Radford quickly establishes the POW camp's economic activity occurred spontaneously because of the prisoner's needs and circumstances. The market evolved as people began trading based on preferences. The information barrier (transaction cost) was bridged by putting up a public notice board, market prices soon reached equilibrium. While cigarettes became the standard form of currency, bartering still took place. I found it interesting that Radford discusses how multiple markets existed within a camp. Prisoners could even take out loans...in cigarettes! It is no surprise that individuals would hold onto rations, say bread, until prices peaked for cigarettes. Radford notes a time in which people began hand rolling their cigarettes, causing market prices to fluctuate because it unstandarized currency. Additionally, the market was plagued with deflation and inflation based on the supply of cigarettes dispersed by the Red Cross. A change in conditions affected the market's price structure more so than the general price level of goods. Paper currency developed, called Bully Marks (or BMs), which were backed 100% by food, but later fell out favor with the prisoners. While there was an attempt to fix prices, this too fell out of favor. Middlemen, much like today, were looked down upon within the camp.
B)
1. Why don't we see the same cycles of inflation and deflation that Radford described in today's market system?
2. What were the problems with having cigarettes be the standard currency?
3. Why were the main transaction costs one had to endure while in a POW camp?
C)
Radford illustrates how a market arises spontaneously because of needs, wants, and preferences. Also he describes the camp's market instability and shortcomings
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