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'The Script' is basically The Labor Theory of Value of Adam Smith and David Ricardo..

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Anything related to matters of the mind

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Before I begin, I want to make a personal remark.

Contrary to many on this forum, I am not here to talk about how one can become rich or talk about becoming an entrepreneur. I am totally not interested in that! The thing that interests me about MJ. DeMarco's books is his original outlook on value and money. He is the first person who writes books that are the beginning of an ideology I am working on.

MJ. DeMarco and I have one thing in common. He was 'thrown out of'' The Script, because his father left his family, leaving the task of taking care of him and his two brothers to his mother. He had first experienced an abundant life when his father was at home. But suddenly they were poor because his father had left him. And that hurt. Because he was not raised in poverty, at least not at the beginning, he felt the hurt of poverty, and had a wish to end it, but did not know how, because he believed that only people with special talents could become rich, and he hadn't any. Then MJ. DeMarco met an entrepreneur, who had become rich by inventing something and then building a business around it. From that moment on he saw 'a way out' of his own poverty and did everything he could to become a successful entrepreneur.

I was also 'thrown out' of The Script. But that was not because of the pain of poverty. I have been born into a basically poor family and accepted that as normal. It didn't hurt me at all and still doesn't. During the rest of my life up till now, I was poor, and didn't care a hoot about it!

I still don't!

What threw me out of The Script was something else painful.

I was born with an extremely active mind. I was born a child prodigy, but my parents didn't realize this. At school others rejected me, because I was so different. They would have been bullying me for being a nerd. But it so happened that my mother saw that, and made me learn to fight by taking Judo lessons! That stopped all bullying. After having a fight with the strongest boy at my school, openly arranged and witnessed by many, and defeating him, they just let me alone. After that, if some of them had a problem with their homework, they went to me, and asked my help, which I always gladly gave.

When I was young, I studied books about mathematics and physics just for fun, and I became extremely good at it! I passed the end exam not only as the best of my school, but, so I learned later, as the best of the entire Netherlands. When the diplomas were awarded, I got an extra paper stating that.

While still at that school, I had taught myself first arithmetic to do properly. This was because the school didn't teach that very well. Then I went on to learn algebra, geometry, complex number theory, and then taught myself calculus. On top of that, I taught myself physics, and also trained myself in classical music. I first tried to teach myself how to play the organ, and was fortunate to first have a woman teacher, who, after about two years passed me on to one of the best church organ players in The Netherlands. So I was a child prodigy in both science and art!

The 'disaster' that struck me happened when I studied mathematics and physics at the University of Leiden, The Netherlands. At that time I became interested in meditation. I began to combine my studies in mathematics, physics, and, yes, music, with meditation. I was experimenting to find out how I could learn faster through meditation.

And then, one day, after an encounter with a Zen Master (who turned out to be an imposter, by the way) he put me into a Koan-like situation. This was such a blow to my mind, that I went home, and after meditating for three days straight, just to deal with that blow, I succeeded to put my mind into somewhat of some order. But to deal with all the side effects took me about four years!

Not only my mind but also my brain had changed! All that studying and meditating had caused a profound change in the functioning of my brain. Ever since then I 'feel' a rhythmic wave go through my body. This is not an illusion, as I was frequently told, because once I was connected to a monitor measuring my brain patterns as a preparation for an eye-operation. The person performing the measurement thought that his equipment malfunctioned because of the strange readings he got!

This transformation had caused a huge disruption in my life!

Why?

Because when I tried to talk about this transformation, others didn't believe me! It was beyond their imagination that a brain could undergo such a transformation! And since then I have been struggling with two things.

1. How can I convince others, that I am not insane, and that such an alteration of the functioning of the brain could really exist?
2. How could I use this altered functioning of my brain to do things that would be of value to others?

Since then I am interested in the concept of value. Later, I became interested in the concept of money and how money and value are connected. It took me literally decades to find that one out! It is obvious once you see it. But it goes right against what everybody thinks about value.

Now you might ask: what, exactly, is the effect of this transformation? It allows me to do one thing. My brains can 'switch off' my thought and thinking, and bring me into a mental state, whereby there is only consciousness, and no thought whatsoever. In that state, it is possible to become aware of the foundations of any thought structure, and one can move to the deepest root of any system of thought. One can 'see' where it originates.

That is how my brains can 'see' that the basis of The Script, for example, is The Labor Theory of Value, as I am going to explain below.

I have never been interested in becoming rich. I had another problem. Namely, how could I arrive at someplace in society without being considered insane? Not only that. How could I use this altered functioning of my brain to bring things about that would help others? Because only if I could do this last thing, I could be in harmony with society without having to deny myself. My quest(ion) was, how can others benefit from this strange thing going on in me?

So, what do I have in common with MJ. DeMarco? Neither he nor I have ever been part of 'The Script'. But his struggle was a different one than mine. I didn't suffer from being poor. He did suffer from being poor and succeeded to end his suffering by becoming rich. My suffering was a totally different one. One that I only fairly recently understood!

I am, at present, re-reading Unscripted . I had read it before, but I hadn't connected it to what I already knew. Moreover, between my first reading and this second reading I had a tremendous brain wave about how, exactly, value and money are connected, and how earning money happens in all cases!

What I want to share here, is a suspicion I had. And now that I reread it, I see it confirmed.

Unscripted basically says, that virtually all people in the West live in what MJ DeMarco calls: 'the hyperreality of the Script'. He describes it very well in 'Unscripted '. But where did 'The Script' come from? What is its ultimate source? Or, better, out of which mistake has it arisen?

I know that Henry Ford is the one, who introduced the 5 workdays 2 weekends 8 hours a day plan. Before Henry Ford, the workdays were longer. Elsewhere people earned nevertheless less. And there was no two days off on the weekend either. Only a free Sunday, because of The Bible.

Henry Ford had good reason for his invention of The Script. He realized that he could have better workers in his factories when they were well-rested, and had some idea why they did what they did. This was especially important with conveyor belt work. How can one stand to do one simple task over and over again? Extremely boring! Charlie Chaplin has rightfully made fun of it in his movie: 'Modern Times'.

There was something else about Henry Ford. Before him, automobiles were luxury products. He saw that if they became it would transform the world. But even his mass-production could not produce these cars so cheaply, that many, especially 'the working people = wage slaves' could afford them. Therefore he raised the wages up to a level so that his own workers could afford them. Especially because he made it possible they could pay them in installments. He succeeded in avoiding 'the Bartender problem' = 'a customer asks the bartender to loan him money. He argues that the bartender will not suffer because of it, because he will use the money only for things the bartender sells' The 'bartender problem' was avoided, because Henry Ford speculated, that the families of his workers would find ways to use those cars to create new services, for which they were paid. So in the long run his cars would become commodities.

The deployment of the conveyor belt by Henry Ford reminds me of a story of a man, here, in The Netherlands, called Godfried Bomans. Although he is now practically forgotten, he was known as a writer and had very funny ways to describe many things in the world. He had also an interesting commentary on the workweek.

His story ran somewhat like this. 'An industrialist realized, that division of labor through a conveyor belt made the actions so simple, that even monkeys were able to do it. So he went to the local zoo and picked up a bunch of chimpanzees. He showed these monkeys what they had to do. And, indeed, it took only 2 hours to make the monkeys work with the conveyor belt to assemble his product.

All seemed to go well... for about four hours. But after this time the monkeys became so extremely bored, that they stopped working altogether. It began when one money threw his wrench at another money. This triggered other monkeys to react. After only ten minutes one could see, in this factory, one monkey grabbing a lamp and swinging back and forth. Other monkeys were running on the conveyor belts. Others again were chasing after each other.

It was a complete mess! No production was produced after that.

This industrialist had forgotten one thing.

Those chimpanzees didn't have families!

He brought the monkeys back to the zoo, and let human workers return to his factory.

So far Godfried Bomans.

Now, let me return to the subject, and continue on a more serious note. The deepest root of The Script stems from two books. The first is 'The Wealth of Nations', published in 1776 by Adam Smith. The second is 'Principles of Political Economy and Taxation' published by David Ricardo in 1817.

In both books, a theory of value was introduced. Within circles of economists, it is known as The Labor Theory of Value.

According to Adam Smith, the value of any good or service is the result of, in modern terms, the labor that has been necessary to produce that good or to create that service.

In Adam Smith's own words. Quote: 'The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose on other people.'

David Ricardo refined it. His book begins with: 'The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labor which is necessary for its production, and not on the greater or lesser compensation which is paid for that labor.'

Maybe this is difficult to grasp immediately. What Ricardo says, is that price does not define value, but that it is the other way around. Value determines price. And value is in its turn determined by how many man-hours of labor are needed to produce commodities.

Ricardo gave an example. He asserted that when the amount of time needed to produce a pen is 10x that needed for the production of a pencil, then the price of that pen is 10x that of that pencil. Therefore, labor-value reveals itself in prices, and not the other way around.

