A)
This essay recounted the economy that arose in a German POW camp during WWII, enterprising POW's created a system of trade and a vibrant market system based on the currency of cigarettes. The entire piece is interesting, especially how real a currency the cigarettes became. With credit being used and all sorts of other mechanisms which we find in the real world. However the most interesting section, and also the most amusing, was the section on price fixing. Some one in authority decided that the prices for food needed to be set by the central store in order to make sure everyone had enough food. However in a classic example of why central planning cannot work the price fixing system failed. Rapid deflationary pressure from other sources changed the real value of goods, but the store could not adjust quick enough and most exchanges went to the black market. Thus the system was forced to be shut down.
B)
B)
- Using the POW camp as proof, can it be proved that a modern economy can survive without a manufacturing base?
- How can the lesson of the Medical Doctors attempt at regulating prices be applied to today's economic problems?
- Would it have been better for the camp to stay in BMKs or do you believe the Cigarettes were a better currency? And how is this similar to the idea of gold/silver vs. dollars.
C.
This essay shows how markets spontaneously erupt out of the natural human behavior. It also demonstrates how supply and demand determine prices in a market. Nothing needs to be done to create the system of the market and the prices, it happens naturally.
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