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From: Romain Kroes <[log in to unmask]> argued:  
> Now, the question is: why does it remain a resulting overproduction 
> or overcapacity of production (and therefore something to be regulated by 
> the market), while every firm does its best at reducing its costs and 
> producing quantities in accordance with market inquiries? 
 
    Game Theory suggests an explanation that overcapacity is useful as 
a threat (to increase suddenly the production if some dangerous competitors 
enter) and/or as option value (if market conditions improve or competitors 
'retreat'). The Nash-optimal solution is that overcapacity is built but not 
used, and competitors lurk but stay away from markets strongly dominated by 
others. 
 
One has to build a dynamic model with at least two periods, to represent 
inertia and irreversibility in the building of physical capital. 
 
For the same reason, nuclear weapons were useful although not used for 55 
years. 
 
    Firms produce 'in accordance with market inquiries', but those market 
conditions are largely shaped by those same firms, by Marketing towards 
customers and suppliers, and their interactions between them. 
We're discussing a typical oligopoly here, not ideal perfect competition. 
 
> This paradox shows that the expression "market economy" does not refer to 
a 
> normal stable reality, but to a disease. In all probability : the 
financial 
> crisis that undermines the occidental World System, despite some 
remissions, 
> since the sixties. Someone wrote: "it has been the Soviet Union, but 
now?". 
> Now? People's fate, in former soviet empire, is much worse than twenty 
> years ago. And this, for having swaped an utopia for another. 
> 
> Romain Kroës 
 
    This speaks more of the hypocrite, formerly 'socialist' potentates who 
publicly agitated for 'free markets' while actually doubly corrupt: they 
weakened the defense of the State's wealth, then offered as intermediaries 
to steal that wealth and 'privatize' it to foreigners at ridiculously low 
values. 
    And all for very small commissions (at macroeconomic scale), but surely 
significant for their small-group welfare. A very inefficient, roundabout 
way to steal. Our problem is there isn't a strong, credible enough 'Civil 
Society' to organize something to stop the mafias. 
 
    Do you imply that the poor former soviet 'peoples' have the power to 
finance and publish dozens of books in Romania ? or some other lobby 
group that feels this will be a politically rewarding (for them) idea to 
spread ? 
 
    Or more, do you imply that a similar, deeper and subtler hypocrisia 
exists in the Western world too ? 
 
    Mircea 
 
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