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In ordinary usage, a price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services. In modern economies, prices are generally expressed in units of some form of currency. (For commodities, they are expressed as currency per unit weight of the commodity, e.g. euros per kilogram or Rands per KG.) Although prices can be quoted as quantities of other goods or services, this sort of barter exchange is rarely seen.

  • Wages - The price of labor, renumeration paid to employees for their work or services

Articles

Antitrust Reform: Predatory Practices and the Competitive Process, by Dominick T. Armentano, The Review of Austrian Economics, 1989
Examines so-called "predatory" practices from various perspectives, such as the purported "intent" of lower prices, pricing "below cost" and the alleged effects on "consumer welfare"
An even more critical position with respect to the issue of intent is that all pricing, even so-called competitive pricing, does intend to take sales and market share away from rivals. A competitive market process implies that resources tend to shift from less efficient uses to more efficient uses ... the price reductions of one firm do aim to affect the sales of another firm. The intent of a price reduction is to put a company in a better strategic position vis-a-vis rival sellers; the reduction intends to improve the position of a business organization relative to other business organizations.
Related Topics: Business, Free Market
A-Scalping We van Gogh, by Sheldon Richman, Future of Freedom, Feb 1999
Explains the economics concepts of opportunity cost, money, prices and entrepreneurship, based on analysis of scalping of "free" tickets for a Van Gogh exhibit at the National Gallery of Art
[The] Gallery chose not to sell the tickets. If it had sold them, fewer people would have lined up — the higher the price, the shorter the lines. On the other hand, imagine how long the lines would be if the Gallery had given away a $20 bill with each ticket! Anything that people value commands a price. Of this we can be absolutely certain. That is what we mean by "value." A value is anything people act to achieve; that is, anything they willingly give up something else to obtain ... What they give up is called the price. If the asking price isn't in terms of money, you can be sure it'll be in terms of time.
The Austrian Economists, by Eugen Böhm von Bawerk, The Annals of the American Academy of Political and Social Science, 1891
Explains some of the major tenets of the Austrian school -just two decades after publication of its seminal treatise, contrasting them with the views of classical economics and the historical school; paper solicited by the editors of the magazine
... the price or 'objective value' of goods is a sort of resultant of the different subjective estimates of the goods which the buyers and sellers make in accordance with the law of final utility ... on the one hand, the price which can be asked in the market is influenced by the estimate which the buyer sets upon the goods, but, on the other hand, it is just as undeniable that in many cases the buyer's estimate is influenced by the state of the market ...
Bad Medicine, by Sheldon Richman, Future of Freedom, Nov 2003
Discusses the potential effects of passing the Medicare Prescription Drug, Improvement, and Modernization Act, signed into law in Dec 2003
Since the elderly vote in large numbers, the political dynamic will favor keeping the cost of the program to them artificially low. This will stimulate demand because the closer a price is to zero, the more of a product will be consumed. Medicine is no different ... There is no more efficient way to destroy productive activity than by imposing price controls. They have already been used to contain the Medicare budget. Predictably, doctors are retiring early or closing their practices to Medicare patients. (These price controls raise prices to non-Medicare patients — a double whammy: high payroll taxes and costlier care.)
Biography of Carl Menger: The Founder of the Austrian School, by Joseph Salerno
Biographical and bibliographical essay, discussing his life and work and delving into various aspects of Austrian economic theory as presented by Menger
... A would agree to exchange the first of his six horses for a cow, if and only if, the marginal utility, and, therefore, the value of a horse—in this case, equal to the sixth-ranked satisfaction attributable to a horse—was less than the marginal utility and value of a cow—since he was starting with a zero supply, equal to the highest-ranked satisfaction dependent on his possession of one cow. Moreover, once the exchange has been completed, the marginal utility and value of horses to A will rise to the fifth-ranked satisfaction dependent on a horse, and the marginal utility and value of an additional cow to him will fall to the second most important satisfaction yielded by a cow.
The Bridge of Asses, by Lew Rockwell, Mises Daily, 2 Oct 2003
Argues that minimum wage legislation is "the pons asinorum of the relationship between economics and politics", explaining that labor prices (wages) are no different from other prices in the marketplace
After all, the wage is but a price for labor services, a price that works like any other in the sense that it is subject to the laws of supply and demand. The employer wants to pay zero, while the employee wants $1 million per hour. The actual market wage results from economic forces that turn these seemingly irreconcilable demands into a cooperative contract that benefits everyone. So it is with all economic transactions. ... This competition between alternative uses of resources brings into play certain dynamics that cause the seller to realize that he can't charge too high a price and the buyer to realize that he can't pay zero.
Cantillon, Richard (c.1680-1734), by George H. Smith, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
Cantillon distinguishes between the 'intrinsic' price of a commodity and its 'market' price. The intrinsic price ... is basically the cost of production, which is the minimum price that sellers must receive as an incentive to bring their goods to market. Although there is a tendency for the market price of a good to gravitate toward the intrinsic price, 'it often happens that many things which have actually this intrinsic value are not sold in the market according to that value.' Rather, market prices, which are arrived at through bargaining, depend on the subjective 'humors and fancies of men and their consumption.'
The Case for Free Trade, by Milton Friedman, Rose D. Friedman, Hoover Digest, 30 Oct 1997
Discusses various arguments made about tariffs, protectionism and foreign exchange intervention, concluding with advocating completely free trade
Government central banks have intervened on a grand scale in order to influence the price of their currencies. In the process they have lost vast sums of their citizens' money (for the United States, close to two billion dollars from 1973 to early 1979). Even more important, they have prevented this important set of prices from performing its proper function.
Related Topic: Free Trade
Central Planning of Electricity Must Fail, by Sheldon Richman, 20 Aug 2003
Explains why deregulation was definitely not responsible for the widespread power outage in Aug 2003 in the northeast and midwest United States, also examining deregulation effects in California
[In] California ... the authorities froze retail electricity prices even when wholesale prices were rising ... Anyone with a smattering of economics would know this is the way to cause shortages — in this case, blackouts. If retail prices cannot move freely in response to changes in demand and other conditions, misleading signals are transmitted in all directions. When higher demand would have raised prices, signaling to end-users that they should conserve, government price controls kept those users from getting the message. Demand continued to rise, squeezing utilities, whose prices were not capped, until a crisis hit.
A Critique of Monetarist and Austrian Doctrines on the Utility and Value of Money, by Richard Timberlake, The Review of Austrian Economics, 1987
Examines the differences and similarities between the writings of monetarists such as Irving Fisher and Austrian economists such as Ludwig von Mises on the topic of money, contrasting them with the meager explanations of John Maynard Keynes
Note that the coercive authority that would force acceptance of the money by means of the legal tender power cannot fix the terms on which the money is exchanged. The price level and the corresponding 'price' of money—expressed by the inversion of the price level—are determined by the number of money units imposed on the economy, the efficacy of the payments system as a means of metering payments over time (that is, on the monetary utility of money), the stability of the economic environment, the productivity of enterprise, et hoc genus omne.
Does the Market Commodify Everything?, by Thomas Woods, Mises Daily, 18 Sep 2006
Contrasts the behavior of participants in a free market vs. the state's attitude towards those it considers its subjects
Market prices serve an important function, apart from making possible both economic calculation and the indefinite extension of the division of labor. Market prices imply ownership, which in turn implies the right of disposal over the thing owned. ... They remind us that social cooperation must involve genuine cooperation, which means that no one side of a transaction has the right to cheat or steal from the other.
Economics of Prices, by Walter E. Williams, 31 May 2006
Explains with two examples why historical costs do not determine current prices and then comments on causes behind high gasoline prices, such as restrictions on oil and gas production in Alaska, oil shale regulations and limited use of nuclear power
Say you owned a small 10-pound inventory of coffee that you purchased for $3 a pound. Each week you’d sell me a pound for $3.25. Suppose a freeze in Brazil destroyed half of its coffee crop, causing the world price of coffee to immediately rise to $5 a pound. You still have coffee that you purchased before the jump in prices. When I stop by to buy another pound of coffee from you, how much will you charge me? I'm betting that you're going to charge me at least $5 a pound. Why? Because that's today’s cost to replace your inventory. Historical costs do not determine prices; what economists call opportunity costs do.
The Economic Way of Thinking about Health Care, by Sheldon Richman, The Goal Is Freedom, 20 Feb 2015
Discusses voicing of opinions on public policy, as exemplified by Mike Lupica's comment on "health insurance for all", without having knowledge of economics, the corruption of the meaning of "insurance" and the goal of universal and affordable healthcare
Because the system makes medical services (defined in ever-broader terms) appear to be inexpensive or even free of charge — the real price is hidden — people overconsume them. This artificial stimulus of demand (other things equal) must then cause the real prices of medical inputs to rise, with multiple rippling consequences: the price of insurance goes up; the government's health care budget rises, requiring higher taxes now or later (because of the debt); and resources and labor flow into the stimulated health care industry and away from other valued purposes, raising the prices of other goods and services.
Eugen von Böhm-Bawerk: A Sesquicentennial Appreciation, by Richard Ebeling, The Freeman, Feb 2001
Broad biographical essay, including Böhm-Bawerk relationships with Menger, Mises and Schumpeter, and his two major works
In the section on price formation, Böhm-Bawerk develops a theory of how the subjective valuations of buyers and sellers create incentives for the parties on both sides of the market to initiate pricing bids and offers. He explains how the logic of price creation by the market participants also determines the range in which any market-clearing, or equilibrium, price must fall, given the maximum demand prices and the minimum supply prices, respectively, of the competing buyers and sellers.
The Free Market Is the High Road, by Bart Frazier, 2 Aug 2004
Discusses how government regulations bear on countless areas, how regulation distorts free market prices and the benefits of deregulation, both financial and moral
Succinctly put, regulated markets are not efficient — they misdirect and waste resources by distorting the price system. A rise in the price of a good tells both sellers and buyers that, for whatever reason, conditions are different than they were before, and that the good is now harder to obtain. When the government blocks this process, buyers and sellers receive distorted or even false information.
Related Topics: Free Market, Government
Free-Market Socialism, by Sheldon Richman, The Goal Is Freedom, 14 Nov 2014
Counters the caricature of libertarians as hyperindividualists or atomistic and explains the benefits that could be gained from truly freed markets
The mundane price system is a perfect if unappreciated example. Prices are critical to our well-being because they enable us to plan our day-to-day lives. They do so by providing signals to us not only as consumers but also as producers. Prices guide our decisions about what to produce for exchange, how much to produce, and by what means. The resulting profits and losses reveal successes and failures at serving consumers. Without prices we'd fly blind, as Ludwig von Mises famously showed in his demolition of central economic planning. This is the upshot of the famous socialist-calculation debate.
Free Trade or Protectionism?, by Jim Elwood, Vince Miller, 1988
Educational pamphlet to inform about the benefits of free trade and the costs of so-called "protectionism" or "fair trade"
Japanese consumers pay five times the world price for rice because of import restrictions protecting Japanese farmers. European consumers pay dearly for EC restrictions on food imports and heavy taxes for domestic farm subsidies. American consumers also suffer from the same double burden, paying six times the world price for sugar because of trade restrictions ... The US Semiconductor Trade Pact, which pressured Japanese producers to cut back production of computer memory chips, caused an acute worldwide shortage of these widely used parts. Prices quadrupled and companies using these components ... were badly hurt.
Related Topics: Free Trade, Taxation, War
Friedrich the Great, by Virginia Postrel, The Boston Globe, 11 Jan 2004
Biographical essay, including Hayek's insights on cognitive science and his influence on postmodernism
The key to a functioning economy — or society — is decentralized competition. In a market economy, prices act as a "system of telecommunications," coordinating information far beyond the scope of a single mind. They permit ever-evolving order to emerge from dispersed knowledge. ... Hayek argued that only in a competitive market, in which prices signal the relative values placed on different goods, can people with very different values live together peacefully. And only in such a market can they figure out how best to meet their needs and wants — or even what those needs and wants are.
George W. Bush's Nixonomics, by Gregory Bresiger, Mises Daily, 22 May 2006
Describes the various fiscal, monetary and economic policies during the Nixon presidency and compares them to those under George W. Bush
Wage and price controls always seem popular before they are actually used. And price controls ... are often intriguing as an economic cure for millions of people who are upset ... but have little understanding of their history. ... 'The announced aim of a maximum price control is to benefit the consumer by giving him his supply at a lower price,' wrote Murray Rothbard, 'yet the objective effect is to prevent many consumers from having the good at all. The announced aim of a minimum price control is to insure higher prices to the sellers; yet the effect will be to prevent many sellers from selling any of their surplus.'
Give America a Raise?, by Sheldon Richman, 5 Feb 2014
Reflects on a remark in the 2014 State of the Union address and explains why legislating a minimum wage tends to harm those it supposedly intends to help
As economists say, "Demand curves slope downward." This means simply that when the price of something rises, the quantity demanded (other things equal) falls. You know this: You are likely to buy fewer oranges or go to the movies less often when the price rises ... It's called economizing. Labor is a service that employers purchase from workers. It follows that if its price rises because of a government decree, employers will buy less ... Most people, including advocates of the minimum wage, understand that a rising price generally discourages purchases ... So why is the pricing of unskilled labor an exception?
Got Price-Fixed Milk?, by Vin Suprynowicz, 16 Dec 2006
Under a 1937 law ... most American dairy farmers participate in a complex system of interlocking subsidies and protection measures that have the effect of keeping the free market from forcing the price of milk ... down. ... A recent study by the U.S. Department of Agriculture acknowledges federal 'dairy programs raise the retail price' of milk.
Government Medical "Insurance", by Murray Rothbard, Making Economic Sense, 1995
Excerpt from Chapter 20. Written around the time of Hillarycare (Clinton's 1993 plan) but even more applicable now to Obamacare
Only in our system of medical insurance does the government or Blue Cross pay, not a fixed sum, but whatever the doctor or hospital chooses to charge. In economic terms, this means that the demand curve for physicians and hospitals can rise without limit. In short, in a form grotesquely different from Say's Law, the suppliers can literally create their own demand through unlimited third-party payments to pick up the tab. If demand curves rise virtually without limit, so too do the prices of the service.
Related Topics: Health Care, Medicine
Hayek, Friedrich A. (1889-1992), by Ronald Hamowy, The Encyclopedia of Libertarianism, 12 Aug 2008
Biographical and bibliographical essay
It was while at the LSE that Hayek also first published his essays on knowledge and prices ... In 'Economics and Knowledge' (1937) and 'The Use of Knowledge in Society' (1945), Hayek maintained that the rational allocation of resources was dependent on the coordination of the dispersed bits of knowledge possessed by each actor in an economy and that only free markets could provide the necessary coordinating structure. Knowledge, he argued, takes a variety of forms and need not even be conscious. It is through the individual pursuit of private ends that bits of knowledge are transmitted to economic actors in the form of prices.
