# Start Here > Guest Forum >  the price system is bad for economic productivity and jobs

## Boshembechle

An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 



The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.

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## Petar

> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.


Are you aware that we don't currently operate in a free-market?

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## Petar

And yes, a slave always _could_ produce more...

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## Boshembechle

> And yes, a slave always _could_ produce more...


Who said anything about slavery?

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## CaptUSA

Ok, this convinces me.  This is someone's sock puppet just having fun.  Nobody is really this stupid.

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## Petar

> Who said anything about slavery?


Either you are free to set the price of your own labor/goods or you are not...

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## Petar

And why do you refuse to recognize that we don't currently live in a free-market?

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## PaulConventionWV

Now THAT is stupid.

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## Boshembechle

> Ok, this convinces me.  This is someone's sock puppet just having fun.  Nobody is really this stupid.


How so? Is it true or is it not true that the price determines how much is produced? Our economy could easily produce more cars, clothing, etc but will not because of price. It makes no sense. Why not use ALL of your resources you have available?

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## CaptUSA

> How so? Is it true or is it not true that the price determines how much is produced? Our economy could easily produce more cars, clothing, etc but will not because of price. It makes no sense. Why not use ALL of your resources you have available?


Funny.  Is this fun for you?  Pretending to be an idiot?  Andy Kaufman would be proud.

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## Henry Rogue

Great, the world can produce 20 Trillion cars and 13 tires.

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## NorthCarolinaLiberty

Tonight, there is at least one unemployed, self-centered, really, really, lazy ass who demands that somebody give him a job.

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## Cleaner44

> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.





> How so? Is it true or is it not true that the price determines how much is produced? Our economy could easily produce more cars, clothing, etc but will not because of price. It makes no sense. Why not use ALL of your resources you have available?


You should sue the economy for being such a dick.  Tell that bastard to start producing more like a good communist economy would.  There is a reason that all of the greatest economies in the world are communist and this stupid free market economy we are stuck with is an $#@! for keeping people from having jobs.

You know what I really hate about our economy?  It's how the economy doesn't care about the poor.  I mean if you look at the communist nations in the world, they don't have poor people.  But here in America our economy just doesn't seem to give a $#@! about the poor. 

Please sue the economy and end this injustice now!  Don't turn your back on the poor.  Only _you_ can prevent poverty.

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## oyarde

> Great, the world can produce 20 Trillion cars and 13 tires.


I have about four or five tires in case of that

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## osan

> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.


Your understanding of economics sucks really badly, I am sorry to inform you.  If you knew how wildly wrong you are, you would wear a paper bag over your head both publicly and privately for the next 5  years.

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## P3ter_Griffin



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## brandon

yall posting in a fire11 thread?

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## acptulsa

And here's _my_ unlabeled X shaped graph proving your unlabeled X shaped graph is all wrong:

X

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## ctiger2

Ben Bernanke trolling RPF's. lol

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## Boshembechle

> 


Yes you are, for consumers determine the price

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## euphemia

I would rather make intelligent and prudent choices about how I spend what I earn than expect everyone else to work harder so I can have more stuff.

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## Boshembechle

> I would rather make intelligent and prudent choices about how I spend what I earn than expect everyone else to work harder so I can have more stuff.


You would expect them to work harder, and they would expect you to work harder. Seems like a fine system that ensures mutual destruction of scarcity.

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## oyarde

> You would expect them to work harder, and they would expect you to work harder. Seems like a fine system that ensures mutual destruction of scarcity.


I work hard every day . I care not if others work at all so long as they get nothing from my labor , as it should be .Ticks .

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## oyarde

> yall posting in a fire11 thread?


Nah , they would ban him and encourage more commies instead .

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## euphemia

> You would expect them to work harder, and they would expect you to work harder. Seems like a fine system that ensures mutual destruction of scarcity.


Exactly.  People work harder to produce more stuff so you can work harder to earn it.

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## P3ter_Griffin

> Yes you are, for consumers determine the price


I agree that for an exchange to take place the consumer must be willing and able to pay the asking price.  If we assume we're dealing with a rational consumer this is setting the upper bounds of pricing.  The individual offering the product is the sole determinate of the lower bounds.  Supply and demand or equilibrium pricing is a _business's_ pricing mechanism.  Just as cost of production theory of value could be a _business's_ pricing mechanism.  As arbitrarily setting prices could be.  Free markets have no pricing mechanism.  They are markets free of force.  The rest is left to the individual actors.

