Which is prone towards overproduction, Free-Market economy, Mixed-Market economy, or Socialist economy? Does overproduction matter in any of these economies?
Socialist economy for sure. Too many left shoes, anyone?
It doesn't matter for a free market. Markets clear.
Socialist response to overproduction:
"overproduction is the natural tendency of capitalism to expand the production of commodities that does not acknowledge the limits of the market (demand). Since the production and circulation of goods is not planned and firms are in constant competition for larger profits and greater market share, capitalist's booms are always followed by busts as we see in the business cycle. In short, capitalist markets are NOT self regulatory."
Strange how they see lack of central planning as a source of overproduction, yet it is the central planning that causes overproduction in the first place.
I always thought that in a socialist market you would see underproduction. Please correct me if I'm wrong.
"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds. " -- Samuel Adams.
kingmonkey: I always thought that in a socialist market you would see underproduction. Please correct me if I'm wrong.
Hmm, would that make our socialist friend correct, Socialism underproduces, and Capitalism overproduces?
Socialist underproduction is a fascinating point, and I never considered it. Perhaps overproduction or underproduction appears contingent on the specific industry in combination with the central planners.
ViennaSausage: kingmonkey: I always thought that in a socialist market you would see underproduction. Please correct me if I'm wrong. Hmm, would that make our socialist friend correct, Socialism underproduces, and Capitalism overproduces? Socialist underproduction is a fascinating point, and I never considered it. Perhaps overproduction or underproduction appears contingent on the specific industry in combination with the central planners.
Yeah, but over production isn't necessarily a bad thing. It makes goods cheaper for the consumer. If I manufacture socks and make too many I'm going to have lower my prices in order to move the excess socks. The consumer wins because they get cheaper socks. I, as the manufacturer, is hurt because I made to many socks but that will teach me a lesson. Don't produce more than the market can consume. In an unfettered free market the market will always adjust to changing conditions. You might have one company that comes out with a 3D television and for a while will be the only one producing it while most of the market wants it but this single company cannot meet the demand (underproduction) but as other firms introduce their own 3D TV's you'll see the production of 3D TV's meet demand. Of course there will be too many 2D TV's on the market and manufacturers and dealers are going to have to cut prices to clear out inventories. I might be wrong so tell me if I am.
kingmonkey: In an unfettered free market the market will always adjust to changing conditions.
Don't get me wrong, I agree with you on this. The market self-corrects.
Would that make underproduction a bad thing?
You see under production of right shoes, and over production of left shoes. Socialism can't calculate.
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liberty student:You see under production of right shoes, and over production of left shoes.
In essence, not necessarily over or under production, but uneven production.
Juan:On the other hand, a brief look at the history of socialist experiments will show you that socialism always failed to deliver the goods to the point that millions of people died of starvation in places like the soviet union, China, and others.
Do you have specific examples of the failure to deliver? or even producing too much that they failed to deliver?
http://mises.org/econcalc.asp
Socialist Markets lead to massive surplus and scarcity and have no way of judging consumer needs/wants. I'd say all top-down arrangements do.
Free markets tend towards equilibrium, so there may or may not be surplus but it's irrelevant.