{"id":54589,"date":"2020-08-06T06:44:48","date_gmt":"2020-08-06T11:44:48","guid":{"rendered":"https:\/\/olduvai.ca\/?p=54589"},"modified":"2020-08-06T06:45:13","modified_gmt":"2020-08-06T11:45:13","slug":"supply-and-demand-deconstructed","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=54589","title":{"rendered":"Supply and Demand Deconstructed"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/economicsfromthetopdown.com\/2020\/08\/05\/supply-and-demand-deconstructed\/\">Supply and Demand Deconstructed<\/a><\/h3>\n\n\n\n<p>Prices are caused by supply and demand, right? So say neoclassical economists. If you\u2019ve bought their fairy tale, I recommend you watch the video below. In it, Jonathan Nitzan demolishes the neoclassical theory of prices. It\u2019s a master lesson in how to deconstruct a theory.<\/p>\n\n\n\n<figure><iframe src=\"https:\/\/www.youtube.com\/embed\/LsUS3ynhAKY?version=3&amp;rel=1&amp;fs=1&amp;autohide=2&amp;showsearch=0&amp;showinfo=1&amp;iv_load_policy=1&amp;start=4&amp;wmode=transparent\" allowfullscreen=\"true\"><\/iframe><\/figure>\n\n\n\n<p>Here\u2019s the 100-word summary. Nitzan shows that the neoclassical theory of prices fails in six ways:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li>Neoclassical theory hinges on utility that&nbsp;<em>cannot<\/em>&nbsp;be measured<\/li><li>It relies on demand and supply curves that&nbsp;<em>cannot<\/em>&nbsp;be observed<\/li><li>It depends on equilibrium whose existence it&nbsp;<em>cannot<\/em>&nbsp;confirm<\/li><li>It requires but&nbsp;<em>cannot<\/em>&nbsp;show that demand and supply are mutually independent<\/li><li>It requires but&nbsp;<em>cannot<\/em>&nbsp;demonstrate that the market demand curve slopes downward<\/li><li>And it must but&nbsp;<em>cannot<\/em>&nbsp;measure capital and therefore&nbsp;<em>cannot<\/em>&nbsp;draw the supply curve, even on paper<\/li><\/ol>\n\n\n\n<p><strong>So what explains prices?<\/strong><\/p>\n\n\n\n<p>If neoclassical theory is bunk, then what explains prices? Jonathan Nitzan, together with Shimshon Bichler, argues that prices are inseparable from&nbsp;<em>power<\/em>.<\/p>\n\n\n\n<p>Here\u2019s a window into Nitzan and Bichler\u2019s thinking. Start with what economists call \u2018demand\u2019. If you\u2019re going to buy something you must need or want it. But your want isn\u2019t some fixed property of human nature. It\u2019s a product of your social environment. Want can be massaged, even manufactured. That\u2019s why we have&nbsp;<em>advertising<\/em>. Everyday, corporations shape our wants so that we buy what they\u2019re selling. This means that demand isn\u2019t some function of autonomous \u2018preferences\u2019 (as neoclassical economists would have us believe). Demand is actively shaped by corporate power.<\/p>\n\n\n\n<p>Now let\u2019s look at \u2018supply\u2019. It makes sense that if people want something that is scarce, they\u2019ll bid up the price. The problem, though, is that scarcity isn\u2019t just a fact of nature. It\u2019s also an outcome of&nbsp;<em>property rights<\/em>.<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supply and Demand Deconstructed Prices are caused by supply and demand, right? So say neoclassical economists. If you\u2019ve bought their fairy tale, I recommend you watch the video below. In it, Jonathan Nitzan demolishes the neoclassical theory of prices. It\u2019s a master lesson in how to deconstruct a theory. Here\u2019s the 100-word summary. Nitzan shows [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[29938,30153,29907,2227,1427],"class_list":["post-54589","post","type-post","status-publish","format-standard","hentry","category-economics","tag-blair-fix","tag-deconstruction","tag-economics-from-the-top-down","tag-prices","tag-supply-and-demand"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=54589"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54589\/revisions"}],"predecessor-version":[{"id":54590,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54589\/revisions\/54590"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=54589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=54589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=54589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}