Forward Trading as a Means of Overcoming Disequilibrium

  • J. R. Hicks


This classification of the causes of disequilibrium has a distinct bearing upon the great dispute about the relative efficiency of different types of economic organization. The third and fourth sources of waste must be found in every conceivable economic system, Capitalist or Socialist, Liberal or Authoritarian. Even Robinson Crusoe would not be free of them; he could not foresee when he might be ill, or when his crops might fail; and he would be troubled in his search for the most perfect adjustment of means to ends by the uncertainty of such events in the future. Even the most perfectly organized economic system (whatever that may be) will be thrown out of its stride by harvest fluctuations, inventions, or political upheavals. It would appear at first sight, on the other hand, that the first and second sources are peculiar to a system of private enterprise. In a completely centralized system they would be removed. But a completely centralized system is a mere figment of the imagination; every government delegates its authority to some extent. Thus in practice the different parts of a State machine can get out of step, just as entrepreneurs can get out of step. Whether capitalism is less or more efficient than socialism depends very much upon the effi?ciency of socialism. That is still rather an open question.


Future Price Spot Price Future Trading Forward Market Forward Contract 
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© Palgrave Macmillan, a division of Macmillan Publishers Limited 1976

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  • J. R. Hicks

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