Dollar voting
In economics, dollar voting is the analogy that explains why the customers decide which products will be produced. Every dollar paid for a particular product may be considered as a dollar vote for that product, and the products with the largest number of dollar votes generate enough profit so that they continue to be produced.
The following is an attempt at setting up a theory on the subject. I'm making this up as I go :). 19:56, 2005 Apr 20 (UTC)
Thus, the free market system can be regarded as a form of democracy. However, there are some differences:
In political elections, the places where you can vote are spread fairly evenly, with usually one such place nearby and all with the same selection available. In the free market you're limited to the shops in your neighbourhood and the selection of products that those shops have. In political elections, all 'products' are uniform in the sense that they are all about the same sort of thing, with (usually) all aspects the product can have described for each product (ie, the views on all topics). In the free market, various products may cover your needs in different ways, without you knowing that, which makes the choice more difficult. Also, one choice may lead to another. If you buy a certain digital camera you're stuck with the type of memory card that goes with it (again, possibly without you knowing it). In political elections, you get a complete overview of who you can vote for. In the free market such information (ie, what products there are) is much harder to come by and usually limited to the selections that the local shops have. In political elections, all 'products' cost the same, namely nothing. In the free market, products not only perform differently, but also cost different sums of money. And it is usually not clear what those price differences stand for (if anything - the price may have more to do with marketing than performance of the product). Political parties may change, but not as much as products do. A product may disappear (even if it is a good product - again to do with marketing) or a product may be presented as the same, but really have changed (usually for the worse, alas). A new product can be tested by one person, who can then tell others about the outcome. A new political party needs to be 'tested' (voted for) by a large group of people before its performance can be assessed. In the free market, if a product doesn't do what it is supposed to do, you can generally get a replacement or your money back. However, if you vote for a certain party and that party doesn't do what it promised, you generally have to wait for several years until you can get satisfaction by voting for another party. If a product you bought doesn't do what you thought it would, you're stuck with it indefinitely. But you can go and buy another product (hoping that one's better). But what the two systems have in common that they work best if the voters/buyers are well informed and intelligent. And especially with dollar voting, ie the free market, things might change considerably with the Internet, especially concerning the first two points. Sites emerge that give complete (or so one may hope) overviews of all products in a certain category. And internet buying means that the location of a shop becomes almost irrelevant (except when it comes to shipping).
|
|
