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imo

how can both parties profit from transaction? - amazing that this argument is popular and uncontested in economics classes - the values of the items have to be different, ie have to be x and x+y

the fallacy is in the 'voluntary' - it is voluntary in that no one is forcing anyone to exchange, but it is involuntary in that the transactors hav incomplete information - they are being 'forced' by lack of information - the buyer is very unlikely to hav a clue how much the thing costs to make - price should [for justice, peace, nontheft, nonviolence] be equal to total costs [including fairpay for owners] - then it is 'fair exchange no robbery' -

the proper purpose of exchange is to mix the products made by job specialisation - not to shift value from earner to nonearner - but dishonesty strives to make y as big as possible, and ignorance of the horrific dangers of injustice [war, crime, nuclear winter] fails to censure this theft, and counterbalance it in any effective way

2006-10-08 14:12:32 · 3 answers · asked by Anonymous in Social Science Economics

3 answers

but both parties have the same advantages and disadvantages, so it equals out. You may sell me an item for $100 when it only cost you a nickel to produce it. But what you don't know is that I use $100 bills as toilet paper.

2006-10-08 14:15:41 · answer #1 · answered by Always Right 7 · 0 0

The mistake is to think that value is absolute, the same for every person.

Do not worry, Aristoteles, Voltaire, Ricardo y Marx made the same mistake, because they took work as the only source of value.

It was not until the second half of the XIX century that the problem was explained by Gossen, Menger, and others.

(It is said that is why Marx never allowed the 2nd and 3rd. volume of "Das Kapital" to be published. They were obsolete)

Value is different for every person.

If you have 2000 t-shirts to sell, and I need one, probably you will give less value to the shirt that you are selling to me that I give to the dollars I are giving to you.

Both profit.

Value is not cost. Is what every person is willing, freely, to give for goods.

Profit is created when I managed to make something that has a higher value for others than it cost to me.

If the price should be equal to cost, there would be no profit.
So, why should I make the good? I would go to the beach, instead. (If I can survive, because we would still be in the Stone Age)

The theory of human job as the sole source of value was never able to explain how the economic world works.

2006-10-11 00:12:06 · answer #2 · answered by oldmarketeer 3 · 0 0

Yes both parties do profit.

If I was forced to pay you what you wanted with out the option to walk away from the table then you would be correct.

You have what I want and I have what you want so lets trade. Now I have something useful and you have something useful.

Before our trade you had no money and you and your family was hungary and might starve to death.

Before the trade I had a car and no water pump so my car would not run very long and was useless.

The money was not of as much value to me because I have lots of food and lots of money just no water pump. The same for you. You had a water pump but you could not eat it so it was worthless to you.

So yes we both profited.

2006-10-08 14:29:44 · answer #3 · answered by Don K 5 · 0 0

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