the price system is bad for economic productivity and jobs

[anaconda]

Monopolies are bad things.

Some monopolies gain their status as such by outperforming their competitors in such a manner that all of the consumers voluntarily select their company's product, and the other firms elect to exit the industry. In contrast to state decreed monopolies where political cronyism might substitute for business performance. Ron Paul seemed to concur, and I believe mentioned Microsoft as an example. Presumably by consumers and businesses using their products at their monopolistic price point resulted in greatly enhanced productivity and enhanced social welfare. Your thoughts?

[juleswin]

The key word here is "business". There are no costs when the state owns the means of production.

I used to think for a second that you were sincere in your posts and you are a true believer but you say something like this and now I know you are making a mockery out of the people who genuinely take you seriously and try to explain economic policy to you.

Also -rep cos I am beginning to think that you're trying to go the record and I want to help you in that endevour.

[Carlybee]

The key word here is "business". There are no costs when the state owns the means of production.

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[Seraphim]

Hence my next sentence: "Price influences demand insofar that price (heavily) influences consumer behavior, but it is a combination of end demand and producer ANTICIPATED end demand that determines how much is produced NOW."

Strong influence is not determination.

Actually, it is one of the crucial determinants. The higher the market price, the more producers will produce. It's what is known as the supply function (or "curve"). It is one half of the determination of supply-demand equilibrium. The supply function is upward sloping. The demand function is downward sloping. Their intersection is the equilibrium price and output quantity.

[Cutlerzzz]

And yes, a slave always could produce more...

Who cares about producing more? Producing very much of little value, which would be inevitable without a price system, does little good.

[really]

A couple of observations:

It is true we do not live in a perfect free market system. No such critter hasever existed. Every “free market” country has some form of hybrid marketsystem.

That said; we are still a sufficiently free market system for economics ofsupply and demand to apply.

Over the long term the forces of supply and demand will seek equilibrium. Whenthings get out of whack like they did in 2008 things can get messy.

[acptulsa]

Over the long term the forces of supply and demand will seek equilibrium. Whenthings get out of whack like they did in 2008 things can get messy.[/FONT][/COLOR]

When things get out of whack like they did in 2008 it's the result of shenanigans like the ones pulled by the bankers, the deficit spenders, the warhawks, Freddie Mac and Fannie Mae. And it will generally be done on purpose so the money of the poor will be stolen and given to the rich under the cover of a TARP.

[Danke]

Hmmm...

[dean.engelhardt]

An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price.



The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.

Have you ever thought that increasing economic productivity would be bad for the overall economy?

Suppose if the US government regulated the price of all automobiles to be half the current price. That would certainly increase the sale of new cars but have other effects. Value of used cars would plummet. Auto manufactures would need government assistance to make a profit or closed down. Increased demand for new cars would create increased need for labor, and material that would cause the price of other goods to increase completing for the same resource and labor.

When you increase supply over demand there is a loss of profit and inefficient use of labor and resources.

[r3volution 3.0]

Based on the title, I was expecting something about sticky prices and idle resources.

An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price.



The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.

Took me about 3 cycles through the gif to realize, no, dude's point is that S slopes upward...



But for those prices, it could just keep going!