Tags

,

1. Demand does not create its own supply (cf. “stagflation”).

2. Supply does not create its own demand (cf. “involuntary unemployment”).

3. What is consumed must first be produced [citation not needed].

4. There is no corresponding necessity that what is produced must then be consumed (see Law 2).

5. For any rational economic activity to occur, supply and demand must be coordinated.

There are many ways to coordinate supply and demand. No way, so far, has been found to be perfect. Generally, it has been conceded that market systems of coordination of supply and demand are more efficient and less prone to shortages than ways based on central control of production. [Edit: A few hours after I wrote this, a 10-hour power outage took place- something that never happened in Communist Russia. Seems nature loves irony.] Most recessions in modern advanced economies are real wastes of real resources (see here).

Advertisements