A comment on the law of supply and demand

Abstract

Graduate economics departments have largely abandoned the law of supply and demand (henceforth, The Law). Nevertheless, The Law continues to be taught in all undergraduate economics programs, and it is accepted as the fundamental law of price throughout the world. This paper explains how the modern conceptions of demand and supply as schedules have driven The Law from graduate economics. A reinterpretation of the meaning of supply and demand is suggested as the basis for bringing The Law back into the corpus of economic theory, that is, supply and demand should be conceived of the same way Adam Smith and the whole classical school conceived of them—as simple quantities.