supply and demand as the possible "common something" "wherein may lie" their value.
Again, the same commodity, under the same conditions of supply and demand, will have different values at different times if the methods of its production have changed. A fact which practically fills up the history of modern production.
The reader might ask: "While it seems to be true that supply and demand cannot be the source or measure of value, it is still a matter of experience,—and appears in the very examples examined here,—that the condition of supply and demand does influence the ratio of exchange of commodities, that is, their value. How do we account for it?" This consideration seems to be what led astray many economists. In fact, the matter does seem extremely confusing. It is evident that value must have some source outside of supply and demand, and yet there is no denying the influence of the latter on the ratio of exchange which fixes the relative values of commodities. This confusion is only apparent, however, and not real. It is due to a failure to distinguish between the value of commodities and the prices which they bring on a particular sale in the market.
We have already explained at length in a preceding chapter that value and price are different and distinct categories. This distinction must always be kept in mind, and a failure to keep this in mind will result in no end of confusion. When this distinction is borne in mind it will at once become apparent that the seeming influence of supply and demand on value is a mere optical illusion. What it does influence is the Price, which oscillates about the value as its normal resting place, to which it constantly gravitates. That is why, when supply and demand cover each other, the price is not nil: it is then at its normal resting-place,—Value; Price and Value then coincide. That is why different articles will, under the same conditions of supply and demand, exchange in an infinite number of ratios to each other, as the same conditions of supply and demand will only result for all of
