Almost Every Market Transaction Is a Swindle
It’s opposite day, you know.
For any good or service, there is some socially just price — some price at which the buyer isn’t getting cheated, and the seller isn’t either.
The market almost never finds this price.
Why not? It’s very simple. One side always knows more about the good than the other. The side that knows more uses this information to cheat the side that knows less. Usually the seller knows more, because it’s his vocation (and often, his avocation) to make, sell, and deceive people using this particular good. Buyers have no hope of getting the better of someone like that.
Only rarely does the market hit the socially just price, and when it does so, this happens only by chance.
Even when goods are sold to a buyer who has full knowledge as to their material nature, this hardly exhausts the knowledge needed to reach the socially just price. That ton of iron may just be a ton of iron, no more and no less. But to get the just price for it, you’d have to know more about the iron market — and again, the sellers have the obvious advantage. Buyers of iron have to know about lots of other markets, too, and their attention is necessarily divided. Sellers just need to know iron, and when they do, they will cheat you.
We have several solutions to this problem, but none of them are adequate.
The first, of course, are laws against fraud. These suffer from being too narrow, because all commerce is an attempt at fraud, and because everyone knows it. If we really wanted to punish attempted fraud, we would outlaw markets, but powerful commercial interests prevent this.
The second is to buy locally, because a person selling to you in a local market is more likely to feel guilt over cheating you. Mistrust anything imported; mistrust anything from a large corporation; mistrust anything whose inner workings you would not be able to duplicate. These goods are all swindles, and none of them are worth buying.
The last solution — and by far the best — is to make everything yourself. Avoid markets entirely. That way you’ll never get cheated. Ever!
If only we weren’t so gullible, I’m sure we’d give that last one a try.
What about competition? If you are buying something for which there are lots of substitutes, won’t competition push down the price any individual seller can charge? This should mitigate the information imbalance to a certain extent. Obviously there are circumstances where this won’t work (buying a house, buying a used car, buying anything that is unique, like a work of art).
Also, your explanation of the value of “buying local” strikes me as too speculative and psychological. I think a better reason for a local seller not to cheat a local buyer is that if the buyer finds out he has been cheated, he will 1) not buy from that seller again, and 2) maybe will hurt the reputation of the seller by telling his friends not to buy. A local business will be more sensitive to blows to its reputation than a big national chain.Report
Competition is part of the solution to this riddle, but not nearly all of it.
I’ll post a refutation tomorrow, if Prof. Hanley doesn’t give it in the comments.Report
Not a full refutation, but I will critique this:
Buyers of iron have to know about lots of other markets, too, and their attention is necessarily divided. Sellers just need to know iron
I think clearly sellers need to know more than just iron, or the iron market, lest they get scooped by the aluminum market, carbon-fiber market, etc. Pity the poor iron merchant with tons of iron he can’t sell because he wasn’t aware of the markets in substitute goods.Report
I remember reading an anecdote about a guy who ran a small destination business in a little mini-mall. There were four units and they were empty excepting the one that he had. His lease was coming to an end and he was looking forward to signing a deal similar to the last one that he had.
The landlord instead raised his rent. “I have to recoup my losses from those three!”, he told the guy.
The small business owner moved. He finished his anecdote by pointing out that he drove past the location the other day and all four units were empty.
Now, a question for opposite day: How much does the business owner owe the landlord for effectively stealing from him?Report
How much does the business owner owe the landlord for effectively stealing from him?
He should be required to return to that location and pay a fair market rent as determined by an adjudicating body.Report
Not to be pedantic (OK, entirely to be pedantic), but this isn’t really the argument as Montaigne gave it at all. He states more than argues (though he does give several examples) that any profit is at the expense of another, because the undertaker only makes money when people die, the physician when they are sick, and so on. The opportunity for profit only arises, in the essay (it’s more like an aphorism), when someone else suffers a loss (the old translations all call it “damage,” which is probably a more accurate way of saying it in this context: the opportunity for profit only arises when someone else suffers damage of some sort: physical, economic, whatever).
It should be noted, of course, that Montaigne doesn’t give any prescription from this. What’s more, he says that this is just the way of nature.Report
Chris
If that is his argument then we solve it by passing a law against entropy. An anti-second law.Report
I can think of lots of ways that we could, in the course of violating the Second Law of Thermodynamics, still leave us much worse off in material terms.
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Absent the second law I am not sure what “worse” means. It’s like down without gravity.Report
Think of it this way.
