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> Price signals work better as the rationality and level of informedness of participants goes up, this should be obvious. It actually isn't obvious. Optimal st

> Price signals work better as the rationality and level of informedness of participants goes up, this should be obvious. It actually isn't obvious. Optimal strategy is not a continuous function of game parameters (ultimatum game is a good example). You can find situations where prices are entirely useless no matter how close to rationality or well informed you happen to be. > you still need prices I agree you can use prices as a substitute for preferences, but I disagree that you can use them as a substitute for information about the product. > Ballot-box style voting is not a replacement for markets. I actually wasn't suggesting it as a practical alternative, I was only saying that the same moral arguments OP had for the free markets work in that case too. > Which are in a sense highly democratic. If we were all only consumers, it would be true. But market participants also invest or save, and that's a problem - these are ways to gain votes over other actors. That's the reason why I find democratic voting morally superior to free markets.

ArkyBeagle 11y ago
But there is a difference between what people say and what they do. Spending is closer to "do". If social interaction rewarded honesty it would be different, but social interaction does not reward honesty.
- asgard1024 11y ago
  > But there is a difference between what people say and what they do. I am not sure what is your argument. Voting (if that's what you're alluding to) can have the same real consequences as spending money. Both are a limited resource. Anyway, I wanted to remark something that perhaps wasn't obvious. When I say "distribute resources democratically", it doesn't necessarily mean to vote about every resource. It can also mean to democratically establish rules that go against the market in specific cases, or choose market in some other cases. Pretty much what I am saying is that free markets can fail and it should be democratic decision on whether they failed in specific case and how to remedy it. > but social interaction does not reward honesty Interesting. Not sure what you mean by social interaction, but it seems that this contradicts the idea that free markets can work in human societies. In particular, it implies that people are rewarded for dishonesty, which breaks down the free flow of information assumption needed for proper market function.
  - ArkyBeagle 11y ago
    I think that the information derived from what people say with money is more accurate than what they say verbally. I think that because of the basic nature of human cognition, we're all more or less liars and hypocrites (uncharitably stated) . Not in any evil way, but still fundamentally, we live in a story we made up. There's rising experimental evidence to support this. After all, we have the phrase "put your money where your mouth is." So this is the substrate for "social interaction does not reward honesty" because social interaction is essentially adding other people to your set of narratives. I think that economic behavior is more honest - a person who wears an expensive watch is saying something with it. People who try to lie in markets don't do well. Markets punish the untruthful, generally - it's too much work to keep a lie going in that case. Of course some manage, but in general, no. How many Bernie Madoff stories are there? Not many.
    - asgard1024 11y ago
      > I think that the information derived from what people say with money is more accurate than what they say verbally. OK. But I still don't understand the point you're trying to make. But even if markets were more honest, it is still not good enough argument to have them. War may also make people more honest but it's not a reason to have it either. > People who try to lie in markets don't do well. I wish it would be true. You probably come from the U.S., which has an extremely strong culture of fairness (although it slowly weakens), expressed in its justice system. But in other nations, this culture is not strong. The problem is that markets cannot really punish anybody; once you successfully cheated, you get more money. If you have been found out, you at most lose a little bit of investment (and a mark, but those are dime a dozen). You can generally start another company with different name and continue with dishonesty. In other words, I don't consider losing a good job or opportunity to be a punishment; it's just a bad luck. > How many Bernie Madoff stories are there? Not many. In Czechoslovakia, shortly after the Velvet Revolution, there were many. The justice system didn't understand the new economic system and wasn't capable to deal with cheaters. Our prime minister, Vaclav Klaus, had the opinion - free markets are of primary importance and the justice system is secondary. What happened during the era (before we passed enough laws to be compatible with EU) was just huge "gold rush" of embezzlement.

ArkyBeagle 11y ago

But there is a difference between what people say and what they do. Spending is closer to "do". If social interaction rewarded honesty it would be different, but social interaction does not reward honesty.

asgard1024 11y ago
> But there is a difference between what people say and what they do. I am not sure what is your argument. Voting (if that's what you're alluding to) can have the same real consequences as spending money. Both are a limited resource. Anyway, I wanted to remark something that perhaps wasn't obvious. When I say "distribute resources democratically", it doesn't necessarily mean to vote about every resource. It can also mean to democratically establish rules that go against the market in specific cases, or choose market in some other cases. Pretty much what I am saying is that free markets can fail and it should be democratic decision on whether they failed in specific case and how to remedy it. > but social interaction does not reward honesty Interesting. Not sure what you mean by social interaction, but it seems that this contradicts the idea that free markets can work in human societies. In particular, it implies that people are rewarded for dishonesty, which breaks down the free flow of information assumption needed for proper market function.
- ArkyBeagle 11y ago
  I think that the information derived from what people say with money is more accurate than what they say verbally. I think that because of the basic nature of human cognition, we're all more or less liars and hypocrites (uncharitably stated) . Not in any evil way, but still fundamentally, we live in a story we made up. There's rising experimental evidence to support this. After all, we have the phrase "put your money where your mouth is." So this is the substrate for "social interaction does not reward honesty" because social interaction is essentially adding other people to your set of narratives. I think that economic behavior is more honest - a person who wears an expensive watch is saying something with it. People who try to lie in markets don't do well. Markets punish the untruthful, generally - it's too much work to keep a lie going in that case. Of course some manage, but in general, no. How many Bernie Madoff stories are there? Not many.
  - asgard1024 11y ago
    > I think that the information derived from what people say with money is more accurate than what they say verbally. OK. But I still don't understand the point you're trying to make. But even if markets were more honest, it is still not good enough argument to have them. War may also make people more honest but it's not a reason to have it either. > People who try to lie in markets don't do well. I wish it would be true. You probably come from the U.S., which has an extremely strong culture of fairness (although it slowly weakens), expressed in its justice system. But in other nations, this culture is not strong. The problem is that markets cannot really punish anybody; once you successfully cheated, you get more money. If you have been found out, you at most lose a little bit of investment (and a mark, but those are dime a dozen). You can generally start another company with different name and continue with dishonesty. In other words, I don't consider losing a good job or opportunity to be a punishment; it's just a bad luck. > How many Bernie Madoff stories are there? Not many. In Czechoslovakia, shortly after the Velvet Revolution, there were many. The justice system didn't understand the new economic system and wasn't capable to deal with cheaters. Our prime minister, Vaclav Klaus, had the opinion - free markets are of primary importance and the justice system is secondary. What happened during the era (before we passed enough laws to be compatible with EU) was just huge "gold rush" of embezzlement.