Note 62 — THE PHASES OF THE ECONOMIC INTEREST

It is pointed out (e.g., by Davenport in his Economics of Enterprise, pp. 53-54) that, mathematically, in a market where large numbers of buyers and sellers confront each other with their respective maximum and minimum valuations on the commodity this interval within which price must fall becomes indefinitely small to the point of vanishing. This is doubtless in accord with the law of probability, but it would be an obvious fallacy to see in this any manner of proof or presumption that therefore the assumptions as to the nature of the individual valuations upon which such analysis proceeds are true. In a large market where this interval is supposed to be a vanishing quantity is there more or less higgling and bargaining than in a small market where the interval is admittedly perceptible? And if there is higgling and bargaining (op. cit., pp. 96-97), what is it doing that is of price-fixing importance unless there be supposed to be a critical interval for it to work in? Such a use of probability-theory is a good example of the way in which mathematics may be used to cover the false assumptions which have to be made in order to make a mathematical treatment of certain sorts of subject-matter initially plausible as description of concrete fact.