Question

do you believe that the exchange system that emerged in this POW camp lead to a "just" distribution of goods? What is a "just" price for a good? Would you have been in favor of regulating the exchange system that emerged?

Answer 1

In the Radford POW camp scenario, cigarettes had emerged as a form of money. They were being used for transactions as well as consumption.

--

The system that emerged in the POW camp was just, and the distribution was also fair. The reason is:

• all goods were equally distributed to all prisoners
• there was no coercion of any kind on anyone
• smokers and non-smokers had their choice regarding what to do with the cigarettes
• there were no restrictions on exchange, and mutual agreement was not restricted

--

A "just" price for a good is where the marginal utility from the good equals the last dollar spent on that good.

From another viewpoint, a "just" price is where the price accurately reflects the cost of production.

Buyers should be willing to buy and sellers should be willing to sell.

--

The pricing system emerged from within the camp itself, and incorporated the mutual agreements of all the prisoners.

Such a system should not be regulated, and no further intervention is necessary.

The system itself will evolve and guide the market towards equilibrium. This is the essence of a free market.