It is a long time since Mr Howe’s A Level economics class at Strode College in Somerset. He taught with enthusiasm and made even dry topics interesting. The supply and demand curves he drew on the blackboard brought the complexities of the market into our grasp (well, almost).
Mr Howe would explain that if capitalism was really to work, there had to be perfect competition and he would take us through the requirements of what was required if a market for good was to be perfectly competitive. His favourite illustration of a market that was nearly perfect competition was that of the London barrow boys, selling fruit in the street, but as most of us had rarely, if ever, been to London, his point was mostly lost.
It being a long time since Mr Howe’s classes, memories of what went on the board are vague, but Wikipedia has a succinct outline of the sort of market that Mr Howe explained with the barrow boys.
Perfect competition requires:
Atomicity: An atomic market is one in which there are a large number of small producers and consumers on a given market, each so small that its actions have no significant impact on others. Firms are price takers, meaning that the market sets the price that they must choose.
Homogeneity: Goods and services are perfect substitutes; that is, there is no product differentiation. (All firms sell an identical product)
Perfect and complete information : All firms and consumers know the prices set by all firms.
Equal access: All firms have access to production technologies, and resources are perfectly mobile.
Free entry: Any firm may enter or exit the market as it wishes.
Individual buyers and sellers act independently: The market is such that there is no scope for groups of buyers and/or sellers to come together with a view to changing the market price (collusion and cartels are not possible under this market structure)
The third condition for perfect competition, that there be perfect information of the prices set by all firms, came to mind when reading the blog of the Bishop of Saint Andrews this morning. His ever faithful Volkswagen Passat makes regular appearances and on Friday prompted the bishop to mention a website where one could find the cheapest petrol prices in the United Kingdom.
Wouldn’t it be excellent if there were an Irish site to match it?
A Google search revealed that there was, www.pumps.ie.
Mr Howe would have been delighted that the Internet was assisting the operation of the market to produce the best outcome for consumers.
Shouldn’t churches be publicizing sites like pumps.ie and all the other sites that provide people with market information? Isn’t assisting ordinary people get the best value for money part of seeking after justice? Isn’t educating people about the monopolies and about the need for competition just as much about the values of the Kingdom of God as the sexual ethical issues that so preoccupy us? Or is it getting into politics?