Stewart Robert Hinsley wrote:
In message , Ian B
writes
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.


I think there's some dispute as to whether an oligopsony qualifies as
a free market.

Only from people who don't understand how a free market works.

If there is no restriction by law on entry to the market, if it is
unregulated, etc, it is a free market. Of course, real markets aren't like
that. The State intervenes all the time. But that's a different problem to
the artificial "oligopsony" problem. It boils down to a fallacious argument
that unless choice is unlimited- entirely impossible- then it is not free.

A good example, socially, is marriage. Nobody has every possible spouse
available to them. Most of us will only have a choice of a very small number
of spouses (compared to the number of the opposite sex in the world, let
alone all the *possible* people that could exist). Nonetheless, we have a
free choice. It is a free market.

Another thing anyway is this; if the farmers en masse don't like the
supermarkets' terms, just refuse en masse to sell at that price. Have a
meeting. Say, "we're all not selling at that price" and demand a higher one.
The supermarkets can't force the farmers to sell, and if they refuse to buy
at the new price, they haven't got any milk. Why aren't the farmers doing
that?

As I said before, is it because there are efficient farms in the market that
*can* sell at that price, and it is only inefficient ones who can't? And if
they can't afford it, why the hell are they doing it? Farmer: sell your
cows, or just slaughter them. Save yourself money. There's no use sending a
cheque every month to Lord Tesco, is there? Something funny going on, isn't
there? It doesn't make sense.


Ian