CHAPTER II

SUPPLY AND DEMAND, AND THE VALUE OF MONEY

_Hiatus_ between general theory of value and theory of value of money 46-47

Partly because former has been developed by different writers from those who have developed latter 47-49

But chiefly because supply and demand, cost of production, etc., _assume_ fixed value of money, and are theories of _price_, rather than _value_ 49

Supply and demand useful but superficial formula, common property of many value theories 49-50

Crude and unanalyzed in Smith and Ricardo; first made precise by J. S. Mill, who gives essentials of modern doctrine 49-51

Boehm-Bawerk's pseudo-psychology spoils Mill's clean-cut doctrine 51-52

Supply and demand assumes fixed _value_ of money-unit, and hence inapplicable to money itself 52-56

But supply and demand does _not_ assume fixed _price-level_ 56-57

Cairnes _vs._ Mill 57-58

Mill's unsuccessful effort to apply supply and demand to money 59-62

Walker's attempt 62

Supply and demand in the "money market" 62-63