Tag Archives: Production

The parts of Böhm-Bawerk’s “Capital and Interest” that resonate most with me (updated as I read).

1. “Literally to ascribe to capital a power of producing value is thoroughly to misunderstand the essential nature of value, and thoroughly to misunderstand the essential nature of production. Value is not produced, and cannot be produced. What is produced is never anything but forms, shapes of material, combinations of material; therefore things, goods. These goods can of course be goods of value, but they do not bring value with them ready made, as something inherent that accompanies production. They always receive it first from outside—from the wants and satisfactions of the economic world. Value grows, not out of the past of goods, but out of their future. It comes, not out of the workshop where goods come into existence, but out of the wants which those goods will satisfy. Value cannot be forged like a hammer, nor woven like a sheet. If it could, our industries would be spared those frightful convulsions we call crises, which have no other cause than that quantities of products, in the manufacture of which no rule of art was omitted, cannot find the value expected. What production can do is never anything more than to create goods, in the hope that, according to the anticipated relations of demand and supply, they will obtain value.”

2. “There is no power in any element of production to infuse value immediately or necessarily into its products. A factor of production can never be an adequate source of value. Wherever value makes its appearance it has its ultimate cause in the relations of human needs and satisfactions. Any tenable explanation of interest must go back to this ultimate source.”

PDF here.

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Here is my response to the blog post below (I have a sneaking suspicion that the author of this post will delete my response. As someone who has done this myself, I think I am justified in this belief. The response is as follows).

“They are mere shells of life eaten out by years of existence in a mechanized society where their energies, from their youth, have been subjected to the wills of bosses, to the deadening prod of identical external stimuli, and been used up in serving ends quite outside themselves. Now they are tired. There is nothing that they want to do — nothing that reflects any thought, or will, or quest, or direction of their own. They seek only relief from their boredom. They want only to be entertained.” I can understand that argument from one point. Yes, work is monotonous, and it sucks the soul out of individuals. But, to put it bluntly, “that’s just how it is”. There is no other alternative because there are no other effective ways to get the needs and desires of humans met. Whether you use your hands, a shovel, or a tractor, food must still come out of the ground, and it will take a certain amount of time, and specific weather, to grow. Whining and complaining about it is a crucial tool to get through the grueling monotony of what is necessary to keep life alive. But I get the sense (perhaps unfairly) that you are a communist. Once again, that could be completely unfair of me to make that judgment. If you are suggesting that life sucks, and are complaining about it, I’m right there with you. But the reason I sense communist sympathy is talk of the “mechanized society”, “subjected to the wills of bosses”, etc. I’d be interested to hear what your alternative to this situation would be. I’m not trying to be rude, but I would guess communism.

Also, sure, maybe we, as hunter-gatherers, weren’t “bored”, as we had to constantly be vigilant of the predator that would kill us. But is that somehow more “noble” than sitting, being bored, and watching television? Why does digging with a shovel make one more “noble” than using a tractor? Why does having an “easier” life make one a worse person? I don’t agree with that argument whatsoever. I certainly agree that television is garbage, and I lament at the brainlessness of it all. Is there something to be said about the average television watcher? Absolutely. They are condemnable on many fronts. But using that to attack “mechanization” or “bosses” is quite silly. Blaming “mechanization” and “bosses” on taking away ambition from an individual is ridiculous. The individual is not “forced” by “mechanization” or “bosses” to be unambitious. It is the “fault” of the individual. Maybe the caveman that hunted for food with a spear was more “ambitious” than the average television watcher today, but that is of little importance to me. To make a comparison equating “labor exerted” to “nobility” is ludicrous. Today, we may seek only relief from our boredom, but our ancient ancestors only sought relief from a constant, imminent death that was around them in more forms than we will ever experience in our entire lifetimes.

“And everywhere it drives men’s own thoughts and judgments out of their heads, deprives them of the condition for getting any thoughts or judgments of their own”. There’s certainly some truth to that. However, many people are limited intellectually. It is a tragic reality. How to “educate” them? Are they “educable”? Perhaps not. If not, we must lament, with our “live and let live” philosophy. We can critique all we want, but what else can we do? We should not be allowed to capture them, against their wills, and read them the greatest philosophical works ever written. “Live and let live” seems to be the only solution, accompanied by a fierce critique to anyone who will listen, if the parties so desire.

Voluntarism and Capitalism.

On Laziness.

