An Economic Debate

Ray Bradbury said, ""

Friday, April 22, 2005

I've been having a little conversation with Pastorius that originated with my idea that barter economies contributed to the misogyny of primitive cultures.

He posted the following on his blog:

Money creates a more moral society? Economics are determinative? There seems to be a lot of truth to his argument, but it presents some intellectual challenges. I'll have to think about that. I don't think money is evil, but neither do I think that it is true that the more society values money, the more moral it becomes. Instead, possibly there is a point at which the system of economics has become sufficiently complex to give as much order to the society as it is capable of giving.

I responded thus:

First. A society does not "value" money. No one but a miser wants money for money's sake (even numismatists value money for other reasons, such as fame, pride, ability to exchange them for better and more rare coins, etc). The value of money comes from what it is exchanged for. Money is a symbol of one man voluntarily exchanging for a value produced by another man. It would not exist unless the following conditions were met: a)men capable of producing values, and b)the ability to exchange those values freely.

To the degree a monetary system is hampered by government regulation, people are coerced in the manner they decide how to spend their money i.e what values they will be able to acquire and produce. To the degree people are incapable of voluntarily exchanging values, the production of new values will be discouraged, and people will be unable to acquire existing values. Furthermore, to the degree government interference with the monetary supply produces results not seen without such interference, people will be unable to make long-term plans, and will thus both curtail their production, as well as be hesitant to fund other people's productive activities. Those societies which lack the latter condition (Nazi Germany, Russia, North Korea, etc), must be seen as operating on something worse than fiat-money: their currencies represent not a claim to value, to be exchanged freely with another man's values, but a barrel of a gun held by the government. It is the same with those countries which still barter young girls- a value (a herd of goats) is exchanged against a value which does not admit of being owned- a human life.

Money would not exist without man's mind, and without the freedom man requires to use it.

Second. The order of society is such that the justly understood interests of humans are harmonious, these interests must be obtained in a finite universe, and the method of obtaining them is rational labor. From these axioms, all economics is based. It extends in a non-contradictory manner just as all of mathematics extends in a non-contradictory manner from its most basic axioms. The a priori logical cohesion of economics is as incapable of reaching a limit in complexity, as mathematics (in one way only. Neither mathematics nor economics can go beyond the axioms they accept as given).

Pastorius responded:

Man places the value. It is human judgement which values one as being worth so much when compared to another thing.

Therefore it is not logical as mathematics.

Economics extend from human judgement. Mathematics extend from logic.

Am I missing something?

I responded:

Yes, you are missing something.

Man will die without food. He will die without water. He will die without shelter. He will die without the means to obtain these, and the only means of obtaining them are by using his mind. None of them are given to him. The necessity of man to produce these things is a requirement for human life as surely and for the same reasons as physical laws. It is as impossible for a single man or a society to live without producing, as it is for a river to flow uphill- for the same reason.

The laws of economics, being derived from the nature of the universe, are as immutable as those of physics. Man must act within them, for it is impossible to act beyond them. Within these laws the entire scale of happiness is found- from the simplest shelter to a mansion, from a flint knife to a machine tool. The laws of economics tell humans exactly what the laws of physics tell humans: what is impossible, and what actions must be taken to achieve desired results. It is impossible to gain prosperity by imposing slave labor, as much and for the same reason it is impossible for the law of gravity to be over-ruled.

All man's actions are undertaken to acquire a value. Those values which are compatible with the nature of man, will allow him to survive. Those which are not, will kill him. No matter how desirable it may be to kill, enslave, rob, or defraud people, they will produce death with apodictic certainty. Nothing can change their results. It is not a matter of opinion or belief, and is as certain a result as stating the conditions for a chemical reaction.

Man acts within the rules of reality, but neither can his desires achieve what is impossible, nor can his desires change what is possible. The laws of economics antedate man's judgment: they do not claim what man should value or desire, but they state that if one wishes to achieve a result (obtain a value), manner X will or will not achieve that goal.