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## anaconda

> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.


What your graph shows you is that consumers are only willing to buy 50 units _if the price is 1_, and producers are only willing to produce 50 units _if the price is 5_. So neither will do either, and those resources will be fortunately directed elsewhere. Social welfare is opitmized at the clearing price of 3 and an output of 30. This maximizes consumer surplus and producer surplus and social welfare. Any beginning principles text in micro will cover this in the first few chapters.

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## Boshembechle

> What your graph shows you is that consumers are only willing to buy 50 units _if the price is 1_, and producers are only willing to produce 50 units _if the price is 5_. So neither will do either, and those resources will be fortunately directed elsewhere. Social welfare is opitmized at the clearing price of 3 and an output of 30. This maximizes consumer surplus and producer surplus and social welfare. Any beginning principles text in micro will cover this in the first few chapters.


Exactly. The price system makes it uneconomical for actors in a market to produce at a level that creates abundance. If the price was 0, and the firm was owned by an entity that didn't have to deal with costs, there would be much more production. (enough to solve the scarcity issue)

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## euphemia

Who doesn't have to deal with costs?  Raw materials, technology, and labor cost something.

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## Boshembechle

> Who doesn't have to deal with costs?  Raw materials, technology, and labor cost something.


Only in free markets

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## acptulsa

> Only in free markets


Um, companies can get plastic for free in China?  Really?

Workers work for nothing in China?  Do you really believe they let everyone buy whatever they want in China, whenever they want it?  They even pay for their doctor visits, buddy.  Communist or not.

Nothing costs anything where there's no free market.  Yeah.  Like here.

You're not even _trying_ to appear serious now...

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## euphemia

> Only in free markets


In every market. There is a cost to doing business.  Nothing is free.

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## Boshembechle

> In every market. There is a cost to doing business.  Nothing is free.


The key word here is "business". There are no costs when the state owns the means of production.

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## acptulsa

> The key word here is "business". There are no costs when the state owns the means of production.


Only if the state steals the diesel fuel to run the shovel and pays the miner with lashes rather than food.

Not exactly viable in the long term.  But then, you know, neither was the Soviet Union, where the idio--er, I mean _people_ in charge all thought like you do.

Don't have enough food?  Good!  I've been meaning to shoot a few million people anyway...

It doesn't cost anything to produce something if the state owns Lenin's 'means of production'.  Well, dude, then volunteer to have the government slap the chains on you and go get the job done for nothing, while you sleep under the stars and starve to death.

I already answered this, Mr. Redundancy.  How simple do I have to make it?  Really?  Can you possibly be serious?  Please say you're kidding.  The electricity to run a factory is free because the government decrees the coal jump out of the ground and march itself to the power plant.  The damned government can't even get a squirrel to obey it--they seem to have more sense than humans.  It can't even reliably get its own overpaid, overfed employees to behave themselves.  How is it going to produce electricity for free?  Explain this to me, please.  I'm all agog to hear.

Tell you what.  You explain this to my satisfaction and I'll give you a genuine unicorn.  For free!

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## euphemia

It still costs the state to harvest and produce.  Labor must be paid.

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## Cleaner44

> The key word here is "business". There are no costs when the state owns the means of production.


Are you a child?  Seriously, you don't appear to have a basic connection with reality as an adult would.  I don't ask this to insult you, it's just that I don't see a mind that has progress beyond believing in Santa Claus and unicorns.  Are you still a teenager?  Have you ever worked?

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## libertyjam



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## euphemia

The state does not own all raw materials.

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## HVACTech

> Exactly.  If the price was 0, and the firm was owned by an entity that didn't have to deal with costs, there would be much more production. (enough to solve the scarcity issue)


Right, Said Fred.

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## anaconda

> Exactly. The price system makes it uneconomical for actors in a market to produce at a level that creates abundance. If the price was 0, and the firm was owned by an entity that didn't have to deal with costs, there would be much more production. (enough to solve the scarcity issue)


You missed the point about optimizing social welfare. At any other point on the graph there is what is known as deadweight loss. No one will provide the factors of production without return to their marginal revenue product. Unless they are conscripted into slavery. Are you advocating widespread slavery?

https://www.princeton.edu/~achaney/t...ight_loss.html

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## Boshembechle

> You missed the point about optimizing social welfare. At any other point on the graph there is what is known as deadweight loss. No one will provide the factors of production without return to their marginal revenue product. Unless they are conscripted into slavery. Are you advocating widespread slavery?
> 
> https://www.princeton.edu/~achaney/t...ight_loss.html


I'm advocating for the state to be the sole employer.

