Communism

[aknisely]

In the Word Association thread, someone says "communism," to which Filburt1 replies "a good idea failing in implementation." Communism and socialism are both poorly developed ideologies that demand that each member of a society is altruistic. This wouldn't be such a horrible thing, except there are no controls over the benevolence of those in power, and those that contribute thereto. Such a condition is unacceptable for the successful functioning of a society.

In addition, the theories of state-owned property and state-managed business is highly undemocratic. There is no competition for products and services, therefore no control over the quality, safety, or reasonabilty thereof. There is no motivation for improving skills or products, because one would be compensated no differently than if he were unskilled or made substandard merchandise. Such a condition is unacceptable for the successful function of an economy.

Capitalism is the only true democratic economic system. Only with people driving market forces by supply and demand --complimented, rather than enforced, by state-ordered direction -- are progression and advancement possible.

[filburt1]

The concept was good. The implementation proved that it is flawed.

[crptcblade]

It may have worked bettter if people didn't get involved

[simonm]

I would agree that Communism doesn't work in practice.

One of the main reasons why communism fails to work is that it exists (in a world) along side capitalism. Capitalism undermines socialist political systems around it because it appeals to peoples base instincts & desires, induces feelings of self-inadequacy and rewards the very activity that socialist systems seek to subvert; greed.

Look at Israel. Communes (kibutzes) were introduced and they worked for a few years. Gradually, the young were lured away by advertising and promises of wealth until eventually they became unviable (financially) and had to be subsidised by the government. I believe that they failed, not due to reasons inherant in the idea of communism itself, but rather due to the inability to exist side-by-side with capitalism.

In addition, the theories of state-owned property and state-managed business is highly undemocratic. There is no competition for products and services, therefore no control over the quality, safety, or reasonabilty thereof.

I don't agree with this attall. In Britain where, over recent years, there has been a trend of privatising the publicly owned utilities, safety has been increasingly sidelined in favour of profit. The share holders have become more important than the cusomers and prices have gone up.
Admittedly, I am refering to companies that, although were privatised, effective competition has failed to materialise and monopolies still remain (e.g. The Railways, Water companies etc.)

There is no motivation for improving skills or products, because one would be compensated no differently than if he were unskilled or made substandard merchandise.

This has been the prevailing school of thought in Britain (over the last 20 years) but I don't see why this has to be the case. Why can the government not setup targets and reward schemes so that incentives are provided for managers of public utilities? Could efficiency not be encouraged this way?

[plenderj]

If my understanding of communism is correct, then I think that it simply didnt work because of the inherrent greed of people.

In order to survive, we have to have a certain aspect of self preservation. Our own bodies/lives are the most important thing of all.
And I think that thats turned itself into a sort of greed.

[simonm]

If my understanding of communism is correct, then I think that it simply didnt work because of the inherrent greed of people.

Yes, but capitalism played upon that greed, indeed, it actively encourages greed.

Capatilism works by allowing people (if they are succesful) to divert a greater portion of society's wealth in their direction. This wealth has got to come from somewhere and it innevitably means taking wealth from others. In a capitalistic society, inequality is innevitable, indeed, wealth itself is defined by the inequality between those that have and those that don't.

[aknisely]

Look at Israel. Communes (kibutzes) were introduced and they worked for a few years. Gradually, the young were lured away by advertising and promises of wealth until eventually they became unviable (financially) and had to be subsidised by the government. I believe that they failed, not due to reasons inherant in the idea of communism itself, but rather due to the inability to exist side-by-side with capitalism.

First of all, people who live on kibutzes won't let you get away with calling them communes

But the socialist ideas still work, I believe, because the populations are small. Corruption and totalitarianism are kept to a minimum, because everyone knows everyone else.

Admittedly, I am refering to companies that, although were privatised, effective competition has failed to materialise and monopolies still remain (e.g. The Railways, Water companies etc.)

I believe that's the result of markets with very high barriers to entry. To setup a water company, you'd need millions of dollars before showing any sign of profit.

This has been the prevailing school of thought in Britain (over the last 20 years) but I don't see why this has to be the case. Why can the government not setup targets and reward schemes so that incentives are provided for managers of public utilities? Could efficiency not be encouraged this way?

It can, but that's nothing compared to rising/falling sales. As a businessman, one doesn't feel the spark of success by recieving government handouts.

[Guv]

Damn it all, capitalism did not cause poverty, it inherited it. If anybody ever compared the robber barons of the industrial revolution to the bas*rds who preceded them, you would think the robber barons were pretty good guys. If you think capitalism is bad, try living under a feudal system, provided you are not lord of the manor.

I have yet to see a decent socialist or communist system which did not inherit the wealth to sustain it from a prior capitalist system.

