Last time we looked at the totally false assumption of "perfect information." Today's first bogus assumption is that Alice and Bob both enter into this transaction freely and willingly. That’s actually hard to define. If Bob’s crop fails and he’s starving, is Bob really free to take or leave Alice’s chicken? You might argue that even if Bob gives Alice everything he possesses, and binds himself to her in servitude for life, he’s still better off because at least he isn’t dead. That may be so, but obviously this isn’t a world Bob wants to live in.
At the very least, to protect Bob in this situation, there have to be a lot of people selling food, they have to be competing with each other and not colluding to hold up the price, and Bob has to know what each of them has on offer at what price, and be able to choose among them. That way he’ll get the best possible deal. If Alice controlled all of the food in town, she’d be the dictator, and you could hardly getting away with calling that a Free Market. But that’s actually the case if Alice has a patent and exclusive marketing rights to a medication Bob needs to survive – a situation that exists for may people in the U.S. today.
Next time, we'll get to the basic stuff of economics, money. As we await the post, keep in mind, indeed deeply ponder, that money does not exist in nature. It is a human invention. What is it exactly?
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