Arman,
Which has more power, in the sense you used it when describing money vs products: $1 or 1,000 cans of corn?
Everything other than food is very elastic in supply and very replacable in consumption. How much oil goes into disposable plastics? How much oil could be saved by insulation? How much oil could be saved by home offices rather than commuting. Then there’s the EFW, electric cars and on and on. We could even employ hundreds of people to work treadmills to produce electricity. There is no basic to the economy but food.
Arman, when I think about your statement of “supply will always be in excess of demand” I come to the conclusion that the supply curve does not matter. That prices ONLY rise and fall in accordance with demand. So in other words, shortages can never exist…since there is no scarcity.
Also, when you continually say the “excess,” what do you mean? Because excess is a very subjective term to begin with. What you would consider “excess” I wouldn’t consider excess. For example, some people believe basketball players make “excess money.” I believe that they do not make excess money. Both of these statements are perfectly valid. So how do you determine that it is in “excess?”
I’m trying to put my hand on where you’re coming from. It seems you’re removing the human nature component from economics. Is there a place I can go to see your system, an economics website you agree with or a book or an economist you admire?
Thanks
Only the waste product of oil goes into disposable plastics. You can’t use that towards gasoline. When we refine oil, we get many different products. The amount going into plastics has no effect on what is going in our car. Because the part of the oil going into plastics can’t work on our car. But alas, you are simply talking about “reducing” our usage of oil, instead of it being replaceable.
Also, do you really believe employing 100’s of people to work treadmills to produce electricity is just as efficient as using something like oil? Also, food intake can be just as easily replaceable too. Companies can just simply create a pill that provides our body with all the nutrients we need. That is what food’s function is anyways. Providing us with nutrients. So food is easily elastic and supply and replaceable in consumption.
When I say excess, I do not mean cash.
There is in the economic system sufficient to fill everyone’s need plus excess. There is in the system goods and services sufficient to fill all demand (not want) plus some excess. The market works in producing and distributing all goods and services. It works best if all participators can get some portion of the excess. Excess supplies and services go into errecting business establishments, that although produce and distribute, work against the interests of other establishments that do the same, and in effect work to reduce the excess goods and services available.
If there are three car repair shops on the block, and bays and mechanics are idle 1/4 of the time, is that not excess? If there are not sufficient sales at the grocery, and so some fruit must be thrown out, is that not excess? The entire junk mailer industry is excess built on excess. But determining that there is excess, is far removed from trying to reduce excess. All of the repair shops are profitable, and none want to give up. The grocery store loses costumers when it runs out, and so it does not want to shave its stocking policy. And when one company goes into marketing of one kind or other, all competition must follow suit or loose market share.
That there is excess is plain to see. Determining exactly which orange constituted excess is another matter.
No, no, no, and definitely no.
The efficiency is moot. There is no scarcity. .
If we run scarce of steel, we might have to put off the new car for a week or two while smelters tool up. No big deal. If we run scarce of food, we cannot put off our next meal for a few weeks or months while the farmers watch their crops grow.
Which is circular. You’ve still not shown that excess resources ever come into play. Rather, entepreneurs are faced with limited resources which they can put to various resources. If they estimate correctly, they will reap high profits. Competition gradually forces these down as somone underbids the original seller. This gives that seller an incentive to try and cut costs by e.g. boosting productivity, lowering costs etc. So yes, efficient use of resources is the result of market interactions.
Not really. Marx’s views are based on Ricardo’s iron law of wages and various Malthusian considerations and errors (or misinterpretations) of classical economics (see George Reisman’s refutation of these fallacies.) Competition provides incentives to lower the costs of providing scarce resources and seeking ways to put them to ever greater uses, and expand their supply too. If a factor’s output is in high demand, this is a good sign that the factor is a profitable one and that it would be good to find more of it. Markets achieve efficiency by achieving higher output over time with the same amount of input factors.
