In a mostly excellent book from Bill Bryson (At Home) we read the following:
Just at this time, sugar prices went into a depression and Beckford ended up uncomfortably exposed to the downside of capitalism (wintercow emphasis added).
Falling prices are a signal that the marginal value of a good (in this case sugar) is low. This important signal reflects the fact that consumers, given their current consumption levels and income levels, would not be willing to give much other stuff up to get more sugar. This important signal also reflects the fact that there is some producer, somewhere, that is able to deliver the sugar for this low price – in other words, not many resources are sacrificed in delivering the good to the consumers. It is also a signal to future producers that not a lot of profit opportunities remain in the sugar market and that perhaps their capital and ingenuity best be applied elsewhere (of course, this is no guarantee of being the right thing to do, profits and losses can only exist in an environment of uncertainty; in addition, the low prices of sugar may themselves stimulate profit hungry entrepreneurs to figure out ways to squeeze (pardon the pun) more efficiency from the production process – indeed we saw that happen as copper prices fell in the 1980s). Rather than being a downside of capitalism, falling prices of sugar are merely reflecting the operation of supply and demand. It is as much a downside of capitalism as the act of taking a temperature is the downside of the weather.
Furthermore, the undertone of the comment is irksome.* So, falling prices are the way hapless and innocent folks get crushed by the capitalist machine … so there must clearly be some other system that does not expose people to anything like falling prices. And of course, if falling prices are the downside of capitalism, the rising prices must be great. I wonder if Mr. Bryson would celebrate the Irish potato famine for raising the price of another important carbohydrate in the mid-19th century? Indeed, he does not – as he spends some time on that lamentable incident elsewhere in the book.
Falling prices for a commodity are as much a downside of capitalism as falling votes for a candidate in an election represent the downside of democracy.
(*) No, I do not find this to be a simple misuse of words. The subtle anti-capitalism (as is his right to believe I suppose, it just seems odd to be an author capable of selling 6 million books on the open market to have such views) is throughout the book. For example, near the end he says (when discussing the advances in agricultural technology in the 19th century US): “Thanks to the McCormick reaper and other large, clattery implements, America’s prairies had become devastatingly productive.” Strange choice of adverbs, no?
Finally, he ends the book with four paragraphs on … climate change. This was a long book about the history of the interior of homes, but of course we still had to have the requisite threats that all of our current comforts of modern homes have threatened the planet and will inevitably cause too much damage for us to easily adapt to (including a loss of resources). His last words were, “The greatest possible irony would be if in our endless quest to fill our lives with comfort and happiness we created a world that had neither. But that of course would be another book.”
Fine, it would also be ironic if, you know, this view was incredibly short-sighted, or perhaps outright wrong. But that of course would be another blog post.