Sunday, 4 December 2011

Cost mechanism and Price mechanism

For one person a cost another a price, the price mechanism is therefore also a representation of a cost mechanism. However the mechanism of reducing costs and those who can reduce costs better while keeping labour effectively engaged can be a positive reason why a system with an ecology of economic actors, free trading individuals, is more likely to survive than a single system (eg planned economy).

While writing this I realised that the economic actors could in fact be entire economies, so explaining Chinese two economy system. Would China be ready for a three economy system?
Countering that is that Chinese World recession time success is their strong position in investment friendliness period or in other words high exploitation of their workers on the world pay scales.

Some costs are caused by the environment eg, bad air quality or salty waters while others are borne of interactions between economic players or the structures of the production itself.

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