The Market as Information Aggregator

War has much to do with the market and is one of the most profitable businesses, probably the most profitable business.

And:

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No. Besides the fact that your picture shows projections the world population is still growing:

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Right now, in this moment, as I write this sentence, the daily increase of the world population is about 230000.

I disagree. War is profitable because it externalizes effectively all of the cost, and it is based entirely on rent-seeking. It doesn’t create value, and probably the best way to decrease the incidence of war and increase peace is to create markets.

I think it is an abuse of language to call the relationship between a lion and a gazelle a “market”. And of course, that is not what any economist means when they endorse the market as a tool to improve human well-being. It is central to an idea of a market economy that exchanges are voluntary on the part of both participants. An “absolutely free” market would be one in which any such voluntary exchange would be allowed.

Sure, but the growth rate is falling, and it’s been falling for decades:

That decrease is centered on countries where wealth is highest, as your map corroborates. The developing world population is ballooning because millions of people are being lifted out of poverty. Once their incomes start to resemble those of the poor in the developed world, their growth rate will similarly fall.

So you do not disagree, because your arguments are not in disagreement with my argument. War has much to do with the market.

Nobody said that, Carleas. I said that a “free market” must logically be an “absolutely free market”, otherwise it would not be a “free market” but merely either a “relatively free market” or “no market at all”. A “free market” is very similar to what we call “nature”. Nobody can seriously deny that.

In a philosophy forum (is ILP a philosophy forum?) the meaning of any economist is not as relevant as you obviously think.

Yes - like I said: the “free market” and what we call “nature” are very similar.

Who said anything different? I, for example, did not say that there was no falling of the growth rate.

Your interpretations is vague, because the derivation of economcal data from dermographical data is not always unproblematic. Wealth has also to do with demography, yes, but it does not only depend on demography. The societies with the lowest fertility are not the wealthiest societies:

Here is another interesting projection of the world population growth rate:

[list][list][list][list][list]b_w_j_w_v_1950_b_2050.gif[/list:u][/list:u][/list:u][/list:u][/list:u]
Just thinking about it.

I do disagree; let me express my disagreement more clearly:

  • Government rents are not determined by the market, they act outside the market to incentivize activity that the market would not incentivize.
  • Government actors (who by and large wage war) are not market actors; they determine for themselves which costs, if any, they will pay.
    Therefore, war does not have much to do with the market.

I can and do deny that. A market is based around voluntary exchanges. In “nature”, might makes right, there are no property rights, there is no rule of law governing what one can and cannot do. A market depends on both parties to a transaction willingly entering into the transaction, agreeing to it. That is not “nature” in the sense represented by the pictures you posted (to which I was referring in mentioning the lion and the gazelle). If you mean something different by “nature”, please clarify. Otherwise, the market, even a very free market, seems very different from nature.

In nature, if I can beat you up, I can take your things.
In a market, if I want your things, I need to give you enough in return to convince you to give your things to me.

But it is still quite relevant. What’s the point of discussing a concept and trying to see what follows from it if we aren’t going to accurately describe the concept? We could make up a million meanings for “market” to which economists would object, and find the awful consequences of all of them, but none of them would necessarily bear any relationship to the concept of a “free market” as its supporters mean when they invoke that term. Nor, for that matter, would such discussions necessarily have anything to do with the “market” as I mean it when I describe the “market as information aggregator”. I’m interested in referring to the “market” that economists are referring to, so the economist’s meaning is quite relevant to this discussion.

I agree that the relationship between wealth and birth rate does not seem to be one-to-one, but this chart does suggest that, up to a point, lower birth rate is strongly correlated with wealth; this chart indicates that above about $15k in gdp, virtually none of the sampled countries has a birth rate at above the replacement rate. Below about $5k, nearly all of them have birthrates well above it.

I’d argue that the causal relationship is that wealth causes a lower birth rate: as the countries stacked along the left side of the chart gain in wealth (which is a trend we see happening across the developing world), we’re likely to see their birthrates fall to developed-world levels.

