavourable circumstances, obtains a value proportioned to its cost of production; all the portions raised in more favourable circumstances, selling as they must do at the same value, obtain a value more than proportioned to their cost of production. Their value is not, correctly speaking, a scarcity value, for it is determined by the circumstances of the production of the commodity, and not by the degree of dearness necessary for keeping down the demand to the level of a limited supply. ”

“ As long as we produce more cereals, meats, and other farm products than we consume, and send the surplus to the world’s markets, the prices of these products, under free competition at home, will be regulated by conditions of world supply and demand, leaving the duties a dead letter on the statute-books. ”

“ General demand and supply are thus reciprocal to each other. But as soon as money, or general purchasing power, is introduced, Mr. Cairnes208 defines “demand as the desire for commodities or services, seeking its end by an offer of general purchasing power; and supply, as the desire for general purchasing power, seeking its end by an offer of specific commodities or services.” But many persons find a difficulty because they insist upon separating the idea of supply from that of demand, owing to the fact that producers seem to be a distinct class in the community, different from consumers. ”

“ But cost of production is the chief factor which, in the case of commodities, ultimately determines the conditions of supply. Utility, similarly, is the chief factor which ultimately determines the conditions of demand. Must not then the symmetrical relations between demand and supply be reflected in a corresponding symmetry between the utility and the costs which underlie them? Demand springs obviously from utility; the only motive for buying anything is that it will serve some real or fancied use. Can we then accord to demand so dignified and to utility so subordinate a place? ”

“ When the demand arises, the agencies of supply, namely production and distribution, usually respond. One of the great tasks of economic organization, therefore, is to estimate the probable demand and so influence production and distribution that the supply will neither be excessive nor fall short. If there is an over-supply of any commodity, prices normally will fall. That means that goods may bring less than it costs to produce and to distribute them. One reason for the organization of industry on a large scale under great corporations is that supply can thus be kept closer to demand. ”

“ But we should never forget that there is no service or commodity produced by man, however essential it may seem, the demand for or the supply of which might not be reduced to nothing, if the price were sufficiently raised on the one hand, or lowered on the other. ”

“ If there be no free competition between industries, then the value of those commodities which has been said, in the above classification, to depend on cost of production, will be governed by the law of Reciprocal Demand. ”

“ Under the rule of an unrestricted commercial intercourse throughout the world, the principle of supply and demand would control the movements of commerce without the aid of legislation; and, when once fully established, it would give stability and security to production everywhere. The products of the world entering into commerce would localize themselves where they naturally belong—where most could be produced with the least labor; and, population obeying the laws of equalization, would adjust itself to the demands of the respective interests of productive labor. ”