Comments on: Not for all the money in the world …

By: Joshua W. Burton

Joshua W. Burton — Fri, 06 Aug 2004 08:32:42 +0000

“For what shall it profit a man, if he shall gain the whole world, and yet have no allowable deductions?” (Spider Robinson)

By: mc

mc — Thu, 05 Aug 2004 21:30:49 +0000

Tracy – I was thinking of “value” as “market value”, monetary value, quantifiable value, price – given the context of the hypothesis Daniel made… I thought that was the definition of value used here. Like I said I’m not familiar with these theories or the background, I was just thinking of the common sense of the word. Seems to me you’re talking of a different meaning. Aside from survival and physical needs, of course, people make their own decisions about what’s of value to them personally, what’s convenient, what’s appealing, what they really need beyond the necessary stuff. But individual needs and preferences are not what determines the value in an exchange. They do affect it in many ways at a much wider level, I guess, if everyone stopped using cars, cars would have no value. But if you stop using yours, because you don’t “value” (prefer, need) it anymore, you can make money reselling it. Same for the big house that you find no longer valuable or practical to maintain. Someone else will place a quantifiable value on what you don’t “value” yourself. You’re not going to price it less just because you don’t need it or like it anymore.

By: Tracy

Tracy — Thu, 05 Aug 2004 19:52:11 +0000

Scott – I did not make myself entirely clear. When I said that the hypothetical world was not an argument for the labour theory of value, I meant it in the same way that it’s not an argument for Pythagus’s Theorem, or the theory that the universe floats in a pool of ether. The hypothetical is irrelevant to the truth of all three theories. I suspect that the search for a theory of value arises from a combination of human curiousity and the obvious fact that the price of various objects does not vary according to some obvious criteria like weight, colour, or necessity for survival. Of course a true theory of value can have a number of benefits, like a true theory of gravity, but even if there is no obvious value to answering scientific or mathematical or logical questions you still find people running around investigating them. And the idea of marginal utility strikes me as somewhat less arguable than that of the second law of thermodynamics (and I say that as someone with an degree in engineering). That we both need food to survive, and that if we keep eating without bound eventually our stomachs would explode is I think obvious enough that we can all, regardless of political persuasion, agree that there is a point where another mouthful of food is of less value than the previous. Ditto for other objects. Wearing too many clothes is as uncomfortable as wearing too few. At some point a house can get so big that the cleaning bills and the time spent hunting for lost guests outweighs the pleasure of another room. One shot of insulin can be life-saving, two life-endangering. The idea that the economy is a way of getting the dirty work done so that we can all enjoy ourselves on the weekend is not exactly restricted to Keynes and Veblen. It shows up in every Econ 101 class when they discuss the work-leisure trade-off. Work brings disutility and income (including the non-monetary sense, a hunter-gatherer has to go out and gather food even if they never see a dollar in their lifetime), leisure brings utility but no income. You need to hang around till Econ 201 or later to get theories that involve a positive utility from work (e.g. theories involving artist’s motives). mc – if owning everything meant that nothing had value to you, this implies that you would stop breathing. Or eating. Or drinking. After all – water, food, oxygen would all be equally valueless. This does not match with what we know of human biology. To a hiker in the wilderness food is valuable, even if there is no one around to exchange it with. And ditto for our hypothetical owner-of-everything.

By: mc

mc — Thu, 05 Aug 2004 07:44:55 +0000

Ok I don’t understand much at all about these theories. But yes, the idea that there’s no fixed value because value arises from exchange seems self-evident. If you owned everything of value, and no one else could buy them from you, then those things you own would no longer have value. Just like if you had a million dollars but were the last man living on earth, that million dollars wouldn’t be worth a thing. So, indeed, there’s no fixed value on anything, individual or whole. What I don’t get is the point of buying labour when you already own everything. Why would you need anyone’s services at all? To produce what, since you already have everything? Plus, wouldn’t the definition “every single object of value” include labour? I think it’s artificial to make a distinction between products or properties as physical objects, and services as non-physical, they both serve as currency, as things of value in exchanges. Also, if you owned every company in the world, you’d automatically ‘own’ all its workers too. So if you ever needed anything more than the everything you already have, they’d be forced to work for you anyway. There’d be no room left for exchage. You wouldn’t have to pay them. Unless the strict necessary to avoid them starving for the duration of the job you require. That would make you the most gratuitously evil dictator ever. Sorry to sound like such a cliché communist, but if I owned everything, I’d definitely redistribute it. There’d be no other sensible option.

By: woodturtle

woodturtle — Wed, 04 Aug 2004 17:37:58 +0000

Why ask questions when you can just try it out yourself? Grow your hair long, practice eating grasshoppers and honey, go off in the desert and wait for the devil to show up and make you an offer, very similar to the one you describe. First hand experience is always the best, I think. Old World- devil offers you all the riches and boss status. New World- devil offers you perfect pitch, song-writing ability, and excellent guitar playing skills. I would find the crossroads in the desert and make sure I got the New World devil deal also. You never know- you might spend all that money foolishly and end up busted broke and need those musical skills to fall back on.

By: nick

nick — Wed, 04 Aug 2004 16:55:54 +0000

I’d bet half of it on ‘O’ in roulette (on a US wheel, natch). Of course, winning would cause some problems thereafter. But losing would give me room to try and win the rest back.

