I've read here that the free market is the best method of social (economic) organization to increase wealth.
What is defined as "wealth" in that statement?
Ability to satisfy wants. Usually money is the best measure of this.
they said we would have an unfair fun advantage
Ability to satisfy wants, yes. Money, no. Money is only good in as far as it can be traded for other things. There is no measure of wealth because everyone's definition of it is different; a different mix of goods and services of varying quality and prices.
Then is the OP statement fallacious?
Money is only good in as far as it can be traded for other things.
But that's what money is by definition -- a medium of exchange.
Robert LeFevre said in his radio talks that money and wealth are indeed different. In essence, wealth is what you can buy with money, wealth is that which satisfies your wants and money is the medium of exchange which you can use to buy the wealth that creates those satisfactions.
In some cases, money can be a wealth if one of your wants were to have a great deal of money sitting in an account somewhere.
Under this rubric, money is not wealth. You cannot eat money, sleep on money, keep the rain out with money. Wealth would be the ability to buy good food, a bed, and a roof over your head.
With this in mind, one can see that having children is a form of wealth, obviously having many physical goods is kind of wealth, the ability to eat enough to become fat is wealth--all these signs of wealth. Usually we use the term 'wealthy' as a comparative term to mean someone is more wealthy than the average person, meaning they have more access to money which they can turn into wealth, and it is the wealth we see and judge them by; we never see the money, but we see the mansion, the car, the clothes, etc.
Even a poor American is, by all historical precedent, incredibly wealthy.
By comparison with kings only a few hundred years ago, we could look at Henry the 8th. He never had a balanced meal, never heard a decent musical performance (by our standards), never had adequate medical care or examinations nor medicine, never slept on a decent bed, wore ill-fitting clothes, lived in dirty surroundings, in a domicile without indoor plumbing or central heating--and many more things that we consider bare necessities he never once saw.
I have now, playing on my computer, musical performances more beautiful than any he ever heard in his entire lifetime, for the cost of at most a penny's worth of electricity, repeatable at will.
All this is wealth.
That's what money is
Whoops, Mika addressed this already
IGNORE ME:
http://www.youtube.com/watch?v=FMNJuSl91qY
"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann
"When A Man Dies A World Goes Out of Existence" - GLS Shackle
Anemone:In essence, wealth is what you can buy with money, wealth is that which satisfies your wants and money is the medium of exchange which you can use to buy the wealth that creates those satisfactions.
Does one necessarily require exchange for wealth? Or money?
Jackson LaRose:Does one necessarily require exchange for wealth? Or money?
I don't think you need exchange for wealth, but money seems to become irrelevant without exchange. In the grand scheme of things, I suppose exchange is mostly involved in all forms of wealth creation, and has been for some time. (Ie, no man is an island and so forth.)
Jackson LaRose: Anemone:In essence, wealth is what you can buy with money, wealth is that which satisfies your wants and money is the medium of exchange which you can use to buy the wealth that creates those satisfactions. Does one necessarily require exchange for wealth? Or money?
Given that man always acts in order to replace a less satisfactory state of affairs (for himself) with a more satisfactory one, and given that exchange is a type of action, it follows that man always exchanges in order to replace a less satisfactory state of affairs with a more satisfactory one. So yes, a person always exchanges in order to obtain more wealth (i.e. a greater ability to satisfy his wants). If he didn't think an exchange would give him more wealth, he wouldn't pursue it.
The keyboard is mightier than the gun.
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Voluntaryism Forum
Autolykos:Given that man always acts in order to replace a less satisfactory state of affairs (for himself) with a more satisfactory one, and given that exchange is a type of action, it follows that man always exchanges in order to replace a less satisfactory state of affairs with a more satisfactory one.
I think I was treating "exchange" more like "trading". Here, you seem to equate "exchange" to "change". Is that fair to say?
Autolykos:So yes, a person always exchanges in order to obtain more wealth (i.e. a greater ability to satisfy his wants). If he didn't think an exchange would give him more wealth, he wouldn't pursue it.
So you are trating "wealth" as "the ability to satisfy wants".
To go back to the OP, the statement now becomes,
"I've read here that the free market is the best method of social (economic) organization to increase the ability to satisfy wants."
Is that necessarily true?
excel:I don't think you need exchange for wealth, but money seems to become irrelevant without exchange.
Agreed.
excel:In the grand scheme of things, I suppose exchange is mostly involved in all forms of wealth creation, and has been for some time. (Ie, no man is an island and so forth.)
I am confused how you are using "exchange" here. Exchange betwwen an individual and his surroundings, or betwwen individuals? Something else?
Jackson LaRose: I am confused how you are using "exchange" here. Exchange betwwen an individual and his surroundings, or betwwen individuals? Something else?
