>Market prices in a competitive economy ("exchange values") *are* indicators
>of scarcity: they carry information about the money-metric utility of that
>particular commodity or resource in its most favorable alternative use.
Why does this remind me of the Baltimore Catechism of my youth?
So let's talk about oil prices. They skyrocketed twice in the 1970s, collapsed in the 1980s, recovered a bit in the early 1990s, and are now in real terms at or below where they were before the OPEC embargo. Has the long-term picture of oil - its physical scarcity, reserves/consumption - changed all that much over the last 25 years? Have investments undertaken according to these signals been optimal from a social point of view? What has changed fundamentally to justify that kind of volatility? Is that signal or noise, information or short-term manic-depression in the futures pits? If we burn all the oil we have in the ground we will probably die; is that reflected in price signals?
Doug