By: Scott Martens

Scott Martens — Wed, 04 Aug 2004 16:11:45 +0000

And of course, hours later, I realise that the original post said that economic theories that don’t have a theory of value are scale invariant, which rather undermines what I was saying. sigh It’s one of those days…

By: Scott Martens

Scott Martens — Wed, 04 Aug 2004 13:57:36 +0000

Tracy, you familiar with Sraffa? That was basically his argument about labour theories of value, except he used corn, steel and labour in his example. You could, of course, imagine an economic theory centred on corn – or edible objects in general – but that means seeing people principally as the mechanism by which corn reproduces itself and satisfies its needs. There is nothing contradictory or illogical about doing so. It is akin to claiming that chickens are an egg’s way of making more eggs. And yet, it seems very uncompelling as economic theory. I’m not advocating a labour theory of value per se either. The thing I’m more struggling with is what a theory of value is for. It seems to have more to do with the ideological intent of the theorist than any statement about the universe as a whole. A labour theory focuses on the economic system as a means by which workers survive from day to day. Marginalism has this Calvinist sort of bent, defining value as a consequence of utlity. Someone like Veblen or even Keynes seems to see the whole thing in a more hedonistic light, as if the economy was a way of getting the dirty work done so that we can all get sloshed at keggers on the weekend and everybody can have a good time. What follows is pretty straight-forward: Marx wants economic structures to relieve the burdens of the working class but has little regard for the complexities of asset allocation; marginalists want assets allocated to those who can make the most of them, even when what they make of them is purely egotistical in function; hedonists want to redistribute wealth so that we can all have some fun, even if redistribution interferes with the efficient allocation of capital. Each seems to have a different conception of the good life and this political consideration motivates their choice of theory of value. At least, that’s my current theory. It is subject to change without notice.

By: Becky

Becky — Wed, 04 Aug 2004 13:45:00 +0000

“If you had all the wealth in the world, ie you owned every single object of value that was known to humanity ….” That defines God. God He, who can speak worlds into existence with a word, owns everything, including us. What God has done is given all of it back to us to freely use, in exchange for nothing but our devotion. In His economy, the only thing that has real value, is our eternal souls.

By: jam

jam — Wed, 04 Aug 2004 13:16:49 +0000

It’s a transient condition, though, having all the money in the world, isn’t it? Once you’ve engaged in one transaction, you no longer have all the money in the world. Whoever you bought labour from now has some.

By: Tracy

Tracy — Wed, 04 Aug 2004 13:16:08 +0000

If you own everything of value in the world, then there’s nothing to spend it on since you already own whatever you could buy. If you own everything of value in the world except human labour, then you’re going to have start exchanging some of the things you own for people’s labour (unless you’re happy to maintain yourself entirely by your own labour and the products you own). This isn’t much of an argument for the labour theory of value. For example, imagine another situation where you own every edible object in the world. You can then spend your wealth on labour and non-edible objects (warm clothes, CDs, etc). I do not think that is an argument at all for the labour+non-edible-objects theory of value.

By: Jeremy Osner

Jeremy Osner — Wed, 04 Aug 2004 13:13:01 +0000

Wouldn’t you need to spend it all to buy back your soul? ~~alternate answer~~ Eternal life, of course!

By: Scott Martens

Scott Martens — Wed, 04 Aug 2004 12:43:28 +0000

I see your point about scale invariance. You can only exchange all the labour in the world for all the things of value in the world, so there is never any prospect of assigning things a value except as a proportion of aggregate labour. (Or, failing a labour theory of value, some other maximal quantity of whatever value is held to derive from.) Actually, I always thought that was a fairly good argument for a basically labour theory of value, since all the labour in the world produces all the sustainably produceable consumable goods and the only other contributions are either non-renewable resources extracted from nature or “dead labour” in the sense of capital goods that embody past labourers’ contributions to present production. Although I have to ask, why would this scale invariance be true of marginalism? With what could one exchange all the value-bearing assets of the world if one was an omniproprietary marginalist? Is the value of everything in a marginalist world the aggregate marginal utlity of everything possessed of utility to the person who has the greatest marginal use for it? If one defined utility in human-centric terms – defined a person-facility as the satisfaction of one unit of need for one person – we could define the value of all things in scale-variant terms. The more people there are, the more needs to satisfy, the more value the enseble of things able to meet all or some of those needs might have. Even if we measured value in per capita terms instead of as an aggregate, there is still no reason to think that one economy might not be able to satisfy more units of need per capita than some other economy. Of course, this relies on imagining that there could even in principle exist a metre which can rank and compare different needs for different people, a notion which poses some serious philosphical challenges. Even ranking utility for a single person is difficult. Still, I suppose it can’t be any worse than the transformation problem.

By: Michael Mouse

Michael Mouse — Wed, 04 Aug 2004 10:55:40 +0000

As some have already hinted, you’re pretty much stuck with spending it on services. (And the main service you’re going to need to start with is an army of accountants to make sense of it all, and another army of managers to organise it all.) Not sure I buy the premise though – that all the wealth in the world is simply the sum total of all the objects of value. Intangibles have value (at least, my employer is prepared to trade its money for my intangible output). Also, “objects” here seems a bit ill-defined. It can’t mean only the physical objects, or you’d only be moderately wealthy. But if it includes such abstractions as companies and electronic money, it’s hard to see how it excludes people.

By: bad Jim

bad Jim — Wed, 04 Aug 2004 09:28:20 +0000

Let me think about Mary Louise Parker, though.