There never was a true laissez faire capitalist system, although the USA and Western Europe approximated it for a while. There is no modern society which is even close to such a system.

The brief history of capitalism shows huge benefits when compared to what came before it. To me, it looks as though socialist and communist concepts infiltrating under the name of liberalism are dragging the system down.

Filburt1.

The concept was good. The implementation proved that it is flawed.

The above is a myth. The USSR is the logical consequence of socialist principles. Communism and socialism require a huge bureaucracy to control industry and the economy. It will not run itself. The larger a bureaucracy, the less efficient it is. It is tuff enough to run a company like General Motors without incurring a lot of unnecessary administrative overhead. When you attempt to run every industry, agricultural enterprise, entertainment, et cetera via a cental control, you must have a mess.

“Each works according to his abilities; Each is rewarded according to his needs.” This is an evil concept. The whining, incompetent are good at expressing their needs. The strong, proud, capable have too much pride to beg.

The system requires that the best and the brightest not be paid what is due to them. From an ethical point of view, willful failure to reward the best and the brightest is evil. From a practical point of view, it is absurd. Who in their right mind would work hard for such a system? Why should anybody put out extra efforts when it does not result in extra benefits? Such a system is inherently inefficient and eventually nonproductive. Such a system cannot be successful on its own, and will eventually fall apart if initiated with the benefits inherited from a more efficient system.

When the bureaucracy makes all major decisions, how do you prevent a bureaucrat from favoring his family, his friends, himself?

You not only need a huge bureaucracy to run such a system, you either need a population of sheep or a police state to keep it stable. It is interesting to note that throughout the history of the USSR, the people tended to refer to them, the government and us. In the USA, many of us complain about the politicians, but do not view the government as them. This is a subtle point. The USSR was never viewed by the rank and file as a legitimate government. Even Nazi Germany was viewed as legitimate by most of its citizens, even those who might have disagreed with some of its policies.

Simomn.

Capatilism works by allowing people (if they are succesful) to divert a greater portion of society's wealth in their direction. This wealth has got to come from somewhere and it innevitably means taking wealth from others. In a capitalistic society, inequality is innevitable, indeed, wealth itself is defined by the inequality between those that have and those that don't.

One of the main reasons why communism fails to work is that it exists (in a world) along side capitalism.

The latter is too much of a copout to address.

The former opinion views the world as a feudal agricultural economy. Many simple agricultural economies are Zero Sum Games, like poker without a house take. What one person wins, another loses. The feudal lord takes from the system, but makes no significant contribution to the economy. His gain is the serfs’ loss. The only service he provides is what he calls protection from the neighboring lord, who would treat the serfs no differently.

In a modern economy, the so called robber barons actually create wealth by their organizational skills. The Carnegies, Rockefellers, Fords, Hughes, Gates, et cetera were (are) responsible for all the steel, cars, TV’s, computers, et cetera that we enjoy today. Labor unions and the government have legitimate functions, but they do nothing productive. The former provide bargaining strength and the latter provides a legal structure to protect from criminals and invaders.

It is the entrepreneur and the scientists types who are the driving forces behind our modern civilization. The average person owes almost everything (including the last 20 years of his life) to the entrepreneurs, scientists, engineers, technicians, et cetera who thrived in a capitalist system and created material goods, medical care, pharmaceuticals, et cetera. What did any government ever produce except the stability to allow the system to work?

All the sh*t about evil monopolies and greed driven corporations are myths to keep politicians and labor leaders in cushy jobs. Divide and conquer. The peon and the businessman have more in common with each other than either has with the labor leader and the government. Make the pie bigger and there is more for everybody. Make the government bigger and it costs us all.

In my early years, communism was considered a wonderful idea due to two aspects of that world. First, Russia was our ally. Second, communism & socialism appealed to the most of the academic community of the time. I suspect that the academic is jealous of the wealth of the entrepreneur, feeling that He (the intellectual) is more deserving.

My father was one of the last rugged individualists. Due to his attitude toward life, I hated communism. He never spoke much about politics, but his actions indicated that he walked to the beat of a distant drummer that nobody else heard.

• His marriage was a partnership between equals in an era when women were nobody, because he wanted a companion that was interesting, not a servant. My mother was one of the few obviously intelligent women I knew.
  
• He ran a small business (3 employees) which paid small salaries, but gave bonuses each month based on shipments and amounts billed. He said that it was his job to see that he got paid and made a profit. His employees were responsible for shipping and billing. His employees were better off than others with similar jobs, and worked hard for him because they knew they had a good deal.
  
• He commented adversely when one of his friends was nasty to a waitress.
  
