> Enrique Diaz-Alvarez wrote:
> >Well, I have no instinctive aversion to the marketplace ...
>
> Hmm, does that mean you think speculative bubbles are a pathology so far as
> market dynamics are concerned, not merely the logical fulfillment of natural
> market tendencies?
>
I think speculative bubbles and manic-depressive behavior are recurrent, unavoidable characteristic of markets for *financial assets*, where, unlike any other markets, rising prices attract buyers, and falling prices repel them (as Doug pointed out). This doesn't happen in markets for consumer goods and services - if the price of a Sony walkman goes up 50%, people don't rush in to buy it before it goes up even more, they switch to JVC. So, assuming a fairly reasonable distribution of wealth, regulation that makes an effort to price externalities, and an average level of education that minimizes the effect of manipulation by advertisers, markets for consumer goods work more or less as they are supposed to, transmitting information about consumer preferences and producer costs back and forth, and weeding out obsolete organizations.
Rather than hate markets per se, I think it is more productive to work towards ensuring the conditions that make them satisfactory prevail. The more so given that alternative methods have met, shall we say, less than stellar successes.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique