On the basic concepts of micro economy_風聞

Micro economy is about supply and demand. Unlike the supply, the demand is not easy to measure. We know that an equilibrium is attained when the supply meets the demand. But if we count in the time factor, this “equilibrium” is never achieved in an active market. The market is always on its way to another equilibrium, like in a relaxation phase of a circuit.

The demand is always changing. The supply is always aiming at an old demand. More importantly, the supply is made by the producers, who themselves have needs. Their needs are and should be the basic part of social demand.

For example, in case of a pandemic, the need of the workers in essential sections, the nurses, the workers in the hospitals, in food industry, in common transportation, their need should be the first and basic part of society.

But in a capitalist society, these needs are ineffective because often these people don’t have enough money to call a demand. Behind this logic is that the suppliers only produce things to those who can afford them. They produce things that create the highest profits.

This becomes a paradox, since the workers in the essential sections themselves ARE the suppliers. They pracitally provide society with the essential materials, food and service that most people (including themselves) need. When the suppliers cannot fulfill their own needs, who is making the demand?

I call it the decoupling of supply and demand. The supply is a false supply because the demand is a false demand.

And the reason is simple. The workers don’t really OWN the means of production. Those who OWN the means of production don’t work.

So the theory of micro economy is hollow in describing capitalist society. The hypothesis about a supply-demand equilibrium is categorically false, because the dimension is ignored. When the supply and the demand are in different dimensions, equality in quantity means nothing. There’s never an equilibrium.

Just a simple example: in this pandemic, Richard needs a luxury yacht fixed, so he needs a team of engineers to fix the engine and designers, workers to fix the hull. So the fix team need cars to go to work and machines and tools to do the job. So the factories run to produce these things and 1000 workers have t o go to work. And they have to take the metro and eat sandwiches so the common transport and foodstalls open.

But it is all happening because Richard can afford 1 million dollars to have his yacht fixed. Once he decides to put off the plan or call a Chinese team to fix it, the whole chain of needs breaks and the above mentioned guys lose their job (at least part of). What about their own needs?

Even if Richard doesn’t need his yacht fixed, 1000 workers still need food and stuff. But they lose their job and their demand disappear in the market, because they don’t have money.

The economists tell us that it’s a big cycle and the market will magically contain all the needs and functions. Everyone gets what they want in a free market.

This is not true. It only functions when the real supply overlaps with and covers the real demand. Those whose demand cannot be covered are the homeless, jobless and they die. Those false demand which create false supplies are what the elites do on exploiting the workers. The market only functions when the producers can produce more than they themselves as consumers need AND are effectively ALLOWED to create them.

The last sentence sounds absurd but it is already happening. The big pharms don’t produce cheap meds anymore, because they want more profits. The government has to step in. The foodstamp, the healthcare, the pension and the house subsidy, they are the proof that capitalist market fails. And in the long run, this is happening to all the sections and creating a systemic breakdown, the economic crisis.

The reason behind the decoupling of supply and demand, again, not surprisingly, is the dislocation of means of production. The ones who OWN them don’t work, the ones who work don’t OWN them.