• When I made fun of a person who spoke poor English, he pointed out that I only knew one language, while the immigrant spoke at least two. Most of my friends and their parents were intolerant. BTW: His family came to the US in prior to 1700, so his attitude was not due to being a recent immigrant.
  
• When we traveled, he knew how to say “Do you speak English” in the native tongue, while I saw other tourists rudely speak English, expecting to be understood.

I instinctively knew that he and communism were mortal enemies, even though he never spoke about politics. Therefore, it was my mortal enemy. I suffered for this attitude through four years of high school and four years of college. The experiences taught me that the so called liberals were neither fair nor kind nor tolerant of those who disagreed with them. Only my science and math teachers treated me with any consideration or respect.

To this day, I recognize communism and socialism as evil. Then it was due my instincts relating to my father. After reading Ayn Rand and learning more about how the world operates, I have more logical reasons for hating it. Some of my reasons are related to the attitude of certain liberal teachers who either deliberately lied or were uniformed about history and economics.

[aknisely]

Absolutely right Guv, it's nice to see another Rand fan here

[simonm]

Guv

CAPITALISM
It seems to me that the defence of capitalism always lies in comparisons to the old, outdated systems that preceded it:

If anybody ever compared the robber barons of the industrial revolution to the bas*rds who preceded them, you would think the robber barons were pretty good guys. If you think capitalism is bad, try living under a feudal system, provided you are not lord of the manor.

The brief history of capitalism shows huge benefits when compared to what came before it.

It always amazes me how capitalists think that wealth can be generated out of nothing:

In a modern economy, the so called robber barons actually create wealth by their organizational skills.

If you knew the first thing about economics you would know this to be impossible. Simply generating wealth proportionately lowers it's value. The more wealth there is, the less it is worth. The only way to get round this is to disproportionately assign wealth so there is a large gap between those that have and those that don't.

Wealth is a relative concept and the value of what you have is defined by how much other people want it. This is precisely why capitalism works so well because, using tools such as advertising, it manages to convince people that they should not be happy with what they've got and always aspire to have more. Obviously this breeds frustration and bitterness amoung the majority as it is intrinsic in the system itself that everyone can't "have it all". This is one reason why capitalistic societies are always crime riddled.

You are right to state there is no "true" implementation of a capitalist system (although I get the impression that you would prefer there to be):

There never was a true laissez faire capitalist system, although the USA and Western Europe approximated it for a while. There is no modern society which is even close to such a system.

And why do you think that is? Pure, unrestrained capitalism is not stable and is not sustainable. It leads to boom/bust economic cycles, high levels of crime and inequality. The ideal status of a capitalistic economy is to have lots of competing companies battling it out for the highly valuable consumers. This itself is not a natural state of a capitalist economy as rival companies tend to merge and "gobble each other up" in an attempt to reduce competition. Companies want to become a monopoly and constant government supervision and intervention is neccessary to prevent this.
Your blind trust in big business is an anathema to me. You really think that they hold your best interests at heart?

COMMUNISM (& SOCIALISM)

Your own remarks illustrate the roots of your irrational hatred and distrust for communism:

Due to his attitude toward life, I hated communism.

I instinctively knew that he and communism were mortal enemies, even though he never spoke about politics. Therefore, it was my mortal enemy.

That you would later find rational explanations for this irrational hatred is no suprise to me. We all seek to provide rational explanations for our instinctive feelings to retrospectively justify them.

“Each works according to his abilities; Each is rewarded according to his needs.” This is an evil concept.

How can this be an evil concept? OK, I can understand it being labled as idealistically immature, unrealistic or simply misguided but to call it "evil" is just another example that your attidute towards communism is irrational.
I do not think that it (necessarilly) follows that those who work hard should not be rewarded. If someone needs to be rewarded for their hard work then that is perectly reasonable in a "true" communist system. Don't forget that this ideology was introduced at a time when many were not working to their abilities and were not rewarded to their needs. In the feudal systems of Europe, class was everything. Natural talent would not be developed if it occurred amoung the lower classes and all the wealth was kept by the upper classes (they had no incentive to work hard either because the riches were already theirs by birth right).

It is offensive for those who respect the ideals of socialism for you to suggest that the system in the USSR was a "logical consequance" of those ideals. Apart from a few early attempts at communal life (which were quickly abandoned) the polilitcal system in the USSR actually resembles very little the ideals of communism. Most of what happened in the USSR would have been abhorant to Karl Marx. It might then be justfied to say that the USSR is proof that communism cannot work in practice, but that is a different thing altogether than saying that it is inherantly evil.

I stand by my beliefs that communism is idiolgically sound but has always be mis-interpreted by those political systems that emerged and had a chance to put it into practice. That may sound like a cop-out but there haven't really been that many communist attempts (compared to the number of capatilist attempts).