EDIT: edited for clarity.

Please do not confuse “market” with “free market”!

I disagree. :stuck_out_tongue:

It is not necessary, because the problem has nothing to do with understanding.

Wars have much to do with the market. Government actors - as you understand them - are not absolutely free; the decision they make are decisions of their money givers who are market actors and mostly also market rulers. Governement actors depend on their money givers. So one should say that the money givers are the real government actors. What is usually called “government actors” is not much more than a joke. Wars depend on decisions, and those who decide to have war are those who domain and regulate the market, thus also the market of weapons and so on. We do not have a “free market” but merely a relatively free market. If we had a free market, then we would not be modern humans but merely humans of the Stone Age. Since humans know what a market “is” or “could be” they have been regulating it. If one denied that, then this one would not know much about humans, their history, especially the history of the market and the word “market”.

A market is regulated. If the market was not regulated, then it would be free, thus like nature. Economically said, the difference between the so-called “capitalism” and the so-called “communism” is not the market but the regulation degree of the market.

And “property rights” mean laws, and laws mean regulated markets, not free markets. Note: My equation was never what you falsely interpreted as such: nature = market. No. I said:

Not more and not less that that.

Therefor you need regulations, thus laws, culture.

Carleas, you forgot that I did not speak about any similarity of the market and nature but about the similarity of the free (thus: absolutely free!) market and nature.

No. A free market is similar to nature, not the same but similar. But the difference between a free market and a market (as we know it, namely regulated by rules/laws) is bigger than the difference between a free market and nature.

No, because I am more competent (more intelligent, stronger etc.) than you. :stuck_out_tongue:

Thus: It depends on the competence whether one will be successful when it comes to beat another one up and to take another ones things.

Yes, and that is because our market is not a free but a regulated market. Our market is regulated by rules (laws).

It is not relevant. This is “ILP” (“I Love Philosophy”) and not “ILL” (“I Love Liberalism”, also known as “I Love Lies”).

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And by the way: You quoted me falsely. And that is not irrelevant, because the falsely quote leads to a different statement and a different interpretation of that statement. Please do not quote me falsely again.

Carleas.

The main difference between us in this discussion is that we have different concepts of a “free market”. Your concept of a “free market” is just like the concept of a “market” (= “regulated market”). My concept of a “free market” differs much from the concept of a “regulated market”. We have to make a difference between a free market and a regulated narket. If we have rules (laws) for a market, then that market is already a regulated market, but if we have no single rule (law) for a market, then that market is a free market, thus similar to nature: “A” is more competent (more intelligent or/and stronger … and so on) than “B”; so “A” beats up “B” and takes “B’s” things.

What is it that distinguishes a market at all from a state of anarchy wherein thieves and robbers just take what they want without giving anything in exchange?

Other living beings have a market too. But is it a free market? Yes and no. For example: the male bonobos, know that they get sex and offspring if they give emotions / love; the female bonobos refuse, if they can, to have sex with the male bonobos, if they do not give emotions to the bonobo children. This may be interpreted as a prestage of prostitution, and it is a market of sex / love.

Arminius, first, a note on “falsely” quoting: I modified your quote and used standard notation to indicate the modification, i.e. ellipses and square brackets. These changes made clear what I was responding to, by removing the editorial aside in your sentence, and including the word whose meaning was at issue (which I gathered from context). If my modifications changed your meaning, that was not my intent, but I noted the modifications so that anyone reading would be able to see them. This is a standard practice in responding to a quote, I have done it in good faith, and I will continue to do it where it is expedient to make my point.

And we can. But both “regulated” and “free” are modifiers of the term “market”. If what we’re talking about is not a market, it cannot be a free market either. Mr. Reasonable expressed the same question I had in reading your posts: how is a state of nature a market? If it is, must we say that atoms are engaging in a market when they interact in a gas? Perhaps a pile of sand is a market, because one grain pushes down while another pushes up.

