11 November 2010

What is unearned cannot be brought to market

In the same fashion as non-exclusive consumption is one of the chief causes of market failure so non-exclusive production could likewise be the cause of a different kind of market failure – the resource curse. 
When the production function does not require human creativity to exploit or when there is no artificial limit to how great the supply is of some commodity then men cannot organize themselves to supplying it in an orderly fashion except by artifice. 
Natural monopoly is one form of such non-exclusive production because the pricing mechanism requires the competitive price to be predatory. The most natural of natural monopolies is the monopoly of the supply of commodities that are available through Nature's grace. The non-exclusivity of the supply comes from the free acquisition of that supply so that there is no natural floor to the price of the commodity. There are no barriers to entry in the equity side so the entry barriers must be set up in the output markets, which means the distribution and the marketing sectors. 
What is gotten for free must be shared for free, else the curse will befall those who partake of its wealth. 
The only thing that can properly command a price is the earning power of men. What is unearned cannot be brought to market. 

No comments:

Post a Comment