THE WAY FORWARD
As you may have surmised, I am not an advocator of comunism as I accept that (at least on a practical level) it fails to work. Capitalism is an adequate system that functions (if constantly tended and monitored) but it is idiologically flawed.
I want to move forward to a new, modern system for the future that overcomes the shortcommings of the systems that went before it. I don't know what it is yet, I just know it isn't anything that's around at the moment.

[plenderj]

teeheeheee good thing you didnt get a page not found error when you tried to post that

[kedaman]

Originally posted by simonm

THE WAY FORWARD
As you may have surmised, I am not an advocator of comunism as I accept that (at least on a practical level) it fails to work. Capitalism is an adequate system that functions (if constantly tended and monitored) but it is idiologically flawed.
I want to move forward to a new, modern system for the future that overcomes the shortcommings of the systems that went before it. I don't know what it is yet, I just know it isn't anything that's around at the moment.

I find the current systems perverse and flawed, the next generation will mainly either not exist or being based on that resources are virtually infinite, and that that and the only infinite resource we need is information, only!

[plenderj]

I just want to say that I find it nearly insulting when people say we're all equal.
We are not all equals. Some of us are born rich, some are poor, some are black, some are white, some are smart, some are dumb, some are left handed, some are righthanded, some are this some are that.

The differences between us all are immense.

Then there's also the fact that some people want to go out and work and help people, some people just want to sit home on the dole (or social security in the states I think).

Bill Gates is certainly not equal to a bum living down an alley that rapes every 2nd woman that walks past.

[simonm]

I just want to say that I find it nearly insulting when people say we're all equal.

Equality (in the socialist sense) is not a dictation that we all are the same (as has been mis-interpreted by some) but rather an assertion that we all should be treated with equal respect and have equal rights. It's not about forcing everyone into the same mould and making them the same. Where do you get that from "Each to their ability and each to their need"? That statement is itself a recognition that we all fave different abilities and we all have different needs.

[kedaman]

I have to agree with jamie, we are more or less forced to be equal

[simonm]

I have to agree with jamie, we are more or less forced to be equal

I was not remarking on our particular state of affairs, rather I was defending the idealogical basis for equality.

[kedaman]

we are on different topics then, i was refering to jamie's standpoint

[simonm]

Honeybee

And every able person can't be expected to get a job, there just aren't enough jobs. So, even if everyone tries to work as hard as he/she can, there will still be involuntary unemployment: people who want to work, but can't work.

I disagree with this hypothesis. I don't see any reason why there can never be full employment. What logical reason is there to suggest that, in any given society, there must always be fewer jobs than there are able bodied people?

What I do know, however, is that some capitalists do actively work against full employment. In Britain, a commitee member of the bank of England (who decide our interest rates) remarked recently that we need more unemployment to reduce inflationary pressures on the economy. What he was actually saying was that the inequality gap was shrinking and this was therefore diminishing the value of wealth. This widely held view amoung capitalist economists is central to their belief that inequality drives economic growth.

This does beg the question: Does the economy serve society or does society serve the economy?

[HarryW]

I don't think you can reasonably say that wealth cannot be created. Redistribution of wealth is one way to gather it, but productive endeavour does create wealth. That's why the economy grows. That's how we can have a tax cut and still increase public spending. The economy grows through industry being productive.

Still, I don't think you can just brand communism, and especially not socialist principles in general, as evil. Communism doesn't work, I agree with that. It doesn't work for a lot of reasons but that doesn't make it evil in concept. It's just unrealistic.

I am very glad of some of the socialist ideas that exist in my society. I like the fact that we have an NHS which everyone has to pay for, if they can. I have read people on this board proclaiming public health services to be totally unacceptable. I cannot fathom that viewpoint. From what I have read about the Canadian system and it's lack of privately-available health care, it seems like a pretty ridiculous idea and I encourage the availability of public services through the private sector, where there is a demand for it, so long as funding is not removed from the public system.

I don't personally think a pure communist or capitalist society would be a good idea. Communism forces people to act in everybody else's best interests, capitalism encourages people to act in their own best interests and screw everyone else. I don't see a pure form of capitalism being much different to the feudal system that's being criticised. The rich put all their effort into staying rich, and the poor are powerless to stop the rich from taking any wealth they generate for themselves. Perhaps you think that sounds like a good idea if you plan on being rich.

[simonm]

HarryW
Ever the voice of reason aren't you?

I don't think you can reasonably say that wealth cannot be created. Redistribution of wealth is one way to gather it, but productive endeavour does create wealth. That's why the economy grows. That's how we can have a tax cut and still increase public spending. The economy grows through industry being productive.

Yes, economies can grow but once again, this is a relative concept.