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## oyarde

> I'm advocating for the state to be the sole employer.


I knew that , of course , I will never work for any State , Nation , Caliphate , commune , union , socialist party or Satan etc . I will delightfully scalp all comers who think I must, until they kill me , unlike those , I will rest in peace. There are losers and there are winners , I am undefeated , of course , I do not expect to stay that way , but it has been a good life .My multitude of spawn have seen this and will do the same . I indoctrinated  them in Liberty just as the commie masses have in evil .

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## oyarde

I think " price systems " are not bad , I do not like how much certain things cost , but I recognize who made them cost , why they cost and have worked hard to extract myself from these. Everyone should  , your choice .

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## anaconda

> I'm advocating for the state to be the sole employer.


So you are advocating for one universal slaveholder.

Yet, why would you wish shortages, unwanted inventories, long lines for bread and meat, black markets, and abject misery on the people?

Are the people not competent to decide how to commit their labor and spend the fruits thereof?

The conditions of supply and demand do not vanish upon state intervention. Intervention negates the collective voice of the people that would otherwise state their preferences for goods, services, and labor. It is of the most horrifying of tyrannies. A very cruel scenario indeed.

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## Boshembechle

> So you are advocating for one universal slaveholder.
> 
> Yet, why would you wish shortages, unwanted inventories, long lines for bread and meat, black markets, and abject misery on the people?
> 
> Are the people not competent to decide how to commit their labor and spend the fruits thereof?


I would rather have these than having people lack the ability to pay for something. Besides, there is not concrete difference between a shortage and an unaffordable good

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## anaconda

> I would rather have these than having people lack the ability to pay for something. Besides, there is not concrete difference between a shortage and an unaffordable good


The only reason that people cannot purchase goods is because the state interferes with the adjustment of the real wage. And shortages are imposed by the state.

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## euphemia

> I would rather have these than having people lack the ability to pay for something. Besides, there is not concrete difference between a shortage and an unaffordable good


Shortage?  Of what?

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## Henry Rogue

> I would rather have these than having people lack the ability to pay for something. Besides, there is not concrete difference between a shortage and an unaffordable good


There is a difference. With shortages there is nothing for a beggar to beg for, there is nothing for a thief to steal, there are no scraps to be had in a dumpster, there is no charity to be given, there is nothing to borrow. In a shortage everyone is poor except those who control the state.

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## Henry Rogue

> Shortage?  Of what?


The shortages that happen in a centrally planned, priceless, incentiveless economy.

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## jllundqu

> The key word here is "business". There are no costs when the state owns the means of production.


Close thread.  My head hurts too bad to try and refute this nonsense.  This person believes the government doesn't spend money.

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## Cleaner44

> I'm advocating for the state to be the sole employer.


Advocating that everyone be a slave to the politicians is beyond sick.  Where as I would want freedom, you would prefer to force me to work as a slave to someone like Joseph Stalin, who by the way killed more people than Adolf Hitler.  

You want to pretend that slavery is good because there is povery in the world, but slavery is evil no matter what.  I would rather live poor than as a slave.  If you want to choose slavery for yourself, I support you, but when you want want to force slavery upon others you one of the sickest types of human beings to roam the Earth.  

How did you get to be so twisted?  Did it start in your childhood?

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## acptulsa

> You want to pretend that slavery is good because there is povery in the world, but slavery is evil no matter what.  I would rather live poor than as a slave.  If you want to choose slavery for yourself, I support you, but when you want want to force slavery upon others you one of the sickest types of human beings to roam the Earth.


Why are you even pretending that's a choice?  Just saying 'I'd rather be poor than a slave' is to hand the b.s.'er a win because _you're the one who's lying now._  There is no such thing as a wealthy slave, and seldom is seen a well-fed slave.

Stalin was not only incredibly wealthy, he was just about the only well-fed person in all of the Soviet Union.  Everyone else was starving.  Stalin sold the food they grew, then killed millions just so that the grain that was left would be almost enough for the people that were left.

If this advocate for slavery to evil masters wants to advocate evil, don't lessen people's shock by pretending that what the OP is proposing might somehow be less evil than it really is.