When you unite Adam Smith's definition of value with that of David Ricardo, you arrive at The Labor Theory of Value, which says that the value of any good or any service is the result of the number of man-hours that went into its production or creation.

Marxism is one of the main poisonous results of this definition of value. His whole argument of the exploitation of the Proletariat by the Bourgeoisie is derived straight from The Labor Theory of Value.

Originally, Marx believed that value only arises out of amounts of labor time; numbers of man-hours. Later he modified it somewhat. He became aware, that people who were more trained earned more. Therefore it had to be, that an hour of the labor of a schooled worker had to have more value than that of an unschooled worker. He could not get around that fact.

Yet, one can still explain that with The Labor Theory of Value. Just introduce the term: 'human capital'. This schooling also takes labor. To become more proficient in anything is a matter of hours, sometimes decades of daily practice of several hours per day. You are then changing your own mind, through the labor of training into 'human capital'. One could use this as an argument that defuses this counterargument. Nevertheless, this is a modification of The Labor Theory of Value, which changes it somewhat into something like this: 'the total number of man-hours needed to produce a good or to create a service is a measure of its value'. This 'total number of man-hours' then consists of the actual amount of man-hours spent in producing the good or creating the service, + the total amount of man-hours needed to make the man-hours more valuable.

Therefore, in our Western society, it is this modified Labor Theory of Value that is the foundation of The Script.

The Labor Theory of Value is also the source of envy of the rich! If somebody is a multi-millionaire, and the total amount of time he has spent to get rich is about equal to that of a wage slave, or of a middle-class person, these people see that as dishonest. It is the source of all measures to 'tax the rich'. Or, worse, to erect such terrible social orders like Fascism and Communism, which are all supposed to be better 'social orders' because they 'correct' this problem. They are supposed to correct the structural dishonesty of huge differences in outcome, of equity. (Hitler: 'Arbeit macht Frei!) Translated; Labor creates freedom! These words are above the gate of the entrance of Auschwitz!

But what virtually nobody realizes, is that it is never true that we are paid for the hours we work!

Let me repeat that!

We are never, never, never paid for the number of hours we work! To think we are is itself a hyperreality illusion!

But before I explain that, let me give an example that shows how problematic the concept of value is! One that demolishes all of present-day economics!

Suppose you are on a deserted beach, walking in the sun, far from civilization. Suddenly you see something about 10 meters away in front of you. Something sparkling.

You go there to find out what it is. And then, at your feet, you find a huge diamond! One that is so huge, that, so you realize, you can sell for at least 20 million dollars!

In other words, you have found something of tremendous value!

The question now is this: where does the value of this diamond come from?

Definitely not from labor. You can hardly call walking for meters and pick it up, work!

Economists think they have the answer. They say that this diamond has this huge value because there are not many places on earth where you can find huge diamonds. This has always been so. Therefore there are not many such huge diamonds ever found. And that is mainly because the geological processes that produce such diamonds take billions of years to complete!

You read this correctly. Not millions of years, but billions of years!

Economists, therefore, say, that it is the scarcity of this diamond that is the cause of its value.

But that is a strange explanation! Because, what, exactly, is scarcity?

Economists explain it as follows: 'the number of diamonds lying around is far less than the number of people who want such diamonds. And that is what scarcity is.

But if that is so, then it is not always labor that is the source of the value of that diamond. Apparently, the value of such a diamond does not originate from the labor needed to 'produce' it but has to come from the wants of people. (Economists who assert this, and who therefore reject The Labor Theory of Value are called Austrian economists.)

Indeed! Ludwig von Mises defines value in a totally different way than Smith and Ricardo do. Ludwig von Mises' definition of value is: 'The value of a good or service is the importance an individual attaches to that good or that service.'

Notice that labor does not even appear in this definition! Yet, at first sight, it looks very plausible. The air we breathe, for example, has a tremendous value to us. We cannot live without it. But because it is not scarce, nobody pays for it. That is why its price is zero.

But there are major problems with this definition of value, too!

To begin with, this definition of value is basically a full capitulation of economics as a science! If value depends only on the importance individuals attach to goods and services, it is totally subjective!

A theory based on subjectivity cannot be transformed into a scientific theory, because science, whatever its form, must be independent of the opinions of anyone. Therefore, if value, which is the most central concept of economics, is subjective, it is impossible to develop it into a scientific theory of economic value!

I must say that I look with great amusement to Austrian and Misean economists. I see how they 'twist and squirm' when they get the reproach that their theory is unscientific, exactly because of the subjectivity of value. Ludwig von Mises himself uses very pompous words to try to rationalize himself out of this through obfuscation!

Economics has come to a grinding halt because of this! Only Marxists still believe that they have a scientific theory of economic value. They refuse to see that it is totally wrong! That is why they are such fanatics!

But it is even worse! Economics, at present, offers no help whatsoever to entrepreneurs!

The diamond example shows that The Labor Theory of Value is wrong, but also that its only alternative cannot be used as a basis of a genuine science of economics!

Mind you, this diamond example is not an exception either! That kite will not fly! (That is what Ricardo thought, although he was aware of this, and other exceptions. Rare paintings of dead Masters is another he mentioned.) Wine, put in barrels in wine cellars becomes more valuable the longer the wine is allowed to ripen. That is, the longer nothing is done with it! How can value arise from abstaining from work?

Wheat growing in the fields does not grow because farmers go to the plants, and pull them upwards one by one. Our food grows in nature by itself. The only thing a farmer does is to create optimal conditions for our grains and vegetables to grow. The same can be said about milk and meat production. Just feed the cows, and the milk in them arises. You only have to get it out. Chickens grow by themselves, and not because of some labor applied to eggs. And isn't it also true, that in the Tesla factories of Elon Musk, cars are built by robots? In other words, he does not use laborers as Henry Ford did, but he uses natural forces. Elon Musk does not build cars. He grows cars in his factories! Elon Musk is a car farmer!

Is there a way out?

Can we have a definition of value that can salvage economics?

Can we have a definition of value that can be used to transform economics into a genuine science?

Yes, there is! Yes, it is possible!

However, I shall only continue here, if there is somebody on this forum who wants to have a real understanding of the surprising connection of value to money!

Anybody here interested?'
 
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Last edited:

mr4ffe

Contributor
Read Fastlane!
Read Unscripted!
Nov 3, 2018
67
54
Stockholm, Sweden
I'm interested in your theory, but I question the conclusion that Austrian economics is unscientific. For something to be scientific, it needs to be observable and reproducible. Is it not possible for independent observers to recognize market demands in a reproducible manner?

Additionally, I want to point out that all free markets do not necessarily follow pure supply and demand: from stores throwing away tons of food instead of lowering prices while people are starving, to countries being full of empty overpriced houses while people are homeless. If these markets operated on a pure supply and demand basis, prices would be lower and the number of consumers would be higher (although total profits would likely be lower).

Companies are only worried about squeezing out as much profit as possible, even if that means less customers overall (because that's how the incentives are set up). Essentially, what you end up with is industries that are implicitly only available to those a part of the middle class or higher.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
I'm interested in your theory, but I question the conclusion that Austrian economics is unscientific. For something to be scientific, it needs to be observable and reproducible. Is it not possible for independent observers to recognize market demands in a reproducible manner?

Additionally, I want to point out that all free markets do not necessarily follow pure supply and demand: from stores throwing away tons of food instead of lowering prices while people are starving, to countries being full of empty overpriced houses while people are homeless. If these markets operated on a pure supply and demand basis, prices would be lower and the number of consumers would be higher (although total profits would likely be lower).

Companies are only worried about squeezing out as much profit as possible, even if that means less customers overall (because that's how the incentives are set up). Essentially, what you end up with is industries that are implicitly only available to those a part of the middle class or higher.
If 'observable' and 'reproducible' is the criterion for being scientific, then economics does not satisfy those criteria at all! This is because humans do not follow laws like those that exist within physics, or within primitive life forms. In fact, the higher the life form, the more unpredictable it becomes!

Let me give a simple example. If you look at a snail, and you touch one of its eyes that stick out, it contracts it. Then it stretches again. If you touch it again, it contracts again and it stretches out again etc... It is fully predictable.

Try to do that with a chimpanzee! The first time you poke the chimp in the eye, he will be startled and draws back. If you try it again he will, maybe, hit your hand away. If you try it a third time, the chimp might become outright angry and attack you!

You cannot predict what the monkey actually will do!

With humans, it is even 'worse'! If you try to create a theory of human behavior, you might, temporarily, be able to use that to predict what people will do. But as soon as they know about your theory about them, they can imagine an action that is in contradiction with your theory about them, execute it, and thus falsify your theory. That is why psychology, for example, cannot ever be a science that satisfies Popper's criterion of falsification!

Also, because economics is about human action (that much I agree with Ludwig von Mises) it can never be a scientific theory as you define it.

