The Free Market

Jdanz · #1 10-04-2005, 11:24 PM

is a tool of people, rather then a value of people.

Discuss

lehighguy · #2 10-05-2005, 12:18 AM

How about, what does that sentence mean?

tylerdurden · #3 10-05-2005, 12:23 AM

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is a tool of people, rather then a value of people.

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It's neither. It's just the totality of voluntary, mutually beneficial transactions. That's all. It's just easier to say "free market" than "a bunch of independent transactions voluntarily agreed to by all affected parties, without any outside interference."

Jdanz · #4 10-05-2005, 12:36 AM

it's a economic system that does something.

It is commonly believedto be the system that provides for the greatest generation of wealth, and i tend to believe that.

However in determining whether we want to use the price setting mechanism that is the free market, we have to determine if that's the goal we have in mind.

Especially because it doesn't account for some non-monetary valuables and it doesn't really deal with distributional issues.

lehighguy · #5 10-05-2005, 12:44 AM

The best way to allocate resources is through accurate pricing.

Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange.

tylerdurden · #6 10-05-2005, 12:45 AM

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However in determining whether we want to use the price setting mechanism that is the free market, we have to determine if that's the goal we have in mind.

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This mindset assumes that someone must make a decision and impose a mechanism. The free market is the result of nobody imposing anything.

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it doesn't really deal with distributional issues.

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It doesn't deal with anything BUT distributional issues. Two parties engaging in a simple trade are doing nothing more than voluntarily redistributing assets.

QuadsOverQuads · #7 10-05-2005, 01:15 AM

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The best way to allocate resources is through accurate pricing.

[/ QUOTE ]

The "free market" does not achieve this.

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Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange.

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$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee. An economic theory that ignores this is standing on a false foundation. I'm not saying I have a solution to this, but the problem should at least be acknowledged.

q/q

SheetWise · #8 10-05-2005, 02:14 AM

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$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee. An economic theory that ignores this is standing on a false foundation. I'm not saying I have a solution to this, but the problem should at least be acknowledged.

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Just because two people value a unit of money differently doesn't change their demand, or the value of what they purchase. A bottle of Coke cost $1. Is it worth more to Bill Gates?

QuadsOverQuads · #9 10-05-2005, 03:15 AM

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Just because two people value a unit of money differently doesn't change their demand, or the value of what they purchase. A bottle of Coke cost $1. Is it worth more to Bill Gates?

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Re-read what you just wrote:

$1 = $1
1 unit of value = 1 unit of value
1 unit of demand = 1 unit of demand

Therefore: equal dollars represent equal units of demand which represent equal value

Do you see the flaw in your reasoning yet?

q/q

ACPlayer · #10 10-05-2005, 04:07 AM

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Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange

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Hard to see how you can believe this and support school vouchers.