An Extinction of Adjustment Time and an Introduction of Stability Condition in Economics through Misunderstandings to J.S. Mill’s Law of Supply and Demand and International Value Theory

It is generally considered that the theoretical development in supply-demand equilibrium theory by J.S. Mill from supply and demand ratio theory by Adam Smith and David Ricardo is the most important event in the history of economics. Marshall (On Mr. Mill’s theory of value. Fortnightly Review, April, reprinted in Pigou AC (ed) Memorials of Alfred Marshall, London, 1925, 1876) and Schwarz (The new political economy of J.S. Mill. Duke University Press, Durham, 1972) identify Mill’s pricing model about absolutely limited commodities in quantity as a partial equilibrium theory. However, his pricing model is not governed by the laws of simultaneous determination between a quantity and a price at all. Followers have been misunderstanding the term “equation” that Mill used in the pricing. Mill’s system is not supply-demand equilibrium theory, but rather sequential process model with time, like Robinson (Econ J 63(251):579–593, 1953) and Leijonhufvud (On keynesian economics and the economics of keynes. Oxford University Press, Oxford, 1968).

When Jenkin (North Br Rev 9:1–62, 1868; The graphic representation of the laws of supply and demand, and their application to labour. In: Sir Alexander Grant (ed) Recess studies. Edmonston and Douglas, Edinburgh, 1870, 151–185. Reprinted in series of reprints of scarce tracts in economic and political science, No. 9, The London School of Economics and Politcal Science, London, 1870) introduced the functions of supply and demand and an expression by a graph into the British economics for the first time, he misconstrued J.S. Mill’s system as the view that was almost identical to present-day microeconomics model. Additionally, Marshall (Pure theory (foreign trade-domestic values). No.1 in series of reprints of scarce tracts in economic and political science. London, 1930, 1879), who was very influenced by Jenkin, misread Mill’s reciprocal demand theory and introduced into economics the theme about the research of an equilibrium and the stability condition in his construction of pure theory.