Assumed technological innovation in the free-marketeer worldview

Following up a bit on the last post, it occurs to me that the idea of “perfect information,” which looms so large in the free market model, is something that we’re actually very close to in the age of information digitization. Specifically, bar codes and hand-held scanners should conceivably allow distributors and merchants to monitor not only minute-to-minute inventory, but also purchasing patterns over time. If a situation like the one that raised my ire yesterday were to occur, this technology could easily be used to alert the store to ask the distributor for more of Product X, or to alert the distributor to just show up with more next time. This would be a valuable system, at least at some scale, because every time this particular inefficiency happens, somebody is losing $4-5. In a competitive market, it’s to Coca-Cola’s benefit to keep me from going my next preferred parity product, sold by PepsiCo, and it’s also to Grocer X’s benefit to keep me from checking the shelves at Grocer Y.

But clearly if such a system exists in the world of retail sales, it’s not being employed by either of these two grocery chains. And it strikes me that part of my annoyance here is that I know the technology exists (both because I’m a technologist by trade and because versions of it are featured in ads from IBM, UPS and others) and I reflexively expect it to be in use. I wonder how much this view exists out there in general, and specifically among strong free market theorist-proponents — I’m thinking specifically about the Reason-types who are happy to argue for free markets based on abstraction and theory. The market and the information here and qualitatively different than those that are found in high finance, insurance and exchanges, to be sure, but the principle of efficiently organizing and providing relevant information is the same.

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