[Marxism] Commodity futures markets as zero-sum

[bauerly at yorku.ca]

To argue that commodity futures markets are zero sum is to take the postion of
traders as the mechanism of the transaction determining the price.  The
positions are the *result* of the process which sets prices not its cause. The
mechanism which drives futures prices higher (or lower) is essentially that
futures are sold by an auction-like process (where both sellers and buyers
compete). Prices go up when bidders outnumber sellers, and go down when sellers
outnumber bidders. This is explicitly stated on the NYMEX website. Now, consider
a situation where you have a hundred bidders but only one seller at the current
price. The bidders bid up the price substantially until only one bidder is
left, and then the contract is concluded. At this point the positions are: one
participant short, one long. Can you use that information to understand why the
price rose? Obviously not. Does that one long and one short appear zero-sum?
Yes.  The information on positions conveys no data whatsoever on why the price
rose, because positions come into existence after the price setting auction in
the trading pit has run its course. So it's no big surprise that position
changes do not cause price changes.  The massive influx of $250 billion dollars
into commodity futures trading in the last few years was the result of a large
increase in the number of bidders and their available investment dollars (which
act like an increase in bidders).  This pushed the price up before the postions
were taken and the appearance of the zero-sum of equal long and short
positions.

Brad