Health Insurance Scam, by Sheldon Richman, The Goal Is Freedom, 13 Nov 2009
Analyzes how what is called "health insurance" is not about health nor is it insurance, how it came about from "wartime economic controls", and why it has resulted in rising medical care costs
What we call health insurance is ... wasteful, because it perversely encourages people to buy medical and other services without regard for cost. As the economists say, demand curves slope downward: The lower the (visible) price the larger the quantity purchased. If you want to know the fundamental reason for medical price inflation in the United States, there it is. Consumers are untethered from cost constraints ... Thus the system that earlier generations of planners constructed creates artificially high prices for services and "insurance," pricing younger and lower-income people out of that market.
The Historical vs. the Deductive Method in Political Economy, by Eugen Böhm von Bawerk, Henrietta Leonard (translator), The Annals of the American Academy of Political and Social Science, 1890
Contrasts the empirical and statistical approach of the German Historical school of economics with the abstract-deductive approach of the then nascent Austrian school
... the existence of a certain empirical relation between cost and market price has long been beyond a doubt. Science has to answer the question on which side is the cause and on which the effect whether the high cost of production is the cause or the effect of a high price of the product. ... Numerous observed instances tend to support the former notion ... Other instances support the latter view ... it is not a greater accumulation of observed cases that will help, but a deeper insight into them. And thus it is with the whole category of theoretical problems as the question of the true character of the influence of supply and demand upon price ...
Inflation Is the Last Thing We Need, by Sheldon Richman, 31 Oct 2013
Responds to promoters of an inflationary environment by explaining price inflation as a consequence of monetary inflation and examines the effects claimed by inflation advocates
Those who are thus privileged are able to buy at the old, lower prices, while the rest of us don't see the money until prices have risen ... And the problem isn't simply a rising price level. Relative prices are what provide entrepreneurs and investors the information required for rational economic calculation and service to consumers. Inflation changes relative prices. Thus, it distorts the price system and ... the multidimensional economic structure. That means any stimulus is unsustainable because the inflationary policy will eventually end and unemployment must follow as the inflation-induced errors are revealed.
Related Topics: Business, Inflation, Wages
Jean-Baptiste Say: Neglected Champion of Laissez-Faire, by Larry J. Sechrest
Biographical and bibliographical essay, discussing Say's life, methodology and his writings on money, banking, the law of markets, entrepreneurship, capital, interest, value, utility, taxes and the state
On the other hand, Say eloquently expresses a clear understanding that it is wholly beneficial for a society to experience generally falling prices whenever such declining prices are the result of productivity gains. ... Moreover, Say correctly perceives that (a) the prices of goods reflect their utility to the buyer, (b) the prices of the factors of production are derived or 'imputed' from the prices of the goods produced, and therefore (c) costs of production represent an interface between the utility of the good and the productivity of the factors of production.
Les Economistes Libertaires, by Carl Watner, Reason, Jan 1977
Discusses the French economists of the 19th century and in particular Gustave de Molinari and his thoughts on the provision of security and defense services by private agencies
It is obvious that consumers, regardless of the commodity involved, are interested in obtaining it at the cheapest possible price. The économistes had already seen that free competition results in the cheapest price on the market. Therefore, let supply and demand set their own price for security. ... Until free competition can be established between competing defense agencies, there is simply no way for citizens of a country to determine whether they are getting the best possible defense services at the cheapest possible prices.
Letters to Thomas Robert Malthus, on Several Subjects of Political Economy, and on the Cause of the Stagnation of Commerce, by Jean-Baptiste Say, 1821
Series of five letters from Say to Malthus, written in response to the latter's criticisms in Principles of Political Economy (1820); the letters were translated from the French by John Richter
In order to constitute riches, the value must be recognised, not by the possessor merely, but by other persons. But what more irrefragable proof that its value is recognised can be given than that other persons are ready to give for it a certain quantity of other things which are valuable. Notwithstanding the value of ten thousand pounds which I set upon my house, yet if I cannot find any body who will give me more than five thousand pounds for it, I cannot say that it is worth ten thousand pounds: it is really worth no more than five thousand pounds; it will produce me no greater amount than five thousand pounds, or whatever value may be had for that sum.
Ludwig von Mises: An Economist for Freedom and Free Enterprise, by Richard Ebeling, 29 Sep 2016
Discusses three major themes in the works of Mises, namely, business cycle theory, his critique of socialism and the unfettered market economy; includes list of suggested additional readings
Market-generated prices enable entrepreneurs to undertake economic calculations that facilitate rational and efficient uses of income and resources in society. Prices for consumer goods tell entrepreneurs what goods consumers may want and the relative values they place on them. The prices for the factors of production—land, labor, resources, capital equipment—inform competing entrepreneurs about the alternative demands and opportunity costs of producing desired goods with differing combinations of scarce means of production.
