4. During the next three hundred years or so—until
the Enlightenment—the problem of value even
suffered a regress. If some histories of economic
thought leave a different impression it is only because
the historian, either through ignorance of the older
writings or through faulty logic, gratuitously credited
some authors with original thoughts. The truth is that
this period contributed an erroneous idea which had
grown out of the fact that throughout Western Europe
the structure of production remained practically con-
stant over the years. The idea, which constituted an
analytical obstacle for a long time, is that demand is
an invariant coordinate for each community. We find
it first stated in an essay, Della moneta: trattato mer-
cantile (1686), by an Italian scholar, Geminiano
Montanari. But its clearest formulation came some
twenty years later from the financier John Law: “If
the Quantity of Wine brought from France be a 100
Tunn, and the Demand be for 500 Tunn, the Demand
is greater than the Vent” (Money and Trade..., p. 4).
Even Galiani spoke of the demand for wheat in the
Kingdom of Naples as a fixed quantity. And, along with
Montanari, he insisted that only fashion, “an affection
of the mind,” may change the demand.
The mercantilist mood induced later writers to rep-
resent demand by an invariant expenditure, instead of
an invariant quantity. According to this view, the price
of a commodity is the quotient between the money
allocated for that purchase and the quantity of the
commodity brought to the market, as Richard Cantillon
neatly explained in a celebrated essay of 1755 (Essai
sur la nature du commerce en général). This fallacy
is stated in equally plain words by Adam Smith (The
Wealth of Nations [1776], Ch. vii) and appears several
times in Karl Marx's circuitous discussion of demand
(Capital, III, Ch. x). J. B. Say derived from it the
theorem that the rise of price is in direct ratio to the
demand, and in inverse ratio to the supply.
One exception strenghens the view that this errone-
ous conception of demand was fostered by the con-
stancy of economic patterns. The great variations
in grain prices caused by climatic fluctuations led
Gregory King to observe as early as 1686 that the
smaller the crop, the greater its cash value. King,
however, remained totally ignored for almost two
centuries. Only much later—with A. A. Cournot (1838)
in France and Fleeming Jenkin (1870) in England, and
independently of King's work—did the notion of de-
mand at a price emerge to clear the way for the mod-
ern theory of utility.
