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Read the rules in the OP before posting, please.In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up! NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action. |
Cayman Islands24199 Posts
On February 03 2014 06:20 FabledIntegral wrote:Show nested quote +On February 03 2014 06:10 WhiteDog wrote:On February 03 2014 06:00 FabledIntegral wrote:On February 03 2014 05:51 WhiteDog wrote:On February 03 2014 05:38 FabledIntegral wrote:On February 03 2014 05:25 Nyxisto wrote:
That's the kind of discussion I was talking about. Why do we need to have an optimal "allocation of resources"? You sound like a bunch of robots. I feel like I'm in some kind of Fordist nightmare.
There are millions of people working their ass off while living on food stamps and people actually are like "well if the market dictates that it has to be right herp derp" , do you even notice we're talking about actual human beings here?
It's a little sad that the fucking pope seems to be the only person that actual things that ethics should play a role in how we shape our economy. Because the optimal allocation of resources results is significantly more likely to result in less poverty, etc. No. It is just the most efficient use of ressource, but it says nothing about the distribution of the wealth created (all distributions are pareto optimal). Actually yes, the models typically do depict the distribution of wealth on where the surplus ends up. The model depict the distribution of wealth, but does not say that the distribution of the wealth optimal. Optimal allocation of ressource is what it say it is - the most efficient way to use the ressources in order to produce or achieve a specific goal (maximizing utility). Ok, I can agree with that. Doesn't mean things can't be implied from it. Show nested quote +On February 03 2014 06:03 oneofthem wrote:On February 03 2014 03:19 FabledIntegral wrote:On February 03 2014 03:11 oneofthem wrote:On February 03 2014 02:18 FabledIntegral wrote:On February 03 2014 02:08 oneofthem wrote:On February 03 2014 02:05 FabledIntegral wrote:On February 03 2014 00:45 oneofthem wrote:
when you say le supply and demand it implies the wage is a product of natural forces. it's really not. different strategies of development taken by employers, employee leverage (unionization, laws, reserve pool of workers) and various factors affecting reservation wage positive and negative.
let's put it this way, looking at the world, you'll see the basic employer employee relationship without a chain (which apparently makes libertarians jump up in rage, rather than the more powerful and simple power of starvation) producing wages so low that it would seem to be barely worthwhile for an american minimum wage worker. why is the american minimum wage worker earning more than a bangladesh teenager, or why is the american worker today earning more than she was during the glory days of children in mines and factories?
the answer has quite a lot to do with politics. not recognizing this basic fact is just to shut your mind with ideology. it's pretty stupid I'm not really sure how I find your post to be relevant in this case... they're still all pretty much market forces when it comes down to it, just in a really broad sense. the market mechanism is always there. so when supply and demand in one situation leads to drastic different results from supply and demand in another situation, then it's not the central analysis anymore. Of course it is... barriers to entry are the direct result of the market wage gap between Bangladesh and the American minimum wage worker, which is a market force. These barriers prevent a more globalized economy. As globalization has become much more significant in the past 30 years, barriers have fallen and this is the exact reason why you see so many things being outsourced the and the U.S. losing the majority of it's status as a manufacturing powerhouse. this is a richer analysis than 'supply and demand' and does not make the situation seem like the product of natural forces. to put more meat on the issue, you can assign some portion to technology and some portion to political actions by specific factions and people. there are many comparative econ studies from for example an anthropological or sociology perspective. It's exactly supply and demand... From Wikipedia, it's the 2nd thing listed on basic premises for a perfect competition marketplace to function... one could hardly call this a "rich" analysis as opposed to the very basics you learn in your first econ class....
Basic structural characteristics
Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may include:
Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long term adjustments to changing market conditions.
Perfect information - All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
Zero transaction costs - Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
Profit maximization - Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
Homogenous products - The qualities and characteristics of a market good or service do not vary between different suppliers.
Non-increasing returns to scale - The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
Property rights - Well defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
Rational buyers - buyers capable of making rational purchases based on information given
No externalities - costs or benefits of an activity do not affect third parties
you have to distinguishb etween internal and external factors. the political stuff are external to the market, and aer usually called external shocks Market forces are always present, the market will simply readjust based on external factors, such as a price floor on wages in our current economy.
i believe i've said that from the start, 'market mechanisms will always be present.' but traditionally defined, they are not the complete story.
unless you want to do this whole 'politics and society is also the market' thing which is more of a marxist or classical political-economy bend
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I used supply and demand in a very large sense, hence why I did add that it could be called a power struggle. Political attitude are also part of that power struggle, and wages are obviously influenced by the state of class werfare (here, I dropped the big bomb I had in mind), and other things like that.
