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There is an economic concept called "perfect competition" I want to be clear that this economic concept is not required for efficient prices.
And I am talking about efficient prices, not "perfect prices". Prices are a process and a search function for an optimal set of tradeoffs. One of the tradeoffs is information. To perfectly know all the inputs of a product, and to perfectly know the desire for that product would be a very costly search process. There is going to be some fudging of prices and that fudging should be expected given that information itself is not free or costless.
You've created a very long example that kind of assumes away many of the standard market fixes. I do generally like to use theoretical examples for most economic concepts, but I find that they tend to lead people astray when it comes to the nature of prices.
To me your example sounds a bit like this:
"Geologists say that older mountain ranges tend to be shorter and rounder than newer mountain ranges, because wind and erosion will gradually wear mountains down. But that's not always true, imagine there are two mountains. One mountain is 20k feet and in an old mountain ranges. And the other mountain is 10k feet in a newer mountain range. They are both subject to similar levels of erosion, and neither is a volcano. So older mountains can be taller."
You've assumed your position to be true in your example.
And yes the government is fully capable of distorting prices, or assisting companies in distorting prices. I usually bring this up as a reason why government should not have this power, or should at least have many restrictions on the use of this power. But this is also not evidence that prices don't reflect the real world, instead it is more evidence. After all if a government makes it hard to be in the plumber business we should expect the price paid for plumbing services to go up, because the supply of plumbers has been restricted. It would be strange if the government could intervene and not change prices.
Sure, but my example is basically a disproof by counterexample. In this example, prices don't match utility, therefore, the statement "prices always match utility" is logically false. It's really easy to disprove an "always" statement with a single example, even a hypothetical one, because an "always" statement is such a strong claim that it's almost never true. Utility value and market value are different things: sometimes they will be equal, sometimes they will not. I'm not saying they're never equal, I'm not saying they won't usually be close, especially in an efficient market. My point is that markets in the real world are not always efficient, therefore the two values are not always equal in the real world. This should not be controversial.
The only time I say "always" is in quoting a fake person that is doing a bad takedown on the concept of erosion with a bad hypothetical example.
I even mentioned fudging of prices. Which I would have thought helped clarify that prices are not some exact mathematical thing.
I'll say what I said again: Prices reflect reality.
Saying that they don't perfectly reflect reality is not a disproof of what I said. Just like finding one mountain that is coincidentally less eroded does not mean erosion is not true. Utility is part of reality and thus prices will tend to capture information about utility and reflect that information.
Marx's work doesn't say there is a slight mismatch sometimes between market prices and utility. It says there is almost always a mismatch, because employers exploit employees for their excess labor to make profits. That is the fundamental economic misconception.
If a price is wrong, then there is often a method to profit off of that incorrectness. If some segment of workers is underpaid then their is a profit opportunity to open a competing business and pay them more than they get now and less than the full value of their wage. The greater the discrepancy, the greater the opportunity.
Fine. It sounds like we don't disagree about any object level issues, just the meaning of certain words and phrases. I don't think what you said originally properly conveys the nuance of what you're saying now, but I understand you now and I don't disagree.
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