mck@ratex.UUCP (Daniel Kian Mc Kiernan) (03/26/85)
The exceptionally verbose tim sevener seems thrilled with himself over the
realization that 'in the real world *every* product involves some degree of
natural monopoly because it cannot be totally replaced by another product'
(he is, in fact, so thrilled with himself that he cannot refrain from
making this point ad nauseum). Perhaps he will some day note that the
planetary orbits are not truly elliptical, and pontificate at great length
in net.physics. Sevener notes that substitution entails costs, that some
substitutions entail great costs, and that monopoly in the production of
the relevant goods could entail problems. This in no way contradicts the
comments that sevener was responding to (videlicet: 'Mr Torek asks about
the case of natural monopoly, suggesting that perhaps I find it unreal or
unproblematic. Indeed, I do. For a natural monopoly to present a
problem, it would have to have exclusive ability to produce a vital product
for which there are no feasible substitutes.'). That a hypothetical case
(a petroleum monopoly) would present a problem does not mean that there
exists (or even can exist) a problem (an attack by technologically
advanced Venerians would also present a problem).
Sevener also objects to models of smooth supply and demand curves, but
adds that he has 'not read current economic journals in a long time'. More
to the point: He is not really very familiar with economics as it was, is,
or will be. There are certainly economists who are overly enamoured with
mathematical models, but there have always been economists who have raised
angry objections; in fact, the Austrians (to whom I have repeatedly
referred) have been the most persistent in objecting! (I would note that
NONE of the supply-and-demand analysis that I have engaged in depends on an
assumption of smooth curves!)
> "A rose is a rose is a daffodil" saith the economist
"Mine enemeies think that which I doth wish them to think, else I would be
faced by more than my mind could grasp, and adrift in a sea of truth
without the rudder of logick!" saith the sevener.
Back later,
DKMcKmmt@dciem.UUCP (Martin Taylor) (03/27/85)
> . . . (I would note that >NONE of the supply-and-demand analysis that I have engaged in depends on an >assumption of smooth curves!) > > Back later, > DKMcK Perhaps not, but the analyses do require equilibrium conditions, and therefore do not apply to the real world or any possible world. For example, the (repeated) theorem on full employment ignores the fact that there must be some unemployment in order to allow people to shift jobs. Full employment is thermodynamically analogous to absolute zero, or to the band-level population of electrons in a perfect insulator. You can't get there from here. Other analyses ignore the effects of phase-shifted feedback, which can lead to oscillations (and even chaotic behaviour) under conditions in which the equilibrium solutions are stable. Time matters. Information matters, and most of the analyses require the underlying assumption that the individual performers (workers, capitalists, unemployed ...) have full knowledge of what might happen as a consequence of their individual decisions. When someone suggested that each individual farmer might not be totally aware of the effect of price changes (in reference to the cobweb effect), this suggestion was roundly denounced as slighting the intelligence of farmers. But it was really an assertion that it takes an infinite amount of time to gather all information, and by the time you have gathered it, the situation is different anyway. The analyses put forward by DKMcK are fun to read, but I seldom feel they have much to do with the real world, or even with a contrived world that contains real people and real information systems. -- Martin Taylor {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt {uw-beaver,qucis,watmath}!utcsri!dciem!mmt
laura@utzoo.UUCP (Laura Creighton) (03/27/85)
As I recall, DKMcK mentioned frictional unemployment when he discussed full employment. In addition, it has not been understood that information is in some way freely available to all. Information is a valuable commodity. Israel M. Kirzener has discussed this at length, especially in *Competition and Entrepreneurship*. To oversimplify, an entrepeneur is, according to Kirzener, someone who uses information to make money. Laura Creighton utzoo!laura