Calling those "external" is either void of all meaning, or living in fantasyland were economy is a thing and political economy isn't.
Edit: well you got it on your own 
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Cayman Islands24199 Posts
meh. wasn't really addressing you though. the problem is that supply and demand, or the invisible hand, is a naturalizing gloss on some rather political questions.
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Well I think we agree on that, but I also think it can be a useful concept, like a few others neo classical economics uses, but it has also managed to render them often useless.
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On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy.
Yup, pretty much.
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On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy.
Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results.
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Hong Kong9154 Posts
I guess I'm glad it's not a command economy because fuck being stuck with doing what my dad did for a living.
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United States42777 Posts
On February 03 2014 10:31 FabledIntegral wrote:Show nested quote +On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results.
When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal.
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United States7483 Posts
On February 03 2014 10:50 KwarK wrote:Show nested quote +On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal.
The point doesn't exist.
There's also the fact that there's really no such thing as a free market.
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TRNETON, N.J. (AP) — A member of New Jersey Gov. Chris Christie's administration who has been subpoenaed in an alleged political payback investigation has resigned.
Christina Genovese Renna left the governor's office Friday, the same day former Christie loyalist David Wildstein claimed to have evidence contradicting the governor's account of a lane closing operation, apparently to create traffic chaos as a political vendetta.
Renna reported to Deputy Chief of Staff Bridget Kelly, who apparently set the lane closings in motion with an email to Wildstein.
Renna confirmed her resignation to The Associated Press through a statement Sunday from her lawyer, Henry Klingeman.
Source
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On February 03 2014 10:50 KwarK wrote:Show nested quote +On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal.
You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said.
The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli.
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United States7483 Posts
On February 03 2014 11:50 FabledIntegral wrote:Show nested quote +On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli.
If your conclusion is "Markets with proper regulation work well" then I agree with you.
Generally, people arguing in favor of free markets are also arguing against any form of regulations at all.
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United States42777 Posts
On February 03 2014 11:50 FabledIntegral wrote:Show nested quote +On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli.
That's a nonsense. Markets are never fixed they are built on a constantly changing system. Supply and demand are constantly changing, if the economy goes up that'll change buying patterns, if it goes down that'll change buying patterns, if people start buying shit off the internet more and shopping less it'll change shit, there is no point at which everything stops and the market is able to work out exactly what it needs and then just provide that. Instead it attempts to best match these changing conditions with businesses going under or having to cease activities as some areas dry up and entrepreneurs starting new ones in other areas to meet new demands. Some of these will provide more than the market can bear and go under, others will compete for the same market and force out competitors with inferior business practices but never, at any time, will it stop.
There is no "in the long term". Capitalism incentivises accurate guesses at what the market wants to encourage people to invest capital in guessing in order to make returns. The better guessers keep going and the worse ones stop but the process itself isn't even slightly efficient and the idea that there's some point where they go "okay guys, we've worked it out, stop everything and we'll just keep this going" is laughable. The market changes and the guessing game continues and each inaccurate guess is lost value.
Capitalism is fundamentally inefficient and someone claiming that it is optimal has a poor understanding of how it works. It's basically evolution in action and while it's cool to go "look at that salmon going back to the river it was born in, how amazing" you can't ignore the billions of shitty proto-salmon that got lost and didn't breed. It's more efficient than a command economy because it has a better feedback and is more reactive to changing conditions but it's certainly not optimal and nobody who understands it would ever claim it was.
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On February 03 2014 11:50 FabledIntegral wrote:
The models never determine that competition will stop, it just reaches a point where things generally stabilize.
if you were to assume that a system was stable and modelled it as such, but then observed instability... wouldn't that mean all previous bets on convergence or equilibrium would be off? how do you reconcile this belief in some stationary point with economic collapses?
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Thankfully I don't care about sports at all, so I managed to avoid seeing anything until now.
But this is twitter, you can find people who will say anything. It didn't come away as a political thing at all to me, but the song does sound odd in other languages (probably because I've never heard it in another language. Would have sounded better if it was in English but with different accents, not languages. Just IMO).
But yea, it's twitter. It should automatically be ignored.
it isnt?
Everything is conducted in English, but no, there is no official language here. Something I think is actually kind of cool.
