Key Arguments

• After describing the adjustment of quantities and components of price, Smith concludes: ‘The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating.’
• He acknowledges that ‘Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it,’ recognizing persistent deviations.
• Nevertheless, ‘whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending towards it,’ emphasizing the dynamic but directional nature of price movements.
• He links this gravitation to the way ‘The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand,’ indicating that industry allocation is the mechanism of adjustment.

Source Quotes

All the different parts of its price will soon sink to their natural rate, and the whole price to its natural price. The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it.

The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating. Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending towards it.

Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it. But whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending towards it. The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand.

But whatever may be the obstacles which hinder them from settling in this centre of repose and continuance, they are constantly tending towards it. The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand. It naturally aims at bringing always that precise quantity thither which may be sufficient to supply, and no more than supply, that demand.

Key Concepts

• The natural price, therefore, is, as it were, the central price, to which the prices of all commodities are continually gravitating.
• Different accidents may sometimes keep them suspended a good deal above it, and sometimes force them down even somewhat below it.
• they are constantly tending towards it.
• The whole quantity of industry annually employed in order to bring any commodity to market, naturally suits itself in this manner to the effectual demand.

Context

Conceptual summary in Chapter VII, where Smith characterizes natural price as a centre of ‘repose and continuance’ and articulates the classical ‘gravitation’ mechanism of market prices around it.