Price Determination In Theory And Reality: Lessons for Liberalisation and Globalisation Policy

Do the prices paid for the goods and services people need — or the money received for work they do — correspond to their real value? Most individuals, after a moment of consideration, would probably answer no. If so, why not? Don’t the economic laws of supply and demand govern the prices paid for goods and services in the competitive market?
Fred Haber has looked at this fundamental question and found distortions in the way market economies actually function. He finds the distortions are caused by the influence of power and notes that the most powerful entities in an economy not only have the capability to set and enforce price, but can influence the distribution of their products as well. Just as significantly, the author finds that great amounts of capital are being diverted to speculative ends — in real estate, on stock exchanges, in foreign currency. When this happens, less capital is available for productive activities and the creation of meaningful work opportunities. Where free competition used to restrict the exercise of power in the market, the global economy has given rise to consolidations to massive forces whose power now determines ultimate success.
To prove his case, Haber examines the theories of a number of prominent economists and compares these theories with economic reality. The author has invested his work with the kind of rigorous scholarship demanded of an academic study. There is a reason behind this approach.