The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

‘Effectual Demand’ in Adam Smith

  • Carlo Panico
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_255

Abstract

Smith’s notion of ‘effectual demand’ is still the subject of several discussions dealing with the role of demand in classical and neoclassical theories of price and distribution and with the influence of demand on ‘division of labour’ and economic progress. Smith defined ‘effectual demand’ as the ‘demand of those who are willing to pay the natural price of the commodity, or the whole value of rent, labour and profit, which must be paid in order to bring it thither’ (Smith 1776, vol. 1, p. 58). According to him, when the quantity of any commodity brought to market falls short of the effectual demand, those who demand it.

This is a preview of subscription content, log in to check access.

Bibliography

  1. Eatwell, J.L. 1983. The long-period theory of employment. Cambridge Journal of Economics 7: 269–285.CrossRefGoogle Scholar
  2. Garegnani, P. 1983. The classical theory of wages and the role of demand schedules in the determination of relative prices. American Economic Review: Papers and Proceedings 73: 309–313.Google Scholar
  3. Keynes, J.M. 1936. The general theory of employment, interest and money. London: Macmillan.Google Scholar
  4. Keynes, J.M. 1973. The general theory and after. Part I: Preparation. Vol. XIII of The collected writings of J.M. Keynes, ed. D. Moggridge. London: Macmillan.Google Scholar
  5. Marx, K. 1894. Capital, vol. 3. London: Lawrence & Wishart, 1972.Google Scholar
  6. Marx, K. 1910. Theories of surplus value, vol. 3. London: Lawrence & Wishart, 1972.Google Scholar
  7. Smith, A. 1776. An inquiry into the nature and the causes of the wealth of nations, 2 vols, ed. E. Cannan. London: Methuen, 1930.Google Scholar
  8. Sraffa, P. 1960. Production of commodities by means of commodities. Cambridge: Cambridge University Press.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Carlo Panico
    • 1
  1. 1.