should be borne in mind, in connection with the future discussion of over-production. The identity of general demand with general supply shows there can be no general over-production: but so long as there exists the possibility that the demand for a particular commodity may diminish without a corresponding effect being thereby produced on the supply of that commodity, by a necessary connection, we see that there may be over-production of particular commodities; that is, a production in excess of the demand.
The proper mathematical analogy [between demand and supply] is that of an equation. If unequal at any moment, competition equalizes them, and the manner in which this is done is by an adjustment of the value. If the demand increases, the value rises; if the demand diminishes, the value falls; again, if the supply falls off, the value rises; and falls, if the supply is increased. The rise or the fall continues until the demand and supply are again equal to one another: and the value which a commodity will bring in any market is no other than the value which, in that market, gives a demand just sufficient to carry off the existing or expected supply.
Mr. Cairnes209 finally defined market value as the price “which is sufficient, and no more than sufficient, to carry the existing supply over, with such a surplus as circumstances may render advisable, to meet the new supplies forthcoming,” which is nothing more than a paraphrase of the words “existing or expected supply” just used by Mr. Mill. It seems unnecessary, therefore, that Mr. Cairnes should have added: “According to Mr. Mill, the actual market price is the price which equalizes supply and demand in a given market; as I view the case, the ‘proper market price’ is the price which equalizes supply and demand, not as existing in the particular market, but in the larger sense which I have assigned to the terms. To this price the actual market price will, according to my view,