The Concept of The “Pure-and-Perfect-Competition”

One definition of the “pure-and-perfect-competition (PPC)”:

Uniform products offered by all the sellers in the same industry, perfect knowledge, quantitative insignificance of each seller, no fear of retaliation by competitors in response to one’s actions, constant changes in price, and perfect ease of investment and disinvestment.

The “pure-and-perfect-competition” doctrine denounces capitalism because, as shown, businessmen refuse to suffer unnecessary losses.

Source: Capitalism by George Reisman

 

The PPC is just another example of a Utopia-like system. But mankind is imperfect therefore any social system will be imperfect. And since capitalism as well as socialism, communism, etc. is a social system it too will be imperfect. It is simple logic. But there are those who believe that man can evolve to be perfect by gov’t help. That gov’t can make a PPC system—hence socialism or even communism is formed as Karl Marx wanted.

In my college macroeconomics class I learned that equilibrium exists when supply equals demand. But this is just theoretical. It probably hardly ever happens. Supply and demand more than likely spirals chaotically around the equilibrium point. No gov’t I believe can ever prevent this behavior from happening. No matter how smart the economist they appoint. The free-market system is just too complex.

Socialism 101 Part 8

It follows directly from socialism’s fundamental moral and political premise, which is that the individual does not exist as an end in himself, but as a means to the ends of “Society.”

Private slave owners were motivated to treat their slaves with at least the same consideration they gave to their livestock, and to see to it that their overseers acted with the same consideration. But under socialism, the slaves are “public property”—the property of the state. Those who have charge of the slaves, therefore, have no personal economic interest in their lives or well-being. Since they are not owners of the slaves, they will not derive any personal material benefit if the slaves are alive to work in the future, nor suffer any personal material loss if the slaves are not alive to work in the future.

Government ownership does not give the alleged citizen-owner the psychological security that the possession of capital gives to a capitalist. Because, unlike the capitalist, he cannot sell his share in a government enterprise. Nor—except in the most unusual cases—does he receive dividends on his share.

The citizen’s share in government enterprises does him no good whatever. The fact that the enterprise is government owned merely means that it is operated without benefit of profit-and-loss incentives and the freedoms of individual initiative and competition. The result is almost always gross inefficiency, high costs, poor service, and low quality of products. (That’s exactly what Obamacare will be.)

Source: Capitalism by George Reisman

Capitalism and Prices

Prices have a twofold function in the planning of capitalism. First, they enable the individual planner of capitalism to perform economic calculations. That is, they enable him to compute the money cost and/or money revenue of various modes of conduct. They tell businessmen to produce the products and use the methods of production that are anticipated to be the most profitable. They tell consumers to consume in the ways that, other things being equal, occasion the lowest cost. And they tell wage earners to work at the jobs that, other things being equal, pay the highest wages.

The second, corollary function of prices is that they coordinate the plans of each individual under capitalism with the plans of all other individuals. That is, prices serve to make each individual adjust his own plans to the relevant plans of all other individuals in the economic system.

Source: Capitalism: A Treaty on Economics (1998) by George Reisman.

Miscellaneous Thoughts Part 26

• It is better to have an irrational free-market than an irrational government.
• If the term “illegal alien” is a racist term then what about white Canadians crossing the border illegal from the north? The term can be applied to them as well.  Right? Just wondering out loud.
• The Left only hates the wealthy if they have not donated to a leftist Democrat candidate for political office.
• It’s not wise for Americans to invest in any country that is hostile to the US, unstable, or that has a low economic (possibly political) freedom rating.
• Humor: Sometimes spirits will attach themselves to objects. Like diamond earrings, gold watches, rare paintings, 100 dollar bills. You know objects like that.
• President Obama once said: “The individual at some point, must be able to say, ‘I have enough money.’” Well, I believe gov’t at some point, must be able to say, ‘I have enough power.’ The wealthy aren’t a threat to my freedom. But a powerful gov’t can be. It makes the laws.
• If gov’t “helped” the private sector by building roads and bridges then who made the tools and materials to build the roads and bridges? Not gov’t that’s for sure. 
• The Left believes that voter photo-id laws discriminate against the poor. To see Obama speak you must have a valid photo id. So, what does that say about Obama?
• Children’s book idea: Jordan the Accordion. An unhappy accordion searches for a polka band to play in. I see the book going number one in children’s books.
• Obama wants to see Romney’s tax records. Did he want to see Secretary of Treasurer Timothy Geithner’s tax records? Or even care about them? Probably not.