If all the economies around the world grew by such an extent that they were still the same proportions of the world economy, then in effect, there has been no increase in wealth, only a devaluation of wealth itself.

World economies aside, when a company becomes more productive, this increases supply which de-values it's product.
The workers who produce a product are now either replaced (by robots) or are more efficient. Which means they are either un-employed or are doing more work for less money. So where is their incentive to work harder? If you pay them more (in proportion to their increased productivity), the company loses the profit gain it made in becomming more productive.
If workers in companies are laid off and paid less for more work, in the wider economy, there is less consumer spending power so prices have to come down.

It's swings and round abouts which ever way you look at it and at the end of the day, you can only increase your wealth if someone elses wealth is decreasing.

[HarryW]

Ever the voice of reason aren't you?

I try to liberally sprinkle my conversation with complete bollocks, but not much of that gets onto this forum =)

at the end of the day, you can only increase your wealth if someone elses wealth is decreasing

I still disagree with this. Perhaps you consider wealth to be evaluated relative to everyone else, whereas I am considering it as an absolute value.

Consider this situation:

Someone plants a tree. It's a very fast growing tree so after a single year of growth, it is a proper full-size tree, ready to be cut down and made into lumber. The person who planted the tree sells it. They have increased their personal wealth through owning the land, planting the tree and waiting. Who has lost wealth through this person's gain?

An alternative:

You are a programmer, and you spend a year sitting at home furiously working on a new compression algorithm. After a year you have completed the algorithm to a saleable extent, and you patent it and license it for use by various companies. Your new compression techniques saves them money in the long run by reducing the need for storage space and reducing backup times. You accumulate wealth from your effort, and so do your customers. Where has the wealth come from?

[simonm]

HarryW

You might choose to consider wealth to exist in the absolute sense but you can only get away with it when looking at a subset of the whole economy.

Someone plants a tree. It's a very fast growing tree so after a single year of growth, it is a proper full-size tree, ready to be cut down and made into lumber. The person who planted the tree sells it. They have increased their personal wealth through owning the land, planting the tree and waiting. Who has lost wealth through this person's gain?

The person in this example has increased his personal weath but, if you consider the whole economy, one more tree means that the demand has reduced by one. The supply has increased by one. The value of trees (in his economy) has declined (ever so slightly). Perhaps this guy was going to have to buy someone elses tree until he grew his own. That's one less customer for some one else, and unless someone else grows one less tree, the unit value of a tree will drop (OK, only by a small degree but we are only talking about one tree here).

You are a programmer, and you spend a year sitting at home furiously working on a new compression algorithm. After a year you have completed the algorithm to a saleable extent, and you patent it and license it for use by various companies. Your new compression techniques saves them money in the long run by reducing the need for storage space and reducing backup times. You accumulate wealth from your effort, and so do your customers. Where has the wealth come from?

OK, this time, we've affected the economy on a much larger scale. The demand for disks (and other storage devices) will drop considerably. The unit price of disks will drop unless the production is greatly reduced and then lots of people will lose their jobs.

If wealth wasn't relative, there would be no such thing as inflation. It all comes down to supply and demand. You define something's worth in terms of how many people want it (and consequantly how much they are willing to pay for it). If everyone has too much of something, it is worth less because people aren't willing to pay much for it.

In absolute terms, how much is a lump of gold worth? How much is a sack of grain worth? A sack of grain is worth a lot to someone starving in a famine but not much to someone who already has more food than they can eat. How can anything have any worth in an absolute sense?

[Seagull0307]

True Socialism, as Marx saw it could only work if the whole world decided they wanted to give it a go. It would be a system without money, without batering, and without greed. Theis is the reason it could only work on a global scale, because no single countryt is large enough, or has the resources to make it work on its own.

[HarryW]

Simon,

You are essentially talking about opportunity cost then, not actual visible cost.

Okay, consider the world as it was 1000 years ago, would you say the amount of wealth in the world then was identical to the amount of wealth in the world now? I am guessing you would because you seem to think wealth is constant. Consider all the cars in the world, all the aeroplanes, all the computers, all the warehouses full of grain, all the information, everything we have gained since that time. Consider the value of these things to us, and the value these things would have had 1000 years ago. A single lorry would have been incalculably valuable to anyone who owned it, not just because they have an advantage over everyone else in the transport industry but because the amount of effort they have to put in results in more production. Today, there is more output for the same amount of effort because we know how to work in ways we couldn't before. The entire world is more productive because of the internal combustion engine. Everybody involved has increased their productivity and can get more out of their occupation by putting the same amount of work in.

Inflation is not due to any kind of relative nature of wealth. If that were true, many countries would have negative inflation to compensate for the positive inflation of other countries. When was the last time you heard of negative inflation? (deflation?)

