Higgling

Abstract

Higgling of the market is described by Adam Smith as a process by which ‘exchangeable value’ is adjusted to its measure ‘quantity of labour’:Compare Fleeming Jenkin:It is possible to accept the writer’s account of the market process (ibid. p. 123) without contrasting so strongly the determination of price by demand and supply and by cost of production (cf. Marshall’s Principles, Preface to 1st edn, p. xi.). Prof. Marshall at the beginning, when treating of the theory of the equilibrium of demand and supply, gives an excellent type of the action of a market (ibid, 5th edn, bk. v, ch. ii, § 2). The subject can hardly be apprehended without mathematical conceptions. Thus Mill, in his description of the play of demand and supply (Political Economy, bk. iii, ch. ii, § 4), in the absence of the idea of a demand-curve or function, may seem to use the phrases ‘demand increases’, ‘demand diminishes’, loosely. A more distinct idea is thus expressed by Fleeming Jenkin in his Graphic Representations: ‘If every man were openly to write down beforehand exactly what he would sell or buy at each price, the market price might be computed immediately.’ A similar idea is presented by Prof. Walras (Éléments d’économie pure, article 50). In some later passages he has formulated the higgling of the market more elaborately. The present writer, criticizing these passages (Revue d’économie politique, January 1891), has maintained that even if the dispositions of all the parties were known beforehand, there could be predicted only the position of equilibrium, not the particular course by which it is reached. Of course special observation may supply the defects of theory. For instance there may be evidence of the incident which Cantillon attributes to the ‘altercation’ of a market, namely the predominant influence of a few buyers or sellers; ‘le prix réglé par quelques uns est ordinairement suivi par les autres’ (Essai, part ii, ch. ii. Des prix des marchés). Compare Condillac: