Tuesday, November 25, 2014

Supply, Demand, Conflicting Interests

According to the Egoist Psychology to which Capitalists subscribe, the fundamental elements of the situation to which the 'Law of Supply and Demand' is usually applied are inherently conflicting interests--the seeking of each party to maximize gain and minimize costs, the achievement of which can come only at the expense of the other.  Thus, in a simple sale, the ideal for the buyer is to pay nothing, while that for the seller is to receive an infinitely large amount.  Of course, in practice, each party typically enters into a negotiation with a specific limit in mind--the maximum that the buyer is willing to spend, and the minimum that the seller is willing to receive. Accordingly, the equilibrium point is halfway between those two amounts.  However, in usual actuality, neither side is aware of the limit of the other, so, the terms of the ensuing negotiating may bear little resemblance to the privately willed ones, with the result an equilibrium that likewise bears little resemblance to the potential of the situation.  So, any assumption that the 'Law' is functioning in the service of achievement of optimal results is groundless.

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