[OPE-L:3775] Re: predicting market prices

Gerald Lev (glevy@pratt.edu)
Wed, 4 Dec 1996 06:36:52 -0800 (PST)

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Paul C wrote in [OPE-L:3774]:

> If one had access to the data, detailed i/o tables, sufficiently early, then
> I think that one could have a good stab at predicting future prices. The
> problem would be to collect the data. Whilst it is technically quite
> practical to collect the data with modern computer technology, this
> collection involves a real cost in labour and equipment. Under
> capitalism there is no way of meeting the social cost of gathering the
> information.

The state has access to most of this data and has the revenues for
expenditures on data collection and tabulation. Yet, state agencies are
not able to accurately predict future market prices.

The banking community and investment brokers have access to many
statistics related to costs and past pricing trends. Yet, these firms are
unable to accurately predict future market prices.

Individual capitalist firms have the data on current costs, but they also
are not able to accurately predict market prices. Of course, they *do*
make predictions about prices. In some cases (e.g. oligopolistic markets),
these firms can even *set* prices (as in the case of much of industrial
pricing). Yet, they have no certain way of knowing that the prices they
predict ... or even set! ... will be the prices that commodities will sell
for in markets. In other words, firms have no way of knowing whether the
prices they predict _ex ante_ will become the actual prices _ex post_.

So, the question concerning the possibility of accurately predicting
future market prices isn't primarily a question of incomplete information
or the costs of gathering information. The problem here is that market
activities by their very nature involve a certain degree of uncertainty
and risk. All the information and computer technologies in the world can
not be used to accurately predict market prices or, relatedly, market
demand. If there was a way to predict market prices, moreover, then
speculation and much of the trading on stock markets would cease.

In solidarity,