If, without using any energy at all, I were somehow able to convert all of the earth’s silicon to uranium, that would violate the second law, because uranium has a lot more potential energy stored up inside it.
Entropically, it would be a step away from equilibrium.
Economically, this wouldn’t be so great, because Armageddon never is.Report
But absent the second law armagedden loses all meaning. Life is a local exception to universal entropy. Entropy is the problem that life and knowledge solve. Absent the problem there is no solution. Or is there?Report
Life is a local exception to universal entropy.
Not true, if I understand you correctly. Your body doesn’t create energy. It slowly transforms concentrated potential energy into heat just like everything else. It gets that energy from plants, which get their energy from the sun, which is slowly dying just like we are and just like everything else is too.
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If the sun cared about dying, I would agree. I operate under the assumption that the sun doesn’t care.
3.8 billion years ago nothing on earth was alive. Now there is life everywhere. The universe has created life, meaning, value, love, knowledge and experience by exporting entropy. Entropy is the problem and life constantly solves it.
Absent entropy, I am not sure what life would even mean.Report
But life doesn’t solve the problem. It just exports it to somewhere else, making it a little bit worse in the process.
(I hasten to add that entropy is a silly problem to worry about, when other problems are so much nearer more easily defined.)Report
But non living things don’t have problems. Thus the problem is solved.Report
It’s a short passage, worth quoting in full:
Demades the Athenian—[Seneca, De Beneficiis, vi. 38, whence nearly the whole of this chapter is taken.]—condemned one of his city, whose trade it was to sell the necessaries for funeral ceremonies, upon pretence that he demanded unreasonable profit, and that that profit could not accrue to him, but by the death of a great number of people. A judgment that appears to be ill grounded, forasmuch as no profit whatever can possibly be made but at the expense of another, and that by the same rule he should condemn all gain of what kind soever. The merchant only thrives by the debauchery of youth, the husband man by the dearness of grain, the architect by the ruin of buildings, lawyers and officers of justice by the suits and contentions of men: nay, even the honour and office of divines are derived from our death and vices. A physician takes no pleasure in the health even of his friends, says the ancient Greek comic writer, nor a soldier in the peace of his country, and so of the rest. And, which is yet worse, let every one but dive into his own bosom, and he will find his private wishes spring and his secret hopes grow up at another’s expense. Upon which consideration it comes into my head, that nature does not in this swerve from her general polity; for physicians hold, that the birth, nourishment, and increase of every thing is the dissolution and corruption of another.
That all profit must be at the expense of another, if not by swindling, then by preying on vices or misfortunes, which is hardly more admirable.Report
Oh!
So he suffered from a combination of the zero sum and the objective value fallacies.Report
Basically, yes. Near the start of the post I stated it in the most sympathetic terms I could find: “For any good or service, there is some socially just price…”
The problem is that there isn’t a just price, not for anything, not even in a hypothetical perfectly free market. Not with perfect information. Not even with perfect competition in every other way.
There isn’t a just price. There is only what you would (or wouldn’t) pay, with varying degrees of happiness, in various states of need. Talking about a just price is like talking about a green idea.Report
I don’t think Montaigne is suffering from either. For one, the profit and the loss can be unequal, or at least nothing he says implies otherwise. When an undertaker makes a few bucks, but I die, are the profits and losses equal? Furthermore, he’s not saying that one person wins and another loses in the transaction. He’s saying that the very possibility of profit arises from a loss in another. This is something quite different than saying that every transaction has a winer and a loser, or that trades are zero sum. In fact, it’s quite clear that the transactions benefit both: the doctor profits and I, if he does his job well, get better: my loss, my damage, is lessened or eliminated altogether. What’s bad about the profit is that it needed the damage in the first place to be possible.
I’m not sure what the “objective value” fallacy is, to be honest, and there’s no doubt that Montaigne thought that certain things have objective value, but I see no reason to believe that he’s suffering from any fallacy in that regard, at least not in this passage.Report
<em>He’s saying that the very possibility of profit arises from a loss in another.</em>
But is <em>that</em> true?
Suppose I have a few extra bucks, and I walk by an ice cream vendor on a warm, sunny day. He charges a modest price, and I buy some ice cream. In fact, lots of people do, and he earns a nice profit that day.
