Adam Smith's Natural Prices, the Gravitation Metaphor, and the Purposes of Nature
David Andrews ()
Economic Thought, 2014, vol. 3, issue 1, 42
Adam Smith's 'natural price' has long been interpreted as a 'normal price' or 'centre of gravitation price' based on the famous gravitation metaphor of the Wealth of Nations I.vii, natural in the sense that it is the price that would result if competition were truly free, unobstructed by monopoly or government regulation, and could also therefore be called normal price, appealing to a sense of natural opposed to that which is produced artificially. This essay has three purposes. First I criticise this interpretation of Smith's gravitation metaphor. For Smith, it is not a Newtonian metaphor for the attractive character of natural price, but rather an Aristotelian metaphor for the pattern of movement of market prices, in which natural price serves merely as a reference point. Second I present an interpretation of Smith's natural price based on his understanding of nature, in the context of his assertions that the goals of nature are the self-preservation of individuals and the propagation of species, goals humans pursue with divided labour under bonds of mutual dependence, facilitated by exchange and hence prices. The natural price of a commodity is the price that supports nature's goals by providing for the maintenance of those who participate in production and supply in a manner that is just sufficient for these activities to continue indefinitely. Third I highlight the similarity between natural prices construed in this way and the prices of Piero Sraffa's Production of Commodities by Means of Commodities.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://et.worldeconomicsassociation.org/papers/ada ... -purposes-of-nature/ (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wea:econth:v:3:y:2014:i:1:p:42
Access Statistics for this article
Economic Thought is currently edited by Kyla Rushman
More articles in Economic Thought from World Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Jake McMurchie ().