The Economic Organization of a P.O.W. Camp

The Economic Organization of a P.O.W. Camp
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The Economic Organization of a P.O.W. Camp
1 Prisoners were both suppliers and consumers in this market. The marginal rate of substitution is the rate at which a consumer is willing to exchange one good for another (i.e., 2 apples for one orange). Discuss how the marginal rate of substitution behaved during different times in the camp, and the role the “cigarette currency” played in these variations, or the lack thereof.
The P.O.W. camp is an existing example of a simple economy. During World War II, the Germans used the camps as detention centers for officers who had become foes. Each camp accommodated approximately 1,200 to 2,500 prisoners’ (Radford, 1945, p. 2). Unlike the normal prison setting, prisoners traded with each other with the intent of satisfying their needs. For example, some of the prisoners traded their food for cigarettes or other foodstuffs and vice versa. The incorporation of cigarettes as a good for exchange made its status change to being a currency. Additionally, the detainees received various supplies, such as tinned milk, jam, butter, biscuits, cigarettes, sugar, among others (Radford, 1945, p. 5). During the allocation of supplies, each prisoner received an equal share, but some of the prisoners would always acquire extra supplies because of the thriving barter trade within the camp.
At the transit camp, the author asserts that each prisoner received a quarter of a Red Cross food parcel a week. Because of the high population of prisoners, it was chaotic and uncomfortable. The high population provided the prisoners with many markets to trade their supplies as opposed to a solitary one. For example, the value of a tin of salmon varied by two cigarettes in twenty between one hut and another. Because of the presence of the simple direct barter trade, a nonsmoker would give his cigarette issue to a smoker friend in exchange for a bar of chocolate. The uneven exchange of supplies between one prisoner and the other made the trade increase, thus making the uneven scales of exchange values come to life. For instance, Sikhs who had initially bartered tinned beef in exchange for other foodstuff began insisting on margarine and jam. Because of this new demand, the value of a container of jam was now l/2 lb. of margarine ...