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Capitalism

October 17, 2008

Luddee: I just heard the news that they’ve developed cell phone technology that allows users to scan barcodes in shops, which then shows them the lowest price available online and in nearby stores!

Brother Hasnaad: But we are having no barcodes here in Pakistan!

Luddee: Yeah, but people can use them here in the west. More significant though, is the implications of this breakthrough. Classic capitalism theory argues that consumers are rational and if informed, will only buy the product they value the most, at the best possible price. This leads to greater efficiency in the market, which benefits the whole economy. The biggest problem with this theory has been the “un-informed consumer”. That is, a person buying a product for $10 is not buying it at the lowest price if she don’t know it’s available at $5 nearby. This lack of information makes the market inefficient. The idea is that if a consumer is perfectly informed, only then will the market be completely efficient. This technological breakthrough brings us closer to the goal of making perfectly informed consumers, thereby improving the economy and hence improving the quality of our lives.

Brother Hasnaad: I am not very good impressed.

Luddee: Why not?

Brother Hasnaad: Because I go to America in remember times and saw only one important difference between your peoples’ society and mines; you people have big roads. That’s all.

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