Where was the loss again?Report
Child Obesity, you monster.Report
Montaigne mentions hunger, so he would say there is the loss. A better example might be an iPod. What the hell loss do I suffer that results in the possibility of iPod profits? A loss of pocket-sized music playing ability? Granted, leisure goods like iPods were a bit less common in Montaigne’s day.
I’m not trying to defend Montaigne, only clarify his point (which, it appears, Mises got wrong too): he’s not making a point about the outcome of transactions, or about how their conducted, but about their origins.Report
This is where, even in philosophers’ terms, I’d have to say that Montaigne definitely got it wrong. A felt desire, not a loss, is the origin of every market transaction.
Still I’d have to say I did not interpret him quite correctly when I first mentioned him.
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If you were writing with an at least broadly Scholastic metaphysics, you’d view need as a sort of damage.
Also, the Essays is one of my four favorite pieces of writing, so I had the advantage of multiple readings.Report
If you were writing with an at least broadly Scholastic metaphysics, you’d view need as a sort of damage.
I’d be tempted to agree, except that it seems so often the easiest way to “repair” that “damage” is not to fix the real-world problem, but only to resolve to care a whole lot less.
For problems without a solution, this is as good as it gets. But still.Report
is not to fix the real-world problem, but only to resolve to care a whole lot less.
Now your a Buddhist!Report
It’s a loss compared to living in a world where scarcity and entropy did not exist, to be sure!Report
“What the hell loss do I suffer that results in the possibility of iPod profits?”
Under some philosophies, the fact that you got so much enjoyment out of your iPod means that Apple was the party that got swindled.Report
Such philosophies are insane.Report
If profit is unjust because it arises from the suffering of others, then the only just price is one that leads to no profit (covers expenses, I guess).
I don’t know that Montaigne held this view, and the fact that he says Demades made a mistake in his judgment implies that he may not have held it. If it’s just the natural way of things, then it is hard to argue that it is unjust. Is an earthquake unjust? A tsunami? Or is it just the way of nature to create here and destroy there, often with the creation depending on the destruction?Report
If profit is unjust because it arises from the suffering of others, then the only just price is one that leads to no profit (covers expenses, I guess).
In the theory of perfect markets, all profits are competed away until revenues just cover expenses. So presumably in a perfect market prices would be just.Report
I suppose that’s true: as long as there’s no profit, it would be just, assuming we argue that because profit arises from loss, it is unjust. Again, I’m not sure (in fact, I don’t think) Montaigne is making that point. But someone could make it starting from this essay.Report
Who says profit is unjust? Without it, help would most definitely not be on he way to lessen the “suffering of others”. Do you think profit is unjust? It’s the most positive, productive, and helpful motive that exists, at least within the marketplace that we live in. Fame just doesn’t do it. Fame AND fortune? Now, you’re talking. Take away the profit motive and we’re still living in mud huts wearing bear skins and eating squirrels for breakfast.Report
Max, I’m not arguing that profit is unjust, and I don’t think Montaigne is either (though I suppose he could be).
I’d argue that individual profit is unjust, though not from anything Montaigne writes, but it’s opposite day, so I can’t.Report
Thanks so much for the reply, Chris. Damn, I forgot about it being Opposite Day here at the League. Boy, does this complicate things. That being the case, that probably means that replying to me was as Opposite of what you would normally do, or want to do, as is humanly possible! Not too long ago, I was reading that NC’s “universal grammar” has been seriously, universely, debunked. Is that true? I remember reading at one time (Chomsky), that children in just about every country or culture use the same sing-songingly way of teasing each other. You know, that, duh duh, duh duh, duhhhhhhhh duh. The variations of the words could be endless. I fail to see why this would be an example of universal grammar–seems to fit in the universal “music” grammar box, not the spoken word box. This was applied only to the structure of written and spoken words, not music. Now do the twain ever meet? Music “grammar” and Verbal grammar? One thing I have noticed, is that–at least with pianists–they frequently moved their lips and mouths when playing. Glenn Gould, probably being the best example, but there were many other components involved in his rather odd gesticulations. Perhaps there is a very strong connection between the area of the brain that processes both language and music. I know several pianists that find it impossible to play without having their mouths used as the 11th finger–it’s just impossible for them to play at the same level of skill with out moving their lips of mouths.Report
Chris,
It is eye opening to read this– not just as a philosopher — but as a historian. To think that times were so bad once that he couldn’t see the potential for progress.
I read somewhere recently that even Smith and Ricardo believed in objective value. Free enterprise doesn’t make much sense without it.