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United States7483 Posts
On February 03 2014 12:16 KwarK wrote:Show nested quote +On February 03 2014 11:50 FabledIntegral wrote:On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli. That's a nonsense. Markets are never fixed they are built on a constantly changing system. Supply and demand are constantly changing, if the economy goes up that'll change buying patterns, if it goes down that'll change buying patterns, if people start buying shit off the internet more and shopping less it'll change shit, there is no point at which everything stops and the market is able to work out exactly what it needs and then just provide that. Instead it attempts to best match these changing conditions with businesses going under or having to cease activities as some areas dry up and entrepreneurs starting new ones in other areas to meet new demands. Some of these will provide more than the market can bear and go under, others will compete for the same market and force out competitors with inferior business practices but never, at any time, will it stop. There is no "in the long term". Capitalism incentivises accurate guesses at what the market wants to encourage people to invest capital in guessing in order to make returns. The better guessers keep going and the worse ones stop but the process itself isn't even slightly efficient and the idea that there's some point where they go "okay guys, we've worked it out, stop everything and we'll just keep this going" is laughable. The market changes and the guessing game continues and each inaccurate guess is lost value. Capitalism is fundamentally inefficient and someone claiming that it is optimal has a poor understanding of how it works. It's basically evolution in action and while it's cool to go "look at that salmon going back to the river it was born in, how amazing" you can't ignore the billions of shitty proto-salmon that got lost and didn't breed. It's more efficient than a command economy because it has a better feedback and is more reactive to changing conditions but it's certainly not optimal and nobody who understands it would ever claim it was.
More or less correct, but the difficulty is in asking "What would be superior?" The concept of 'optimal' suggests that there is an absolute best system to employ, and everything else is inferior. What systems could be employed that would outperform capitalism?
The vast majority of serious issues with capitalism can be compensated for with appropriate and well designed regulations.
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On February 03 2014 12:16 KwarK wrote:Show nested quote +On February 03 2014 11:50 FabledIntegral wrote:On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli. That's a nonsense. Markets are never fixed they are built on a constantly changing system. Supply and demand are constantly changing, if the economy goes up that'll change buying patterns, if it goes down that'll change buying patterns, if people start buying shit off the internet more and shopping less it'll change shit, there is no point at which everything stops and the market is able to work out exactly what it needs and then just provide that. Instead it attempts to best match these changing conditions with businesses going under or having to cease activities as some areas dry up and entrepreneurs starting new ones in other areas to meet new demands. Some of these will provide more than the market can bear and go under, others will compete for the same market and force out competitors with inferior business practices but never, at any time, will it stop. There is no "in the long term". Capitalism incentivises accurate guesses at what the market wants to encourage people to invest capital in guessing in order to make returns. The better guessers keep going and the worse ones stop but the process itself isn't even slightly efficient and the idea that there's some point where they go "okay guys, we've worked it out, stop everything and we'll just keep this going" is laughable. The market changes and the guessing game continues and each inaccurate guess is lost value. Capitalism is fundamentally inefficient and someone claiming that it is optimal has a poor understanding of how it works. It's basically evolution in action and while it's cool to go "look at that salmon going back to the river it was born in, how amazing" you can't ignore the billions of shitty proto-salmon that got lost and didn't breed. It's more efficient than a command economy because it has a better feedback and is more reactive to changing conditions but it's certainly not optimal and nobody who understands it would ever claim it was.
Would like to add that an imperfect and free market that reaches equilibrium will still be sub-optimal, constant change and competition is not even required for your argument to work. Profit is in itself indicative of lost wealth.
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On February 03 2014 12:16 KwarK wrote:Show nested quote +On February 03 2014 11:50 FabledIntegral wrote:On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli. That's a nonsense. Markets are never fixed they are built on a constantly changing system. Supply and demand are constantly changing, if the economy goes up that'll change buying patterns, if it goes down that'll change buying patterns, if people start buying shit off the internet more and shopping less it'll change shit, there is no point at which everything stops and the market is able to work out exactly what it needs and then just provide that. Instead it attempts to best match these changing conditions with businesses going under or having to cease activities as some areas dry up and entrepreneurs starting new ones in other areas to meet new demands. Some of these will provide more than the market can bear and go under, others will compete for the same market and force out competitors with inferior business practices but never, at any time, will it stop. There is no "in the long term". Capitalism incentivises accurate guesses at what the market wants to encourage people to invest capital in guessing in order to make returns. The better guessers keep going and the worse ones stop but the process itself isn't even slightly efficient and the idea that there's some point where they go "okay guys, we've worked it out, stop everything and we'll just keep this going" is laughable. The market changes and the guessing game continues and each inaccurate guess is lost value. Capitalism is fundamentally inefficient and someone claiming that it is optimal has a poor understanding of how it works. It's basically evolution in action and while it's cool to go "look at that salmon going back to the river it was born in, how amazing" you can't ignore the billions of shitty proto-salmon that got lost and didn't breed. It's more efficient than a command economy because it has a better feedback and is more reactive to changing conditions but it's certainly not optimal and nobody who understands it would ever claim it was.
