- Capitalism and Alternatives -


Posted by: Dr. Cruel on November 24, 1999 at 13:17:06:

In Reply to: I can't believe my eyes posted by Stoller on November 24, 1999 at 00:43:46:

: RD:
: If 500 people wanted a car, say, and 500 wanted a bog roll, and supply and demand are exactly the ratio same in both cases, then shouldn't the price of a car and of bog-roll be teh same?

: Gee:
: There are several reasons why they are not - one of which you'll like and the others you wont. lets start with the one you like - yes it takes up more labor time to make cars. Now - bog rolls have more easy substitute goods whilst cars are limited to walking for days, horses, trains all of which are very different from the car. Further to this bog rolls dont enhance one's life as much as a car can so you get more utils for a drive (for most people). Cars are important to many people as expresions of individuality, privacy and 'show' as well as a means to travel - I've never met a person who utilises bog rolls to the same effect, they perform a less interesting role (pun!) That list goes on almost ad infinitum..

: Well, Gee, I thought I heard everything---but that paragraph above has got to be the MOST FOOLISH utterance under the sun.

He's right, you know. Your explanation is a bit foolish. They very well might be the same. Case in point:

In war-torn Leningrad, the city was surrounded by the evil Hitlerites, supposedly to be starved into submission. At the time, food was particularly valuable - bread was being made from wallpaper paste, and loaves of this precious commodity were very expensive. One of the accounts related the exchange of a piano for one of them (this from the Time-Life series on WWII, as I recollect).

If you are hungry enough, you will pay $500 for a 'roll' (assuming the availability of sufficient capital, of course). Similarly, one might have a jet for $200, or a tank for $50 (both examples from post-communist Russia). Certainly, this sort of thing cannot go on for long - the supply&demand theory* makes this clear. But it certainly could happen, and does.

Very good, Grasshopper. Your reformation into an industrious capitalist is coming along quite nicely. Bravo.

"Doc" Cruel

*That is, the supply would go down. As Gee explained, the price of making the product would not be covered by the sale price, and the 'supply' would decrease in the face of a (presumed) constant demand. Wouldn't stop me from selling my stock, though...

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