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Roger, Montaigne was, famously, a pessimist. However, I don’t think he believed progress was impossible, just that it wasn’t going to be any better (and perhaps worse, in fact probably worse). Check out his essay “Of Cannibals” (essay #30 of the first book).Report
It is a nice little passage. All of his passages are nice, though.
And you’re right, it’s hardly more admirable, but what he’s doing here is a sort of metaphysics of profit: all gain comes from (the causal direction is important, I think) loss. In a sense, this was Montaigne formulating entropy as a principle of nature a few decades before Newton was born. So while we may not want to praise the doctor or undertaker or husband or whoever, we can’t really blame them, either. This is just the way things are. It’s not even clear we could do away with profit: things change, even in economics, and if they’re going to change, at least some of the time someone or something will benefit, which would mean that someone or something else will suffer.Report
Except that not all gain comes from loss. There is such a thing as a Pareto improvement, though they are extremely rare.Report
But there is a surplus through trade, and the more I take of that surplus, the less you receive–you have a loss of the possible. But the more I take, the less you receive–also a loss of the possible. So although we both gain, we both lose, and the greater my gain, the greater your loss, and vice versa. Only if there is no surplus to exchange, only if our trade provides no gain for either of us, can we avoid loss.Report
Humans can of course prosper despite entropy. Indeed life across the universe can progress. The key is to export entropy to non life. Humans and other living things have values. Dirt doesn’t.
The key to prosperity is positive sum value which is essentially infinite.Report
Argh, I’m sorry to have created this diversion. Ya’ll are thinking like economists, not philosophers. Montaigne was thinking like a philosopher. That is, he wasn’t making a point about what is gained or lost in the exchange. As I said above, the sick person, if the doctor does his job well, improves by the transaction. However, what made the transaction possible, what made the sick person visit the doctor in the first place, was the sickness. That is all Montaigne is saying. I go to the grocery store because I’m hungry, and I benefit from the visit, because I can now be sated; I go to the mechanic because my car isn’t running right, and I benefit from the transaction, because my car now runs well. In each case, I benefit from the transaction, and so does the grocer and the mechanic, but in each case the transaction is only possible because I am hungry, or my car isn’t working — in Montaigne’s language, because I have suffered damage.Report
Ya’ll are thinking like economists, not philosophers.
Thanks, how nice of you to say so. *grin*Report
Haha! I figured that would be the response. But it’s kind of interesting to see how thinking like an economist, and a 21st century economist at that, limits people’s ability to interpret Montaigne’s little essay on the fly (I mean, I doubt people are giving this hours of thought). These are the default schema that ya’ll go to, and it’s not easy for you to get past them. As a cognitive psychologist, I’m enjoying it.Report
Admittedly, I’d read it quite a few years ago.Report
As a cognitive psychologist, do you think a philosopher would be limited in ability to interpret, say, Hayek on the fly?Report
James, oh, of course. I don’t mean to imply that economists are unique. We all work with schemas, or templates, or whatever you want to call them (we tend to call them schemas or scripts, depending on the context), and they limit us. When I read Hayek, I read The Sensory Order anyway.Report
in Montaigne’s language, because I have suffered damage
The Buddha talks about this.Report
So do the peripatetics. Something tells me this is the context.Report
Can the Laws of Thermodynamics, Hinduism/Karma, and Newton’s Laws of Motions be applied here? Yes. Thank you. As we all know from 8th grade physics, energy can only be manifested and changed in different forms–it CAN NOT be either created or destroyed. The amount of all the energy in the entire universe remains constant and never changes. Find a big enough scale and weigh the universe at the moment of the Big Bang–it will be precisely the exact same weight as the universe today. And what about entropy? Good question, class. Entropy exists and happens when no additional force field acts on an object so that energy transfers or exchanges that occur will always have less potential energy than it had prior to the energy change. I’m saying “potential” energy meaning that it’s energy that hasn’t been activated or put in motion—kinetic energy is actualized energy that is being actively used. As far as I’m concerned, until someone can prove that energy CAN be created or destroyed, God exists and He exists outside of time, person, place. Hate to break the news to the atheists–we’ve been around, in one form or another, forever. If you don’t like this, give a shout-out to the Big Fella. One of the very biggest errors in thought and reason we humans make is the assumption that God operates by the exact same logic as us. We want God to be this nice little tidy, anal retentive, organized, reasonable, rational Being who would never just let all this suffering and pain, injustice, wars, famines, happen. How and why did we come to such a conclusion? It has absolutely NO theological basis in any facts whatsoever. We’ve made the entire narrative up to comport with our anthropomorphic, cubical logic. Now how this all ties into this discussion, we have mankind’s greatest genius, Sir Issac Newton, to thank. It was he, (should “he” be capitalized?) okay, it was HE who came up with the laws of motion which are basically the laws of inertia, acceleration, and action/reaction. Let’s concetrate on #3–that for every action, there is an equal and opposite reaction. This is precisely what the laws of Karma and the physics of thermodynamics are, and all at once. It has the same ramifications for bodies in motion as for moral consequences both good and bad. If I’m not mistaken, the universe at its essence is a universe of perfect balance–from the deepest molecular level to the most grandiose of galaxies. Good and evil are real, cosmic, measurable forces. And Chris was entirely correct when he stated that when one suffers a financial loss, it creates an opportunity for financial gain and profit for someone else. What’s that saying…When God closes a door, somewhere He opens a window. I don’t know the exact words, but it’s something like that.Report
There are some sad, delusional fools who believe the lord is so weak that he must close a door to open a window. Luckily the true lord ensures we can open windows all day long! Praise be to him!
