ABSTRACT
The first of these differences constitutes the feature of classical theory perhaps most surprising for the modern economist.3 Indeed in classical theory, demand (‘effectual demand’) and supply (‘quantity brought to market’) were introduced only to explain the tendency of a commodity’s actual price – or ‘market price’ as the classical economists called it – towards a normal or ‘natural’ level which was itself determined without reference to any such demand and supply. Thus ‘effectual demand’ was defined by Smith as ‘the demand of those who are willing to pay the natural price of the commodity’, with the ‘natural’ or normal price being therefore a datum for defining that ‘demand’ itself.
