What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Easily the most fascinating aspect of this article is the idea that free trade is so persistent a force that it can occur in un-free societies. The atmosphere of a POW camp certainly doesn't seem conducive to the development of a method of exchange. However, the fact that markets regulate themselves definitely rings true. Non-money prices did exist, and cigarettes prevailed as the main form of currency. Because of this, cigarettes had value to everyone, including the non-smokers. Arranging a trade proved to be difficult, and before a better way to do so was established, people would wander around calling out their offers and desires. This is almost identical to what happened to us in recitation during the buyers and sellers game. The residents of the POW camp recognized this hinderance to trade, and each bungalow posted a board that listed specific desires and prices of its residents. This organized the transactions quite nicely, although transactions costs were encountered. There were often people from many nationalities in these camps so language barriers were frequent, and it was sometimes difficult to overcome the information problem. People who were in the know, however, made the smartest transactions. For example, when it was discovered that a driver of a ration truck was willing to sell bread for one chocolate bar, bread and chocolate became complementary goods.
Discussion Questions
The economic markets within the camps became more and more fixed when they had very little contact with outside markets. What does this say about our global trade market? Do prices fluctuate too much? What would happen if countries took a more isolationist approach? Would this be less efficient? Explain.
Interference is a transaction cost. Violence, for example, hinders transactions. Prisoners of war are a product of violence. How do you explain the existence of a market amongst them then? Did they find a way to overcome this transaction cost?
Annotation
This article was used to convey the persistence of markets. They are born out of a human desire for trade and transaction, and the most successful ones aren't controlled by a single person. Markets are prone to constant fluctuation in both money and non-money prices. Free trade is also essential to market stabilization. The wider the trading sphere, the more variables a market has. The main point is that market prices establish such a feeling of normalcy that they were born and sustained in a society where the people had almost all of their rights revoked.
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