Television.

News.

Excerpts from “Breaking News: story 2 of the Apocalyptic series”.

A Short Explanation of How Wealth is Created

The biggest lesson in economics is that one man’s profit is another man’s profit. We need to have filthy rich people, because a wealthy person’s wealth has no value to that wealthy person unless he buys something with it, and when he does, he gives some of that wealth to the person he is buying from, making that person better off.

So then how does wealth become created if things are changing hands? If the only reason that I have money is to give it to someone else, and that person’s money only exists to be given to another person, then how is the wealth actually created? How is net wealth created instead of having one fixed pie exchanging hands without having any new wealth created?

The answer is in the products. The products themselves are the wealth. The products make processes required to make other products easier, which means that less money is going to labor, and more money is going to someone else that would have otherwise not had it before. So products are created to obtain profit, and the profit is used to obtain the products. As the products improve, wealth is created. Products cut down costs and save labor time, resulting in those cut costs being spent on other things, which helps out the new seller, which in turn helps out his seller, and the process continues forever. The saved labor time means more time to create other businesses, which have the potential to create new profits, which means new profits for all of the sellers to which the profits are spent, then more profits to the sellers from whom the first seller’s profit were spent, etc. etc.

The products create the new wealth because they cut down on costs and provide more free time: money and time that will be spent on new things that they would not have been before. This is how wealth is created: through the actual products themselves.

The products are what constitute creating wealth for both the producer (who cuts down on costs and has more free time, which means that his new profits will go to someone else) and the consumer, who has new products to buy because of the producer wanting to create wealth for himself (i.e., he doesn’t get paid by you unless you believe his product will make you better off, i.e. “wealthier”), and you do not receive his product unless your payment will make him wealthier as well.

This is how wealth is created: by exchanges (because no one will buy something unless what he buys will make him better off (i.e., “wealthier”) and likewise, no one will sell something unless he believes to be better off, i.e. wealthier, by doing so). When you do not allow one seller to obtain wealth, all you are doing is destroying the potential wealth that he would have given to those from whom he bought his products from. Therefore, when you destroy one person’s wealth, you are also destroying the wealth of all of the people he would have bought his products from.

Economies build wealth for one reason: because everyone is trying to become wealthier. I will not buy something unless I believe to be better off (i.e. “wealthier”), you will not sell or buy something unless you believe you will be better off, and the same goes for everyone. Everyone is trying to obtain wealth, and that is exactly how the wealth is created.

August 19, 2013.

Things that I have for sale on Kindle.

Where you can financially support me if you so desire.

A Short Message to People That Are Afraid of Machinery Taking Away Jobs

To the people that are afraid of machinery taking away jobs: would you not like machines to do everything for you and not have to work? Would you rather “be working” by washing clothes in a wash bin instead of being “unemployed” while your washing machine does the work?

Do you not see how you have more time freed up to do other things? Do you not see how productivity was increased with less effort? The same applies to a free-market capitalist system: when you are replaced, products become cheaper (which means easier for you to buy as well), and your time is freed up to find a new job which will be more beneficial for the economy, which means that it will be beneficial to you as well. Because everyone is looking for profit, inevitably, there will be markets created to replace old ones (whichever markets produce the most money will win out), which means that these new markets will employ people, replacing the old jobs. Things inevitably become easier in a free-market, capitalist system and that is exactly its purpose: to make things cheaper and easier.

Is that not what you want? To have things cheaper and easier? What happened when cell phones replaced rotary phones? Rotary phone employees lost their jobs, but they were replaced by cell phone employees. Why do you not hire a stenographer if you want more people employed instead of using a computer? If we discount the number of people required to initially build the computer, would you rather hire a stenographer for all of your writings or use a computer? Are you not better off by using the computer? Why? Did you increase productivity with less effort? Is this not what wealth is?

What if the stenographer now makes computers? What about all of the jobs that would have never been created without the invention of computers? What about all of the lost wealth and time that would have gone to wages and work for yourself? Why is increased profits and increased free time good for you, and a whole economy?

Because when you consume with your profits, you are employing your producer, and the more money you have to consume, the more money the producers you are buying from have to consume, and the more that they are buying for consumption. This is why everybody wins with free-market capitalism.

Learn more here: Henry Hazlitt – Economics in One Lesson.

August 18, 2013.

Things that I have for sale on Kindle.

Where you can financially support me if you so desire.