By claiming that the laws of economics depend on human desire, you miss the key point: human desires take place in a finite universe in which they can only be obtained through rational labor. Unless one takes account of this, no understanding of economics is possible without running into the contradictions which will inevitably occur when one begins to ask whether "positive freedoms" exist.

Pastorius expressed confusion over this argument:

Give me a chance and try to explain to me how a monetary transaction, or a barter transaction does not involve the judgement of human beings. As individuals we decide whether a particular product is worth buying to us. As a group our decision (judgements) decide the price of a product. How could that not involve human judgement?

I responded:

Economics is the study of human action: the science of the means humans choose to attain their chosen ends, and the commensurability of those means with the ends sought. It does not posit which ends are desirable, but only that given a desired outcome X, out of all the infinite methods possible to humans, some means will be commensurate with achieving that goal, and others will bring about different results which from the stand-point of the individuals involved, are worse than the previous situation. It encompasses the commensurability of all means to all possible goals, from the basest sexual predation to the highest fulfillment of religious virtues. It is ordered on the same non-contradictory expansion from initial and incontrovertible premises, toward infinite complexity, as mathematics.

You are looking at economics wrong. It is not the study of human judgments. It is the study of the logical consequences of those judgments in a finite universe in which all values are to be obtained through rational labor. Economics is the interaction of human desires with the physical reality in which they may occur and from which no alternative is possible.

It is clear that voluntary exchange is bounded by the nature of reality, and it is equally clear what this nature is: values cannot be exchanged if they are not first produced and they can only be produced through rational effort. The production of those values will be bounded by the laws of physics, and the benefit men acquire from those values will depend on their knowledge of the laws of physics in achieving their goals. Beyond this level of order, there exists the further level of order which is confusing you: it matters not what the judgments of the individuals are in what they choose to exchange, but whether their decided course of action is commensurate with those judgments, from an economic perspective. In other words, no matter how much you may desire prosperity, unless your means are commensurate, you will either not attain it, or you will attain famine instead.

In the specific case of voluntary exchange, it is again not simply a matter of the choices humans make in which values to produce and exchange: it is the interaction of those choices with the nature of reality which bounds them and determines as surely as the laws of physics the commensurability of certain courses of actions with certain selected goals. It is this interaction between the choices humans make and the logical consequences of those choices in a finite universe in which rational labor is required for human survival, that is the point of study, not the infinitely variable and unobservable desires of men. It is the study of the consequences of free will.

My argument has so far been tangential to Pastorius' objection. I have yet to touch specifically on voluntary exchange in the manner which he seeks.

Posted by: Tom "The Pooklekufr" Treloar at April 22, 2005 13:39 EST | Permalink | comments (4) |
economics, lizardoids
Comments open but moderated. I reserve permission to kill spammers on sight.

Comments:

#1 22 April 2005 - 20:12

Gah! Haven't I suffered enough in Macroeconomics this week? Does it have to intrude on my blog-time as well?

That said- are you an Econ major?

ButterflyLane

#2 23 April 2005 - 11:45

There can be no division in economics- it is all based on individual decisions. Most "macroeconomics" is not economics at all, but voodoo mathematics.

I'm studying Austrian economics while simultaneously learning to refute the Keynesians.

Pooklekufr

#3 25 April 2005 - 10:33

The answer to this question is found at an essay I wrote: Is money the root of all evil?

Anonymous

#4 26 April 2005 - 14:37

Sounds very Randian to me. I like it.

Anonymous

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An Economic Debate

Posted by: Tom "The Pooklekufr" Treloar at April 22, 2005 13:39 EST | Permalink | comments (4) |
economics, lizardoids
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An Economic Debate

Posted by: Tom "The Pooklekufr" Treloar at April 22, 2005 13:39 EST | Permalink | comments (4) | postCountTB('445672'); economics, lizardoidsComments open but moderated. I reserve permission to kill spammers on sight.

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Posted by: Tom "The Pooklekufr" Treloar at April 22, 2005 13:39 EST | Permalink | comments (4) |
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