An Inquiry into the Principles of Political Oeconomy (Vol. 1 of 2) / Being an essay on the science of domestic policy in free nations. In which are particularly considered population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit, and taxes

by Sir James Steuart

Demand marks an inclination to have, competition an emulation to obtain a preference.

Demand can exist without competition, but competition must constantly imply demand.

Demand is called simple, when there appears only one interest on the side of the buyers.

Competition is called simple, when it takes place on one side of the contract only, or when the emulation is at least much stronger on one side than on the other.

Demand is called compound, when more interests than one are found among those who desire to buy.

Competition is called compound, when an emulation is found to prevail on both sides of the contract at once.

Simple competition raises prices; double competition restrains them to the adequate value of the merchandize.

While double competition prevails, the balance of work and demand stands even, under a gentle vibration; simple competition destroys and overturns it.

The objects of competition frequently determine its force. Merchants buy in order to sell; consequently, their competition is in proportion to their views of profit. Hungry people buy to eat, and their competition is in proportion to their funds. The luxurious buy to gratify their desires, their competition is in proportion to these. Strong competition on one side, makes it diminish on the other; and when it becomes so strong as effectually to unite the interests on one side of the contract, then it becomes absolutely simple; this totally overturns the balance, and must in a short time destroy the divided interest.

Chap. VIII. I next examine the relative terms of expence, profit and loss. The relations they bear, are often not expressed, which involves those who use them in ambiguities proper to be avoided. I therefore call expence national, when the national stock is diminished by it, in favour of other states; it is public, when the money proceeding from a national contribution is expended by the state within the country; and private expence is the laying out of money belonging to private people or private interests: this has no other effect than to promote domestic circulation. I farther distinguish between what we call spending, and what is called advancing of money; the first marks an intention to consume; the second marks a view to a subsequent alienation.