Machiavelli and U.S. Politics, Part 4: War, by Lawrence M. Ludlow, 22 Aug 2005
Part of a six-segment series examining The Prince vis-à-vis contemporary U.S. politics; this article covers Machiavelli's simple advice on war and contrasts it with that of James Madison and Robert Higgs in Crisis and Leviathan
... the current interventionist foreign policy conceals the true cost of petroleum-based products. U.S. soldiers, for example, currently are posted in 135 countries around the world — many in or near oil-producing countries. Consequently, the price consumers pay for heating oil, gasoline, and other petroleum-based products does not reflect the high cost of maintaining this military presence or of sending foreign aid to the leaders of these nations. In other words, the true cost of petroleum products is unknown because U.S. taxpayers subsidize their supply — distorting energy markets and other sectors that rely on petroleum.
The Market Is a Beautiful Thing, by Sheldon Richman, Future of Freedom, Jul 2013
Explores whether most people's aversion to the market is aesthetic and explains the beauty in the dynamics of the (freed) market, with quotes from Bastiat and Adam Smith
This dynamic (it is not a mechanism) operates for all goods and services simultaneously. So when the market price of a good falls below the level sufficient "to bring it thither," some producers will move to the production of some other good for which the market price is above the level required "to bring it thither," setting in motion a lowering of the latter good's market price. The preferences of consumers — reflected in prices — tell producers, "We have enough of good X, but we need more of good Y." And producers have an incentive to respond cooperatively and produce more of good Y.
Medicare Rx Reform: The Road to Medical Serfdom, by Sheldon Richman, Health Freedom Watch, 23 Jun 2003
Criticizes the proposed (and later passed) addition of prescription drug coverage to Medicare and predicts the eventual nationalization of health care
Since the elderly vote in large numbers, the political dynamic will favor keeping drug prices, and hence the price of coverage, artificially low. This will have at least two effects. Demand will be stimulated because the closer a price is to zero, the more the product will be consumed. Medicine is no different ... When the price of the program goes through the ceiling, we'll see a host of restrictions on what drugs the elderly can buy ... We'll also see price controls imposed in an effort to control the budget ... When government imposes prices below the market-clearing level, shortages will result.
Related Topics: Bureaucracy, Health Care
Middle-of-the-Road Policy Leads to Socialism, by Ludwig von Mises, 18 Apr 1950
Speech to the University Club of New York; argues that the middle of the road policies of interventionism, such as price controls and progressive taxation, eventually lead to socialism via central planning
The government believes that the price of a definite commodity, e.g., milk, is too high. It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market. The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market.
Mises: Defender of Freedom, by George Reisman, Mises Daily, 29 Sep 2006
Written on the 125th anniversary of his birth, describes several of Mises' contributions to economics theory and other areas, along with some of Reisman's personal reminiscences
Mises identified the existence of planning under capitalism, the fact that it is based on prices ('economic calculations'), and the fact that the prices serve to coordinate and harmonize the activities of all the millions of separate, independent planners. He showed that each individual ... is led to adjust his particular plans to the plans of all others. For example, the college student who decides to become an accountant rather than an artist ... changes his career plan in response to the plans of others to purchase accounting services rather than paintings.
Monetary Central Planning and the State, Part 18: Say's Law of Markets and Keynesian Economics, by Richard Ebeling, Future of Freedom, Jun 1998
Contrasts the views of John Maynard Keynes with "the commonsense foundations of economics" by explaining the basics of exchange and markets, and discussing Say's Law and John Stuart Mills refinement
But how much others are willing to take of our supply is dependent upon the price at which we offer it to them. The higher we price our commodity, ... the less others will be willing to buy of it. The less we sell, the smaller may be the money income we earn ... if we want to sell all that we choose to produce, we must price it correctly, i.e., at a price sufficiently low that all of it we offer is cleared off the market ... Pricing our goods or labor services too high, given other people's demands for them, will leave part of the supply of the good unsold and part of the labor services offered unhired.
Monopolies versus the Free Market, Part 1, by Gregory Bresiger, Future of Freedom, Sep 2006
Contrasts state-backed monopolies or quasi-monopolies vs. regular businesses in a free market, with historical and current examples, and discusses antitrust laws
Usually, the 'offense' is that the competitor has engaged in aggressive price-cutting. But is it a case of 'predatory pricing' ... or is it simply a case of a competitor's trying to attract larger market share and larger gross profits with a lower price? ... But if a firm is trying to expand market share by lowering prices, aren't regulators and those looking to the government to protect them doing a disservice to the consumer? Access to the company's products at below-market prices are a boon for consumers, many of whom presumably would be unable to buy the products without the company's aggressive pricing strategies.
