Natural price and the long run: Alfred Marshall’s misreading of Adam Smith

David Andrews

Cambridge Journal of Economics, 2015, vol. 39, issue 1, 265-279

Abstract: This article challenges Alfred Marshall’s widely accepted claim that it was Adam Smith’s ‘doctrine’ that ‘the “natural” value of a commodity is that which economic forces tend to bring about in the long run’. Smith did not define natural price in this way either explicitly or implicitly. The classical natural price of a commodity functioned instead as a reproduction price, the price that is just sufficient to maintain an ongoing supply of the commodity to the market, a concept fundamentally different from a long-run outcome.

Date: 2015
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