SHAVING BRUSHES 101
LeisureGuy, 25 October posts on shaving brushes HERE
“When the Invisible Hand of the Market picks up a shaving brush…
…When I saw today how very much better the silvertip badger brush worked than the boar brush on the same soap, I had my “duh” moment. Silvertip badger brushes are much more expensive than boar brushes. That means that the invisible hand of the market is willing to pay (substantially) more for silvertip badger. The invisible hand of the market is considered by some to be pretty much an infallible guide: if prices that are artificially high (i.e., in excess of the benefits gained), then those prices must fall as “the market” turns to lower-priced alternatives to keep the cost/benefit ratio acceptable. So of course silvertip badger would perform better than boar—otherwise, everyone would buy boar, since the higher cost of silvertip would produce no benefit.
I personally am not that enamored of “the invisible hand of the free market,” particularly when Libertarians present it as a universal panacea. We see manifold failures of the free market: environmental degradation, refusal to develop medicines for which the market is small or poor (I’m looking at you, ebola vaccine, but many other examples exist), and in general all the government services undertaken for the general welfare that the invisible hand will either not address or screws up abominably (e.g., for-profit hospitals, for-profit schools, for-profit military units like Blackwater).
Still, given the undeniable major difference in lather quality from the silvertip badger brush and the Omega boar, one can certainly see how the invisible hand will pay more for silvertip badger than for boar. I do understand that boar is more readily available (more supply) and thus less costly to obtain, but the fact that the market is willing to value silvertip badger so much more highly means that (overall) the market recognizes the superiority of the brush in terms of its function: making lather.”
This is a classic example of muddled thinking. No, I am not going to launch into my regular theme of banging on about the myth of the “invisible hand”.
I want to highlight the error so basic that it borders on sheer nonsense. The post itself is probably of interest to those looking for a case study for a tutorial class in marketing (follow the link above) or a case for students of “duh” moments, or even students of product differentiation in Marketing 101.
In terms of the economics of markets it completely misses the most common, fundamental and absolutely essential characteristic of all markets - no exceptions. I refer to the VISIBILITY of prices. Without prices - however expressed - markets cannot function.
Smith expressed this as a function of ‘Truck’ (offering on thing or service for another (example: labour for things - think of the folk song ’16 tons and what d’ya get? Another day older and deeper in debt’); ‘Barter’ (offfering one thing for another - ‘my fishing rod and tackle for your stamp album’) and ‘Exchange’ (anything for anything). Money of course simplifies the claculations of the worth of what’s offered for what is sought.
Modern markets work in commonly understood VISIBLE prices; all exchanges throughout history (and pre-history too) have been facilitated by each party knowing what they give for what they get, whether its ‘things’, ‘obigations’ or cash money. Without VISIBLE prices modern markets would not work, which is why markets took so long to evolve and today are bounded by rules, backed by laws.
It has nothing to do with an “invisible hand” that is “willing to pay more for silvertip badger than for boar” because it is down to a real, living customer who is “willing to pay more for silvertip badger than for boar”, once the customer can see the difference in the VISIBLE price and can relate that to what money she has available, should she be in the market seeking a shaving brush, or whatever.