Mostly, I was thinking in terms of how people start up their wealth-generating endeavors. For the most part, materials already exists with which to produce new goods, and it is far easier to exchange for these materials than to produce them yourself. For some reason, I got stuck on a farming perspective, and it's not very likely that someone would cultivate wild plants into a harvestable crop and then use those crops to produce more food for themselves, instead they would exchange for seeds from already existing crops. So I suppose I would say that exchange between individuals is not necessary for wealth, but it's hard to get away from, and a lot easier than, for example, going through agricultural history anew, while I consider exchange of labor into your surroundings in order to be necessary for wealth.
Jackson LaRose:I think I was treating "exchange" more like "trading". Here, you seem to equate "exchange" to "change". Is that fair to say?
No, I'm treating "exchange" the same way you are. I said that exchange is one type of action.
Jackson LaRose:So you are trating "wealth" as "the ability to satisfy wants". To go back to the OP, the statement now becomes, "I've read here that the free market is the best method of social (economic) organization to increase the ability to satisfy wants." Is that necessarily true?
I'm afraid that I need you to qualify what you take "best method" and "necessarily true" to mean before I'll answer.
excel:Mostly, I was thinking in terms of how people start up their wealth-generating endeavors. For the most part, materials already exists with which to produce new goods, and it is far easier to exchange for these materials than to produce them yourself.
Does "wealth" always equate to "goods produced"?
excel:I consider exchange of labor into your surroundings in order to be necessary for wealth.
What do you mean?
Autolykos:No, I'm treating "exchange" the same way you are. I said that exchange is one type of action.
Oh, I re-read the passage. I understand now. You roriginal passage doesn't really address the OP, it's just a truism about action always working towards the elimination of want.
Autolykos:"best method"
The most appropriate, given desired ends (wealth, or satisfaction?), and available means .
Autolykos:"necessarily true"
Being the case in all circumstances.
In other words, is free exchange always the best way to increase wealth?
Jackson LaRose:Does "wealth" always equate to "goods produced"?
Yes. Wealth is useful things like cars and haircuts. They are made abundant only by producing them.
Money is an allocation mechanism. People confuse money and wealth because there was no allocation mechanism in our evolutionary past. All socialist ideologies are based on the belief that wealth can be made abundant by tinkering with the allocation mechanism.
Jackson LaRose:Oh, I re-read the passage. I understand now. You roriginal passage doesn't really address the OP, it's just a truism about action always working towards the elimination of want.
Yes, and it was actually based on a mis-reading of your later question. I thought you were asking if one always exchanges for wealth. Somehow I missed the word "require" there. So to answer the question that you actually asked, I'd say that exchange is not required to obtain wealth.
Jackson LaRose:The most appropriate, given desired ends (wealth, or satisfaction?), and available means.
I think a caveat of "at the time" should be added. One is free to change his mind later on, but he can't undo the past.
Jackson LaRose:Being the case in all circumstances. In other words, is free exchange always the best way to increase wealth?
Logically, I must answer no to this question. For example, an individual could have a strong aversion to producing things that others value, while at the same time be strongly present-oriented. The "best method" for such an individual could very well be to simply (try to) take what he wants.
Edit: Let me add my own "at the time" caveat to the above.
EmperorNero:Yes. Wealth is useful things like cars and haircuts. They are made abundant only by producing them.
"Wealth = Products" in all cases? How do you reconcile this with the Subjective Theory of Value?
EmperorNero:All socialist ideologies are based on the belief that wealth can be made abundant by tinkering with the allocation mechanism.
That is a very interesting point. Aren't we guilty of the same charge?
Autolykos:I'd say that exchange is not required to obtain wealth.
OK.
Autolykos:I think a caveat of "at the time" should be added. One is free to change his mind later on, but he can't undo the past.
Makes sense.
Autolykos:For example, an individual could have a strong aversion to producing things that others value, while at the same time be strongly present-oriented. The "best method" for such an individual could very well be to simply (try to) take what he wants.
Does this change the definition of "wealth", at least for this individual?
Jackson LaRose:"Wealth = Products" in all cases? How do you reconcile this with the Subjective Theory of Value?
Jeah, wealth is the amount of stuff you can afford. I don't see why that would contradict subjective value. It's not like productivity is somehow objective. What makes some piece of material a product is that we subjectively value it. The materials in my cell phone would be utterly useless to me in a slightly different configuration. The reason someone built it is that I value it. Productivity is our ability to put the universe into the state we want it to be. Money is a way to make it happen, a technology like the alphabet or spreadsheets.
I'm using "products" in a very broad sense here. Spending time with your kids is a product, in that you have to expend scarce resources, which you could have used for something else, to produce it.
Jackson LaRose:That is a very interesting point. Aren't we guilty of the same charge?
I don't think so, but what do you mean?
EmperorNero:I'm using "products" in a very broad sense here. Spending time with your kids is a product, in that you have to expend scarce resources, which you could have used for something else, to produce it.
I see. My question was based upon a much more literalistic interpretation of "products". That's I saw a contradiction vis a vis STV. What if you don't particularly value "stuff", you know?