I actually agree that the concept of ‘market’ is appropriate for something like bonobo exchanges, or the exchanges seen in capuchin monkeys when the concept of money is introduced to them in the lab settings, although here I’d qualify them as “proto”-markets: isolated market transactions do not a market make.

Contrast these with war or theft, where there is no exchange, where value changes hands through the use of force. These aren’t market transactions.

The question isn’t one of free-ness, but of market-ness. And the distinction is crucial. The special properties of a market as distinct from non-market social interactions is that they involve the exchange of values, such that each party believes they are better off to exchange than not to exchange. The voluntary-ness proves that both parties believe the exchange is to their benefit, which is how markets allow goods to flow to the place they’re valued most. It’s what makes markets into information aggregators, and what makes them in theory efficient.

I agree that there is a difference between a regulated- and a free-market. But there is also a distinction between a market and a non-market. I think your description of a free-market includes a lot of things that are not market at all.

You’d have to ask a pure libertarian how they’d answer it, but MY answer is that a free market requires at least a minimal state to enforce contracts, protect physical trade, and perhaps to maintain some minimal level of infrastructure. As far as I can tell that’s been the traditional answer as well. This idea that the free market is literally just the state of nature is false; the state of nature can’t support a free market.

It seems to me like Arminius’ concept of a ‘free-market’ exists as a rhetorical tool- he’s created it to be as horrible and implausible as it possibly can be, then sticks it in the mouth of people who advocate for a free market. It’s used that way when he introduces his definition: ‘Here is what the term ‘free-market’ must necessarily (tautologically) mean. Here is what liberals who advocate for a free market want’. A concept that you don’t support yourself that exists purely to be put in the mouths of others you disagree with isn’t a seriously defensible position. It’s enough to say “You don’t want a free-market under that definition, that’s not what people who advocate for a free-market mean when they use the term, so why are we discussing it?”

The answer of course is, “Because if I can force my definition and get everybody to agree that all coherent market concepts are ‘regulated markets’, then I’ve created a rhetorical advantage for myself when I go on to propose some further market regulations”.

I’m slightly more charitable, to a point: I think Arminius may simply be making a mistake in deriving the state of nature from his understanding of what a free market entails. He seems to think that any regulation of society means that any market that is created by such a society is a regulated market, and I don’t think that’s totally unreasonable, though I do think it’s wrong.

As I would define it, a market does not, in theory, require a minimal state to enforce, even if in practice it always does. A market is simply any system of voluntary exchanges. That can happen without state intervention, but for a robust global market to exist, some level of state is probably necessary (I think libertarians would accept this definition, but anarcho-capitalists would disagree).

There’s a distinction between regulating people and regulating markets. The line is sometimes blurry, but it is still meaningful. If we establish as a set of laws governing a group of people, “you cannot lie; you cannot steal; you cannot use violence against other people”, and otherwise allow the people in the group to do as they please, a market will emerge in the group fairly quickly (humans do this naturally). Because lying, stealing, and violence are prohibited, transactions will be voluntary. Even exploitative transactions will have to be voluntary in the sense I mean that term (as in choosing the least-bad of several bad options). This describes a free market, which exists even though the society itself is regulated.

Contrast it with a situation where other laws are added to the simple set: “beets can’t be exchanged for corn; you can’t demand more grain for beets than you do for corn; grain producers can’t produce more than X pounds per year”. This is a regulated market: market transactions are directly targeted by the laws.

For an example of how the distinction can be fuzzy, take a law like “people own the ideas they come up with” or “children inherit their parents property”. Those target ownership, which is necessary for a market and so in one sense they are pre-market, but because they establish what counts as property and default rules of how ownership passes, they define how certain exchanges must happen, which in another sense regulates the market.

Carleas ( viewtopic.php?f=3&t=188569&p=2567495#p2566297 ).

A quote is a quote, and a definition is a definition.