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Roger, I was merely using the abstraction of that metaphor to illustrate the interconnectedness all forces in nature. Yin/Yang, Tao, Chi, God/Devil, light/darkness something/nothing etc. Nothing could possibly exist without its perfect, opposite, existing as well. No wonder quantum mechanics almost drove Einstein mad. He wasn’t a Vegas kind of guy as in “God doesn’t play dice with the Universe!” Did you know that Einstein passionately loved Jesus Christ?Report
Umm, wasn’t Einstein Jewish?Report
Yes, absolutely. But hardy a practicing Jew. It didn’t at all take away his fascination and love of Christ. Jesus was “his” guy and he frequently came to defend and stick-up for JC. Do you know that 74% of all scientists believe in God? I have no doubt that if a poll was taken of the Founders of this Nation, the figure would be in the high 90s percentile. In both cases, scientists and the Founders, I equate theism and belief in God as one and the same. Lord knows the Founders bickered themselves to death about the tiniest little Theistic incongruity–that hardly puts them in the agnostic camp. Agnostic is such an unnecessary and meaningless word. Of course, on some level, everyone is an agnostic–no one knows what happens after death, or how the universe was created, or if God really exists. I just find it much more fun to believe there is a reason and purpose to our existence than mere, random asteroids and dinosaurs playing havoc with planetary life cycles.Report
Don’t lemon theorems result in no-trade equilibria rather than high-priced equilibria? The market drives toward the low-price low-quality outcome.
Regardless, if everyone marks up their prices, nobody gets ahead 😀Report
I’m giving this argument more or less as Montaigne gave it. Ludwig von Mises went as far as to call this the “Montaigne fallacy,” though it hardly seems fair to single him out for what was, in his day, such a common view.Report
Well, modern neoclassical economics has no shortage of imperfect-information results, lemons and revelation principles and folk theorems and all.
Would you, in a non-opposite sense, view these as more relevant or insightful than the narrative you outlined above? During the 80s there was a brief fad of asking whether game-theoretic quirks dominated Walrasian auctioneering but this seems to have faded.
To be sure, prior to the era of Arrow, Samuelson, and their contemporaries, economics certainly loved to engage in a rather careless reasoning of the kind outlined above.Report
Well, modern neoclassical economics has no shortage of imperfect-information results, lemons and revelation principles and folk theorems and all.
Would you, in a non-opposite sense, view these as more relevant or insightful than the narrative you outlined above?
I would certainly regard them as both relevant and insightful.