Ludwig von Mises, in his book: 'Human Action' defines value as 'the importance that acting man attaches to ultimate ends'. (Page 96, the second sentence of Human Action, Third Revised Edition, Contemporary Books, Inc,) Chicago.)

A science of economics must be about value and money!

When I then return to your criterion: 'observable and reproducible', you cannot observe the importance any 'acting man' you look at attaches to his ultimate ends. And even if you could, he will not always act in the same manner, based on this ultimate end of his. Also, if two people attach the same importance to an ultimate end they both have in common, they will do different things to try to accomplish that

On this forum, for example, there are many who attach the same importance to having so much money that they do not have to earn more of it to take care of themselves. But what a huge difference there is in how each of them tries to realize this same important goal for themselves!

The issues you mention further are surface phenomena that, ultimately, stem from two things combined. Namely, our political systems that are built on taxation, and therefore exploitation. Taxation causes societies to split up into two kinds of people. Namely, those that produce, sell goods and services, receive money for that and pay taxes. And those that are on the receiving end of those taxes. These are people who do not have to produce anything because they profit from the producing people. This is exploitation based on threats of violence. (Pay your taxes, because if you don't!... )

And then there is, on top of this, a thoroughly corrupt banking system, where people are not robbed through threats of violence, but through seducing them to buy a lot of 'junk', like houses, cars, beautiful clothes, and much other stuff. They are seduced to buy all that stuff by going into debt! They then become slaves of those banks by being seduced to buy a lot of stuff they better had not bought! So, money can make people become doubly enslaved. If you pay 50% taxation, you are 50% slave of the government. And if you, on top of that, spend, say, 25% of what remains on interest on debt just to keep up your standard of living, you are 25% slave of the banks. In total, you are then 75% enslaved!

Why is going into debt enslavement under our current banking system? Lending and borrowing is a deep subject. If you really want to go to the bottom of this, I can recommend a book written by Jesus Huerta de Soto Money, Bank Credit, and Economic Cycles - PDF Drive,

Or, watch the following videos:
View: https://www.youtube.com/watch?v=2nBPN-MKefA&t=1054s&ab_channel=EthanielRockX
and
View: https://www.youtube.com/watch?v=bSPzc5lNp08&t=2628s&ab_channel=TheP.I.L.L.MethodChannel


and after you have seen these videos, think! This thinking is needed because Paul Grignon does not have everything right! But if you can understand him, and you can detect his mistakes, you have gained tremendous insight into our banking systems, and all the economic misery that arises out of them. (The things you mention!)

So, why is lending from a bank under the present system an act, whereby you enslave yourself partially? It is because when you go to a bank for a loan, the bank does not lend you money they have borrowed themselves. No, they have created that money 'out of nothing' just by typing it into your bank account! They are, under certain rules, allowed to do that by all governments. This is fractional reserve banking! And when you pay back this loan, they are not allowed to keep the principal in existence. (The money they created through typing. They must destroy that, by erasing your debt, which exists in a separate account in that bank in your name.) But they are allowed to keep the interest on this loan as their income. And, again, this creates a new group of people who can get rich by getting income out of nothing. Namely these interest payments. The banks do not have an objective right on those incomes out of interest, but are allowed to steal in this way!

What they do by granting your loan, is give you buying power by creating money out of nothing through typing. The buying power is then 'financed', that is, stolen through inflation from all who use their kind of money.

I dare to make the following statement.

All corruption in societies originates from making it possible for certain people, legally, to obtain goods and services without the need to contribute anything to anybody in their entire lives!

And it is this corruption that leads to the terrible things you describe that are, indeed, happening everywhere!

These two sources of exploitation, taxation through the threat of violence, and fractional reserve banking through seduction are the two ultimate causes of the mischiefs you mention. The 'corporate greed' you are talking about. The houses that are built, financed by money created out of nothing, which has, among other things, caused the extreme housing bubble in China! And this food dumping, while letting people starve!

Money makes fractional slavery possible! That is why one can become a slave of several Masters!

In any case, now that there is one person interested, (you), I shall continue the above article, and explain the connection between value and money in a future article.
 

Move the chains

Contributor
Read Rat-Race Escape!
Read Unscripted!
Dec 15, 2019
49
46
We are never, never, never paid for the number of hours we work! To think we are is itself a hyperreality illusion!
I find this intriguing. I completely understand where you're coming from and the hourly rate of pay rarely ever equates to the true value of the output in the bigger picture of how it can be leverage for high rates of income by the company.

It can also be reasoned that unless a worker is measured and held accountable to a certain level of output (think Amazon delivery or warehouse staff), very few people 'work' every minute of their work day. I'd be curious as to the real output per hour, especially in roles that aren't directly customer facing where service can't be avoided or it's measured.

Still could argue most people aren't compensated fairly but the output of many employees is probably much less than think.
 
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KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
I find this intriguing. I completely understand where you're coming from and the hourly rate of pay rarely ever equates to the true value of the output in the bigger picture of how it can be leverage for high rates of income by the company.

It can also be reasoned that unless a worker is measured and held accountable to a certain level of output (think Amazon delivery or warehouse staff), very few people 'work' every minute of their work day. I'd be curious as to the real output per hour, especially in roles that aren't directly customer facing where service can't be avoided or it's measured.

Still could argue most people aren't compensated fairly but the output of many employees is probably much less than think.
I think you do not really get what I was saying. In the way you express your response, you suggest that there is something like: 'a honest pay for a honest amount of work'. And it is exactly this idea that is The Labor Theory of Value. Namely, that you are paid for the amount of time you spend creating value for others, and that there exists 'a honest compensation' for that.

That you don't get it, is not your fault. It is my fault! I haven't explained (yet) how value and money are connected. To be honest, when I myself 'got it', it was yaw-dropping! It took my breath away! My amazement is comparable to one who first believed that the earth is the center of the universe, and then learns that not only is the earth revolving around the sun, but the sun is one of an estimated number of 10,000,000,000 suns in our milky way alone!

I shall explain the connection between value and money in a future article.
 

Hong_Kong

Contributor
Apr 7, 2022
59
74
1. How can I convince others, that I am not insane, and that such an alteration of the functioning of the brain could really exist?

Zen Master (who turned out to be an imposter, by the way) he put me into a Koan-like situation. This was such a blow to my mind, that I went home, and after meditating for three days straight, just to deal with that blow, I succeeded to put my mind into somewhat of some order. But to deal with all the side effects took me about four years!

Our food grows in nature by itself. The only thing a farmer does is to create optimal conditions for our grains and vegetables to grow. The same can be said about milk and meat production. Just feed the cows, and the milk in them arises. You only have to get it out. Chickens grow by themselves, and not because of some labor applied to eggs. And isn't it also true, that in the Tesla factories of Elon Musk, cars are built by robots? In other words, he does not use laborers as Henry Ford did, but he uses natural forces. Elon Musk does not build cars. He grows cars in his factories! Elon Musk is a car farmer!
This was very interesting, thank you.
 

mr4ffe

Contributor
Read Fastlane!
Read Unscripted!
Nov 3, 2018
67
54
Stockholm, Sweden
If 'observable' and 'reproducible' is the criterion for being scientific, then economics does not satisfy those criteria at all! This is because humans do not follow laws like those that exist within physics, or within primitive life forms. In fact, the higher the life form, the more unpredictable it becomes!

Let me give a simple example. If you look at a snail, and you touch one of its eyes that stick out, it contracts it. Then it stretches again. If you touch it again, it contracts again and it stretches out again etc... It is fully predictable.

Try to do that with a chimpanzee! The first time you poke the chimp in the eye, he will be startled and draws back. If you try it again he will, maybe, hit your hand away. If you try it a third time, the chimp might become outright angry and attack you!

You cannot predict what the monkey actually will do!

With humans, it is even 'worse'! If you try to create a theory of human behavior, you might, temporarily, be able to use that to predict what people will do. But as soon as they know about your theory about them, they can imagine an action that is in contradiction with your theory about them, execute it, and thus falsify your theory. That is why psychology, for example, cannot ever be a science that satisfies Popper's criterion of falsification!

Also, because economics is about human action (that much I agree with Ludwig von Mises) it can never be a scientific theory as you define it.

Ludwig von Mises, in his book: 'Human Action' defines value as 'the importance that acting man attaches to ultimate ends'. (Page 96, the second sentence of Human Action, Third Revised Edition, Contemporary Books, Inc,) Chicago.)

A science of economics must be about value and money!

When I then return to your criterion: 'observable and reproducible', you cannot observe the importance any 'acting man' you look at attaches to his ultimate ends. And even if you could, he will not always act in the same manner, based on this ultimate end of his. Also, if two people attach the same importance to an ultimate end they both have in common, they will do different things to try to accomplish that
The assumption that a theory needs to be prescriptive to be scientific is false. A scientific theory can be descriptive (such as the laws of physics), yet we may encounter contrarian phenomena where the law or theory does not apply (such as the laws of thermodynamics in the event horizons of black holes). That does not render the laws of physics any less scientific. Essentially, economic theories describe previously observed phenomena scientifically, but using those theories prescriptively would be unscientific.
 