The New Deal and Roosevelt's Seizure of Gold: A Legacy of Theft and Inflation, Part 1, by William L. Anderson, Future of Freedom, Aug 2006
Discusses the economy of the United States in 1933 and the measures taken by the Roosevelt administration in an effort to reduce unemployment and preventing deflation, namely restricting production and destroying crops, as lead-up to inflating the dollar
Progressives who dominated the Roosevelt administration held that the principal cause of the economic downturn was falling prices, along with falling wages. Furthermore, they believed that the cause of falling prices was 'overproduction,' so the 'cure' was to find ways to limit the production of goods. Thus, in the minds of the New Dealers, the government needed to restrict production and force up prices. As prices rose, so would wages, and high wages would bring the country out of the Depression.
On gouging, by Tibor Machan, Rational Review, 8 Sep 2004
Discusses various sides of the issue of gouging, from generosity, to economic justification and being well-prepared or not, due to other life challenges, concluding with advice for politicians and bureaucrats
The usual complaints on such occasions have to do with gouging -- with people, including private parties and businesses, charging much higher prices than they would in times of less inclement weather for the materials that are needed to cope with the emergency. ... when emergencies hit and the materials are immediately needed by many people, the unusually high price will usually have to be met or one must go without. And this makes it appear that there is something wrong with asking the higher price. The truth, however, is that there is no universal principle for how people should act in such emergencies.
The Organization of Debt into Currency: On the Monetary Thought of Charles Holt Carroll, by Robert Blumen, Mises Daily, 27 Apr 2006
Review of the fractional reserve banking and monetary arguments made by Charles Holt Carroll, a 19th century Massachusetts merchant, in a collection of 36 essays re-published in 1964 in Organization of Debt into Currency and Other Papers
The wealth of an individual depends on his purchasing power. And his purchasing power depends only on the ratio between the prices of what he has to sell and what he would like to buy. It is relative, not absolute prices that matter. Imagine, for example, that your wages (or the prices of the goods that you sell) were double what they are today, and at the same time the prices of all goods that you buy were also twice their current values. Then you would be no better off, nor any worse off, in purchasing power terms.
Related Topics: Banking, Gold Standard, Inflation, Money
The Origin of Economic Theory: A Portrait of Richard Cantillon (1680-1734), by Mark Thornton, 3 Aug 2007
Examines the sections of Cantillon's Essai relating them to episodes in the author's life, then delving into several Austrian economics insights that can be found in the work
Cantillon has a sophisticated understanding of the price system, containing most of the elements of modern Austrian analysis. Price is determined by demand and relative scarcity. Demand is a subjective concept based on the 'humors' and 'fancies' of the people. It is the 'consent of the people' along with the relative scarcity of a product that determines the market price, where market price is understood to be the price paid to the seller. Likewise, the market value of metals 'varies with their plenty or scarcity, according to the demand.'
Our Secret Desires, by Frédéric Bastiat, 1848
Originally "Abondance, Disette" (Abundance, Scarcity), an essay in Economic Sophisms, translated in 1964 by Arthur Goddard
The consumer becomes richer in proportion as he buys everything more cheaply; he buys things more cheaply in proportion as they are abundant; hence, abundance enriches him; and this argument, extended to all consumers, would lead to the theory of abundance! It is an imperfect understanding of the concept of exchange that produces these illusions. If we analyze the nature of our self-interest, we realize clearly that it is double. As sellers, we are interested in high prices and, consequently, in scarcity; as buyers, we are interested in low prices, or what amounts to the same thing, in an abundance of goods.
Related Topics: Free Trade, Labor, Money
Parity: Bureaucratic Tyranny by Moral Fraud, by James Bovard, Future of Freedom, Sep 1999
Discusses the consequences of establishing "parity" for agricultural prices, in the name of "fairness", as was done by the Agricultural Adjustment Act of 1933 (and subsequent legislation)
How would the public react if American television manufacturers stormed Capitol Hill to protest the fact that the price of television sets had fallen sharply in real terms over the past decades? ... Parity is simply a worship of ancient farm prices. ... many farmers claim that they are still victimized because crop prices are lower now in real terms than they were in 1910. But so are prices for most commodities, farm and nonfarm. The only justification for parity nowadays is that farmers are treated unfairly because nonfarmers don't pay as much for farm products as their great-grandfathers paid.
Price Controls Are No Answer to Isabel, by Jacob Hornberger, 19 Sep 2003
Explains the counterproductive effects of government setting price controls, such as forbidding selling of candles at a price higher than before Hurricane Isabel struck
The imposition of a mandatory ceiling on prices ... enables state officials to portray themselves as friends of the consumers ... Actually, price controls are among the worst attacks that a government can levy not only against producers but also against the consuming public ... suppose that Isabel knocks out electricity ... All of a sudden, the price of candles in that area skyrockets. The soaring price serves to send a ... message to consumers in the affected area: "Conserve candles. Use them sparingly." ... the rapidly rising price also sends a message to producers: "People in that area need candles. Get them there fast."