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## CaptainAmerica

Excuse me if I am economically illiterate, but doesn't the value of oil import effect the overall production value of a product and create a limit on the price range of that said product because it is after all determined by an oil import...? No matter what, production always seems to hit a wall called "shipping and handling" and the price of a product is set at a percentage usually marked up because of it. Most stores seem to set within 10 dollar range , the same values for the same products

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## Seraphim

No, always.

The freer the market the faster prices can adapt to real world conditions allowing goods and services to actually change hands.




> Only in free markets

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## Seraphim

No, price does NOT determine how much is produced. 

Price influences demand insofar that price (heavily) influences consumer behavior, but it is a combination of end demand and producer ANTICIPATED end demand that determines how much is produced NOW.

If the producer antipates more demand then what actually occurs, their stock will go into a clearance sale to salvage as much of their mal investment as possible.

Unregulated prices are capable of fluctuating rapidly enough to allow economic calculations to be made in real time, as they require to be made. That's not to say PERFECTION is attainable. No one, NO ONE is capable of accruing AND analysing the required data perfectly to come up with a permanent state of perfect production and perfect pricing.

It is foolish to think that it's even possible, by the free market or a State beaurocracy.

The difference is that the free market is a peaceful and civil affair that is closest to the changes in real economic conditions,allowing participants to ADAPT quickly (rightly or wrongly).

State systems employ violence and cohersion into the matter while also lairing beaurocracy and (many) meddling middle men who systematically add time to the adaptation process for pricing and output. Communist governance is the most extreme version of this. It is why every communist country sees two major underlying themes...scarce production and innovation (poverty) as well as brutal (violent) oppression from those tasked with running the system.






> How so? Is it true or is it not true that the price determines how much is produced? Our economy could easily produce more cars, clothing, etc but will not because of price. It makes no sense. Why not use ALL of your resources you have available?

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## anaconda

> No, price does NOT determine how much is produced.


Actually, it is one of the crucial determinants. The higher the market price, the more producers will produce. It's what is known as the supply function (or "curve"). It is one half of the determination of supply-demand equilibrium. The supply function is upward sloping. The demand function is downward sloping. Their intersection is the equilibrium price and output quantity.

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## Victor Grey

> Yes you are, for consumers determine the price


Eh people just don't know what's good for them. More stuff they don't value, that's what they need.

Those Soviets, well they just didn't appreciate all that concrete production and such they were forced to make, which western academia used to portray the place as an industrious paradise for all. Yep.

The state is wonderful at determining what society should produce. We should trust it to produce things.

Like we should trust some poor slobs complaining how they're so useless in being unable to produce anything, because someone else owns the all means of production.

If only they owned things, why they could show the world through an entire century's history, just how innately adept they are by nature when they have any say in the matter. But that's never happened at all multiple times again and again. They just haven't proved themselves and it's very sad.

Let's trust _those_ people. The man is just putting them down.

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## osan

> Close thread.  My head hurts too bad to try and refute this nonsense.  This person believes the government doesn't spend money.


Stop trying.

This is either ignorance of a spectacular variety or a troll of monumental cast.

The nonsense it is spewing may even cause blindness, so beware that you have been warned.

1/2

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## osan

> Actually, [price] is one of the crucial determinants [of how much is produced].


True, but you stop short of the fuller explanation.




> The higher the market price, the more producers will produce.


Not necessarily so.  Firstly and perhaps most commonly, how much is produced is determined by the ratio of price to cost.  Naturally, a producer wants it to be as high as possible because a crucial goal is maximization of profit.  But there is more to things than just that.  There may be so-called "social factors".  Whether a business enjoys monopoly status, especially that of the government-granted variety, has a huge influence on how much is produced.  The OP, in his apparently depthless ignorance, has here suggested that when the "state" becomes the sole controller (monopolist owner) of the means of production, bounty will ensue.  This is an outright lie.  Were he to take a class in MICRO-economics he would learn that monopolists are strongly motivated to produce LESS than the optimal amount of any good or service, the reasons for which I will leave to him to research.  This is pretty well a hard and fast rule in the biz.  So my suggestion is for people like him to bite the bullet, head down to the nearest university book store, and grab a microeconomics text book and look up "monopoly".