You misunderstood pure and perfect competition thought process.
You are referring to the fact that supply and demand change constantly, that price also change constantly, but that is all considered as "exogene" from a market standpoint. And it is exactly because all those things change constantly that the market is considered the best way to allocate ressource : the market always tend toward equilibrium, so as soon as something change in the society, the price will instantly change to inform supply and demand of the changing equilibrium. It is the capacity of the price to change instantly that makes them the best way to allocate ressource - according to the theory. In a society where price would be determined by the state, not only the price would be sub optimal, but any change in supply and demand would result in a sub optimal alocation of the goods (offer would produce too much, or not enough, and the fixed price would not evolve fast enough to inform on this).
The model are based on a certain number of assumption that are always wrong (the criteria of the pure and perfect competition, but there are more, like the consideration that agents are rational). Pushing this argument further, people are not saying a free market economy is efficient, they say that if we let the market run free, if we make sure that the real life conditions are close to the condition of pure and perfection competition, then we would be closer to an optimal situation. Taking that as a ground structure, economists built a huge set of "if this then there is a problem for the market" theories, with a solution for every "if" (the market failures).
Equilibrium is like a fiction that we should all try to realize on earth, according to free marketists. Every bit of inefficience is linked to an imperfection that we should / can fight through various means.
Note that I think all this is bullshit.
On February 03 2014 18:05 Crushinator wrote:Show nested quote +On February 03 2014 12:16 KwarK wrote:On February 03 2014 11:50 FabledIntegral wrote:On February 03 2014 10:50 KwarK wrote:On February 03 2014 10:31 FabledIntegral wrote:On February 03 2014 08:06 KwarK wrote:
Should also be noted that the free market is in no way optimal. Supply and demand relies upon undersaturation of markets to create price gouging victims to create a profit stimulus for increased production. Likewise it relies upon failed enterprise to determine when the market is sufficiently saturated and overlapping businesses to weed out the inefficient business practices. Nothing about it is particularly optimal, about the most you can say for it is that it's better than a command economy. Everything you just stated are short term issues while the basic premise of the free market being optimal is considered for long term results. When is this hypothetical point where the market decides it's optimised and competition stops? Has it happened yet? Because as long as competition is happening it's suboptimal. You typically are a decent poster, but I can't help but feel you're either just playing dumb or don't have a basic grasp of what's being said. The models never determine that competition will stop, it just reaches a point where things generally stabilize. Also, as stated prior, the vast majority of people are entirely aware that a true free market does not exist, but rather it's better to apply the principles when possible. The majority of economic research typically doesn't have to do with stating why a free market does work, but at finding as many imperfections as possible and finding ways to optimally fix them, typically through regulations or other external stimuli. That's a nonsense. Markets are never fixed they are built on a constantly changing system. Supply and demand are constantly changing, if the economy goes up that'll change buying patterns, if it goes down that'll change buying patterns, if people start buying shit off the internet more and shopping less it'll change shit, there is no point at which everything stops and the market is able to work out exactly what it needs and then just provide that. Instead it attempts to best match these changing conditions with businesses going under or having to cease activities as some areas dry up and entrepreneurs starting new ones in other areas to meet new demands. Some of these will provide more than the market can bear and go under, others will compete for the same market and force out competitors with inferior business practices but never, at any time, will it stop. There is no "in the long term". Capitalism incentivises accurate guesses at what the market wants to encourage people to invest capital in guessing in order to make returns. The better guessers keep going and the worse ones stop but the process itself isn't even slightly efficient and the idea that there's some point where they go "okay guys, we've worked it out, stop everything and we'll just keep this going" is laughable. The market changes and the guessing game continues and each inaccurate guess is lost value. Capitalism is fundamentally inefficient and someone claiming that it is optimal has a poor understanding of how it works. It's basically evolution in action and while it's cool to go "look at that salmon going back to the river it was born in, how amazing" you can't ignore the billions of shitty proto-salmon that got lost and didn't breed. It's more efficient than a command economy because it has a better feedback and is more reactive to changing conditions but it's certainly not optimal and nobody who understands it would ever claim it was. Would like to add that an imperfect and free market that reaches equilibrium will still be sub-optimal, constant change and competition is not even required for your argument to work. Profit is in itself indicative of lost wealth.
Economists goes around this argument saying that what you consider as profit is in fact the remuneration of the capital factor
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EPT
