But let’s also be clear that the stereotype of capitalism that so many want to believe in is as simplistic, and as wrong, as that of socialism I have noted above. That stereotype is widely taught by economists as if it is true.
It assumes that all markets are ‘perfect’. That means there are masses of firms engaged in the supply of any product and each competes only on price because consumers have all the information they need on all of them to know that the products are indeed identical.
Those same consumers, it is also assumed, could also at any time set up their own business to compete in this market if they wanted to because it us assumed everyone has equal access to all the capital they need, and at the same cost, whoever they are.
But if instead they decide to work for someone else they will join a labour market where everyone i paid exactly the value of what they produce: there are no standard wage rates in this market. Each gets paid their own worth, and what is more everyone can work that out, without cost arising to do so.
Oh, and by the way, there is no advertising to persuade anyone to buy anything in this market. All advertising that there is provided just for information as everyone already knows exactly what they want, even if it has not been invented yet.
He doesn’t even manage to get his misunderstandings right. For example, in a “perfect market,” that logical simplification just to see what happens, all firms and producers are price takers, meaning they cannot compete upon price. Because there is only that one, market, price.