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BizyDad

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How someone who spent so much time convincing us of his genius doesn't see the holes and contradictions in his thinking is beyond me.

Also sweeping generalizations, clever turns of phrase, and grandiose statements do not usually make a sound foundation for a scientific theory of value. You've pointed these flaws in those who came before you, but I see no evidence that your path is any clearer.

But I can't not watch. Please, sir, continue. You have my attention, such as it is.

The deepest root of The Script stems from two books. The first is 'The Wealth of Nations', published in 1776 by Adam Smith. The second is 'Principles of Political Economy and Taxation' published by David Ricardo in 1817.

I'd make the case that the origin of the script goes back much much further, and I cannot point to the origin myself, but certainly the Roman patronage system held some basis for "the script".

Did not Cicero and Socrates bemoan the state of education in their days? Diogenes' thinking ultimately led to the school of stoicism in part to combat the script of their time.

These 18th century economic philosophers took a conversation about labor in a new direction. But it's not like they started the thought that labor held value, monetarily or otherwise.

Certainly the ancient Egyptians and Babylonians and Carthiginians understood the concept that labor had value.

The Romans paid wages in salt, hence the origin of the phrase "being worth your salt". Is that also not an echo of the script predating these classical economic philosophers?

Smith and Ricardo are hardly the "deepest roots" nor the origin. But if you need to assert so in order to found your new school of Neo-Misean economics, who am I to stop you? Carry on, please.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
The assumption that a theory needs to be prescriptive to be scientific is false. A scientific theory can be descriptive (such as the laws of physics), yet we may encounter contrarian phenomena where the law or theory does not apply (such as the laws of thermodynamics in the event horizons of black holes). That does not render the laws of physics any less scientific. Essentially, economic theories describe previously observed phenomena scientifically, but using those theories prescriptively would be unscientific.
Ì haven't said that a scientific theory needs to be prescriptive. In fact, my own theory of value and money is not prescriptive.

The big shock of the heliocentric model of Copernicus was that you could have two theories, that of Ptolemy and Copernicus, both of which gave a completely adequate explanation of the same facts, nevertheless both of which were in total contradiction with each other.

Realizing this gave a fatal blow to what is now called: 'naive realism'; the idea that we can just observe facts and thus know what is real. And that if we express what we have accepted as facts in a verbal form, those statements are true, just because they are verbal expressions of facts.

For quite a long time, thinkers didn't know how to deal with the contradiction of the Ptolemaic and the Copernican model, until Immanuel Kant published his book: 'Kritik der Reinen Vernunft' = Critique of Pure Reason, which began with the statement: 'although understanding begins with observation, it does not arise out of observation.'

This was the beginning of understanding of understanding itself!

Kant believed in what he called: 'categorical imperatives, which, in plain English, you could call: 'innate theories' He believed that these are needed to make sense of the data of the senses. He believed that Euclidean Geometry and the absolute time idea of Newton were such innate theories. They had to exist before observation, otherwise, our brains could not make sense of the data of the senses. That is, without such innate theories our brains are not able to transform the data of the senses into experiences.

Kant's authority had such a tremendous weight, that Gauss, who developed a non-Euclidean geometry, didn't dare to publish it. He was afraid that he would be ridiculed. After all, one cannot go against innate theories! Therefore, about 25 to 30 years later two other mathematicians, Boljay and Lobatschewski came up with the same theories, and they got the credit. Since this caused Non-Euclidean to become accepted, Gauss dared to continue this work, which was taken up by one of his main students: Bernhard Riemann, who developed a general multi-dimensional non-Euclidean geometry.

These new geometric theories were just curiosities. People believed they could not have anything to do with reality. Then came the next shock. Einstein showed that Euclidean Geometry and Absolute Time were false ideas! In his special theory of relativity, he showed that both Euclidean Geometry and Absolute Time were approximations of a more general theory wherein time and space could be transformed into one another! That was a tremendous revolution! And then, in his General Theory of Relativity, he went even further by using the multi-dimensional non-Euclidean geometry of Riemann to give a totally different description of gravity!

Gravity, in the general theory of relativity, is not really a force. It is a 'pseudo-force'. Objects do not fall if you let them drop. No, they are standing still in a space that is falling! And this falling is mainly because of a change in the time gradient of curved spacetime.

This was such a shock for those who understood Einstein's general relativity, that we needed a new Kant. And this new Kant was Popper.

Popper showed that creating new science is not a matter of innate theories, but they begin in us!. Our brains create those theories, first in the form of fantasies, which he called: 'conjectures'. And then the mind directs its attention to the outside world, and 'looks at reality' through 'the glasses of those fantasies', so to speak. With this he solved the so-called 'problem of induction'. This is the question: how do we arrive from observations and facts to scientific theories? This is the problem of how we can distinguish scientific theories from just bodies of knowledge that are not sciences, like astrology.

What Popper came up with was that we cannot go directly from facts to scientific theories! There is no way that you can make observations, and generalize them into theories. A 'logic of generalization', a so-called inductive logic is impossible!

What happens is this. You start with a conjecture. And then you look at reality, 'by using such a conjecture as your mental 'glasses''. You then try to find experiences that contradict your conjecture. You try to disprove this conjecture.

Now, if this fails, you have found something that is not false according to the conjecture. If you make many such attempts, then, gradually, a domain can be constructed, within which you cannot find any exception, even when you make repeated attempts. So, within this domain, you know that the conjecture is not false! Therefore, you can be certain that, as long as you remain in this domain, every logical or mathematical deduction or prediction you make will be valid. In other words, through a series of failed attempts to disprove a conjecture, you transform it into a scientific theory!

Now, what is a conjecture, exactly? A conjecture is just a fancy word for: 'fantasy'!. In other words, scientific theories are fantasies of which you know that there are domains in existence within which you cannot find any experiences that contradict them. But since all scientific theories begin as fantasies, these can never be descriptions of reality as it really is!

Or, to say it in terms of the book: Unscripted . Scientifically speaking, we cannot make a distinction between realities and hyper-realities!

Or, more radically, according to Popper's solution to the Induction problem, truth itself does not exist! It is scientifically speaking impossible to claim that you know reality as it really is! As soon as you express certain experiences in words, you have a possible theory about reality. But as far as its content is concerned, you can only say that this description does not contradict your experiments or your experiences as far as you know. You can never claim that that what you think to know about reality is what reality really is!

Simply said: truth does not exist!

Truth itself is not a scientific concept!

Popper didn't dare to say this!, Just like Gauss, he was afraid to go against the consensus. He was afraid that his fellow scientists would ridicule him if he dared to say that truth does not exist! What? The basic thing we are after in science does not exist? Ridiculous! Therefore Popper used lots of fancy terms to keep his discovery somewhat hidden. Terms like: 'corroboration', 'hypothesis', 'falsifier' and what not. All intended to 'beat around the bush'. But if you really grasp what he is saying, it is quite a shock! But it solves the Induction problem! This is because his solution has unmasked the induction problem as a pseudo-problem because induction simply does not exist!

I myself see Truth as a religious concept, because I have seen, that whenever somebody accepts a statement as being true, he has created into himself a source of bigotry, anger, violence, and religious zeal.

And, to return to your claim about economics. I define economics as the science that investigates the production of wealth under a system of division of production. It is a slight modification of George Reisman's definition of economics, which he wrote down in his book: Capitalism. He defines economics as the science that investigates the production of wealth under a system of labor. But, as I have argued, lots of production happens because of natural forces, like growing wheat and vegetables.

Value and money are at the center of the production of wealth. You must have a theory that is able to define value in such a way, that it is a measurable quantity, and you need to describe how this quantity can be connected to money. Only then you have a theory of economics that can be called scientific. You then have a theory that can tell us how wealth is produced and, even more importantly, how wealth is not produced! You can then use that theory to falsify all present-day economic theories!

Up till now, there have been several conjectures about value, and all have failed.

You have, for example, the idea of intrinsic value, which asserts that value is a property of things, just like color. Gold, for example, has a yellow color and has a large conductivity of electricity, and is said to have value! Well, if that is so, then if gold is money, inflation based on gold cannot happen, The more gold we have, the wealthier we are. But there was a huge inflation in Europe when lots of gold stolen from the Inca's was brought to Europe by the Spaniards. So that theory has been refuted!

The 'finding a diamond' example I gave, or the example of the barrel of wine in a wine cellar I have described, demolished both The Labor Theory of Value and that of the Austrians!

Are there more theories of value within economics? In mainstream, no! All theories about value that are mainstream are either of the intrinsic kind, of the kind of the Labor Theory of value, or of the subjective evaluation kind of the Austrians, or combinations of these. Keynesianism for example appears to be a new theory of value, but it is really just a mathematical form of the Austrian definition of value!

