Economics 101
1. The basis of modern economic thought, the ideas that predominate, is found in
the 19th century biases of laissez-faire theology. It presents itself as a
natural law of nature that capitalism will sustain itself due to certain natural
truths. Among these are:
1. The substitutionary nature of goods.
2. The neutrality of money
3. The scarcity of resources
4. The inability to be satisfied
The first three of the above characterizations or natural truths can be
dismissed in a few words on each.
2. The very idea of “substitution” suggests that there is perhaps some other
medium other than money in which the marginal worker is able to procure a
subsistence. This is not to suggest that certainly the marginal worker could not
procure a subsistence without money. There are many substitution theories that
would guarantee the rights to housing, food, health care and education as a
natural right. However at present, no known modern society operates with these
basic principles. Thus we are left with the basic truth of this natural law,
money is substitutional. No need to engage in a long discourse on this
supposively natural truth. Every sane person realizes the stupidity of the
proposition.
3. However, a few editorial comments are due. How has the substitutionarity of
money been evidenced? Without a doubt, crime has become more rampant as a means
of gaining a subsistence. The natural rewards of eating, having shelter and good
health care are disregarded in order to engage in self-destructive behavior in
order to gain -- eating, shelter and possibly good health care if connected
properly. Of course this paradox just reveals the true nature of money or the
medium of exchange that finds its source in government. And the source of this
problem is in the unsubstitutionary nature of money. So much for the first
proposition.
4. The above two paragraphs should sufficiently diffuse the second proposition.
However, for the sake of argument, we can quit worrying about any value in money
per se. After-all, money is just the grease in the motion of a natural
unalterable movement of goods. This is what the laissez-faire theology would
have the modern economist’s believe. However, Government by its nature in the
modern arena creates the non-neutrality of money. It demands a portion of every
bill of transaction it prints. Supposively to pay for the printing cost. Thus
money is not neutral. Otherwise, I would substitute pecan tree leaves for
greenbacks and pay for my groceries with pecans (rotten or otherwise).
5. Thus money is non neutral. For one economist,' this meant that government
could actively sustain 0 unemployment and low interest rates by controlling the
money supply. This process is known as deficit spending. In the current climate
of political ideology and theology, the active pursuit is deficit reduction.
This is far removed from the reality of the marginal worker who is merely trying
to subsist. If I cannot get enough dollars by ordinary labour bargaining, then
something must suffer. One must wonder, if money is so neutral, what kind of
ideological concept has permeated America’s collected mind to be concerned and
devoted to a Balanced Budget Amendment. So much for the second proposition.
6. The scarcity of resources presents its own fallacy. Without the above two
propositions, this proposition has no standing on its own. If money was truly
neutral, and goods were truly substitutes, then resources could be expanded and
recycled given today’s technology. Thus, solar power would require the same
economy of scale as say coal power. The transition from one technology to
another would enable the freeing up one resource for another. This is
particularly true concerning labour, the one resource that is the most abundant.
The only question is not scarcity, but how to free labour to produce the goods
of subsistence to enable a sufficient standard of living for all, a true
economic substitute for today’s economy. Of course we all know that labour
scarcity is just a matter of the non-neutrality of money and the
unsubstitutionary nature of goods. The rewards of certain labor positions
entails the non-neutrality of money and the unsubstitutionary nature of goods.
Thus the very theological concept of scarcity must have its basis in the
non-freeing of labour to produce. Or in the laissez-faire proposition, the
superiority of one man over another, gifted by divine providence. Forgive me,
but this is 1997, not 1880.
7. One cannot leave this proposition without a brief comment on the nature of
technology and labor. Technology produces its own dependent factor in economic
growth. Technology is dependent upon labor for its growth. At the same time,
labor is in itself dependent upon technology and its growth. Thus enters the
balance between management and labour. The decision of scarcity!!! Must one say
anymore?