Invested effort can result in increased wealth, and it is not down to having something someone else can't have.

If you're stuck on a desert island with noone else around, you are the entire economy that you can affect. Suppose you cultivate an orchard to supply you with fresh fruit. You invest time and effort in digging the land, planting the fruit trees, setting up irrigation and so on. Due directly to your investment your orchard grows and when the trees mature your personal wealth increases not only by the value of the fruit, but the potential for more fruit when the time comes with little more effort. You have increased your personal wealth through productive endeavour. Remember you are also the entire economy.

If you disagree with this, explain either why you haven't incresed your wealth, or why you aren't the entire economy. Bear in mind this is a hypothetical situation in ideal circumstances - noone is ever going to interact with you or that island. You might as well be the only person on the planet.

[simonm]

HarryW

First let me say that I will adress the question you raised at the end of your last post but first, let me systematically answer your questions.

Okay, consider the world as it was 1000 years ago, would you say the amount of wealth in the world then was identical to the amount of wealth in the world now? I am guessing you would because you seem to think wealth is constant.

OK, the world's economy has definitely increased in size over the last 1000 years but to suggest that the world's wealth has either increased or decreased (or even stayed the same) is to accept the assumption that wealth exists in an absolute sense and is not relative. Since I believe that it is relative, I would therefore say that this question is meaningless.

Consider all the cars in the world, all the aeroplanes, all the computers, all the warehouses full of grain, all the information, everything we have gained since that time.

Setting aside the fact that 1000 years ago cars, aeroplanes and computers wouldn't have actually had any value because the fuel/power required to operate these was not available and the knowledge on how to operate them wasn't there either, I still don't think that these have increased our wealth.

Did the invention of the car/train/aeroplane increase the world's wealth? Granted we can now get from A to B quicker than we could before but with our increased ability to travel, the expectations placed upon us has increased. A lorry is expected to get from Newcastle to London in 5 hours (or whatever) now whereas before, it might have taken us 2 days by horse and cart. We didn't need to get there any quicker because we weren't expected to.
This same argument could be extended to any so called "time saving" device that has been invented.

If the world 1000 years ago had had all the grain we have available today, the grain would be a lot less valueble to them than it is to us. This is because the population of the world was much lower then and therefore the demand was much lower.

Inflation is not due to any kind of relative nature of wealth. If that were true, many countries would have negative inflation to compensate for the positive inflation of other countries. When was the last time you heard of negative inflation? (deflation?)

Well, actually, Japan has been recently experiencing deflation but that is besides the point. Inflation is the rate that a given currency is losing it's value. Why does a currency lose it's value? Because wages and prices go up, this seems to increase the wealth of the shop keeper and the worker (respectively) but in reality this is mere illusion (because the macro effect of this is that the currency is losing it's value).

This is what I mean when I say that inflation is a relative concept. It is nothing to do with the relative wealth of different countries.

If you're stuck on a desert island with noone else around, you are the entire economy that you can affect. Suppose you cultivate an orchard to supply you with fresh fruit. You invest time and effort in digging the land, planting the fruit trees, setting up irrigation and so on. Due directly to your investment your orchard grows and when the trees mature your personal wealth increases not only by the value of the fruit, but the potential for more fruit when the time comes with little more effort. You have increased your personal wealth through productive endeavour. Remember you are also the entire economy.

OK, in this case, I am both the supply and demand of my singular economy. What dictates the demand in my economy? My needs. I might satisfy my needs by producing food but the more my needs are satisfied, the lower the value of the food itself. What if I produce food so effieciently that I can no longer eat it before it goes off (with no means of preservation)? Does that excess food have any value? What if I could somehow switch off my need (and desire) for food. Does the food I produced have any value then? I would say not because it is my demand that dicates the value of what I produce. If I sat there making a computer but had no way of ever supplying power to it, does it have any value?

So to address your final point, I would say that the value of an available supply is dicated by the value of the present demand. i.e. The supply has no value if the demand for it is non-existant.

On my desert Island, the more efficiently I produce food, the less it is worth (in unit value). I only have a finite demand and it doesn't matter how much food I produce, I can only eat so much. If I have too much, I might get spoilt, throwing away food half eaten and not worrying about food that decays. Why do I not worry? Because it has become almost worthless to me.

None of what you have said conveys wealth in an objective sense. OK, technology has enabled us to do things that we couldn't do before but we didn't need to do it before. Technology has extended what we are able to acheive but has also extended what we are expected to achieve.

[HarryW]

You are making the fundamental assumption that wealth is a relative thing though. I'm not. All of what you say is reasonable so long as you only think of wealth as being relative, but personally I see it as an absolute thing.