Opposite day is tricky, but my purpose here is not at all to deny the reality of asymmetrical information. I would instead affirm that good-enough exchanges can and do happen in the large majority of consumer transactions even despite asymmetrical information.Report
good-enough exchanges can and do happen
But why should we be satisfied with “good enough”? Who gets to declare that they’re good enough anyway? If they’re only good enough there is room for improvement, and the state needs to step in and ensure a Pareto-superior outcome to merely “good enough.”Report
Good enough… FOR WHOM???Report
Hush.Report
Your narrative doesn’t contradict that, either. It just claims that the transactions do not occur justly, presumably meaning that surplus is unjustly shifted from consumer to producer. But clearly consumer surplus must be non-negative, since the consumer remains in the market. Any theorem implying a negative return from trade would entail a no-trade equilibrium…
Of course, we could be living in a world where right now we are missing out on millions of trades which don’t happen due to imperfect information and the Montaigne narrative applies for the whole possibility space of trades. Would you know if we weren’t? 😉Report
You really are thinking much more like an economist than what I was aiming at. There are about four or five concepts in this one comment that all depend on what the refutation really is, as I see it, though so far you have (admirably) avoided stating it.Report
I suspect you too are thinking much more like an economist than Montaigne would have preferred; like Chris above, I think you and von Mises have missed his point. Your narrative does sketch an interesting point about trade, albeit a different (and rather uncharitable) one.Report
On pre-emptive reflection, if tomorrow’s refutation turns out to be “consumers remain in the market; ipso facto the exchanges that occur must be good enough”, I’m going to have to express grave disappointment… one can be swindled by not having received one’s due, not only by having a received a negative return.
But I trust Kuznicki has a more ingenious argument up his sleeve 🙂Report
david,
What is “one’s due?”Report
Presumably, the price at which markets clear (holding egalitarian impulses over endowment aside for the time being), even if you are not the marginal trader.Report
“consumers remain in the market; ipso facto the exchanges that occur must be good enough”,
I would not call this a refutation at all. I’d call it evidence that a refutation might exist.Report
Perhaps we could argue that people don’t know what they want until we tell them what they want at which point they clamor against their wills for the things we tell them they deserve.
Sort of like a “we are the 99%” writ large.Report
One word response….
Brands.
If a producer wants to sell to more than one person or make more than one sale they need to compete with other producers. This drives the system to better quality, price and service.Report
Two word response: Subjective ValueReport
Iron is just fancy dirt. There’s nothing special about dirt. Therefore the price of iron should be exactly the same as the price of dirt.Report
Except fancier.Report
Iron is just fancy dirt?
I’ll try growing plants in it then. But only the really fancy ones.Report
DId you know that orchids grow beautifully in iron filings aerated by an ionizer?Report
Did you know there’s egg on my face? Aerated by an ionizer?Report
Furthermore, try building a bridge out of smelted dirt.Report
AKA “Bricks”Report
I am intensely amused that people actually replied to this comment.Report
I am not sure if Jason or I hate seeing this strain of thought in the wild.
I like the effects of markets, I don’t like the side effects.
Losing in the market place shouldn’t mean destitution. External costs shouldn’t be ignored.Report
Of course, most sellers don’t know exactly how much each consumer wants an item. If they did, then the consumer would be really in trouble.Report
Of course, you could say (as I did above) that buyers can certainly cheat the seller. To you it’s a ton of iron, but to me it’s a bridge that I can build and then charge everyone a dime to drive over. I pay you for that ton of iron one time, but I make money from it forever.Report
Making everything yourself nixes specialization and economies of scale, resulting in a much lower level on production.Report
There is a magnificent joke in there about one’s mother’s areas of specialization, level of production, and certainly her scale but I cannot find it after digging for a couple of minutes.Report
Jason, I know you don’t actually believe what you wrote, but that is one of the stupidest things I have ever read.Report
I don’t know if it’s stupid, but it is unlike any argument I’ve ever heard anyone make.Report
Are you kidding? The first two premises are everywhere.
After that, all that’s missing is the courage of one’s convictions.Report
I have to agree with Jason here. The two premises, just price and information asymmetries, are very common.
Most people don’t use the term “just price” anymore, but it’s a concept that is irrevocably fixed in any discussion about people being paid “what they’re worth,” whenever the standard for “what they’re worth” is something other than what an employer is willing to pay and what they’re willing to accept. And it’s lurking around any time someone argues a price is unfair, or doesn’t accurately reflect the “real” value of something (“It can’t cost that much to make a widget; they shouldn’t be charging that much for it”). When approaching these issues from a moral point of view, I would think it’s a bit hard to avoid some implicit concepts of just price.
Information asymmetries are agreed upon by economists, with J. Stiglitz, M. Spence, and G. Akerlof sharing the Nobel Prize for their research in it (Akerlof’s “The Market for Lemons” is a classic piece in this field). It’s a concept that has been seized upon by market critics as providing a very serious critique of the efficiency of markets (and they’re not entirely wrong, either).
So, yeah, these premises are pretty much everywhere.Report