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The Forum > General Discussion > The effect of ideology on outcomes

The effect of ideology on outcomes

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The principal of a recognised "recommended retail price" could be restored.
Posted by thinker 2, Tuesday, 21 September 2010 1:25:56 PM
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Jefferson,

"How do you distinguish between the fair price and the market price in any given transaction?"

There have been two major theories of value over the last few hundred years. First there was the 'labour theory of value', which tells us that a product is worth what it costs to produce and supply. Karl Marx is the most famous exponent of this theory. Then there is the 'marginal utility' approach, which basically tells us that a product is worth whatever we will pay for it.

The former will be more useful for understanding cooperative processes within the economy, the latter will be more useful in understanding competitive processes.

Unfortunately our society is heavily focused on competition at the moment at the expense of cooperation. A balance between the two would be more appropriate.
Posted by GilbertHolmes, Tuesday, 21 September 2010 2:18:40 PM
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continued...

Ideally then, there would be a strong cooperative aspect to the economy, through which most products/services would be available. This would set a base rate for prices, setting a benchmark against which competitively sold items could be measured.

This base price for things would tend to remain stable over time, and would therefore also prevent inflation.
Posted by GilbertHolmes, Tuesday, 21 September 2010 2:23:39 PM
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Gilbert
So according to the labour theory of value, if I spend a week making a cake, that means the cake is worth, let’s say, average weekly earnings at, what, $780? Doesn’t sound right.

What makes you think that governmental decision-making would provide more of a balance between competitive and co-operative processes, given that governments are themselves the result of a competition process, namely elections?

“…a strong cooperative aspect to the economy, through which most products/services would be available. This would set a base rate for prices, setting a benchmark against which competitively sold items could be measured.”

So the government would set prices? Based on the labour theory of value? Isn’t that just socialism by a different name?

What is the answer to this question please: how would government distinguish between the market price, and the fair price, in any given transaction?
Posted by Jefferson, Tuesday, 21 September 2010 4:34:01 PM
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A whole lot of barking, thinker 2, but not a lot of care in tree selection.

Let's start with this:

>>As a consumer, this outcome makes me feel as though my Gov't is not looking after me by ensuring that I'm getting a fair deal when I'm spending my money<<

My first thought: should this actually be a concern of the government?

It is obvious that you believe that it should be, so let's accept that as a baseline for the time being, and move along...

>>...the truth is that market forces have little effect upon the the outcomes of most people.<<

Oh, but they do. They most definitely do.

Think about your petrol price example for a moment.

It is pretty well known - at least, it is where I live - that if you fill your tank on a Wednesday, as opposed to a Saturday, you save up to $5. Regular as clockwork. More, if the weekend is also a public holiday.

This is the result of market forces in action.

What happened last year, when petrol stations came under scrutiny? Suddenly, you'd find that your favourite pump had run out... on the Wednesday. And was miraculously full again by Saturday.

This is also the result of market forces in action. Supply, and demand. Economics 101.

The consumer is in full control: cheaper petrol on a Wednesday, or more expensive petrol on Saturday.

Your "solution", by the way, simply won't work. History is against you, I'm afraid.

>>Changes to the TP act could re-introduce the notion of ethics based upon a model of profits as a serviceable percentage of cost<<

Centralized management of prices has always, inevitably, led to waste and unnecessary additional expense, for all concerned.

Who decides the "ethical" price? Does it take into account, for example, geographical differences? Or that the garage pays more for weekend staff? Or socio-economic factors - Mosman vs Redfern.

If they set the price too high, the consumer becomes permanently ripped-off. If they set it too low, fewer sellers will be in the market, and the product would become scarce.
Posted by Pericles, Tuesday, 21 September 2010 4:58:24 PM
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Jefferson,

"So the government would set prices? Based on the labour theory of value? Isn’t that just socialism by a different name?"

I am not an advocate of socialism. I think that generally speaking, socialism can be understood as being too far oriented toward cooperation in the same way that capitalism can be understood as leaning too far toward competition.

The cooperative processes that I am talking about can involve large scale production by large, government run enterprizes. They may also involve small, community run enterprizes. I am very much an advocate of relatively high levels of decentralization within society, both in relation to political power and economic infrastructure.

If various products/services were being provided at cost via these diverse cooperative processes, this would provide the price benchmark that I am talking about.
Posted by GilbertHolmes, Tuesday, 21 September 2010 7:32:54 PM
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