Taking the opposite side of the desert island situation:

You don't do anything. You don't make any effort and you don't have anything to eat. You are starving. You have taken up sucking stones and eating gravel to distract from your hunger.

Meanwhile, on my island (where I'm also stuck, on a different planet, still the only person) I've grown my own fruit and I'm living quite comfortably. In fact I have a little too much so some of the fruit doesn't get eaten and is wasted, but I'm not bothered because I'm quite happy.

Who is more wealthy?

[aknisely]

You are essentially talking about opportunity cost then, not actual visible cost.

Oh hell, not this again

Okay, consider the world as it was 1000 years ago, would you say the amount of wealth in the world then was identical to the amount of wealth in the world now?

I was thinking about this a few years ago, and I came to the conclusion that is quite similar to yours. Introduction of wealth into an economic system, namely useable product, is done only by primary industry where, essentially, something is created from nothing. Fishes are caught, coal and iron are mined, apples go on trees. The factors that go into the "production" of these commodities have an economic value that is completely different from the economic value of the factors of production in, say, manufacturing.

For instance: you have a shoe factory. You must pay for the purchase of leather, paint, and string. You must then sell the shoe at, in most cases, a price that exceeds your purchasing and production costs. Even though you seem to have created a product, you have merely transformed other products. If it costs $20 to purchase the materials for and make the a pair, and you sell them at $100 a piece, the cost is directly dependant on how many shoes you sell (or think you can sell). If sales go up, you are still paying $20 per pair, and if sales go down, you are still paying $20 per pair. You have introduced no new wealth into the economic system. You have only shifted it from your customers to your suppliers.

In a coal mine, on the other hand, you are taking raw materials that do not already exist in the economic system, and are introducing them for the first time into the economic system, where they are subsequently transformed into other things. After they are initially exchanged (most likely for money), the coal no longer has the power of adding to the economic system.

Likewise, wealth leaves an economic system only by being destroyed or lost.

[HarryW]

Secondary, tertiary and quaternary industries do also add wealth to the economy. They add value to what already exists. The intrinsic value of a shoe to someone who needs it is more than the material and labour costs involved.

You are right in some ways though, material wealth increases without simply an increase in existing value only occur in primary industry.

Although you could say the wealth is already there and you're just adding value by catching the fish/mining the coal/cutting down the trees.

[aknisely]

Secondary, tertiary and quaternary industries do also add wealth to the economy. They add value to what already exists. The intrinsic value of a shoe to someone who needs it is more than the material and labour costs involved.

Value is the perception of how much of your goods/services (represented in currency) are to be exchanged for someone else's goods/services, thus something entirely different from wealth. "Wealth" isn't really the term I was looking for, perhaps "product" is better.

Although you could say the wealth is already there and you're just adding value by catching the fish/mining the coal/cutting down the trees.

Right, but it hasn't yet been introduced into the economic system, and useable by consumers or producers or anyone else. On that scale, which relates probably more to biology than economics, the world possesses a wealth of indeterminate capacity, and a recycling power that industry cannot match.

[HarryW]

Right, but it hasn't yet been introduced into the economic system, and useable by consumers or producers or anyone else.

By the same kind of logic as this, you can suggest that the 'shoeness' ()of the raw materials that go into making a shoe, which is the extra value of a shoe over the value of the raw materials involved in making it, hasn't yet been introduced into the economic system and is therefore unuseable.

Value and wealth are entirely different? Perhaps. I am not sure if they are or not. You have said what you think value is, maybe you'd like to explain what you think wealth is and why you think they are so very different? I can see that they are different but I'm not convinced about just how different they are.

[simonm]

HarryW

You are making the fundamental assumption that wealth is a relative thing though. I'm not. All of what you say is reasonable so long as you only think of wealth as being relative, but personally I see it as an absolute thing.

How am I making that assumption? You have consistantly failed to explain how anything has and value independant from those who give it value.

I might define my personal wealth as the total sum of the value of all the products I own.

I would define value in terms of the either the demand it would satisfy if I owned it, or the demand it does satisfy by the virtue of the fact that I already own it.

Demand is a fickle and subjective thing. Consequantly it implies that all wealth is relative (to those that would demand it).

If I am wrong here, please explain where I am making my false assumptions.

Taking the opposite side of the desert island situation:

You don't do anything. You don't make any effort and you don't have anything to eat. You are starving. You have taken up sucking stones and eating gravel to distract from your hunger.

Meanwhile, on my island (where I'm also stuck, on a different planet, still the only person) I've grown my own fruit and I'm living quite comfortably. In fact I have a little too much so some of the fruit doesn't get eaten and is wasted, but I'm not bothered because I'm quite happy.

In this example, you would be more wealthy than I. But consider another example.

