Common Sense Comes to Town!

Common sense is the most fairly distributed thing in the world, for each one thinks he is so well-endowed with it that even those who are hardest to satisfy in all other matters are not in the habit of desiring more of it than they already have. (Descartes)

Love and Efficient Markets

Posted on | May 11, 2011 | No Comments

Free market promoters argue that in theory, a perfectly efficient market allows for perfect transmission of information and, consequently, optimal equilibrium of supply and demand. Let’s illustrate the absurdity of this proposal by analysing romantic relationships through the lenses of the perfect market.

First, a market is perfectly efficient only if everyone has access to all the information. This means that necessarily everybody knows everything about everybody else, your small character flaws, your greatest failings and your hidden demons. Fortunately, others are as exposed as you are. In extreme cases, we will be so discouraged by such mediocre partners that those few genuinely extraordinary persons will benefit from a displacement of demand.

 Consequently, everything else being equal, the latter will be able to ask for a higher compensation for their emotional involvement. In other words, your entire devotion will only get you part of their attention. Thus polygamy and polyandry are validated by neoliberal theory. Especially polyandry, as there are slightly more men than women on the planet (this said, equilibrium could also be reached if male homosexuality exceeds female homosexuality).

For others it will simply be a matter of supply and demand equilibrium. And since information flows freely, any minute change in your personal value will immediately be known of the market, which will react by adjusting the demand for your person, allowing you to abandon a partner in favour of a better one or, more dramatically, being supplanted by a rival for your current partner’s affection. But that’s what the market wants…

Furthermore, free markets allow full access to all participants. So in theory, anybody can shop for partners at any time. A relationship cannot be exclusive unless contractually bound to do so. This allows for limited partnerships.

Yet this contract can form a society, or even a cooperative where a potentially unlimited number of members can contribute. What more, these contracts do not prevent participants from doing business elsewhere, instead offering an advantage when dealing with the group.

In practice neoliberal theory brings us straight back to the hippies’ commune. And you thought economy was boring?

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