prices are a shortcut

clay shentrup
3 min readFeb 23, 2023

i recently encountered a stridently market-denying leftist on twitter, and i think their common misconceptions of economics are instructive. at one point i asked:

suppose bob and alice have their lottery assigned homes, assigned by you, and they talk and realize they’d prefer each other’s house. should they be allowed to swap those houses?

the answer?

what this leftist fails to realize is that money is just a shorthand for an arbitrary series of these consensual voluntary trades, and so they’ve contradicted themselves. it is mathematically proven that consensual trades result in a pareto optimal allocation of any fixed set of goods.

for instance, suppose bob prefers XYZ and has Z, and alice prefers YZX and has X, and eve prefers ZXY and has Y. bob can trade Z to alice for X. now bob has his favorite thing. alice can then trade Z to eve for Y, and now alice and eve both have their favorite thing too.

a monetary price is simply a statement that X may be swapped for Y through an arbitrarily large series of consensual trades. something that this leftist specifically said they’re okay with.

and this fungibility is beneficial for all the participants, by definition. and the larger we make this market, the better for everyone, because that expands the opportunities for mutual benefit. this is all just objective physical reality.

the leftist continues:

of course, they are all fungible. the leftist literally just said houses should be swappable by consent. housing may be a basic need, but no one wants to live in the absolute smallest house they can survive in, or in the worst climate imaginable, in some place far removed from culture. so if i’ve got a house that’s even a little bit beyond my basic needs, i can in principle swap that with someone else for a smaller house plus a guitar, or shirt, or anything else that would make me more happy than that extra bit of house that i enjoy but don’t need.

here was another gem.

here the leftist is making the fallacy of suggesting the money is less valuable than the housing because there’s a “risk” of not being able to buy a house. but that’s confused. the amount of money is already defined with the risk taken into account. as i pointed out.

the overarching point is that leftist thought isn’t grounded in reality, and involves these kinds of “lying to yourself” arguments.

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clay shentrup

advocate of score voting and approval voting. software engineer.