Guided By Prices
Coincidentally, today I read this essay by Peter Boettke… Israel M. Kirzner on Competitive Behavior, Industrial Structure, and the Entrepreneurial Market Process. It’s quite good and so are the responses.
The importance of prices is a consistent theme throughout the essay and the responses. Yet, the essay itself does not have a price.
I’m definitely not saying that the essay needs to be behind a paywall! That’s not the only way to put a price on it!
Donors to the Libertarian Party were recently able to use their money to signal the value of the potential convention themes. Here are the top results…
$6,222 — I’m That Libertarian!
$5,200 — Building Bridges, Not Walls
$1,620 — Pro-Choice on Everything
$1,377 — Empowering the Individual
$395 — The Power of Principle
This order (relative importance) of the themes was determined by the Invisible Hand (IH). Thanks to the IH we can see and know that the most valuable theme is “I’m That Libertarian!” This theme has the highest price… $6,222.
Honestly though it feels a bit funny to refer to “$6,222” as the price of “I’m That Libertarian!”. No single person paid $6,222 for that theme. That amount is actually the sum of each donor’s willingness to pay for that theme. So… $6,222 is the demand for that theme?
A few years back Boettke told me that prices embody opportunity costs. And I suppose it’s pretty reasonable to think of $6,222 as embodying the opportunity costs of “I’m That Libertarian!”.
So here’s my question for you… and Peter Boettke, Peter G. Klein, Mario Rizzo, Frédéric Sautet, Israel M. Kirzner and anyone else who thinks that prices are important…
Is it beneficial to know the price of each of the potential convention themes?
If the answer is “yes”… then wouldn’t it also be beneficial to know the price of each of the scholarly works on the Liberty Fund (LF) website?
Donors to the LF could have the option to use their money to signal the value of specific works. Then we’d all see and know the price of each and every work.
Prices guide us; profits lure us; losses discipline us — this is how we learn. This is how markets work. This is how civilization progresses. — Peter Boettke
Is his essay an exception to his rule? Prices for thee, but not for me?
LF is in a market. Donors can decide whether or not they give their money to LF. But… LF is not a market. Donors can’t decide how much money they give to the LF’s products. So we see and know the LF’s price… but we don’t see and know its products’ prices.
It’s one thing to explain the importance of prices. It’s another thing to explain why the LF’s products should have prices.
The LF’s products should have prices because scholars need to be guided by prices, lured by profits and disciplined by losses.
Once the liberty movement puts its scholars to their most valuable uses… then it will finally win. The alternative is for the liberty movement to continue promoting a tool that it doesn’t even use.