[ExI] retrainability of plebeians

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Thu Apr 30 14:56:41 UTC 2009

See, Emlyn, I have not been disappointed. On the other hand, Bill did
write a long post on supply and demand rather than a curt dismissal
which could mean that he is developing doubts. Not all is yet lost -
he may yet see the light of the market.

Bill, economists do not really argue about the law of supply and
demand, although many of them love finding goods with unusual demand
and supply curves. Most definitely you do not need perfectly
competitive markets for the law to work. Contrary to what you claim,
demand and supply is active even in highly regulated economies, such
as communist ones (which is of the reasons they malfunction). All it
needs to be applicable is for humans to be able to respond to
incentives and to operate under conditions of scarcity which means
almost everywhere. And to go back to the comment that started this
offshoot of a thread, supply and demand determine labor prices as

I do appreciate your willingness to expound your views in detail but I
will not tackle them.


On Thu, Apr 30, 2009 at 5:13 AM, BillK <pharos at gmail.com> wrote:
> On 4/29/09, Rafal Smigrodzki wrote:
>> ### Acceptance of certain basic economic knowledge is indispensable
>>  for any discussion of economics. Since you seem to be playfully
>>  rejecting the basics, I see no reason to continue.
>> ### Let's wait for Bill to take umbrage at being characterized as an
>> anti-free-marketeer and a supply-and-demand denialist....
> That's the point I'm trying to make.
> Rafal loves theoretical discussion where intricate logic can 'win' the argument.
> I point to all the real-life exceptions where humans don't behave the
> way the theory says that they should behave.
> (I would happily call myself an anti-free-marketeer because a truly
> free market society has never existed and *can* never exist while
> trying to get unequal humans to deal, negotiate, trick, con, etc. each
> other. A regulated market is the best you can get in practice, and
> even that has human failings).
> I'm not so sure about being a supply-and-demand denialist, but there
> are definitely many situations when it just doesn't work in real life.
> That's why you have all the different schools of economists, all
> arguing that the others are talking / doing the wrong thing.
> Let's see....    The basic theory is childishly simple.
> *All_things_being_equal* if the price of goods increases consumers
> tend to buy less and if the price reduces consumers tend to buy more.
> Note: 'All things being equal' defines the theory. In real life things
> are often very unequal.
> The theory of supply and demand is important in the functioning of a
> market economy in that it explains the mechanism by which many
> resource allocation decisions are made. So Rafal understands,
> (correctly, I may say) that pointing out all the flaws in supply and
> demand theory is also pointing out all the flaws in free market
> theory, as it actually occurs in the messy, inconsistent and
> unpredictable real world.
> The basic theory of supply and demand assumes that markets are
> perfectly competitive. This means that there are many small buyers and
> sellers, each of which is unable to influence the price of the good on
> its own. This assumption is central to the simple understanding of
> supply and demand taught in introductory economics. However, in many
> actual economic transactions, the assumption fails because some
> individual buyers or sellers or other external forces have enough
> market power to influence prices.
> Then there are all the other exceptions, like -
> where the supply is fixed. If you only have 1000 widgets, then the
> price can be as high as you like, providing at least 1000 people will
> still buy one,
> where there is a monopoly supplier, or only a few buyers and sellers,
> the price is easily manipulated,
> where the price drops and consumers stop buying because they think the
> price might drop even more next month (depression),
> where the price rises and consumers buy more because they think the
> price might increase even more next month (inflation),
> where the reward is not in the price paid and the price is really
> irrelevant. Consumers buy things for many reasons, not just that the
> price is right for them at that time,
> and so on.
> And no market is isolated, they all interact with each other. If
> popular fashion, or a TV campaign gets consumers buying widgets, then
> these consumers will be buying less sprockets or grungeons. So the
> price in one market affects the price in other totally unrelated
> markets.
> Then there are all the problems of market interference, price fixing,
> taxes, subsidies, bailouts, rationing, externalities, etc.
> What I am saying is that there is no *law* of supply and demand. It is
> a useful part of economic theory, but it only applies in very
> restricted times and circumstances. Like most ideal theories, once the
> list of exceptions and special cases becomes too large, you have to
> examine every real life case on its own merits, because trying to
> apply a global 'law' will lead to error.
> BillK
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Rafal Smigrodzki, MD-PhD
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