David Colander writes: > Classical economists knew and used supply and demand... But their focus was on supply forces and costs as determinants of value--demand was a side issue, and given far less focus. Thus, they specifically said that their major analysis did not cover non-reproducible goods where demand forces were seen as central. > With the introduction of marginal and neoclassical ideas primarily in the late 1800s, but which existed earlier in less well known work, the focus shifted initially to demand, and then to supply and demand.> But isn't the key point that the opportunity cost focus of neoclassical analysis swept away the Ricardian insight that non-reproducible goods ("Land" in the broadest classical sense) are the free gifts of Nature, with zero real or social costs of production? Yes, they command a price because of their inherent fixity relative to demand. So price is an essential rationing device. Nevertheless this price, or rent, is a pure surplus whose value is community created, a value that is transferred to those who hold the property rights. In the neoclassical and entrepreneurial view, even the most valuable land in Manhattan has an opportunity cost. Thus there is no surplus, and the focus shifts conveniently from distributive justice to allocative efficiency and a rationale for unconditional private property rights over the free gifts of Nature. Perhaps Henry George's Progress and Poverty (1879-80) was the high water mark of the classical approach to supply and demand. He showed that rent is an essential rationing device, rightly reflecting microeconomic opportunity costs, but that from the social point of view it is not a cost. Thus David Colander is right: how we approach supply and demand is a matter of "the focus of analysis" - but, specifically, the entrepreneurial vs the social focus. Today the social perspective appears to have been diverted and marginalised by the entrepreneur's (and our textbooks') focus on marginal opportunity cost as "the proper scope of economics". Roger Sandilands