The Law of Supply and Demand Isn't a Conspiracy, It's a F-A-C-T of Life

This was a meme I found on Twitter or Facebook some time ago. It's annoying when Communist hippies argue things like:

1. Profits are just unpaid wages.
2. The value of labor is determined solely by labor. 
3. Poor people exist because rich people exist.
4. Supply and demand are just excuses, not valid reasons, to raise prices.

It's laughable how commie hippies would make fun of supply and demand. However, no amount of insults will change the laws of supply and demand (read here). Insults may succeed in starting a fistfight (which could have been avoided by walking away), but the perpetrator can play the victim all they want; however, the laws of business and economics remain the same.

Whether commie hippies want to admit it or not, Vladimir Lenin actually understood supply and demand. Lenin instituted the New Economic Policy. In fact, these are the five key points of Lenin's policy, despite the fact he was also a dictator:

Five key points 

1. The New Economic Policy, or NEP, was a revised economic strategy, developed and introduced by Lenin in early 1921 – a time when the Bolsheviks faced rising opposition and rebellion.

2. The NEP replaced war communism as the Soviet regime’s official economic policy. It ended grain requisitioning, replacing it with a fixed tax to be paid in kind, and allowed private ownership of small business, the return of markets and the sale of surplus goods.

3. The NEP allowed the return of capitalist behaviours, such as buying and selling for profit, and produced the emergence of new kulak and Nepmen classes.

4. In comparative terms it was a success, allowing Russia’s agricultural production to quickly recover and, by 1925, reach similar levels to before World War I.

5. Some in the Communist Party considered the NEP a betrayal or abandonment of socialist economic principles. Lenin justified it as a temporary “breathing space” for the Russian economy, which had been exhausted by years of World War I, the Civil War and war communism.

Of course, Stalin reversed all that to the Soviet Union's demise. However, the NEP seems to have influenced the Chinese Communist Party (CCP) and the Communist Party of Vietnam (CPV). The late Nguyen Duy Cong (who died in 2018) implemented the badly-needed Doi Moi, or restoration. Vietnam was a mess after the reunification.  

Whether we want to admit it or not, the law of supply and demand is as real as the laws of physics and the laws of biology. Economics is a behavioral science. Science is a study of facts! The Oracle Net Suite (and I expect people to just bash my sources as "just capitalist black propaganda):

Law of Supply and Demand Explained 

The law of supply and demand describes how the relationship between supply and demand affects prices. If a supplier wants more money than the customer is willing to pay, items will most likely stay on the shelf. If the price is set too low, customers will be eager to buy the items, but each item will be less profitable. The law of supply and demand is based on the interaction between two separate economic laws: the law of supply and the law of demand. Here's how they work.

The Law of Supply. 

The law of supply predicts a positive relationship between pricing and supply. As prices of goods or services rise, suppliers increase the amount they produce — as long as the revenue generated by each additional unit they produce is greater than the cost of producing it. Seeing a greater potential for profits, new suppliers may also enter the market. For example, prices of lithium and other metals used in batteries have soared as sales of electric vehicles have increased. That has encouraged mining companies to explore new sources of lithium and expand production at existing mines in order to increase the supply and generate higher profits.

The law of supply can also operate on a local scale. Let's say a well-known musician is coming to town. Anticipating a huge demand for tickets, promoters aim to maximize the supply by booking the biggest venue possible and offering as many tickets as they can, at high prices. As the supply of tickets runs out, the price of secondhand tickets rises — and so does the supply — as casual fans who bought tickets at the list price see the opportunity to resell them at a higher price. As a result, they enter the market as new suppliers.

The Law of Demand. 

The law of demand says that rising prices reduce demand. So as prices rise, customers buy less. That's particularly true if they can substitute cheaper goods. When the famous musician comes to town, not everyone may be able to afford a ticket even if they'd like to go. So, if the theater sets prices too high, fewer people will decide it's a worthwhile purchase, and the show organizers will be left with empty seats. Fans who want to resell their tickets may need to lower their asking price. Some people may decide to see another artist instead, if those tickets are cheaper.

The Law of Supply and Demand. 

The price where supply and demand meet is known as the equilibrium price. At that price point, suppliers produce just enough of a good or service to satisfy demand, and everyone who wants to purchase the product can do so. In practice, of course, balancing supply and demand is more complex. As supply and demand fluctuate, the equilibrium price can vary over time. Furthermore, the law of supply and demand assumes that all other factors that can affect pricing remain constant. In reality, that's often not the case. For example, fluctuating production costs or supply chain problems can have a big impact on pricing.

Why Is the Law of Supply and Demand Important? 

Business success in any competitive market depends on accurately assessing supply and demand. Every company that launches a new product needs to determine how much of the product to make and how much to charge. A business that manufactures too much of a product or sets prices higher than customers will pay can easily find itself left with products that don't sell and become dead stock. On the other hand, understocking or setting prices too low reduces profits and can drive away customers who can't wait for backorders to be fulfilled. Demand forecasting can help businesses determine the optimal supply level and find the equilibrium price — the price at which the supply just meets customer demand.

People have tried to defy the laws of economics, with utterly bad results. For example, the Great Leap Forward was just one of them. Mao Zedong (who died in 1976) attempted to establish his self-industrialized utopia, rather than learning from other countries. Some people say it wasn't Mao's fault. However, ask the survivors or their descendants, who will say otherwise. The problem was that Mao exhausted the supplies, and prices went up, as a result. Mao tried to defy the laws of economics and failed. It wasn't long until Deng Xiaoping (who died in 1997) established the real Great Leap Forward (read here). EDSA 1986 probably only succeeded because the Philippines was already greatly weakened. However, the Tiananmen Square protests failed as China had secured its position as an economic superpower.

It's crazy (really) how people want to think they're above supply and demand. In truth, they aren't and history has proven it. That's why people who demand #SahodItaasPresyoIbaba better prove it works. Otherwise, they're just making useless noise, which they are.