Dave Liquorice wrote:
On Thu, 2 Jun 2011 23:32:10 +0100, Sacha wrote:

It's a question of supermarket chains dictating the prices they pay
AND being able to buy YOUR food at cheaper prices from other
countries which more heavily subsidise their farmers, pay less to
workers or factory farm their animals.

Hear, hear. The food market as dominated by the big supermarkets is
not a free market. The buyers are dictating the price not the sellers
based on cost plus. This why large numbers of diary farmers *are*
giving up milk production.

That's not how a free market operates; what you're describing is basically
something called the "Labour Theory Of Value" which was realised to be wrong
in the nineteenth century; the idea that (labour) costs fix prices. They
don't.

Costs have to adjust to prices, not the other way around, and prices are set
by buyers. Think about it at the retail level; maybe a shop would like to
sell milk for £2 a pint. But for me, and most conusmers, it isn't worth that
to us, so we wouldn't buy it. We force a lower price from the shop. It
doesn't matter if it's the only shop in the area (a "monopoly"). It can't
make me pay £2 for a pint of milk.

The same is true further up the production chain; e.g. as here between
producers and retailers.

In very crude terms "buyers dictating the price" is precisely how a free
market *does* work. Economists understand that, but unfortunately most other
people don't.


Ian