On 6/4/2012 4:16 PM, David Shemano wrote: > On behalf of all market fundamentalists – > > I view a price, which is the product of an exchange, as information. > Nothing more and nothing less. I don’t view information as good or bad, > such as a “just price.” It is simply information.
The market fundamentalist who I've read and who have been trained in economics would say that, following Cowen and Tabarrok, "a price is a signal wrapped up in an incentive." When you ignore the incentive piece, you miss the value judgement. > > Some people do not like the information, just like some people do not > like what a scale tells them when they stand on it. The dislike of > specific information is subjective. Normally, this is no big deal. If a > buyer subjectively views the appropriate price for an apple as 25 cents, > and the seller subjectively views the appropriate price at 50 cents, > they each go on their way without a second thought. At this point, we > are in the realm of economic and/or moral reasoning, and I have nothing > insightful to say whether buyer should or should not be offended that > seller will not sell the apple at 25 cents. There is not much economics involved in a signal trade. Marx discussed this in the opening chapters of Capital. Murray Rothbard also discusses it in Man Economy and State. The bargaining that takes place between a buyer and a seller is not sufficient to determine market prices.[1] And voluntary exchange is not a sufficient condition for a market. I am quit amazed by the number of libertarians who don't understand this point. [1] "There is, for all practical purposes, no theory of bargaining; all that can be said is that since the owner of each factor wants to participate and earn some income, all will most likely arrive at some sort of voluntary contractual arrangement. ... Economists have always been very unhappy about bargaining situations of this kind, since economic analysis is estopped from saying anything more of note." > The issue moves from the economic/moral to the political when the > discussion moves from whether one “should” disregard a price to one > “must” disregard a price, or whether A and B should not be permitted to > engage in exchange regardless of a mutually satisfactory price. To reach > such conclusion, we necessarily must conclude that C’s view of the > proposed transaction between A and B is so important that it should be > imposed by force of law/gun. For you to convince me, a market > fundamentalist, that C should be permitted to impose value on A and B, > you must convince me that C knows more than A and B about the exchange > from the perspective of A and B. It is easy to make such a demand when the incentive role of market pricing is ignored. The fact is that most of the millions of acts of production and consumption in which we daily engage are social and involve externalities. Thousands of ordinary daily acts all affect others. The fact is externalities are totally pervasive. Only the most extreme individualism could have resulted in an economic theory that assumed otherwise. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
