3 ms·

Regarding the validity of supply and demand determining prices, check out this essay from an Economics professor: https://professorwerner.org/shifting-from-cent

Regarding the validity of supply and demand determining prices, check out this essay from an Economics professor: https://professorwerner.org/shifting-from-central-planning-to-a-decentralised-economy-do-we-need-central-banks/ https://professorwerner.org/shifting-from-central-planning-t... He argues that equilibrium conditions necessary for validity of the supply-demand curve almost never actually occur. So what Harari writes is by no means nonsensical, certainly it has respectable academic support.

_cs2017_ 8y ago
Werner says that supply and demand aren't in equilibrium, and supply has the upper hand in negotiating the price because the transaction cannot happen unless one of the suppliers is involved. I don't see this in any way supporting Harari suggestion that any kind of fiction is involved in price discovery.
- mendelsd 8y ago
  Werner writes: "Thus the theoretical dream world of “market equilibrium” allows economists to avoid talking about the reality of pervasive rationing, and with it, power being exerted by the short side in every market. Thus the entire power dimension in our economic reality – how the short side, such as the producer hiring starlets for Hollywood films, can exploit his power of being able to pick and choose with whom to do business, by extracting ‘non-market benefits’ of all kinds. The pretense of ‘equilibrium’ not only keeps this real power dimension hidden. It also helps to deflect the public discourse onto the politically more convenient alleged role of ‘prices’, such as the price of money, the interest rate." Whether Werner supports his own argument adequately is an interesting question. What's not in doubt, to me at least, is that he is in agreement with Harari regarding price discovery being a fiction.

3 ms·

Regarding the validity of supply and demand determining prices, check out this essay from an Economics professor: https://professorwerner.org/shifting-from-cent

by mendelsd 8y ago

_cs2017_ 8y ago
Werner says that supply and demand aren't in equilibrium, and supply has the upper hand in negotiating the price because the transaction cannot happen unless one of the suppliers is involved. I don't see this in any way supporting Harari suggestion that any kind of fiction is involved in price discovery.
- mendelsd 8y ago
  Werner writes: "Thus the theoretical dream world of “market equilibrium” allows economists to avoid talking about the reality of pervasive rationing, and with it, power being exerted by the short side in every market. Thus the entire power dimension in our economic reality – how the short side, such as the producer hiring starlets for Hollywood films, can exploit his power of being able to pick and choose with whom to do business, by extracting ‘non-market benefits’ of all kinds. The pretense of ‘equilibrium’ not only keeps this real power dimension hidden. It also helps to deflect the public discourse onto the politically more convenient alleged role of ‘prices’, such as the price of money, the interest rate." Whether Werner supports his own argument adequately is an interesting question. What's not in doubt, to me at least, is that he is in agreement with Harari regarding price discovery being a fiction.