The following is an excerpt from Adam Smith's The Wealth of Nations. Where
in the modern free enterprise system can his economic philosophies be
seen?
br> The actual price at which any commodity is commonly sold is called its
market price. It may either be above, or below, or exactly the same with its
natural price. The market price of every particular commodity is regulated by
the proportion between the quantity which is actually brought to market, and
the demand of those who are willing to pay the natural price of the
commodity, or the whole value of the rent, labor, and profit, which must be
paid in order to bring it thither. When the quantity of any commodity which is
brought to market falls short of the effectual demand, all those who are
willing to pay the whole value of the rent, wages, and profit, which must be
paid in order to bring it thither, cannot be supplied with the quantity which
they want. Rather than want it altogether, some of them will be willing to give
more. A competition will immediately begin among them, and the market
price will rise more or less above the natural price, according as either the
greatness of the deficiency, or the wealth and wanton luxury of the
competitors, happen to animate more or less the eagerness the
competition.