Saturday, 5 November 2011

The economic organization of a P.O.W camp

The economic organization of a P.O.W camp demonstrates the emergence of the market system and the price system in a stimulated environment called the P.O.W camp. Through the disorganized and decentralized activities of those prisoners in the camp we can see clearly that the spontaneous emergence of the market system and the magnificent role played by the price of the goods. It also demonstrates that a controlled system by a central planner is more harmful than beneficial to the market. Based on this simulation, we can see that this is how our real market system rise into our society, and how it eventually becomes part of our life and redefines the meaning of economy.

Some of the rhetorical questions that comes into my mind when I read this article are:
1. Can we play this experiment in a class scale with a time frame of 2 hours? I think most probably it will work though!
2. Can this simulation truly describe how the market system emerge in our real society when those prisoners might be exposed to the idea of exchange and trade already before they were even in the camp? So I think that although most probably this example can explain the process of the emergence of price and market, it still doesn't explain how the very idea of trade come into existence in a society with no exposure of any idea relevant to trade and exchange.
3. Why tobacco at the first place? it's so unhealthy.

I think this article is really interesting and it explains well the instability of the price and the importance of the price itself in keep motivating us and incentivizes us to earn more profit. It resonances with Mr Rizzo's classical quote, "trade is the road to wealth, self-sufficiency is the road to poverty".

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