Tuesday, May 16, 2017

Capitalism adds value

i was listening to Jeffery Tucker, someone with whom i disagree with on several things, talk about Capitalism and Love... and he made a wonderfully salient point that i want to get further into... i'm going to ramble on a little bit, not to educate or to explain, but because this is my Rambling and i do what i want here.

about 25 minutes in, he talks about defining what he means by "love"... referencing C.S.Lewis... the first level being storge, or a fondness or empathy love... it's the kind of love one has for family, friends, or even pets...it's a love which grows out of familiarity, lacking coercion... it just is.

storge shows how love can be a value judgement... love for people in your life may have no actual value... in fact, they can have a negative value in some cases... but you can still have a type of love for them; finding a value in them.

commerce, a commercial interaction, the exchange of goods and services, can also be a value judgement of individuals with no concern for their intrinsic value or even for a relative value to others... basically, i can love chocolate to such a degree that i would pay well over the established market value... i would do this because my personal valuation for chocolate is greater than the intrinsic value of chocolate, and even greater than the accepted relative value of chocolate among the rest of the persons who value chocolate... my value for chocolate can even be higher than the known health risks of consuming high quantities of chocolate!... chocolate can have a negative intrinsic value, but a positive personal value.

alternatively, some value eating peanuts, even knowing they are allergic to consuming them and will shortly have debilitating stomach problems and bloating... you know who you are.

so the value of a good or service is relative to individuals... it is also relative between the same individual at two different times... i may, during a chocolate craving, pay exorbitant sums for even low quality chocolates... but after being satiated, my value of even high quality chocolates may wane to almost zero.

using Mr. Tucker's example of two prehistoric capitalists, one who was an entrepreneur of domesticating sheep and the other an entrepreneur in horticulture, we can see that each values what they possess much differently than what they want... the sheepherder values his sheep, but even the nicest leg of lamb holds little value to those ears of corn his neighbor owns... after eating nothing but mutton day in and day out, a nice ear of roasted corn sounds delightful!

meanwhile, the gardening neighbor next door is so sick of corn he could cry!... yet he still holds his corn to have value... he has placed work and time into the sowing and harvesting... he doesn't throw it away, nor does he want it to rot on the stalk.

Mr. Tucker references Aristotle at about minute 23 of the video... he notes that Aristotle concludes that commerce is a zero-sum game... one healthy lamb might equal one bushel of corn... but that is really never true... in the eyes of the sheepherder, the bushel of corn has an immeasurable price... it's something he cannot possess on his own... he knows nothing of horticulture... and in the eyes of the gardener, the plump lamb equally holds an immeasurable price.

to Aristotle, they would trade equal value of lamb to equal value of corn... but there must be a negotiation of value and an agreement of the final value of possessing the object of their desire... for instance, the sheepherder may decide that one bushel of corn will last two weeks; two glorious weeks of roasted corn and cut corn and cream corn and corn casserole... the gardener decides that the lamb will be slaughtered that day, eaten that night, and some measure of sheep-jerky to chew on later... he will soon desire another lamb... the gardener knows that the sheepherder will not return for more corn for at least two weeks, long after he runs out of fresh chops of lamb... so he tells the sheepherder that his bushel of corn is worth two lambs.

so the sheepherder has to decide if two weeks of corn is worth two of his lambs... he'll need to do some calculations on how many sheep he owns, how often do they give birth, the replacement rate of lambs to bushels of corn... if he wants 52 weeks of corn, that will cost him 52 lambs!... suddenly he values the sheep at a much higher price!

and so on, and so on...

but, in the end, what do each end up with?... if successfully negotiated, each end up with a higher value of commodities than they started with... the sheepherder began with only sheep; now he has sheep and corn... likewise the gardener began with an overabundance of corn, and he ends with corn and lamb!... had each not engaged in commerce with one another, each would have remained at a lower value of overall goods... but the quantity of goods never changed... it was only the perceived value which changed.

likewise with capitalism... money has a finite and described value; we might call this its intrinsic value... a dollar is worth 100 pennies... but if you were paid $10 for work, would you value 10 dollars and 1000 pennies equally?... probably not, if only for the inconvenience of exchanging those pennies for other goods or services... if a high-paid doctor were to exchange his services for Lamborghini's, eventually his desire for high-end automobiles would wane (most likely in inverse ratio to how quickly his driveway filled)... while the intrinsic value of any person's work is equal, we naturally value some work over others... the doctor's work is of higher value because we perceive it as saving, or at least lengthening, our lives... the garbage man's work, we value less than the doctor's, but i guarantee that the garbage man is saving and lengthening your life equally, if not more, than the doctor... (imagine the heaps of rotting garbage in everyone's home and yards... thank a garbage man.)

we complain about the cost of milk at the grocery, but we value the milk in our cereals more than the dollars we've earned through our labors.

people learn a skill in hopes of marketing that skill to others who will then engage in commerce for it... a sheepherder may love herding sheep, but he also loves corn... he raises the best sheep he can in hopes that each sheep will provide him with overflowing bushels of corn.

another sheepherder may hate herding sheep, does it poorly, and offers scrawny mange-filled sheep to the marketplace of commerce.

the gardener now has a choice of lambs... he values his corn differently between the two lambs being offered... while one might place equal intrinsic value on the two lambs (perhaps they weigh the same or other equal objective measure), the subjective value TO THE GARDENER is greatly different... he might offer the first sheepherder a full bushel for his lamb, but to the second only a half bushel.

at which point, the second sheepherder cries to the Sheepherder Union 408 about the unfair trading practices going on... the government steps in and takes 1/4 bushel from the first sheepherder and gives it to the second for "fairness"... at which point the first sheepherder gives up sheep for growing corn himself, since he loves corn anyway... but now there is a glut of corn on the market and too few sheep (because, let's face it, the first guy still likes to eat mutton, too)... and now both corn-growers must offer two bushels of corn for one scrawny diseased sheep, or else go without.

but we've left Capitalism and entered into something else entirely.

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