Keynes asserts that value arises out of consumption! And his 'multiplier theory' is just a lot of confusing mathematical nonsense! I should know because I am a mathematician. What Keynes did in mathematics was sheer lunacy! He ignored the most important falsifier of mathematics: logic!

Are there more theories of value out there? There are only two interesting beginnings. One is David Ricardo's principle of comparative cost/value. A principle many economists find upsetting, because they don't know what to make of it. And the other is one by Frédéric Bastiat. That of Ricardo is wrongly formulated, but a crucial insight. And that of Bastiat is not worked out clearly, and is tainted by the Labor Theory of value, so that it appears to be nonsense. Nevertheless, my own theory of value has arisen out of these two principles!

So, at present, economics is definitely not a science!

I claim to have solved the problem of economic value, and that of how money functions in all cases.

The interesting thing is, that my theory of value can be understood by everybody. This is because the reason why people have failed to give a clear definition of value is the same as why people have failed to give a clear definition of time. Both concepts are so simple, that people frailed to go right to the heart of the matter! In the concept of time, physicists drag entropy and information into the picture, neither concept saying anything essential about time. Therefore they are confused about time. And in value, it is both the Labor Theory of Value and the Subjective Evaluation theory of value that has confused them, neither of which have anything to do with value as such!
The assumption that a theory needs to be prescriptive to be scientific is false. A scientific theory can be descriptive (such as the laws of physics), yet we may encounter contrarian phenomena where the law or theory does not apply (such as the laws of thermodynamics in the event horizons of black holes). That does not render the laws of physics any less scientific. Essentially, economic theories describe previously observed phenomena scientifically, but using those theories prescriptively would be unscientific.
In general, a science arises, when one finds, within a body of knowledge, a criterion for falsification belonging to the language used by the body of knowledge to state its contents. This criterion for falsification is a test criterion!

The test criterion must be formulated in a way consistent with the language used to express the contents of the theory.

For example, astrology does not have a test criterion one can use to make falsifications. Some arithmetic is used in astrology, and therefore you can make mistakes in your calculations. But, although falsification of such calculations is possible, just by doing them again, number theory is not a basis for astrology. Therefore such calculations do not prove or refute anything belonging to astrology.

Mathematics is a science because its method of falsification is logic. And logic, in the form of Boolean logic, belongs to mathematics.

Physics is a science, because its method of falsification is the experimental test, which itself belongs to physics.

Biology is a science, because Darwin's principle of evolution belongs to biology. If a theory supposed to tell us something about life does not satisfy Darwin's principle of evolution, it is biological nonsense.

Chemistry is a science, because it also uses the experiment as its method of falsification. Since it has the same method of falsification as physics has, it is a part of physics.

String theory cannot be tested by experiment. Therefore it is not a part of physics. But it has to satisfy logic. Therefore it is a branch of mathematics.

But, apart from that, economics does not describe previously observed phenomena scientifically. This is the task of history! And that is not a science!

I define economics as the science that studies the production of wealth under a system of division of production.

This is a slightly altered version of the definition of George Reisman in his book: 'Capitalism'. He defines economics as the science that studies the production of wealth under a system of division of labor.

I think the definition of Reisman is not encompassing enough. By putting labor in his definition, he shows that he overlooks, as so many do, the finding a diamond example I gave. Finding a huge diamond on a deserted beach far from civilization increases the number of diamonds bought and sold with money. This diamond is wealth. But it is not the result of a system of division of labor. However, finding such a diamond, and thus increasing the total amount of diamonds bought and sold for money is a form of production! If it were not so, all mining activities, all activities to get oil from the ground etc.. would also not be forms of production. But getting minerals, oil etc.. out of the ground does increase wealth!

It seems to be really hard to free oneself from The Labor Theory of Value. This theory raises its ugly head in the most unexpected places, causing confusion everywhere!

I shall soon describe my own vision of value and money.
 

BizyDad

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The big shock of the heliocentric model of Copernicus was that you could have two theories, that of Ptolemy and Copernicus, both of which gave a completely adequate explanation of the same facts, nevertheless both of which were in total contradiction with each other.
I'll read the rest of this dissertation later, I had to stop at this point because clearly "the big shock" of the heliocentric model of Copernicus was not what you say it was.

When you need to revise history to make your points, you show your need to be right is greater than your need to be correct or accurate.

Anything that is going to follow is merely opinion.
 
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Happyheart

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Hi Konrad,

a fellow Dutchman here.
You have put much thought into your philosophy and it is obvious that you are highly intelligent.
There are some indications in your writing though, that suggest you may be suffering some early stage chemical imbalance issues that may affect brain function in the long term. As it is not good to be diagnosing people from afar, I would urge you to speak to your GP about a psych referral.
Very interesting thoughts though. Are you currently still at a university?

Take care,

Happyheart, MD
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
How someone who spent so much time convincing us of his genius doesn't see the holes and contradictions in his thinking is beyond me.

Also sweeping generalizations, clever turns of phrase, and grandiose statements do not usually make a sound foundation for a scientific theory of value. You've pointed these flaws in those who came before you, but I see no evidence that your path is any clearer.

But I can't not watch. Please, sir, continue. You have my attention, such as it is.



I'd make the case that the origin of the script goes back much much further, and I cannot point to the origin myself, but certainly the Roman patronage system held some basis for "the script".

Did not Cicero and Socrates bemoan the state of education in their days? Diogenes' thinking ultimately led to the school of stoicism in part to combat the script of their time.

These 18th century economic philosophers took a conversation about labor in a new direction. But it's not like they started the thought that labor held value, monetarily or otherwise.

Certainly the ancient Egyptians and Babylonians and Carthiginians understood the concept that labor had value.

The Romans paid wages in salt, hence the origin of the phrase "being worth your salt". Is that also not an echo of the script predating these classical economic philosophers?

Smith and Ricardo are hardly the "deepest roots" nor the origin. But if you need to assert so in order to found your new school of Neo-Misean economics, who am I to stop you? Carry on, please.
You might be right.

I am not a historian.

The only objection I have, is that, to quote Ludwig von Mises loosely, 'people were very surprised to discover, that a just social order is not just a matter of wise Kings and noble Princes, but that there are laws of Human Action which, if you go against them, can lead either not the social results you want, or you can even get the exact opposite, even with the best intentions!. In Human Action, Ludwig von Mises was very close to the awareness that a sound economics could replace politics fully. He just didn't dare to take this final step. Just like Popper didn't dare to take the final step: that truth does not belong to science!

In ancient Greece, economics as a science did not exist. There were some sciences. Number theory was mathematics. Plane geometry is basically a forerunner of physics. Biology existed. Aristotle was the first biologist if I am not mistaken. Science as such was born in ancient Greece. In fact, it was born when Aristotle published his Organon. But the idea of science as such, as something separate from philosophy, is very recent. Somewhere around 1800. I don't want to google it now. Before that, it was called Natural Philosophy.

I think that mathematics is the only science that began with the ancient Greeks, with Euclid's elements. Astronomy as a science began with Copernicus. Physics as a science began with Newton's Principia. And biology as a science began with Darwin's On The Origin of Species.

In the same manner, economics apparently began as a science with Adam Smith's 'The Wealth of Nations', wherein for the first time, the idea that you could make social mistakes leading to poverty, independent from 'good intentions' was brought forward. This book might have become the beginning of a science of economics if only this mistake of The Labor Theory of Value wasn't made!

But, indeed, I have made enough claims. Let me now begin in earnest!

Here is my description of value.

To begin with, value is dependent on the individual, but it is not subjective! Value is not an ordinal quantity, as Ludwig von Mises asserted.

I want to do it step by step. I explain it by a method I learned from Eugen von Böhm-Bawerk, which consists of first starting simple, and then adding more and more to it. The first step is not (yet) realistic. But by adding to it, it gradually becomes consistent with reality. So, if I begin, do not just jump immediately to some exceptions. First, follow the general line.

Imagine an individual, who wants to accomplish something, anything. Something that, for now, I assume, does not yet exist. Now, the time this individual needs to accomplish that result he imaginest is the amount of value that result has for this individual.

Time is measurable. Therefore value, defined in this way is measurable. However, since there are huge differences in the amounts of time different individuals need to accomplish the same result, value depends on the individual. In most cases, it depends on how fast an individual is capable of realizing what he imagines, whatever it is.

That what he imagines can be a good, a service, but it can also be that some dictator wants a very powerful bomb to destroy a neighboring country with just this one bomb. So, my definition of value does not only apply to production or building something. It is also possible to apply it to destruction.

Now, let me apply my definition to the simplest example I could find. It is a very simple example, which nevertheless shows the most important aspects of value. It takes a teeny weeny little arithmetic. So don't be put off by that.

Imagine two farmers. Let us call then Charles and Bob. Both can make cheese, and both can make butter. But there is a difference in how fast they can produce either cheese or butter.

