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"when people trade freely, they are both better off (otherwise they wouldn't trade!)" isn't true. Instead, it's that both people think that they are better off
by voronoff 12y ago
"when people trade freely, they are both better off (otherwise they wouldn't trade!)" isn't true. Instead, it's that both people think that they are better off when they make the trade. A subtle distinction but also the most important criticism of a purely free market.
- Multics 12y agoValue is subjective. A.K.A, the subjective theory of value. Without subjectivity, there's no marginal utility. And that takes us back to classical economics. I.e pre-marginal revolution.
- voronoff 12y agoI'm not talking about the subjectivity of value at all, though I can see how that might be unclear. I'm talking about the assumption of perfect information that is inherent in your statement.
- Multics 12y agoIn situations of asymmetrical information, there can be market solutions. Such as warranties. The information, or the lack thereof is also reflected in the price.