8. The final proposition or natural law is the most interesting. It is said that
human wants are unlimited. Humans want everything. Given an ability to take
anything in a store, you will grab the most expensive things
quickly......Okay...Hollywood break here...Since when can an individual consume
to its mental desire? Okay....we have strokes, diseases, plagues, etc., that can
physically destroy due to mental desire. But what human being can consume
unlimited quantities....?
9. Herein lies the paradox of this proposition. Human observation makes it
abundantly clear that there clearly exists a desire to consume un-limited
quantities. Yet few ever succumb to this life pursuit. Sure, the novelty of
being able to walk out of a grocery store with your family needs without cost
would cause a sudden insatiable tendency. Would there be enough rib eyes to
satisfy everyone? Whatever, the novelty of this economic order would soon become
quite mundane....why have tons of cheese dip in the frig when you can pick it up
fresh at the grocery...?
10. I call this a paradox because it is true that this last proposition is
debatable. There is an element in human behavior that is unpredictable by any
economic system of belief. In this regard, human tragedy will persist. The
isolated event that effects thousands if not millions. The suspicions and rumors
that drive rational thinking. These are qualities of labor that are
unpredictable. To control such economic animal spirits would be to deny the very
essence of humanity. So the question becomes, can the appetite of human
consumption ever be satisfactorily met?
11. In this rebuttal of the last proposition, unlimited wants refers to human
desire and uncertainty. This is a far better definition of wants than they are
insatiable. This has important implications for the other three propositions.
For the first, substitution goods become real and very viable to subsistence.
Given my uncertainty and personal desire, I may elect to buy a Caddie rather
than a Mercedes. Equally, I may buy the store brand ice cream rather than
Eddy’s. Of course, this is merely a function of the fact that money is not
neutral. Thus human desire and uncertainty can be seen as a natural function of
the non-neutrality of money.
12. This has important implications on the nature of value. Money and what it
can purchase become the predominant measure of labour’s worth. Thus the
uncertainty of if one can measure up to the standard associated with particular
labour positions. Of course skill is an important consideration. Most positions
of wealth have been either derived biologically or by natural talent or by a
need among the rentiers for a specific solution. Though I have done no studies
on the distribution of this group, I suspect that most positions of wealth have
come due to the need of rentiers for a solution. The freeing of labor to be
innovative and productive. Naturally, these marginal labor units produce well
beyond their capacity to consume. Thus the development of savings and thrift.
Thus we can see a specific example where the unlimited consumption theory is
seriously flawed......
Kind of an economic question.......at what point does consumption ever stop
growing?
Since this is Economics 101.....most say the economic question is the scarcity
of resources and its allocation. Based on the above discussion a sample
definition of
economics would be:
Economics involves the study of ideology interacting with monetary systems.
13. The problem with this definition is that intelligent discourse on the nature
of economics has been defined away into a metaphysical construct. Thus,
economics becomes a branch of philosophy. But this is a stupid assertion to
begin with. Economics is certainly more than ideology and control. Economics is
the realization that major discrepancies in income distribution exists. It
recognizes that the future is uncertain and that individuals act on this
uncertainty in rational and irrational ways. It recognizes that in a monetary
system money has great value. Questions concerning how its value is derive are a
focal point. Thus, money and its value will never be substituted as an economic
system until some adequate subsistence level is achieved by the whole of
mankind.
14. How this subsistence level is defined is the economic question........
15. Guess this is the irony of the neo-classic position......for 150 years,
economists have been harping on the non-substitutionary nature of money. Money
just represents a fuel that provides nothing of intrinsic value in itself. One
wonders why Forbes would even bother with a wealth index. Nonetheless, the true
source that has driven economic activity and growth is the most abundant...labour.
And the one economic reality that has driven labour is subsistence. I would like
to suggest that when money does have intrinsic value the intrinsic value of any
human endeavor will be measure by such. Again, the economic question returns to
simple subsistence and the honors that might be obtained by any subsistence
system. Obviously, the present distribution of income can only lead to more
conflict for the future of economic modeling.
© CopyRight 2002 Scott R. Simpson