Related Topic: The State
Prices, by Ludwig von Mises, The Freeman, Sep 1981
Extracted from Human Action by George Koether
The valuations which result in determination of definite prices are different. Each party attaches a higher value to the good he receives than to that he gives away. The exchange ratio, the price, is not the product of an equality of valuation, but, on the contrary, the product of a discrepancy in valuation. The characteristic feature of the market price is that it tends to equalize supply and demand. Any deviation of a market price from the height at which supply and demand are equal is—in the unhampered market—self-liquidating.
Profiting from Misfortune, by Sheldon Richman, 5 Oct 2005
Reflects on the fairness of those who profit from the "misfortune of others", such as medical doctors and farmers, in view of gas price hikes due to the hurricanes of the 2005 Atlantic season
[When] supplies of vital goods are disrupted, nothing matches the price system for restoring normalcy as quickly as possible. It does so by encouraging conservation and attracting additional supplies. In each case, it is the rising price that causes the badly needed effect ... Prices are not determined by past costs. Bygones are bygones, and all action is aimed at the future ... A fair price is one a seller and buyer agree to. If you have trouble seeing this, ask yourself whether you intend to sell your home for the price you paid rather than the higher price you might be able to get. I think I know the answer.
Related Topics: Farming, Fuels, Health Care
Rent Control, by Walter Block, The Concise Encyclopedia of Economics
Defines rent control, its general effects, its effects on tenants and offers some solutions; citing supporting examples from New York City and elsewhere
In a competitive market and absent controls on prices, if the amount of a commodity or service demanded is larger than the amount supplied, prices rise to eliminate the shortage (by both bringing forth new supply and by reducing the amount demanded). ... The high demand in the noncontrolled segment along with the small quantity supplied, both caused by rent control, boost prices in that segment. Paradoxically, then, even though rents may be lower in the controlled sector, they rise greatly for uncontrolled units and may be higher for rental housing as a whole.
Related Topics: Government, New York City, Vietnam
The Sanctity of Private Property, Part 2, by Jacob Hornberger, Jan 1991
Contrasts the attitudes of 20th century American citizens towards international trade and the oil business to citizens in communist countries, the former believing they live under a "private property" system which is not socialistic in nature
The best example ... was the price controls imposed on the oil industry ... in the 1970s. What was the result of those controls? ... shortages and long lines. But did the American people blame them on the political controls ...? Of course not ... the shortages and long lines were blamed on American oil-producers. And how do Americans explain the fact that no shortages and long lines have developed as a result of the recent Middle East crisis? They are unable to do so because they have no idea that only political control over prices, and not private owners and producers of oil and gas, create shortages and long lines.
Say's Law and the Keynesian Revolution, by Richard Ebeling, Future of Freedom, Feb 1999
Review of Say's Law and the Keynesian Revolution: How Macroeconomic Theory Lost Its Way (1998) by Steven Kates
If Robinson Crusoe ... wants some commodity that Friday has ... [he] must offer some good in exchange to acquire it. He plans to supply just that quantity of commodity "A" that he believes will be sufficient to buy the amount he desires of commodity "B" owned by Friday. This clearly requires Robinson to correctly estimate what commodity Friday might be willing to take in trade and the price Friday would be willing to pay ... Robinson will not be able to successfully sell all he wants to offer if he incorrectly guesses that Friday wants "A" at all, or if he wrongly estimates the price Friday is willing to pay for "A."
Socialism, by David Prychitko, The Encyclopedia of Libertarianism, 15 Aug 2008
Describes socialism, the economic calculation debate and some socialist variations such as market socialism, decentralized participatory socialism, anarcho-communism and the welfare-regulatory state
Market socialism ... conceded to the Austrians that markets are necessary—advanced economies cannot coordinate millions of independent plans without the information signals generated by market prices—which encouraged Lange and his followers to devise abstract economic models that combined social ownership of the means of production with what amounted to capitalist-like markets for consumer goods. Informed alone by these consumer goods prices, Lange believed, central economic planners would possess the kind of knowledge necessary to calculate the values of all the scarce resources and capital goods needed to produce consumer goods and services.
Stigler, George J. (1911-1991), by Aaron Steelman, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
Economists had a hard time reconciling how similar, or even identical, products could fetch different prices from one seller to another. This diversity of price, some argued, was an example of market failure. But Stigler made the case that it was the result of rational decisions by consumers. Attaining information about products is costly, so in many cases it simply does not make sense to acquire 'perfect information.' Consumers will search until the marginal expected gain is equal to the marginal cost of additional searching.
Related Topics: George Stigler, Free Market
Stiglitz is Wrong on Government, by Michael S. Rozeff, Mises Daily, 6 Sep 2006
Criticizes the 1986 Bruce C. Greenwald and Joseph E. Stiglitz paper "Externalities in Economies with Imperfect Information and Incomplete Markets", which posits that certain government interventions "can make everyone better off"
The Stiglitz model is an equilibrium model, which means that everyone has already done the best they can possibly do. From that perspective, private parties already have done the best they can do in order to internalize the externalities (create contracts, exchanges, and prices for them). It is then inconsistent with the spirit of optimizing models and equilibrium models to introduce ad hoc externalities. Where do they come from, and why aren't they already priced out?
