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.
A price ground out by a market cannot be "simply information." To embrace the market fundamentalists' radically normative position -- i.e., markets are the best way of organizing production, distribution, and consumption -- they have no choice but to attach normative meaning to prices. Therefore, the market price has represent _correct_ information, or at least the best possible information. If it's not at least better information than the available alternatives there's no point in being a market fundamentalist (an MF). Consider the price of a ream of paper. In order to understand what the correct information is, we need to know what kind information is supposed to be represented by the market price. In standard (NC) economic theory, the price represents two kinds of information: (1) the benefit of the paper to the individual purchasing it; and (2) the cost of providing the paper to the individual selling it. Let's assume that each of these traders knows what's good for themselves (even though this is unlikely to be true all the time: assume we have a can opener). > 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. Actually it's not subjective at all. If the paper mill pollutes the air and water, then it not only screws up Nature, but also imposes real and tangible (external) costs on people: they must pay more for clean air and water. That's an objective fact.The paper purchase has a private cost to its maker and to its purchaser, but there's a larger social cost which is paid by a lot of other people, including future generations (who aren't represented in market decision-making). That is, even though the market price might be a good measure of the cost of producing a ream of paper to its producer, it is _not_ a good measure of the cost that society as a whole has to pay for that paper. The MFs get around this embarrassing fact by ignoring or minimizing the role of external costs (pollution). It's only a "neighborhood effect" (where in the case of global warming the neighborhood is the Earth) or the unrealistic assumptions for the so-called Coase theorem are assumed to apply. > ... 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. We should remember that B (the paper maker) is imposing costs on the rest of society. In the real world, the government would use the force of law/gun to defend his "private" property. Absent environmental protection laws, B is given a license to pollute. Of course, in classic rent-seeking style, B would use the profits reaped from production and pollution to lobby to prevent or neuter environmental protection laws. > 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.... You must convince me that B -- the polluter -- knows much more than I do or the government does about the environmental impact. Why is he allowed to dictate to us? Who made him dictator? Absent government regulation, he's not even subject to democratic control on the theoretical level. The only control over his operations is through the market, which rewards low private costs and thus rewards pollution. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