Every entrepreneur works at his own efficiency because of the competition, true. This is not because of scarce supply, but surplus suppliers. If the services supplied were scarce, then the entrepreneur would sell out anyway, without worrying about the competition.
As evidence of excess,
Junk mail and all other advertizing
Vacant storefronts
Functional storefronts razed for improvements
Vacant factories
Discarded produce
Empty chairs in the restaurant
Competition
I could go on and on, but you reject my observations, and offer none of your own. What do you offer as clear evidence of demand exceeding supply? So far you have only shown why all your theories depend on the doctrine of scarcity.
But as I have noted none of these are instances of scarcity (least of all competition!). They are all examples of misallocated input factors or attempts to entice consumption to gauge potential demand in an industry. A simple proof of scarcity is that at any time a firm must bid for factors of production such as labour, capital etc.; were these abundant in supply (in excess of their demand for them) this would be unnecessary. Yet it is necessary. Why?
But the guy with the product can demand more cash and the guy with the cash can demand more product. When they agree to the quantities, it’s a trade, both equally served, both equally powerful.
Who has more power, assuming our current market prices, the guy with $1 or the guy with 1,000 cans of corn?
One guy has cash, yet the guy with the 1,000 cans of corn isn’t willing to trade. You said that the guy with cash has much more say than the one with the product. But the guy with 1,000 cans of corn will not trade with the guy that only has a $1. Why? What if he has $2? What if he has $500? If $500 is enough to effect a trade, then how was it the guy with the 1,000 cans of corn was able to have so much say? There is no greater power in trades. It’s a mutual benefit.
I have an idea. Why not apply this idea to water? I mean, we can survive longer without food than we can without water. If we run scarce of drinking water, we can not put off our next drink for a weeks or months(actually, we can not survive longer than 7 days without water). Fresh clean drinking water is not easily replaced. you better place water with your idea of food.
Also, some people can not live without their car…or their computer. Without my car, I could certainly not get to my job, or my school…so I couldn’t do anything. If we ran scarce of steel, people couldn’t get around anywhere.
None of these instances are scarcity. Scarcity of a good comes not from the lack of demand, but from the amount of resource is left on this earth. The only “economic” definition you have.
From dictionary.com:
The basic problem on which classical economic theory is built: simply, that human wants will always exceed the resources available to fulfill those wants.
Yes, human wants will ALWAYS exceed the resources to fulfill those wants. These wants are important. People’s wants are unlimited…not even you have denied this. Because of this, scarcity exists because businesses as a whole try to use these scarce resources to fulfill as many wants as they can. But of course, they can not fulfill them all. In order for scarcity to not exist, we must say that all wants at all times are fulfilled. Tell me Arman, would you say you do not desire anything at this very moment? I know I certainly desire things all the time. Therefore, my wants can never be satisfied. I know for these other posters, I believe the same thing.
Xevec,
Arman said, ‘wants being met isn’t at all important.’ I think that’s where things go astray. He removes humanity from the equation. It’s like were automatons and that particular nature were ascribed results in many of the definitions and concepts he uses and rejects.
Revision:
Xevec,
Arman said, ‘wants being met isn’t at all important.’ I think that’s where things go astray. He removes our human nature from the equation. It’s like we’re automatons and as such we require his unusual concepts to describe our actions.
Again, all things are limited, but nothing is scarce. That things must be paid for illustrates that they are not limitless. This does not illustrate that things are scarce. Can you not do better than that?
That some wants will be met is a given. That more wants can be met isn’t that important. 20/i =2000/i (where i is infinity).
I don’t know where you get that from.
Um, how does it illustrate that at all?
It isn’t important because we can still act as economic machines, right? We can still be factors in a system. Isnt that the qualification you’re applying when you say, “That more wants can be met isn’t that important?” Since our wants are infinite, satisying another want isn’t that important. But if our wanting is infinite, how can you say it’s not important? You’re saying wanting isn’t important because we just keep on wanting. But the definition of wanting is to want.