PRICES. Price is value expressed in money. Thus, price is not identical with value. It is an expression of value in terms of some one commodity, which commodity is called money. Value is thus the more fundamental term; it is the thing expressed, whereas price is the ex pression of the thing.
The general scale of prices may rise or fall without any material change in the supply of or the demand for commodities in general. The forces of supply and demand, however, operate upon money as well as upon other commodities. It is quite possible for money to become cheap, in which case considerable quantities of money will be given in exchange for small quantities of other commodities. This makes what . we call Thigh prices?' On the other hand, money may become dear, in which case small quantities of money are given in exchange for large quan tities of the other commodities. This is what we call slow prices' The causes of high or low prices therefore may operate on money alone or they may operate on the other com modities 'for which money is exchanged.
It is commonly assumed that money is cheap or dear according as it is abundant or scarce. The abundance or scarcity of money is un doubtedly a factor in determining its cheap ness or dearness; but with money, as with all other commodities, demand is as important as supply. The supply or the quantity, therefore, is only one factor in the problem. With an abundance of stoney, if there is a general desire to hold on to it and a reluctance to spend it or to let it go, it may remain dear and its pur chasing power may remain high. That is, when every one who lacks money is anxious to get it, and every one who has it is reluctant to part with it, large quantities of other com modities may be offered in exchange for small quantities of money. On the other hand,
when there is no great eagerness to acquire money except as a means of purchase, no general disposition to hold on to it or reluc tance to part with it, it is likely to be cheap; and when every one who lacks money desires to possess it solely for the purpose of spending it quickly, and every one who has it is anxious to spend it for the purpose of getting other commodities as quickly as possible, the result is cheap money or high prices. Large quantities of money are freely spent in order to get small quantities of the other commodities.
If we assume, even for a short period of time, that no change has taken place in the quantity of money or in the desire to possess it, then such change of prices as occurs will be due to factors affecting other commodities. Any change of fashion with respect to dress goods, or change of habit with respect to food, will of course bring about a considerable read justment of prices. Under such conditions, these changes in the price list become a fairly accurate expression of the desires of the people. That which is most desired will command the highest price. That which is least desired will command the lowest price, whether it be in ma terial commodities or the services of labor which are under consideration. The price list is therefore a pretty safe guide to the desires or wants of the community, and he who is anxious to give the community what it desires could scarcely do better than to follow the price list, whether he be producing commodities or selling his labor. Consult Laughlin, J. L., and Prices' (New York 1919).