The Soviet Onion was a textbook perfect example of this.  They owned EVERYTHING, and NOTHING was in abundance.  This has nothing to do with the Soviet "government" mismanaging the nation's resources in some spectacularly special and unprecedented way.  It had everything to do with the fundamental characteristics of running a monopoly.  Those people were buffoons and stooges, but they were not idiots.  Their economists knew precisely what ours knew.  They did what was perfectly predictable long before the Soviet Onion was formed, the economic outcomes written in stone before they even began.

Monopolies are bad things.  This is demonstrated in both soft theory, hard-mathematical economic models of the most fundamental variety, and most importantly in real world practice.

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## acptulsa

> The Soviet Onion was a textbook perfect example of this.  They owned EVERYTHING, and NOTHING was in abundance.  This has nothing to do with the Soviet "government" mismanaging the nation's resources in some spectacularly special and unprecedented way.


Sure it did.

Oh, I'm sure they created shortages on purpose as well, as you say.  But they were incompetent micromismanagers (as all humans are) and that did have _something_ to do with it.

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## anaconda

> Monopolies are bad things.


Some monopolies gain their status as such by outperforming their competitors in such a manner that all of the consumers voluntarily select their company's product, and the other firms elect to exit the industry. In contrast to state decreed monopolies where political cronyism might substitute for business performance. Ron Paul seemed to concur, and I believe mentioned Microsoft as an example. Presumably by consumers and businesses using their products at their monopolistic price point resulted in greatly enhanced productivity and enhanced social welfare. Your thoughts?

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## juleswin

> The key word here is "business". There are no costs when the state owns the means of production.


I used to think for a second that you were sincere in your posts and you are a true believer but you say something like this and now I know you are making a mockery out of the people who genuinely take you seriously and try to explain economic policy to you.

Also -rep cos I am beginning to think that you're trying to go the record and I want to help you in that endevour.

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## Carlybee

> The key word here is "business". There are no costs when the state owns the means of production.


Attachment 2739Attachment 2740

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## Seraphim

Hence my next sentence: "Price influences demand insofar that price (heavily) influences consumer behavior, but it is a combination of end demand and producer ANTICIPATED end demand that determines how much is produced NOW."

Strong influence is not determination.




> Actually, it is one of the crucial determinants. The higher the market price, the more producers will produce. It's what is known as the supply function (or "curve"). It is one half of the determination of supply-demand equilibrium. The supply function is upward sloping. The demand function is downward sloping. Their intersection is the equilibrium price and output quantity.

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## Cutlerzzz

> And yes, a slave always _could_ produce more...


Who cares about producing more? Producing very much of little value, which would be inevitable without a price system, does little good.

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## really

A couple of observations:

It is true we do not live in a perfect free market system. No such critter hasever existed. Every free market country has some form of hybrid marketsystem. 

That said; we are still a sufficiently free market system for economics ofsupply and demand to apply.

Over the long term the forces of supply and demand will seek equilibrium. Whenthings get out of whack like they did in 2008 things can get messy.

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## acptulsa

> Over the long term the forces of supply and demand will seek equilibrium. Whenthings get out of whack like they did in 2008 things can get messy.[/FONT][/COLOR]


When things get out of whack like they did in 2008 it's the result of shenanigans like the ones pulled by the bankers, the deficit spenders, the warhawks, Freddie Mac and Fannie Mae.  And it will generally be done on purpose so the money of the poor will be stolen and given to the rich under the cover of a TARP.

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## Danke

> 


Hmmm...

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## dean.engelhardt

> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.


Have you ever thought that increasing economic productivity would be bad for the overall economy?   

Suppose if the US government regulated the price of all automobiles to be half the current price. That would certainly increase the sale of new cars but have other effects.  Value of used cars would plummet.  Auto manufactures would need government assistance to make a profit or closed down.  Increased demand for new cars would create increased need for labor, and material that would cause the price of other goods to increase completing for the same resource and labor.

When you increase supply over demand there is a loss of profit and inefficient use of labor and resources.

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## r3volution 3.0

Based on the title, I was expecting something about sticky prices and idle resources.




> An economy COULD produce more if it wanted to, but it won't because of the free market's mechanism of finding the correct price. 
> 
> 
> 
> The above illustration shows that a quantity of 50 COULD be produced (which means more productivity and more jobs), but it won't because of the price.


Took me about 3 cycles through the gif to realize, no, dude's point is that S slopes upward...



But for those prices, it could just keep going!

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