Surge pricing goes universal: some effects

Here's something I learnt today in an article which definitely deserves pondering by those concerned with culture, social justice and keeping an eye on corporate tactics.

In 1861 a shopkeeper in Philadelphia revolutionised the retail industry. John Wanamaker, who opened his department store in a Quaker district of the city, introduced price tags for his goods, along with the high-minded slogan: “If everyone was equal before God, then everyone would be equal before price.” The practice caught on. Up until then high-street retailers had generally operated a market-stall system of haggling on most products. Their best prices might be reserved for their best customers. Or they would weigh up each shopper and make a guess at what they could afford to pay and eventually come to an agreement.

Now, I never knew that history, though I suppose any of us would have guessed that perhaps there had to be a first place to move from haggling (and the personalised pricing that must have meant) to fixed ticket pricing. I am intrigued and delighted by the insight into how a simple change alters a whole culture for a couple of centuries across the globe. I note how it plays well with massification and the then-developing ideology of free trade.

Downsides not mentioned: this would blow a hole in rpi calculations and render difficult or impossible inflation calculations and thus problematise things like index-linked pensions or other payments relying on rpi systems (note the comment in the article "Increasingly, there is no such thing as a fixed price from which sale items deviate"). There's an interesting feed-back loop potential in that. And then there is the hint in the article that poorer people might not come out well, that they would be given higher quotes on the basis that they are less likely to buy lots.
It might also become difficult to argue for the price-lowering effects of the Market (capitalisation intended) if in fact such selective pricing is taking place. Interestingly this exposes, possibly, the reliance that market economics may have on fixed pricing as its ideological support. Now I understand that 'surge pricing' or whatever does rely on free-market justification but I suggest that offering a price based purely on demand at a particular point is not the same as offering personalised prices based on what the algorithm suggests that you are willing or able to pay. If the algorithms are using the same or similar digital shadows for you or me, they will all tend to offer similar 'deals' to us. Thus the possibility of shopping around with the consumer power that commands is nullified: this could become a sort of cartel/oligarchy arrangement powered by algorithms. This would create its own algorithmic feedback loop having the effect of ratchetting up prices over time. And I say that in contradiction to the article's assessment towards the end:
This looks a lot like the beginning of the end of John Wanamaker’s mission to establish “new, fair and most agreeable relations between the buyer and the seller” and to establish something closer to a comparison site that works both ways – we will be looking for the low-selling retailer, while the retailer will equally be scanning for the high-value customer.
I'm not sure that the algorithm's will be sufficiently differentiated. If you want a sense of how this might work, spend half an hour looking at the prices of rarer second-hand books on a variety of sites, asking yourself the question about who would buy at that price -yet probably the prices have been set by an algorithm: the idea that second hand means cheaper in most cases has been blown. Unless of course someone creates price-busting algorithms that have the consumer's better price interests at heart. Algorithm price-wars, anyone?

My own response is surprisingly visceral at a personal level. I feel that somehow this seems like a violation of natural justice -I resonate with Wanamaker's slogan about equal before God and price. And yet I find myself questioning how far that gut feeling is actually an artefact of a lifetime's exposure to fixed pricing and the way that it has become part of the way that I calculate swathes of everyday life.
Perhaps this kind of response is why "Horgan suggests that British retailers are still a bit terrified that customers will be put off by changing prices ".

I'm also thinking that it is likely to bring to the fore questions of profit; charging what the market /consumer will bear may increase an awareness of how questions of relative power are framed. Is the retailer really adding "that much" value to the product? Is the price of status projection really that high? Most of us don't quibble about the idea of a reasonable mark up for costs and a living wage, but some 'surge pricing' seems to be sheer profiteering and this would be a mechanism for that. 

So, I'm wondering whether we need to have a set of standards for algorithms which give a quality assurance which guarantees the protection of consumer interests?