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Paradigm Shift

The old guard built this movement. Without them, it’s unlikely any of us would be aware that a liberty movement even exists! This alone is an accomplishment. And the history books will look favorably upon them for it - & justifiably so. Their preference for a political approach however, has been ineffective at bringing about liberty (just take a look around, if you’re still permitted). Progress hasn’t just stagnated, we’ve been losing ground rapidly. It’s time for a paradigm shift. One that moves away from the old way of thinking & instead focuses on teaching people how to opt out of corrupt systems & to build competing, market-based alternatives to state institutions. Like sports teams, ideas also get tired & worn out, old players retire, & new, fresh ideas take their place. In the world of ideas, when paradigm shifts occur, the old guard resists the change at first, but eventually comes around to seeing the benefits and virtues of the new way. This is how progres

The Louisville Black Markets: A Case Study in the Ethics of Counter-Economics





It has long been a running joke that someone who pays $20.00 for a gram of marijuana is new to the market; but does an analysis of this phenomenon, as well as other observations about market forces at play indicate some conclusions about the illegitimacy of statist claims about the black market? Why is $20.00 for a gram such a laughable price for a substance that is federally—and often locally—prohibited? The short answer is that while this substance and its distribution exist in the black market, also known as under state prohibition, it does not exist in red market: the set of transactions that is both state-prohibited and immoral. The state would like to have people believe that these two markets are indistinct: they would like the populace to believe that anything they prohibit must also be immoral because it was prohibited by a legitimate entity (themselves). The market for marijuana—this article will focus on the Louisville market (where it is still locally banned)—exhibits characteristics that weaken this argument, though. For a substance that supposedly has no morally justified medical or recreational use, the underground market for weed sure does exhibit typical phenomenon associated with free market incentives.

Price Equilibrium


The most evident attribute of a stable market is an equilibrium price and quantity. If there is evidence of a long-term equilibrium, then there is strong reason to believe that predictable and normal supply and demand forces are present. Equilibrium quantity may be very difficult to asses in a black market, but an equilibrium price is not so hard to discover. In fact, when asked the question of “How much would you sell a normal gram for?”, two dealers* that I interviewed separately both said ten dollars, though both said they would charge more for someone new to the market. I also interviewed a consumer who said he would never pay more than $10.00 for an average quality gram. When asked if they would sell/buy for $5 more or less, all interviewed said only if there was a significant change in quality. The consumer I interviewed reported that, “If I’m getting weed for $5, it’s probably… shit weed.” This commonly agreed upon price is an example of price equilibrium. If the selling and usage of marijuana was as chaotic as the government believes it is, then this common price, agreed upon by producer and consumers outside of transition, would be incredibly unlikely.

Demand Elasticity


Not only is this price of $10.00 common place, but it is also apparently fixed, ceteris paribus. If a dealer wanted to sell a gram for more than $10.00 under normal supply and demand, then it would have to be “gas” (also known as above-average quality) as one producer puts it. This means that a gram of average weed has almost perfect demand elasticity. Assuming people are even a little naturally inclined for morality, the state’s argument that whatever it prohibits is also immoral is significantly weakened by this phenomenon. If a state-ban also imparted immorality, then people would only buy/sell/use marijuana in desperation or if they were the type of people to regularly disregard morality and ethics. However, desperate demand formulates itself as inelasticity, the exact opposite of what we see in the black market for pot.

Price Response to Changes in Supply


Note that the equilibrium price of $10.00 is demand elastic at ceteris paribus. However, Louisville has been experiencing what is known as a ‘drought.’ One dealer said it might be because of a lack of rain where cannabis is grown; another attributed it to more “bust.” But whatever the true reason is, the market responded. Both dealers reported being able to increase prices—one specified to $15.00—because of the decrease in supply. This response in price substantiates the equilibrium claim since prices can rise only if market forces call for it. If dealers could charge whatever they wish at any time, then why not charge $15.00 even when Louisville is not in a drought? Consumers are only willing to pay higher prices if supply or demand signals them to do so in predictable ways.

Peaceful interactions


In Louisville, the market for marijuana is relatively peaceful. All three persons interviewed reported having experienced no direct violence during transactions. One dealer reported hearing about others experiencing conflict but did not have any personal experience. Another claimed selling marijuana “is like selling candles.” The market in the city is so massive and complex that it often simply does not make sense to rob or harm producers or consumers. The state would have you believe that if an act is prohibited, then it will always lead to violent transactions. While it is true that prohibition often leads to an increase in violence, the Louisville market proves that avoiding state-bans does not mean one has to participate in violence or even have grave risk of encountering it. In short, black markets can arise under agoristic rules. These rules can incentivize peaceful and stable market and transactions.

Hayek’s Cosmos


Finally, the pot market exhibits the most basic free market principle: Cosmos. This is the concept of order from spontaneity. Obviously, there is no government agency regulating marijuana sales in Louisville. No occupational licensing allegedly protecting consumers. No government-enforced price floors or ceilings. No way for large marijuana corporations to lobby for special protections. The statist may ask, how can such a healthy market, a market that predictably responds to normal incentives and signals, exist and even thrive without the government overseeing it? The answer: counter-economics. Peaceful people can, and often will, operate a moral market not only without but even in defiance of the government. Weed may never be legal in Louisville, but the market will provide.

*Names have been removed to protect interviewees identity from prosecution

by Benjamin D. Myles, @benjamindmyles1 is a student at the University of Louisville.




Comments

  1. Great article! Im in the legal pot business in Oregon and the idea that the market needs to be overseen by a group of assholes sitting in a meeting room is asanine and disrespectful to the fact that folks have been buying and selling good weed under peaceful conditions for a very long time.

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