Long-run influences on the demand for money in a progressing economy will tend to be manifold, and in both directions. On the one hand, an advancing economy provides ever more occasions for new exchanges as more and more commodities are offered on the market and as the number of stages of production increases. These greater opportunities tend greatly to increase the demand-for-money schedule. If an economy deteriorates, fewer opportunities for exchange exist, and the demand for money from this source will fall.

A popular fallacy rejects the concept of “demand for money” because it is allegedly always unlimited. This idea misconceives the very nature of demand and confuses money with wealth or income. It is based on the notion that “people want as much money as they can get.” In the first place, this is true for all goods. People would like to have far more goods than they can procure now.

We have been discussing money, and shall continue to do so in the current section, by comparing equilibrium positions, and not yet by tracing step by step how the change from one position to another comes about. We shall soon see that in the case of the price of money, as contrasted with all other prices, the very path toward equilibrium necessarily introduces changes that will change the equilibrium point. This will have important theoretical consequences.

Many economists, beginning with Irving Fisher, have asserted that the market rate of interest, in addition to containing specific entrepreneurial components superimposed on the pure rate of interest, also contains a “price” or a “purchasing-power component.” When the purchasing power of money is generally expected to rise, the theory asserts that the market rate of interest falls correspondingly; when the PPM is expected to fall, the theory declares that the market rate of interest rises correspondingly.

To the great bulk of writers “hoarding”—an increase in the demand for money—has appeared an unmitigated catastrophe. The very word “hoarding” is a most inappropriate one to use in economics, since it is laden with connotations of vicious antisocial action.

Those Keynesians who recognize the grave difficulties of their system fall back on one last string in their bow—”liquidity preference.” Intelligent Keynesians will concede that involuntary unemployment is a “special” or rare case, and Lindahl goes even further to say that it could be only a short-run and not a long-run equilibrium phenomenon.

Up to this point we have always concluded that the market tends, at any given time, to establish one uniform market price for any good, under competitive or monopoly conditions. One phenomenon that sometimes appears, however, is persistent multiformity of prices. (We must consider, of course, a good that is really homogeneous; otherwise, there would merely be price differences for different goods.) How, then, can multiformity come about, and does it in some sense violate the workings or the ethics of a free-market society?

Turning now to patents and copyrights, we ask: Which of the two, if either, is consonant with the purely free market, and which is a grant of monopoly privilege by the State? In this part, we have been analyzing the economics of the purely free market, where the individual person and property are not subject to molestation. It is therefore important to decide whether patents or copyrights will obtain in the purely free, noninvasive society, or whether they are a function of government interference.

One of Professor Chamberlin’s most important contributions is alleged to have been his sharp distinction between “selling cost” and “production cost.”84 “Production costs” are supposed to be the legitimate expenses needed to increase supply in order to meet given consumer demand schedules.