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A world without market inefficiencies is a world where there are no excess profits--everything converges to the natural rate of profit. Any place money could be
by scarmig 14y ago
A world without market inefficiencies is a world where there are no excess profits--everything converges to the natural rate of profit. Any place money could be that offers an economic profit would immediately receive many competitors who would drag it down to the natural rate.
What I gather he's saying is that the natural rate of profit is itself zero: given that and no economic profit, capitalism could not reproduce itself. It's probably true that, in a world with complete and perfect knowledge, the natural rate is zero: that world, however, is so radically different from our own or any conceivable socialist one that I've got to reject that part of his point.
- baddox 14y agoIt would require more than just perfect knowledge, wouldn't it? Market inefficiency has other sources, too, like transaction costs, non-excludability and non-rivalry (e.g. public goods), etc.