This chapter shows that the Marshallian crossing supply and demand curves may be inconsistent with classical price theory in particular cases, and therefore cannot be reconciled with that theory in general. It outlines a formalization of the classical conception–or at least one interpretation of that conception–that resolves some of the obvious problems arising from simple interpretations of those passages. The classical view sees supply and demand as opposing forces pulling market price away from a center that is not itself explainable in terms of supply and demand. The classical view of price dynamics can be presented from the standpoint of a single commodity or industry, a presentation that is conformable to the partial equilibrium perspective of orthodox theory. A carefully formalized classical approach helps situate arguments on different levels, and establish the conditions in which the counterfactual curves framework may be useful as a way of representing aspects of reality.
