Liberals In Exile: I'm Just Saying...

Tuesday, August 21, 2007

You might want to read this.

Canardius said...: I found this and thought you'd find it interesting. It is a quote from www.friesian.org in a discussion of capitalism, communism, and social welfare:

"Since prices depend on demand, and demand cannot be calculated without a market, the great Austrian economist Ludwig von Mises (1881-1973), a man with the distinction of having his papers stolen first by the Nazis and then by the Soviets, argued in 1920 that a socialist economy cannot calculate prices and so cannot calculate how much or how little to produce of anything. "; 3:26 PM
Melinda said...: von Mises ignores the fact that a huge portion of the market is involved in creating demand and that the necessity of creating demand through advertising, sponsorships, high-paid spokespersons, etc. adds a tremendous amount to the actual price of the product without contributing anything to the real as opposed to the market value of the product. We pay more for basic necessities like medicines, personal hygiene products, etc. than we would if the market were purely a response to demand.

For instance, the branding of Tylenol and the seductiveness of its advertising creates a demand for the brand far beyond the demand for generic acetaminophen, its active ingredient. People pay more for a product that works no better and thus suits their purposes no better than a generic alternative.; 8:47 AM