Erm, no thank you

politics that aims to put democracy in control of markets

No, really, no thank you.

Let us consider a simple market, one for bread, the staff of life.

We vote for the price of bread to be 50p ….but that doesn\’t mean that the price of bread will be 50p. If the market clearing price is in fact £1 then voting for the price to be 50p means that there will be no (or little perhaps) officially and legally available bread and on the black market the price of a loaf of bread will be…..£1.

If the market clearing price is 25p then huge amounts will be produced at 50p and we\’ll have bread mountains, just as we\’ve had butter mountains, wine lakes and sheds full of frozen cows.

The only way this works is if we democratically decide that the price of bread is in fact the same as the market clearing price. At which point, why not simply use the market to determine that?

Which, given that the market clearing price continually changes, in response to changing tastes, wheat harvests, inflation in general and whether Julia has brought out a book on how to make sandwiches seems like a pretty sensible idea really.

Or, to adapt a favourite phrase, you can ignore markets but that doesn\’t mean that markets are going to ignore you…..or your democratic votes.

6 thoughts on “Erm, no thank you”

  1. Actually, the black market price will be higher than £1: there is risk (of getting punished by the forces of democracy) that needs to be compensated for.

  2. I liked this comment further down that CiF thread:

    “Privatisation has its place but not in the public sector. ”

    It seems that there are two kinds of idiots; one lot comment on CiF and their polar opposites, politically, on the Daily Telegraph/Spectator threads.

    It’s a good way of keeping them out of the way of doing real harm.


  3. Brian, follower of Deornoth

    I particularly liked this one…

    “Any spend on the social services is money well spent. We spend far to much money propping up the failed capitalist merry go round via wage subsidies and tax breaks.”

  4. A true free market is what I call hyper-democratic. Each individual “votes” whenever they want in regards to whatever they want, with whomsoever they want and only if the counterparty agrees. All the time the “democratic will” is coalesced, combined, netted off, weighted, discounted, leveraged as appropriate.

    The true democracy is the Free Market. Everything else is a form of coercion, tyranny of the majority or forced collectivism.

  5. “only if the counterparty agrees”

    Yes, Thornhill. The center of it all is voluntary exchange.

    Certainly true for an economic market to work. I think also true for a body politic to work.

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