If a child has to give three goodies in order to get one toy from another child, then this child knows the “price” and can only be stopped “buying” the wanted toy because of a law that is called “age of consent” / “capacity to contract”, but this law does not change anything of the fact that there is a market for the said two children. A market does not have to be regulated in order to be a market.

I don’t think this conflicts with anything I’ve said. My point was more that if Child 1 asks for three goodies for the toy, and Child 2 simply hits her and takes the toy, it is not a market.

A market does have to be voluntary to be a market. And that distinguishes the state of nature from an absolutely free market.

The absolutely free market in nature can be and is not seldom “voluntary” (your word), as I already said several times. The said market of the bonobos is a “voluntary” (your word) market, because the bonobos can decide whether they “buy” or not. And my example of the children explains the same: the market is voluntary, but the laws of the adults do not or not always allow children to buy things. Your example with the girl that hits the boy because of he toy is an example that simply shows how violent regulations can be. Laws do not have to be written laws in order to be laws. The female bonobo shows the male bonobo the “laws” as well as the female child shows the male child the “laws” by hitting him. :slight_smile:

I think your charity is misplaced simply because his wrong concept of a free-market isn’t something he endorses, he’s something he’s proclaiming other people he disagrees with politically endorse. Seems like a classic strawman to me.

Yeah, state enforcement is required for a market to sustain for any length of time, not purely to exist I suppose.

I guess I don’t find the distinction meaningful. Everybody can understand the details of a market in which contracts are enforced by the state, lying is discouraged, and violence is prohibited. Whether or not such a market is ‘regulated’ or ‘free’ seems to me only to matter to people concerned with who gets to be called a free-market advocate and who doesn’t.

Sure. But somebody could argue that such a market is free if it’s still more free than any other market out there, though it’s less free than a hypothetical market which doesn’t exist. I mean, ultimately I agree with you about the difference, but if somebody wants to declare that any market that occurs in a human society subject to the sorts of mores human societies have is ‘regulated’, I find it to be a pedantic point made for tactical reasons.

Bribes go around in almost any form you could imagine.
Theft and war, in its most domesticated form, would be debt and morality.

Morality of that kind is war vs the immoral.

Theft of that kind has to do with tiething, and if you don’t give it,
you become “in debt”.

Freedom is a large cage in a zoo.
Tyranny is a small cage in a zoo.

That’s all for now.

All electronic exchanges such as the NASDAQ that deal only in virtual goods like shares of company stock are markets, and so are certain places deep in the heart of the Amazon that deal in the physical exchange of things like fried insects and witches potions. It’s a bit hard to say which one of these is closer to being something like the market… I guess it depends on what you are, uh… in the market for!

As far as pure “information aggregation” is concerned, I’m quite happy with my Googs:

I reject the idea that debt is theft, provided that the debt isn’t exploitative (which in some contexts is a large proviso). I would guess that debt increases with wealth, which is what we should see in a properly functioning market economy: wealth should be correlated with productivity, and if you’re level of productivity is above average, you should borrow at market rate and expect to beat the market return for the use of the money you borrowed.

Debt is a very valuable thing, it’s empowering when used correctly, it allows for much more efficient and productive markets. Good proof is in societies where lending is outlawed for religious reasons (medieval Europe, much of the modern middle east), which flounder economically and produce perverse outcomes like lack of investment and high failure rates for completing development projects.

H.E., I’m not sure if Google uses any market-like processes to improve its information-access products; certain information is best collected by use of a market, but Google probably tries to connect people to those markets, rather than run the markets themselves.

I think it’s a plausible argument to say that there’s a market for search results, where the cost is paid in time by users looking for answers, and Google analyses user choices in that ‘market’ to improve its suggestions. The behavior here almost certainly has similarities to traditional markets, and I would be interested to know if they borrow from economics in designing their search algorithms.

Another example would be China during the Great Leap Forward. When the peasents lost the ability to lend, rent, and borrow against the land they owned, it completely destroyed them economically. You can see peasent farming as a sort of small business that needs to borrow against future yields in order to get itself going after each winter.