Teaching Basic Economics to Fifth Graders, by Arthur E. Foulkes, Mises Daily, 21 Jun 2006
Recounts the experience of teaching economics to fifth graders, one concept per week, for five weeks, focusing on trade, money, savings, competition and prices
To illustrate 'prices' we held an auction. ... Items that had several bidders sold for higher prices than items with few bidders — establishing a role for 'demand,' and when only one or two units of a particularly appealing item, such as chewing gum, remained, its price had a tendency to sky-rocket, showing that the physical quantity of a good matters in light of the human demand imposed on that quantity.
Related Topics: Children, Economics, Free Trade, Money, Wages
The Use of Knowledge in Society, by Friedrich Hayek, The American Economic Review, Sep 1945
Explains how particular knowledge is dispersed throughout society, making centralised planning impossible, and how prices empower individuals to achieve decentralised coordination
Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. ... The mere fact that there is one price for any commodity ... brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.
What's Wrong with Public Schools?, by Sheldon Richman, Separating School & State, 1994
Excerpt from chapter 2 of Separating School & State (1994), published online on 25 March 2005
A related problem is that tax financing precludes market prices for educational services. Market prices do not only let buyers know what they are paying. They are the fruit of a complex communications process that encapsulates information about the relative scarcity of resources and conveys it to all participants in the marketplace. That information is crucial to intelligent planning by buyers and producers of services. It is at the very heart of market competition, which Nobel-laureate F.A. Hayek properly called a "discovery procedure."
Who Is Garet Garrett?, by Jeffrey Tucker, Mises Daily, 25 Oct 2007
Biographical and bibliographical essay, including both his novels and non-fiction writing
Finally, ... there is Satan's Bushel (1924), a splendid book, not just from the point of view of economics but also as a piece of literature. What is Satan's bushel? It is the last bushel that the farmers put on the market, the one that 'breaks the price' — that is, reduces it to the point where wheat farming is no longer profitable. The problem that afflicts the wheat farmers is that they sell their goods when the price is low and have no goods to sell when the price is high. ... As implausible as it may sound, the central figure in this book is the price of wheat. It is the main source of drama.
Who Owns the Internet?, by Tim Swanson, Mises Daily, 4 May 2006
Explains how and why "net neutrality" proposals came about, monopolistic tendencies, comparisons to natural resources and others held in common, and how variable pricing has been used elsewhere to solve similar problems
This phenomenon of adapting to supply and demand is also seen in other markets, such as sporting events. ... Several commercial airline providers ... have successfully used variable pricing based upon how far in advance you booked, the level of demand for a particular flight, weekdays versus weekends, and so forth. There is no shortage of empirical examples illustrating profitable business models that embrace variable pricing.
Will An Oil Price Fall Push Inflation Down?, by Frank Shostak, Mises Daily, 21 Sep 2006
What is a price? It is the rate of exchange between goods established in a transaction. The price, or the rate of exchange of one good in terms of another, is the amount of the other good divided by the amount of the first good. In the money economy, price will be the amount of money divided by the first good.
Related Topic: Inflation
The Writings of F. A. Harper—A Review, by Paul L. Poirot, The Freeman, Aug 1979
Slightly amended from the "Introduction" to The Writings of F. A. Harper, published in 1978 by the Institute for Humane Studies, and serving as a review of the "two-volume memorial edition"
So begins another step in free market economics, the process of competition and cooperation through voluntary exchange of pri­vate property. Exchange, yes, but at what rate of exchange, how much of mine for thine, at whose price? At the market price, suggests Baldy ... market prices afford businessmen a means of economic calculation or business accounting—a way of knowing their profit or loss. Out of this seeming bedlam of bids and offers, from individuals with various and ever-changing supplies of goods and services and demands for other things, emerges a series of market prices.

Cartoons and Comic Strips

The Government Should Do Something About These Big SUVs!, by Chuck Asay, 7 Jul 2005

Books

Are Predatory Commitments Credible?: Who Should the Courts Believe?
    by John Lott, 1999
Price Theory: An Intermediate Text
    by David D. Friedman, 1986
Partial contents: I: Economics for Pleasure and Profit - II: Price = Value = Cost: Competitive Equilibrium in a Simple Economy - III: Complications, or Onward to Reality - IV: Judging Outcomes - V: Applications - Conventional and Un
Value and Price: An Extract from Capital and Interest
    by Eugen Böhm von Bawerk, 1973
Translation of Wert und Preis; partial contents: The Two Concepts of Value - Nature and Origin of Subjective Value - Insignificance of the Idea of Abstract Categorical Value

The introductory paragraph uses material from the Wikipedia article "Price" as of 7 Oct 2018, which is released under the Creative Commons Attribution-Share-Alike License 3.0.