Capitalism provides a framework for the setting of prices for goods. In a capitalist economy, price setting is primarily driven by market forces—specifically supply and demand—though it can also be influenced by costs, competition, and, in some cases, government intervention.
In a free market, the price system is the mechanism through which the value of goods and services is determined. Prices adjust based on:
- Supply: How much of a product is available.
- Demand: How much consumers want at different prices.
- Marginal utility: The additional satisfaction a consumer gets from one more unit of a good, which influences willingness to pay
Unlike capitalism, socialist governments are involved in many aspects of the economy. This means that these governments determine the amount of output (or production) and the pricing levels of these goods and services rather than the free market. People in socialist economies may depend on the state for food, employment, healthcare, and other basic goods.
In America, Obamacare with its high prices and limited access is an example of a socialist/communist economic system.
In Western society, other mechanisms have evolved to control the pricing issue outside of the straight forward supply and demand issue. Corporatism, that is, corporations especially multinational ones, exercising corporate financial control over government systems is a plague on the free market.
Vladimir Putin recently nailed this issue in a way that is difficult for western elites to refute. For a long time, Russia has battled with the EU over the pricing process for oil and gas. Russia, specifically Putin, wanted to sell oil/gas to the EU based on production prices and fair profits.
However, the EU wanted to use “market prices.” These can be and are manipulated by speculation and traders. This results in artificially higher prices. One has to pay the prices that the commodity markets say.
Let’s apply this to gas. Producers can provide increases in volume at lower cost per unit levels just by turning a dial on gas volume. Why would Europe want to pay more, when the cost to deliver a higher volume lowers the per unit price?
Of course, the answer to that is control. And efforts at increasing control are a reaction to fear. The rise of nationalism across the continent is a big concern of all the globalist elites.
Putin had this to say:
As for the economic sphere, the most pressing issue at present is, naturally, energy. This represents yet another area – namely, the economic domain – in which mistakes have been made. How many times did we discuss with them the necessity of maintaining our established energy relations? We supplied gas to Europe at a price of $150 – well, $180 dollars – per 1,000 cubic metres. “That is too expensive,” they told us, “we must switch to market pricing.” But what does market pricing mean?
Under our long-term contracts, prices were – and indeed still are – indexed to the price of oil and petroleum products, which are determined by market mechanisms. “No,” they insisted, “prices must be set on the exchange.” We warned them that gas is not a market commodity, or at least not a classic market commodity; this approach will yield nothing and your prices will only increase. And so, it has turned out: prices are now at 1,000 dollars or euros per 1,000 cubic metres. And they may well rise even further.
Put all of this in the context of the Nord Stream pipeline sabotage. How willing would German politicians have been to back Ukraine if cheap natural gas was available? Remember we are talking about pricing that is currently more than 5 times higher than it would have been with the pipeline in operation. There is no amount of pontificating or gaslighting that would have kept the story alive of how evil Russia was.
Would the Ukraine/Russia war be over? If that war was over, would the Iran war still be going on?
The EU needs war to keep their economies from serious problems. The elites will keep pushing for war completely disregarding the effect on pricing. War is profits to the globalists who do not care how many people die.