The goal of this blog is to describe the problem of exchange. I think a theory of exchange (as opposed to a theory of value) must incorporate the following sorts of ideas.
I sometimes thinks that if I were to write the chapter on value again which is in my book, I should acknowledge that the relative value of commodities was regulated by two causes instead of by one, namely, by the relative quantity of labor necessary to produce the commodities in question, and by the rate of profit for the time that the capital remained dormant, and until the commodities were brought to the market. David Ricardo
Not all the decisions in a given period can be carried out, since many of them erroneously anticipate and depend upon other decisions which are in fact not being made. Again, many of the decisions which are successfully carried out in a given period may not turn out to have been the best possible courses of action. Had the decision-makers been aware of the choices others were making during the same period, they would have perceived opportunities for more attractive courses of action than those actually adopted. In short, ignorance of the decisions which others are in fact are about to make may cause decision-makers to make unfortunate plans - either plans that are doomed to disappointment or plans which fail to exploit existing market opportunities. Israel Kirzner
References
- David Ricardo, Letter to J.R. McCulloch, The Works and Correspondences of David Ricardo.
- Israel Kirzner (1974) Competition and Entrepreneurship.
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