Free market capitalism is natural and there is no need to communicate it because it happens. You need very little thought about why it works. You can just observe. It happens whether or not you have any economic theory or not. You place 100 people in a community and free market capitalism will happen. An exchange happens between people when both parties agree voluntarily and many exchanges will continue to happen thereafter.
BTW I read Equitable Commerce and I enjoyed it. Thanks for the link.
The very idea of Cost Limit of Price is contradictory to the idea of Individuality Warren talks about. Mises and Menger's subjective theory of value on the other hand is perfectly consistent with the idea of Individuality. http://en.wikipedia.org/wiki/Subjective_theory_of_value
On the supply side: The cost and QUALITY of all products vary. (There is Intellectual capital/logistics/operational management/distribution/sales & marketing/research & development that determines both cost & quality.)
On the demand side: The desires of each individual is different. As individuals, desires are temporal. One day a person may want to buy a Tickle me Elmo doll before Christmas for a child for $1000 and another day the person may lose his job and know that he would not pay $1.
That is why Carl Menger and Mises subjective theory of value is consistent with Warren's explanation of Individuality. Value is determined by each individual at any moment in time and constantly fluctuates.
In one of Warren's last chapters, he encourages that people write down their desires and needs in a book and to display it to others. This is not only unnatural it's impractical and a direct contradiction to all the points he made about Individuality. Why would I right down that I desire 1 bushel of oranges for $10 or an IPad for $400 next winter when I won't know my desire nor my capacity to pay in the future.
Supply & Demand
In classical economics one of the fundamental theories is supply and demand. However most people overlook the fact that when you create a supply curve each supplier has a different cost structure (and also different quality).. it may take $10, $20, $30, $40, or $50 to produce a bushel of oranges from different suppliers and they will all have different profits. The suppliers together at different quantity and price levels will create a supply curve. The demand curve is similar. The buyers will each desire various quantities at various price levels. Each person has a subjective value of what they would pay for an orange... $10, $20, $30, $40, or $50 etc. When the supply at various cost structures meets the demand of different desires you will have an overall equilibrium price and the overall supply will meet demand at a certain price. Let's say the equilibrium price is $30 with some aggregate total of supply in this case. Some people will make more profits because their cost structure is lower (ie. $10 vs $30) and some buyers will feel like they'll get a great deal because they are buying oranges at $30 when they would be willing to pay $50 (vs. $30). Those that do not produce at a cost low enough from the equilibrium price will decide not to produce until there is more demand at a higher price and those that desire to buy the oranges at a lower price than the equilibrium will not get any oranges unless supply at a lower price increases.
Over time in a truly competitive free market the marginal cost will equal price in aggregate. However there will be a variety of different profits for each supplier and various levels of satisfaction from buyers. Furthermore the supply and demand curve in this case assumes a static supply/demand curve. The Austrian Economic school's subjective theory of value shows that the supply and demand curve always changes so any objective analysis is fruitless. Who knows whether bell-bottom pants will make a come back, if the low carb diet will continue in popularity or if people will keep watching American Idol.... maybe even the ideas of liberty or anarcho-capitalism will be the next big thing in the free market and more people will pay for Ron Paul books in the future...
Hope that helps...
9-11 Media Fakery: Did anyone die on 9-11?
Pysops.. media.. actors.. propagandists... disinfo agents.. fake videos.. fake photos
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