Price theory
Concentrates on the pricing of final products and the theory of distribution.
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What Hacker News says
- If by this you mean that standard supply-demand economics can't model price discrimination, which is what's going on here, that's not correct. See, for example, Chapter 10 of David Friedman's Price Theory, where he models price discrimination using supply and demand curves just fine. In terms of this kind of analysis, price discrimination is a way for sellers to try to transfer as much as possible of what would otherwise be consumer surplus, to themselves.
- Other theories of price setting (non-classical and non-marginalist) exist, for example the sample chapter of this book, which describes how the existence and prevalence of markup pricing was discovered independently several times over the past century.
F. Lee, 1998, Post-Keynesian Price Theory
https://assets.cambridge.org/97805213/28708/sample/978052132...
Also see Nicholas Kaldor's Economics Without Equillibrium which can be read in an afternoon.
- You're missing the point of marginal utility. Because the price of water is so low, the marginal use of water is not for purposes vital to survival. People water their lawns, fill swimming pools, wash cars, etc. In other words, they use water for things whose utility is equal to its current price, because there's plenty of water left over at that price after all the vital-to-survival needs are met.
If the price of water went up, people would stop using it for purposes with lower utility, in order to be sure to have enough for purposes with higher utility (like drinking and cooking). So the marginal utility of water would still be equal to its price.
See David Friedman's text, Price Theory; in particular Chapter 4:
http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Cha...
He discusses this exact case (diamonds vs. water).
- I wish Yzupnick had left that part out, because the rest is true. Money falls out of a few simple assumptions, which just spewing them out in a simple HN comment (i.e. "please don't hammer me too much on the mathematical details") is something like: 1. For any given thing, different people have varying personal valuations of that thing. 2. As people have more of a thing, they value gaining yet more of that thing less per unit. 3. People can engage in the trade of goods.
From there it's a short step to bartering things for things I value highly with things I have too much of (or can make too much of) and therefore value less than my trading partner does, and from there only a slightly longer step before an economy develops in which there is a measure of fundamental market value, because the actors in the market conduct arbitrage until there are no more arbitrage opportunities, which mathematically implies the existence of a sort of standardized value measure.
I call money the most real abstract concept in the world. You can't actually have any of this "value", you can only have dollars or Euros or 1000 pounds of cabbage or something else real, but it underlies and informs every economic thing you do. You just barely can't touch it, it's just as real as it can be without quite being real. And money will exist until at least one of those three things is no longer true. (And even post-scarcity there will still be the little matter of time, and the trades thereof.)
(If this interested you, I really recommend at least the first few chapters of http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... .)
- What on Earth are you talking about "there's no conversion between them"?!? You can't trade dollars for food? You can't trade food for dollars? What are dollars good for if there's no conversion between them and food?
The lack of an abstract market selling and buying abstract "calories" at some price doesn't mean there isn't a conversion between them, just that it isn't clean and has a lot of other moving parts, just like everything else in the real world.
Hie thee hence to a microeconomics textbook forthwith, I've been enjoying http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... but heck anything would do.
- "This statement of yours sounds like an avowal of ideology (an ideology that's sadly all too prevalent on HN), rather than any sort of argument in favor of capitalism or against communism."
No, it's a reflection of Economics 101, really. You simply can not replicate the amount of information in a price in a centralized system, it's actually impossible.
Walk through the first few chapters of http://www.daviddfriedman.com/Academic/Price_Theory/PThy_ToC... . No, seriously, do it. The first few chapters are very basic and if you can just wave them away as "ideological" then we're done here anyhow. Prices contain a lot of information and no central authority can match it. They especially can't match it if they believe prices are a moral issue and they ignore the basis of them in the first place.
"Are you saying that "favored central government cliques" and violence aren't possible in capitalist systems? Even a superficial look at a model capitalist country like the US will reveal their presence."
First, the US is not a model capitalist country and has not been in a long time. The idea that the US is some sort of unrestricted capitalist paradise is propaganda, not fact. Second, your logic here is terrible. When I say that the only outlet for advancement is one or another form of violence in a centralized system, therefore I am claiming that in a capitalistic system it is never a form of advancement? If you're not even reading my actual points and you're willing to bend what I'm saying that hard, or you can't even see the grievous crime against logic you just committed, that's not even worth replying to.
