ABSTRACT
The market is the characteristic phenomenon of the economic life and it presents the. central problem of Economics. It is the machinery by which objective equilibrium in the marginal significance of exchangeable things is secured and maintained in a catallactic society, Equilibrium exists when the commodity occupies the same place at the margin on the scales of all who possess it. and is higher at the margin on all their scales than on the scales of any one who does not possess it. The equilibrium price of any commodity is the price which if at once established would produce equilibrium without oscillations; and it is determined by the quantity of the commodity at command and the composition of the collective scale. It is the interest of each dealer to know this price, and any erroneous estimate of it he may form, while placing him under penalties, will tend to correct itself, but will have a secondary reaction on the equilibrium price itself. The law of the market is implied in the definition of equilibrium; for the market price will be determined by the place on the communal scale of the lowest of the desires for a unit that are gratified, and these will all of them be higher than any that are not gratified. Hence if there are x units of the commodity the place of the xth unit on the collective scale will determine the equilibrium price. The collective scale registers the estimates not only of the buyers but also of the sellers at reserve prices, who are equivalent to buyers at those prices. Vicarious or speculative estimates are to be reckoned in with the rest, and as long as they tend 213to regulate tlie consumption of the commodity they perform a valuable social service; but they often transcend this limit and become socially pernicious. There are many types of market and forms of sale, but they all conform to the same law, so far as the essential condition of free communication, and knowledge of each other's doings, is realised amongst the persons concerned; and where this is not the case mens actions are still controlled by the same fundamental laws and forces which create more or less perfect markets where the conditions are favourable. Markets in raw materials follow the same law as markets in finished articles.