To be precise, Charles can make, in one day, one kilo of cheese. But to make one kilo of butter would take him, say, 5 days. Bob on the other hand needs, say, 10 days to make one kilo of butter, and he needs a whopping 20 days to make one kilo of cheese.

Now my last assumption.

Suppose Charles wants one kilo of butter, and Bob wants one kilo of cheese.

According to my definition of value, the value one kilo of cheese has to Charles is equal to one day of production time, and the value one kilo of butter has to him is equal to 5 days. And the value one kilo of cheese has to Bob is equal to 10 days of his production time, while one kilo of cheese has a value to Bob equal to 20 days.

Now, if Charles produces the kilo of butter he wants by himself, he needs 5 days of his production time. And if Bob produces the kilo of cheese he wants by himself, he needs 20 days of his production time.

But now imagine they strike a deal. Charles produces the kilo of cheese Bob wants, and in return Bob produces the kilo of butter Charles wants. Assuming they meet after one month, Charles has spent one day producing 1 kilo of cheese, which has therefore a value to him equal to one day of his production time. And Bob has spent 10 days producing 1 kilo of butter which has a value to him equal to 10 days of his production time.

Charles now gives up the kilo of cheese he has made for Bob, and Bob returns the favor and gives his kilo of butter to Charles.

In this exchange, Charles gives up something that has a value to him equal to one day of his production time, the kilo of cheese he produced. But he gets something back that has a value to him equal to 5 days of his production time. Therefore, thanks to his deal he has obtained an advantage of 4 days of avoided production time!

Likewise, Bob gives up the kilo of butter which has a value to him equal to 10 days of his production time. But he gets something in return that has a value to him equal to 20 days of his production time. Therefore, thanks to this very same deal he has obtained an advantage of 10 days of avoided production time!

Notice several things here.

To begin with, the kilo of cheese has, according to my definition of value, a value to Charles equal to one day. But, even though this kilo is produced by Charles, it still has a value to Bob equal to 20 days! Because that is the amount of production time he would have needed to produce that kilo of cheese by himself. So, it does not matter to Bob that it took Charles just one day to produce that one kilo of cheese. Its value will still be 20 days to him!

Likewise, the fact that Bob needed 10 days to produce the one kilo of butter for Charles does not mean that the amount of value Charles receives in the form of one kilo of butter is 10 days. Nope. the (gross) amount of production time he receives in the form of this one kilo of butter is just 5 days!

This shows, that in exchange the actual amounts of production time parties who exchange with each other to benefit from each other does not play any role whatsoever!

The amount of labor time you spend to produce goods or create services for others is not equal to the amount of value those others receive from you!

Economically speaking, labor does not produce value!

Your expertise and your productivity creates value to others!
Indeed, only the results count! Your tools and machines make you more productive, and therefore you can deliver more value to others! By making it unnecessary for others to spend lots of time to produce goods and services they are not good at producing, you deliver value without creating value. In fact, you are doing the exact opposite! Through specialization you are destroying value!

If you realize this, then you also realize that the foundation of our entire Scripted society is totally and utterly wrong!

To be precise, the reward Charles gets from Bob by exchanging his cheese depends only on the amount of production time he is able to avoid! That it took Bob 10 days to produce that kilo of butter was totally unimportant to Charles. His benefit just consists of the amount of production time Charles is able to avoid through that exchange. And that is 4 days.

Also, it is, to Bob, totally irrelevant that Charles could produce this one kilo of cheese in just one day. When he received the cheese, he got something that has a value to him equal to 20 days! And his net advantage is 20 days minus 10 days = 10 days of avoided production time.

Also, notice the following.

Charles needs one day to produce 1 kilo of cheese, while Bob needs 20 days for that. Therefore Charles is 20x more productive in making cheese than Bob is. No surprise here.

But Charles also needs only 5 days to produce 1 kilo of butter, while Bob needs 10 days for that. Therefore Charles is 2x more productive in making butter than in making cheese!

So, although Charles is better, that is, more productive in producing both cheese and butter, both benefit from this exchange. That Bob benefits from Charles is no surprise, because Charles is the more productive of the two. But that Charles can benefit from Bob, while Charles is better in producing butter than Bob is a huge surprise!

Notice also something else that is very strange. The advantage of Charles is just 4 days of avoided production time, while the advantage of Bob is 10 days. If you think about this, you might come to a shocking realization.

Charles, the more productive of the two, has the smallest advantage. He has the smallest advantage exactly because he is the more productive of the two!

This shows a general principle. In a free market, the least productive and competent people benefit the most! They benefit the most exactly because they are less competent and productive!

You might think that this example is not new. You might think that this is just Ricardo's principle of Comparative Cost/Value. But you would be mistaken!

Ricardo formulated his principle in terms of the amounts of butter and cheese produced by two countries. He started with man-hours, and then looked at how much two countries could produce from a given amount of man-hours available, and how specialization means that given a certain amount of man-hours, both parties could have more through exchange. But, by doing so, he had no clear picture what was going on. His principle of comparative cost/value has only been considered a numerical curiosity. But to me it is one of the two foundations of my vision on value and money!

My example is different! I start with how productive the two parties are, and look at how much time each needs to arrive at a certain result. In other words, I have described a reverse problem.

Ricardo, fully entrenched in The Labor Theory of Value, started with man-hours and derived this apparently same surprising result. But he hadn't understood what he had found, because he was blinded by The Labor Theory of Value. He therefore did not realize, that his principle basically refuted the entire Labor Theory of Value.

My example makes clear what is going on. This is because I start with production capability and look at how much time individuals need to arrive at certain results. I even cast it into the very definition of value! And that is a huge difference!

Within mathematics there was, at the end of the 18th century, a problem with elliptical integrals. A scientist, if I remember well, it was Abel, worked for 20 years on a problem involving these mathematical constructs, and he progressed very slowly. And then there was a newcomer, who considered inverse functions, and he produced all the results of this other mathematician in just two weeks! And after that he produced in the next year far more results than this other mathematician could ever get with his approach!

My point is: that inverting problems can have huge consequences!

I have inverted Ricardo's example. And therefore I have now succeeded to describe, in principle, where the advantages of barter come from!

Look again at this example. Neither one is rewarded for the actual amounts of time they needed to produce what the other wanted. In other words, in this exchange, neither one was rewarded for the actual amount of labor or production time they had needed to produce what the other wanted.

This proves my assertion, that we are never rewarded for the actual amount of time we spend producing goods and services. We are only rewarded for the amount of time we make unnecessary for others to have what they want.

The strange thing is that Adam Smith, in his Wealth of Nations, and in his very definition of value, mentioned the the value delivered in exchanges is indeed the amount of labor time the other would not need to spend. His mistake was that he thought that the amount of labor spent is equal to the amount of labor the other would avoid. Adam Smith did not take differences in productivity, and therefore specialization into account.

That was the big mistake of Adam Smith!

Through becoming better in a limited number of things. That is, by becoming more productive through our training, we make what we want to offer to others less valuable for ourselves! Or, to say it more bluntly, if we train in different things, we are training ourselves in destroying the value the things we specialize in to have for us. But, although we destroy the value for ourselves, exactly because we specialize, the value is not destroyed for others, who are not specialized in that what we are specialized in.

If this point is not clear. Suppose Bob, the butter maker, invents a method whereby he can now produce the one kilo of butter in, say, 6 days instead of 10. If he then exchanges one kilo of butter in exchange for one kilo of cheese produced by Charles, his benefit becomes 20 - 6 = 14 days. So, through specialization, Bob has destroyed some of the value a kilo of butter has to him. And, as a result, he receives a greater benefit from his exchange with Charles.

This is how society creates the survival of us all!!

Just look around in your room at everything you have. Imagine that you would need all of it by yourself. How much time would it take you to produce your smartphone by yourself? A hundred thousand years maybe? Maybe a million years? That is the value your smartphone has to you! But thanks to being specialized in just a few things, you obtain the money you need to buy the smartphone in maybe one or two months, if not much sooner!

If you really get all this, you are now prepared for the second part: my explanation of money!

I shall continue with that tomorrow if there is nothing else that will ask for my attention. But for now, I leave it at this.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Hi Konrad,

a fellow Dutchman here.
You have put much thought into your philosophy and it is obvious that you are highly intelligent.
There are some indications in your writing though, that suggest you may be suffering some early stage chemical imbalance issues that may affect brain function in the long term. As it is not good to be diagnosing people from afar, I would urge you to speak to your GP about a psych referral.
Very interesting thoughts though. Are you currently still at a university?

Take care,

Happyheart, MD
This 'early stage of chemical imbalance' you are talking about has been going on for about 40 years now! (I am 67, and it started after an extremely intense meditation when I was 25, exactly at the moment something became clear.)

I want to point out, that it was said of J. Krishnamurti, that he could suddenly faint! By reading the two biographies of him, I have understood that I have the same 'chemical imbalance' he had!

