- Capitalism and Alternatives -

Fundamental error

Posted by: Stoller on December 10, 1999 at 00:26:37:

In Reply to: The above is true if consumer demand is being met. posted by DonS on December 09, 1999 at 10:28:42:

: Don: Now I have your definition of "average necessary social time". And I must disagree with your above statement. The cost to make the item must be less (by some margin) than what consumers are willing to pay.

HOW does the consumer---anyone, for that matter---determine WHAT something is worth?

I'm not WILLING to pay anything for a car, yet the price remains.

: : The guy with the steam-hammer, nonetheless---or shall I say because of this---, is under-selling everybody and making a killing on the market.

Don: He has NO reason to reduce the price (and under-sell the competition) unless consumer demand is being met.

Again: Sam Walton.

Or: the guy with the steam-hammer wants everybody else's customers.

: : ... [S]ome peasant proprietor who still uses a hammer & anvil. This guy is on the fast track to bankruptcy because he can either sell his widgets at his 'average' cost (one per hour, or nine times the price everybody else sells them for) which no consumer would accept OR he can sell at the REAL average (which would be his loss).

: Don: The above is true if consumer demand is being met.

You're making a fundamental mistake, Don.

First of all, consumer 'demand' is nothing more than what employers are willing to pay workers (who become consumers after work).

Second---and specifically in the context of the above---if there's more demand for widgets, the peasant won't get any sales; the steam-hammer dudes will simply crank out more widgets (again underselling the peasant).

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