There will be no market, but there will be production based on need and want? How will need and want be determined, if there isn’t a market to determine prices? Will everyone have to fill out a weekly survey or something?
That’s not what a market does. In classical economics and every economic theory derived from it (like, say, capitalist libertarianism), that is not what the market does. Speaking idealistically, the market is supposed to recognize need and react to it. But the need already exists with or without the market. The market doesn’t determine it in the way you imagine.
I didn’t say that the market determines need and want. I said it determines prices. Prices are a reflection of need and want. Prices are the gauge by which you find out how important a given good or service is too people.
Prices are a reflection of need, but that’s not the same thing as them determining need. You need to think about the difference between what these words are saying, reflection and determine. And there’s so many other factors besides pure need that can affect prices in real life that it’s basically useless to talk about them in this kind of idealistic way.
craftbeerhallputsch, I know you love this part of economics, maybe you can explain this in economic terms for our erroneously logical friend.
Yes, I agree that prices don’t -make- need. And it’s just a reflection, it’s not -perfect-. But as long as there’s a price, there will be a way to get close to the target. And I feel like, if your friend responds, they’ll probably be talking about oil or tulip bulbs. I hope so. I do love the classics.
How is price a guarantee of getting close to meeting need? That seems like pure idealism to me. Price gets it wrong all the time. We waste billions of dollars of food a year because people who are hungry can’t afford it. We have more homes in this country than we have homeless but the realities of price thwarts supply meeting demand. And we waste rare and useful commodities like helium on frivolous bullshit because the price has been deflated to the point where it has no relation to actual need or real value. The less said about the health care industry, the better.
I know you’re going to say this is all the result of unwise and unjust manipulations of the market (especially the helium thing), but to say that you’ll have to ignore the historical realities that have lead to these contradictory conditions existing in the first place. You’ll have to ignore the comodification of labor and the extraction of surplus value that necessarily requires that the needs of some not be met. That’s what assdownloader is trying to get at when he talks about who controls the means of production.
So, I have to ask you, given how poorly price does at fulfilling basic needs like food and shelter, how is price as a mechanism for “getting close to the target” any less ridiculous than just giving everyone a survey to fill out?
“needs” are not even a thing in neoclassical (or, usually, libertarian) economics. Utility or preference are the terms used, and in the most basic neoclassical model it’s basically assumed that all actors are magically endowed with varying preferences for particular goods or services (or rather, that it’s not the economist’s job to ask where preferences “come from” or how they arise), are perfectly aware of their preferences at all times, and that their preferences for different goods or services can always be perfectly ranked, and a number of other assumptions that enable nice utility/preference curves and equations that wouldn’t be possible if the concept didn’t meet some mathematical criteria. So that market interactions will ultimately end up reflecting those preferences. There’s a bunch of other oddities with the basic neoclassical model, but basically it is pretty fundamental to it and every development regarding it that people’s desire for things is basically god-given, or at least outside the purview of the market and economics.
Actually interesting developments in neoclassical developments have pretty much always come from economists trying to adapt the model to reflect reality. Such as the fact that prices seem to fluctuate based on something other than people’s preference for a good, which is literally something which has been observed (it’s not exactly hard to observe either) and led to relatively interesting developments in neoclassical economics.
Also, considering that participation in the market is dependent on actually having some amount of money (the demand in “offer and demand” is solvent demand, someone who can’t pay obviously does not register as demanding anything), the idea that what happens on the market is tied very closely to “need” seems strange. On the market, your “need” can only be as big as your wallet, but your wallet can also be way fucking bigger than anything you’d ever, ever “need”. Which is why economists tend to avoid that word in actual economic discourse. Making the market central to the recognition of human needs pretty much means people excluded from the market cannot have recognizable needs, which is fucked up.
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Thoughts From The Peacock Angel 