A New Theory of Supply and Demand

Nine-tenths of the confusion and obscurity in which the doctrine of price has hitherto been involved has arisen from searching after the unsearchable, from seeking for some invariable rule for inevitable variations, from straining after precision where to be precise is necessarily to be wrong. Supply and demand are commonly spoken of as if they together formed some nicely fitting, well-balanced, self-adjusting piece of machinery, whose component parts could not alter their mutual relations without evolving, as the product of every change, a price exactly corresponding with that particular change. Price, and more especially the price of labor, is scarcely ever mentioned without provoking a reference to the 'inexorable' the ' immutable,' the 'eternal' laws by which it is governed; to laws which, according to my friend Professor Fawcett, 'are as certain in their operation as those which control physical nature.' It is no small gain to have discovered that no such despotic laws do or can exist; that, inasmuch as the sole function of scientific law is to predict the invariable recurrence of the same effect from the same causes, and as there can be no invariability where as in the case of price one of the most efficient causes is that ever-changing chameleon, human character or disposition, price cannot possibly be subjected to law. -- William Thomas Thornton, 1866.