This 'chemical imbalance' has several names in the East. It is called: 'Dhyana' in India, Chan in China, and Zen in Japan. In fact, it is the main source of my 'high intelligence' as you call it, because it allows me to transcend thought and thinking. I combine it with studying, something J. Krishnamurti didn't do. It allows me to 'go to the heart' of many things that are baffling to many others, and also to me whenever I start with a new subject.

I have once offered a brain specialists to make a measurement of my brain. He declined, because he, too, thought to know what 'was the matter' with me, without even seeing me!.

When this 'chemical imbalance' started I had 5 years whereby I went through an extreme nighgmare! In those years I meditated first 5 hours a day just to function. Gradually I reduced it to 4 hours a day, 3 hours a day. And now it is reduced to one hour a day. Sometimes two hours a day if there is something that is very puzzling to me.

For about 30 years I had, during my meditations, 'attacks' that looked much like epilepsy. But now, in the last six years or so, these 'attacks' are gone, and there are only Tai-Chi like motions that happen when my meditation becomes very deep. Also, in this period of those first five years of intense meditation, I gained control over these 'attacks'. I could allow them to happen, and stop them at any time.

Thanks for your concern. But I think your diagnosis is beside the mark.
 
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Happyheart

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Read Rat-Race Escape!
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Dec 11, 2020
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This 'early stage of chemical imbalance' you are talking about has been going on for about 40 years now! (I am 67, and it started after an extremely intense meditation when I was 25, exactly at the moment something became clear.)

I want to point out, that it was said of J. Krishnamurti, that he could suddenly faint! By reading the two biographies of him, I have understood that I have the same 'chemical imbalance' he had!

This 'chemical imbalance' has several names in the East. It is called: 'Dhyana' in India, Chan in China, and Zen in Japan. In fact, it is the main source of my 'high intelligence' as you call it, because it allows me to transcend thought and thinking. I combine it with studying, something J. Krishnamurti didn't do. It allows me to 'go to the heart' of many things that are baffling to many others, and also to me whenever I start with a new subject.

I have once offered a brain specialists to make a measurement of my brain. He declined, because he, too, thought to know what 'was the matter' with me, without even seeing me!.

When this 'chemical imbalance' started I had 5 years whereby I went through an extreme nighgmare! In those years I meditated first 5 hours a day just to function. Gradually I reduced it to 4 hours a day, 3 hours a day. And now it is reduced to one hour a day. Sometimes two hours a day if there is something that is very puzzling to me.

For about 30 years I had, during my meditations, 'attacks' that looked much like epilepsy. But now, in the last six years or so, these 'attacks' are gone, and there are only Tai-Chi like motions that happen when my meditation becomes very deep. Also, in this period of those first five years of intense meditation, I gained control over these 'attacks'. I could allow them to happen, and stop them at any time.

Thanks for your concern. But I think your diagnosis is beside the mark.
Glad to hear you have everything covered.
Wishing you all the best.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Glad to hear you have everything covered.
Wishing you all the best.
Thanks for your concern. It seems that you are a brain expert.

So, let me tell you something! Something that might make you think, and take a really close look at what you might be doing!

About 5 years ago, I got into a serious bicycle accident, whereby my skull hit a pole and was cracked.

After that bicycle accident, those same symptoms that were so painful to me when I was 25 came back with a vengeance! They were far more serious now.

In those five years back then I meditated until I had the attacks under control. But they were still there! To be precise, when I did some 'action' with my brain, which I find hard to describe, it triggered immediately this epilepsy-like attack. But, while the attack occurs, I could stop it whenever I wanted.

This fairly recent bike accident led to, I think, brain damage. I couldn't do the simplest things anymore, without having a terrible headache.

I live for learning. Therefore this was, to me, a major disaster!

However, I continued to study various subjects, even though they made me have a lot of pain. I decided to devote my time to studying simpler things than I used to do. No longer calculus, Cliffford geometry, or thinking about higher-dimensional numbers I started to follow courses from the Teaching Company, which I used to consider a wast of time because I thought them to be too easy. I began learn things like history, some high school cemistry and some architecture. Gradually I started to take some of their algebra and calculus courses. Then I decided to try something tougher. So I began to learn to speak German with the Pimsleur method.

All the while I did those things there were setbacks, which took me several hours of meditation per day to cope with. And when I meditated, I had those same epilepsy-like attacks.

Yet, they gradually became less severe, but this did not happen in a linear fashion. One day they were barely there. Another day they were so severe, that once I even went to the hospital because my heart was poinding so much! And they sent me away! From that moment on I decided to deal with it on my own, no matter how severe the symptoms were. And that was tough!

In any case, gradually I could study tougher subjects. At present, I learn how to make midi music animations, which requires mathematics and programming skills. Just look at my YouTube channel, and type: Konrad Swart and you can see some of the stuff I have learned to make recently. Or type YouTube Konrad Swart to go to one of my channels.

In any case, after that bicycle accident, I again imposed this rigorous meditation regime onto myself. I meditated again 3 to 5 hours a day, while gradually increasing the load on my brain. It was a delicate balance. If I studied too much, I got epilepsy-like attacks and terrible headaches. But if I did nothing, I know that the brain will atrophy. Not using your brain is the main cause of dementia.

Now, my 'beef' with you brain experts is this!

I think there are forms of epilepsy that are not at all signs that there is something wrong! I think that they are growing pains of a brain trying to reach a higher level of functioning! A higher level of functioning that requires that the two halves of the brain are able to function completely in sync with each other.

Normally, so I think, is it that the left half of the brain is focused on the outside world, and therefore is the main controller of all functions of the body having to do with action. So the motion of the body are basically controlled by the left half of the brain. I think this makes sense because time awareness is in the left half of the brain and not in the right half. This makes that the left half of the brain is directed at time, the future and action, while the right half of the brain is focused on the present, the 'now' and on experiencing. In other words, the left half of the brain moves in the direction of an ever growing awareness of time, and the right half of the brain moves in the direction of an ever growing awareness of the present. If you study mathematics, you are training your thinking, and your control over time, while if you meditate, which is the counterpart of thinking, you are training your 'being' and your control over your ability to be presently aware.

Now, in virtually everybody, this 'division of tasks' whereby one brain focuses on the 'now' and on 'experiencing', and the other half focuses on time and on 'action' and focuses on the future, is underdeveloped. That is why there is doubt about the, by some brain investigators made claim, that the left half of the brain is the conscious one, and the right is the center of the 'subconscious'. I think that in a 'normal' brain the left half is just more conscious than the right. Likewise, the ability to experience is more developed in right half of the brain. But both have the ability to conscious experience.

I think that people like me and J. Krishnamurti have undergone a total transformation of both halves of the brain, which has resulted in the completion of this specialization. That is, the left half of the brain is 'in time' and the right half of the brain is 'in the present'. In such a brain, the right half is fully specialized in experiencing, and the left half is fully specialized in consciousness.

I think there exists a 'phase transition' of the brain, whereby this particular 'division of labor' so to speak, has become fully developed. It is also a phase transition, whereby the neocortex becomes dominant over the midbrain.

In a 'normal person', the midbrain is dominant, and the neocortex is 'the slave' so to speak of the midbrain. All actions of people are then triggered by the two amygdala, one of which is specialized in positive emotions (the one in the left hemisphere) and the other in negative emotions, the one in the right hemisphere. So all actions of people can be explained as attempting to accomplish two things: avoiding pain or suffering and trying to experience pleasure. And that in this order! Avoiding suffering is paramount. Only if that has been accomplished sufficiently, people start to find ways to make their lives more pleasurable.

In this transformation, the neocortex becomes dominant over the midbrain, and there develops a 'division of labor' between the left and right hemisphere of the brain. And while this transition occurs, the brain is totally out of balance, which manifests itself in a particular type of epilepsy.

This is why cutting the corpus callosum 'helps' in removing this kind of epilepsy.

But when you do that, you are making the same mistake as when people in the past were 'curing' psychological disturbances through lobotomy!

I think that there might be many people who have undergone this kind of operation to 'cure' something that is not at all a disease or a malfunctioning! If milk teeth fall out and real teeth take their place, you should not remove the real teeth, just because they 'push away the milk teeth!

Likewise, you should not interfere with a brain, that tries to reach a higher level of functioning, just because you are completely ignorant about even the existence of such a stage of greater differentiation and higher development!

Such people should not undergo a corpus callosectomy, but they should be taught how they can restore their balance through meditation! They should know about this cure!

In any case, 'the process' I constantly feel going through me is probably a 'wave' that causes both halves of my brain to remain in sync. In this way, there is no 'fight' between the two halves of the brain to gain dominance. A fight that, I think, manifests itself in this symptom of epilepsy. When their brain reaches a new equilibrium, both halves of the brain become part of a united functioning.