Two people are stuck on a desert island. Both with access to the same natural resources. The first one being a person taken from 2000 years ago who was plucked from a hunter/gatherer lifestile. The second from modern day New York. Both take steps to harness the natural resources available on the island for food.

Who is more wealthy here?

I would say that the hunter/gatherer is much more wealthy because he is meeting all his needs where as the modern day person will miss all the modern day luxeries such as TV, music, clothe etc. His needs are greater. Therefore he is failing to meet his needs by a greater amount than the hunter/gatherer.

Now can you not see that wealth is relative?

[aknisely]

By the same kind of logic as this, you can suggest that the 'shoeness' ()of the raw materials that go into making a shoe, which is the extra value of a shoe over the value of the raw materials involved in making it, hasn't yet been introduced into the economic system and is therefore unuseable.

It's unuseable only by certain groups of people. For instance, you and I can do very little with raw leather. However, it's been introduced into the system because it is available to the shoemaker who values it and makes use of it.

Value and wealth are entirely different?

Merriam-Webster tells us, in her infinite knowledge:

• Wealth:all property that has a money value or an exchangeable value.
• Value: the monetary worth of something : marketable price

Wealth can be expressed in a fixed figure: assets minus liabilities of an entity. Value is the worth of a particular item, unique to everyone. I really can't think of anything deeper than that this early in the morning

[HarryW]

Now can you not see that wealth is relative?

Please try not to be patronising. I'm not trying to patronise you, and I'll thank you not to take this kind of stance with me. Always be aware that there are no absolute truths and you may well be wrong just as I may well be wrong. Coming from a position where you are convinced of your own correctness is not productive and is no better a stance in my eyes to the kind of stance many of the religious fanatics around here take.

That dealth with...

I think you are confusing needs with wants. Those luxuries are not necessary. They are both meeting their needs to the same extent.

The hunter gatherer simply doesn't realise the potential value of the things the New York guy craves. Does this lack of understanding make him more wealthy? In my opinion, certainly not. He is just happier being ignorant because he can't have those things anyway, although I think information is almost always a good thing.

That is beside the point though. What I would like to point out is that you have gone from a position of saying the wealth of one person in an economy cannot increase without a decrease in wealth somewhere in that economy, to saying that someone can increase the amount of wealth they have without a corresponding decrease. You have all but said this by saying that in the desert island example I would be more wealthy. The point I was trying to make is that through people's efforts they can increase their own wealth (or the wealth of whoever they are acting on behalf of) without necessarily taking that wealth from someone else.

Your ideas about wealth and value being relative to demand seem reasonable enough, but the impression you gave earlier in this thread was that each individual's wealth was valued as relative to the people around them. You were proposing that it was impossible to gain wealth without taking it from elsewhere in the economy.

[HarryW]

Mr. Knisely (how do you pronounce that?)

Furry muff about the wealth/value thing.

It's unuseable only by certain groups of people. For instance, you and I can do very little with raw leather. However, it's been introduced into the system because it is available to the shoemaker who values it and makes use of it

Coal while it is in the ground is only useable by certain groups of people - those that know how to mine it. Fish are only useable by those that know how to fish. Et cetera. They have been introduced into the system because they are available to those who know how to get them.

[aknisely]

You were proposing that it was impossible to gain wealth without taking it from elsewhere in the economy.

He did have a point there, you can't create something out of nothing. You introduce things to an economic system -- a fisherman catches a fish -- but on that global-scale-limited-resource thing, you can't take something without removing it from another location or possession.

[HarryW]

Yes there is a valid point but there is also inherant value in a service, which doesn't necessarily use resources.

[aknisely]

Coal while it is in the ground is only useable by certain groups of people - those that know how to mine it. Fish are only useable by those that know how to fish. Et cetera. They have been introduced into the system because they are available to those who know how to get them.

Yes, but availability isn't the same thing as useability. You can't use something you don't have.

[aknisely]

<sun glasses w/ Tom Cruise-like attitude>By the way, it's "Nicely." With a Z.</sun glass obnioxious self-serving ness>

[kedaman]

wealth is a subjective boolean measurement. It wouldn't make sense to pick a need and compare it with another, and give a certain weight to each as there is no such measurement. It's not a usefull concept but in the objective world the conecpt of wealth is suppose to derive from subjective concept, by giving weight to each need and sum up them for use in comparation. There's no logic in the concept but it's practically valuable in the economy.

[HarryW]

Gotcha. Any nicknames we should know about? Preferably insulting ones

The availability of the raw materials to make the shoe is not the main issue. The shoe-ness of those materials is unavailable to those who don't know how to get at it.

It's a little like sculpture - the sculpture is already there in the material, you just have to know how to reveal it.