Natural Price in the Long Run: Alfred Marshall's Misreading of Adam Smith

by David Andrews, SUNY-Oswego

This essay 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 continuation or 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.