The market forces also only work if you assume that enough time will pass for the relative differences to become better, and that the relevant differences overcome the arbitrary differences. It also is a satisficing operation, not a maximizing operation.
If the experiment is only going on for three years, perhaps Geffen is good enough at copper wire that some people will keep coming to him and he doesn’t go out of business (even if he isn’t growing as quickly as the better copper wire producers). If he has a large enough set of initial funds, he might be able to survive for three years without selling a single wire. Market forces only work as you approach infinite time.
Also, suppose that Geffen on his first day on the beach grabs a central spot to set up his copper wire store. He’s right by the main food source, so people always buy his copper wire because it’s convenient. The other copper wire producers who are much better at it go out of business because they’re not in a good location. Even if someone start gives them capital and they buy a location near Geffen’s, they’re starting out in debt while Geffen doesn’t have to pay any interest. That gives Geffen a relative benefit for nothing related to his copper wire skills.
And finally, we’re supposing that Geffen is a good satellite engineer but bad at making copper wires. But suppose that Geffen is great at both, no one else is good at satellites, and many people are good at copper wires. If Geffen is happy to make copper wires all his life, he’ll make copper wires and no satellites will get made. Even if lots of people come to Geffen and say that he would be really good at satellites and someone needs to and they’ll pay him lots of money, he might just say “nah, I’m happy to be a copper wire maker, I don’t need more money.” Unlike economic models, humans aren’t money maximizers, they’re money satisficers.
Regarding the first two paragraphs, yes you can think of reasons why markets might not work, but it’s still (edit: as originally presented) a fairly central example of the sort of thing that usually works better using markets than central planning. The third paragraph is actually an advantage of markets over central planning (i.e. taking into account workers’ enjoyment of jobs).
The market forces also only work if you assume that enough time will pass for the relative differences to become better, and that the relevant differences overcome the arbitrary differences. It also is a satisficing operation, not a maximizing operation.
If the experiment is only going on for three years, perhaps Geffen is good enough at copper wire that some people will keep coming to him and he doesn’t go out of business (even if he isn’t growing as quickly as the better copper wire producers). If he has a large enough set of initial funds, he might be able to survive for three years without selling a single wire. Market forces only work as you approach infinite time.
Also, suppose that Geffen on his first day on the beach grabs a central spot to set up his copper wire store. He’s right by the main food source, so people always buy his copper wire because it’s convenient. The other copper wire producers who are much better at it go out of business because they’re not in a good location. Even if someone start gives them capital and they buy a location near Geffen’s, they’re starting out in debt while Geffen doesn’t have to pay any interest. That gives Geffen a relative benefit for nothing related to his copper wire skills.
And finally, we’re supposing that Geffen is a good satellite engineer but bad at making copper wires. But suppose that Geffen is great at both, no one else is good at satellites, and many people are good at copper wires. If Geffen is happy to make copper wires all his life, he’ll make copper wires and no satellites will get made. Even if lots of people come to Geffen and say that he would be really good at satellites and someone needs to and they’ll pay him lots of money, he might just say “nah, I’m happy to be a copper wire maker, I don’t need more money.” Unlike economic models, humans aren’t money maximizers, they’re money satisficers.
Regarding the first two paragraphs, yes you can think of reasons why markets might not work, but it’s still (edit: as originally presented) a fairly central example of the sort of thing that usually works better using markets than central planning. The third paragraph is actually an advantage of markets over central planning (i.e. taking into account workers’ enjoyment of jobs).