Saturday, October 11, 2008

Rational utility v. rational selfishness -- in the free market

Unfettered market enthusiasts perceive a matrix of rational decisions -- only of the innocent, comparative value seeking sort -- leading virtually automatically to prices (including labor prices) that accurately reflect relative utility. Anyone sufficiently familiar with selfish human nature knows that equally (often dominant) rational decisions of market players constitute maneuvering themselves into position to be the indispensable
last lot sellers while maneuvering everyone else into being the desperate fire sale sellers -- this being very rational indeed.

Pre-industrialization, the labor market pitted fire sale sellers v. fire sale sellers -- e.g., individual weavers v. individual clothes makers -- result: both made decent livings for their time. Post-industrialization pitted newly minted last lot sellers v. fire sale sellers -- e.g., steam loom factory owners v. (100 X more productive) steam loom operators -- result: owners got to live in the big houses on the hill while operators whole families got to live on oat cakes three times a day because they could no longer afford wheat bread.

Formula for post industrial labor market fairness: last lot seller v. lately minted last lot seller -- e.g., ownership v. (sector-wide) collective bargaining and the highest practicable minimum wage.

See also:

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