The "law" of offer and demand isn't a law at all and there is no "invisible hand" equilibrating the economy.
The "law" of offer and demand isn't a law at all and there is no "invisible hand" equilibrating the economy.
As stated in the title..
Unpopular opinion or just tankie shitpost?
It’s not an unpopular opinion but it might be a tankie shitpost. I just really fucking wish people would explain their reasoning rather than just blatting out a stupid idea. This one isn’t stupid, per se, but if you want actual feedback you should say why you hold this opinion so people can tell you where they agree and disagree and it’s not just a downvote fest.
Having said that, this is the least stupid of a series of incredibly vapid posts, so I’m writing a response.
Yes, there is a supply/demand relationship. Let’s say you make 50 widgets a year and sell them for a dollar. Then a new use comes out for them, and people are willing to pay two dollars (this is actually the story behind the kong dog toy coming from a VW part). So now you can increase production, but eventually you’ll run out of customers, so you can reduce the price to $1.50, and so on. You can see this happening in real time in commodities markets, where oil producers will cut output to drive up prices, or increase it to drive them down (eg if they want to reduce oil production in other countries).
Where you’re not wrong is that it’s a highly idealized model, like a lot of basic economics. It works best with commodities, but we’ve seen it with video cards, hard drives, cars, and so on. However, the more complex the market, the more factors beyond supply and demand are involved. There are things like sticky prices, information disparity (look up a paper called “A Market for Lemons”), and biases like those that won experimental psychologist Daniel Kahneman the Nobel prize in economics.
Do you believe that demand is not a downward sloping curve, when quantity is on the X axis and price is on the Y axis? Like do you think that at higher costs people demand more normal goods?
Do you believe that quantity supplied doesn't slope upwards (in the medium term) in response to higher prices?
Do you think that suppliers are not profit maximizers? Do you think that consumers are non-rational in certain circumstances? What is your actual opinion?
"Supply and demand" is just a saying that means "people prefer more to less". Why do you disagree?
I think the "law" of offer a demand works only in capitalism but if people would want to move to another economic system like socialism or communism we should get rid of these dogmas like "the invisible hand" example.
If you are serious, you have to actually disagree with one of the assumptions that I listed. Economics isn't "prescriptive", it's "descriptive". It doesn't tell you how things should be, it tells you how they are.
The way you talk, it's like saying "I don't believe it's raining outside. We should switch to a different weather system. Sunny days are better."
You might be right, but an hypothesis has to be backed up by some form of argumentation, otherwise we have no point of reference for a dialogue.
Which thought process led you to this statement?Just lack of experience in any kind of simulation. Be it in class or in some sandbox games.
If you'd have that experience, you'd see that it works with not too few participants and not too high complexity of supply chains.
Like Newtonian physics generally work.