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> Markets solve the resource allocation problem Not really. If they did, markets would be more stable. Look at the prices of commodities such as copper. Prices
by Animats 1mo ago
> Markets solve the resource allocation problem
Not really. If they did, markets would be more stable. Look at the prices of commodities such as copper. Prices swing up and own by as much as 3x, despite both supply and demand not changing much. That's the problem. If supply and demand have a lot of inertia, and thus lag, the feedback loop becomes unstable. This is basic control theory. Hedging with derivatives was supposed to add stability, but doesn't work very well for that purpose.
- chii 1mo agothe price swings are part of the market's reaction to real life situations. The opposite of a market solving a resource allocation problem is the command economy, where some (small) group people are tasked with decisions like how much copper to actually produce. Instead of price swings, you get shortages. In any case, the point in my parent comment is that crowd intelligence solves some problems that cannot be easily solved by human intelligence (command economy vs free markets). But i would not call crowd intelligence a super intelligence.