EmperorNero:I don't think so, but what do you mean?
All [insert economic adjective] ideologies are based on the belief that wealth can be made abundant by tinkering with the allocation mechanism.
That seems to be the argument we all make vis a vis socialism, or neoliberalism, etc.
"If only we left the market alone, we would all be rich!"
[EDIT]: Looking back at your post, you also seem to be conflating "products" with "stuff" in almost that entire first paragraph. It's only that last sentence, where you treat "product" as not necessarily "stuff" IMO. I think my question about the contradiction with STV is fair.
My definition:
Wealth is the ability of an individual to satisfy their least important desires.
So wealth is based upon individual preference and has nothing to do with money and things. To say a person is wealthier than another would be to say that one person is satisfying desires that the other person is unable to do. The problem is that outside of basic desires: food, clothing, shelter, sex, etc two individuals living in an economy with a complex division of labor can be remarkably different in their desires.
Bogart,
Interesting post.
Wealth is completely subjective, then? Hmm.
Almost seems that economics and morality are inextricably linked then, huh?
Great food for thought. Thanks guys.
Jackson LaRose:I see. My question was based upon a much more literalistic interpretation of "products". That's I saw a contradiction vis a vis STV. What if you don't particularly value "stuff", you know?
Yup. The conventional wisdom is that there's economic goods and "extra-economic" goods. But that is not the case, everything we want has to be produced expending scarce resources that have alternative uses.
Jackson LaRose:All [insert economic adjective] ideologies are based on the belief that wealth can be made abundant by tinkering with the allocation mechanism. That seems to be the argument we all make vis a vis socialism, or neoliberalism, etc. "If only we left the market alone, we would all be rich!"
Communism/The Venus Project is the hardcore version of this, featuring the belief that we can create superabundance by just abolishing money altogether. Most modern socialists believe in a more mitigated version that's just about a few industries, which makes it easier to disguise the 'free lunch fallacy'. All of demand-side economics commits this fallacy.
Supply-side economics is the specific rejection of the free lunch notion, we are saying that there is no way to trick the economy into releasing free resources by tinkering with market signals, you actually have to produce stuff to get it. We are proposing a particular economic system, but one that leaves market allocation alone.
Oh, and if you want a response to that resource thread, I can do one. I kinda wrote a response but then forgot about it.
That is very debatable - and here is an interview with a very heterodox economist you may find interesting:
http://mises.org/journals/aen/shackle.asp
No, one does not. in primitive societies with limited concepts of money and exchange it would be entirely possible to become considered wealthy on the basis purely of your own labor. Having many wives and children and livestock was considered wealth. Among Hawaiians, a fat belly was wealth, etc. :P
Jackson LaRose:Does this change the definition of "wealth", at least for this individual?
I don't see how. How do you think it does?
EmperorNero:I call these 'free lunch theories'.
LOL, now that's the pot calling the kettle black! I read some pretty hardcore magical thinking in that Jevon's Paradox thread!
Not to beat a dead horse, but what is the endgame of a free market, then? Isn't superabundance of material goods the goal?
EmperorNero:Supply-side economics is the specific rejection of the free lunch notion, we are saying that there is no way to trick the economy into releasing free resources by tinkering with market signals, you actually have to produce stuff to get it. We are proposing a particular economic system, but one that leaves market allocation alone.
I don't really understand how this jibes. I though the market worked to satisfy want. Production eventually drives all prices to zero, no?
EmperorNero:Oh, and if you want a response to that resource thread, I can do one. I kinda wrote a response but then forgot about it.
Go for it. I always enjoy good conversation.
Anemone:No, one does not. in primitive societies with limited concepts of money and exchange it would be entirely possible to become considered wealthy on the basis purely of your own labor. Having many wives and children and livestock was considered wealth. Among Hawaiians, a fat belly was wealth, etc. :P
So, wealth is still always material, then?
Autolykos,
Based on your last response, it seems that you reject the statement in the OP.
You've lost me, Jackson. Also, you didn't explain how you think my earlier statements change the definition of "wealth", at least for the individual I mentioned.
Jackson LaRose: Anemone:No, one does not. in primitive societies with limited concepts of money and exchange it would be entirely possible to become considered wealthy on the basis purely of your own labor. Having many wives and children and livestock was considered wealth. Among Hawaiians, a fat belly was wealth, etc. :P So, wealth is still always material, then?
But, does this mean it's not physical anymore? I doubt it, since it's now material goods for someone else, just not you. Wealth is a satisfaction, which is innately 'spiritual' (meaning non-physical) yet it's achieved by physical means, as all things must be in this world.
Wealth could be anything someone values. Thus, wealth to one person could also be time to think, a sunset to view, etc. But this ends up being achieved via money, money purchasing free time, money purchasing property with a sunset view.
So perhaps we could say that while wealth isn't always material, it's attainment always is.