When I had this first transformation, when I was 25, this differentiation of the two halves in this particular division of labor was not completed. But when I had this bicycle accident, I was forced to try to restore the functioning of my brain through this same heavy regime of meditation. And only about a year ago, this 'wave' has become so 'fluid', that no epilepsy-like motions appear anymore. What now happens when I try to trigger such 'epilepsy' attacks, is 'Tai-Chi' like motions.

The thing I want to say is just this. If you are indeed a brain specialist, maybe do operations like corpus callosectomy, think twice!

Maybe
you are doing a lot of harm, without being aware of this, because you might be ignorant about the kind of brain development that exists in me and existed in J. Krishnamurti. You might make the mistake to misdiagnose certain forms of epilepsy as malfunctionings, while they might be just manifestations of a brain moving from 'the normal state' of development, whereby the midbrain is dominant, to a state whereby the neocortex becomes dominant over the midbrain.
 
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Myster kouadj

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Mar 13, 2022
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Thank you for your very interesting speech. But I'm sorry for tout paradigm. I'm going to comment a bit h on your remark. I am of the same opinion on her. .because I want to learn his ideology because it is very practical and simple for me to follow, if one is ready to take certain responsibilities of his own life, such as not putting his dream in the hands of someone else.


.about value and money, I see you know a lot about that. I also want to know more about this topic. I am interested. So if you can say more about these concepts, I love to read. Thank you
Before I begin, I want to make a personal remark.

Contrary to many on this forum, I am not here to talk about how one can become rich or talk about becoming an entrepreneur. I am totally not interested in that! The thing that interests me about MJ. DeMarco's books is his original outlook on value and money. He is the first person who writes books that are the beginning of an ideology I am working on.

MJ. DeMarco and I have one thing in common. He was 'thrown out of'' The Script, because his father left his family, leaving the task of taking care of him and his two brothers to his mother. He had first experienced an abundant life when his father was at home. But suddenly they were poor because his father had left him. And that hurt. Because he was not raised in poverty, at least not at the beginning, he felt the hurt of poverty, and had a wish to end it, but did not know how, because he believed that only people with special talents could become rich, and he hadn't any. Then MJ. DeMarco met an entrepreneur, who had become rich by inventing something and then building a business around it. From that moment on he saw 'a way out' of his own poverty and did everything he could to become a successful entrepreneur.

I was also 'thrown out' of The Script. But that was not because of the pain of poverty. I have been born into a basically poor family and accepted that as normal. It didn't hurt me at all and still doesn't. During the rest of my life up till now, I was poor, and didn't care a hoot about it!

I still don't!

What threw me out of The Script was something else painful.

I was born with an extremely active mind. I was born a child prodigy, but my parents didn't realize this. At school others rejected me, because I was so different. They would have been bullying me for being a nerd. But it so happened that my mother saw that, and made me learn to fight by taking Judo lessons! That stopped all bullying. After having a fight with the strongest boy at my school, openly arranged and witnessed by many, and defeating him, they just let me alone. After that, if some of them had a problem with their homework, they went to me, and asked my help, which I always gladly gave.

When I was young, I studied books about mathematics and physics just for fun, and I became extremely good at it! I passed the end exam not only as the best of my school, but, so I learned later, as the best of the entire Netherlands. When the diplomas were awarded, I got an extra paper stating that.

While still at that school, I had taught myself first arithmetic to do properly. This was because the school didn't teach that very well. Then I went on to learn algebra, geometry, complex number theory, and then taught myself calculus. On top of that, I taught myself physics, and also trained myself in classical music. I first tried to teach myself how to play the organ, and was fortunate to first have a woman teacher, who, after about two years passed me on to one of the best church organ players in The Netherlands. So I was a child prodigy in both science and art!

The 'disaster' that struck me happened when I studied mathematics and physics at the University of Leiden, The Netherlands. At that time I became interested in meditation. I began to combine my studies in mathematics, physics, and, yes, music, with meditation. I was experimenting to find out how I could learn faster through meditation.

And then, one day, after an encounter with a Zen Master (who turned out to be an imposter, by the way) he put me into a Koan-like situation. This was such a blow to my mind, that I went home, and after meditating for three days straight, just to deal with that blow, I succeeded to put my mind into somewhat of some order. But to deal with all the side effects took me about four years!

Not only my mind but also my brain had changed! All that studying and meditating had caused a profound change in the functioning of my brain. Ever since then I 'feel' a rhythmic wave go through my body. This is not an illusion, as I was frequently told, because once I was connected to a monitor measuring my brain patterns as a preparation for an eye-operation. The person performing the measurement thought that his equipment malfunctioned because of the strange readings he got!

This transformation had caused a huge disruption in my life!

Why?

Because when I tried to talk about this transformation, others didn't believe me! It was beyond their imagination that a brain could undergo such a transformation! And since then I have been struggling with two things.

1. How can I convince others, that I am not insane, and that such an alteration of the functioning of the brain could really exist?
2. How could I use this altered functioning of my brain to do things that would be of value to others?

Since then I am interested in the concept of value. Later, I became interested in the concept of money and how money and value are connected. It took me literally decades to find that one out! It is obvious once you see it. But it goes right against what everybody thinks about value.

Now you might ask: what, exactly, is the effect of this transformation? It allows me to do one thing. My brains can 'switch off' my thought and thinking, and bring me into a mental state, whereby there is only consciousness, and no thought whatsoever. In that state, it is possible to become aware of the foundations of any thought structure, and one can move to the deepest root of any system of thought. One can 'see' where it originates.

That is how my brains can 'see' that the basis of The Script, for example, is The Labor Theory of Value, as I am going to explain below.

I have never been interested in becoming rich. I had another problem. Namely, how could I arrive at someplace in society without being considered insane? Not only that. How could I use this altered functioning of my brain to bring things about that would help others? Because only if I could do this last thing, I could be in harmony with society without having to deny myself. My quest(ion) was, how can others benefit from this strange thing going on in me?

So, what do I have in common with MJ. DeMarco? Neither he nor I have ever been part of 'The Script'. But his struggle was a different one than mine. I didn't suffer from being poor. He did suffer from being poor and succeeded to end his suffering by becoming rich. My suffering was a totally different one. One that I only fairly recently understood!

I am, at present, re-reading Unscripted . I had read it before, but I hadn't connected it to what I already knew. Moreover, between my first reading and this second reading I had a tremendous brain wave about how, exactly, value and money are connected, and how earning money happens in all cases!

What I want to share here, is a suspicion I had. And now that I reread it, I see it confirmed.

Unscripted basically says, that virtually all people in the West live in what MJ DeMarco calls: 'the hyperreality of the Script'. He describes it very well in 'Unscripted '. But where did 'The Script' come from? What is its ultimate source? Or, better, out of which mistake has it arisen?

I know that Henry Ford is the one, who introduced the 5 workdays 2 weekends 8 hours a day plan. Before Henry Ford, the workdays were longer. Elsewhere people earned nevertheless less. And there was no two days off on the weekend either. Only a free Sunday, because of The Bible.

Henry Ford had good reason for his invention of The Script. He realized that he could have better workers in his factories when they were well-rested, and had some idea why they did what they did. This was especially important with conveyor belt work. How can one stand to do one simple task over and over again? Extremely boring! Charlie Chaplin has rightfully made fun of it in his movie: 'Modern Times'.

There was something else about Henry Ford. Before him, automobiles were luxury products. He saw that if they became it would transform the world. But even his mass-production could not produce these cars so cheaply, that many, especially 'the working people = wage slaves' could afford them. Therefore he raised the wages up to a level so that his own workers could afford them. Especially because he made it possible they could pay them in installments. He succeeded in avoiding 'the Bartender problem' = 'a customer asks the bartender to loan him money. He argues that the bartender will not suffer because of it, because he will use the money only for things the bartender sells' The 'bartender problem' was avoided, because Henry Ford speculated, that the families of his workers would find ways to use those cars to create new services, for which they were paid. So in the long run his cars would become commodities.

The deployment of the conveyor belt by Henry Ford reminds me of a story of a man, here, in The Netherlands, called Godfried Bomans. Although he is now practically forgotten, he was known as a writer and had very funny ways to describe many things in the world. He had also an interesting commentary on the workweek.

His story ran somewhat like this. 'An industrialist realized, that division of labor through a conveyor belt made the actions so simple, that even monkeys were able to do it. So he went to the local zoo and picked up a bunch of chimpanzees. He showed these monkeys what they had to do. And, indeed, it took only 2 hours to make the monkeys work with the conveyor belt to assemble his product.

All seemed to go well... for about four hours. But after this time the monkeys became so extremely bored, that they stopped working altogether. It began when one money threw his wrench at another money. This triggered other monkeys to react. After only ten minutes one could see, in this factory, one monkey grabbing a lamp and swinging back and forth. Other monkeys were running on the conveyor belts. Others again were chasing after each other.

It was a complete mess! No production was produced after that.

This industrialist had forgotten one thing.

Those chimpanzees didn't have families!

He brought the monkeys back to the zoo, and let human workers return to his factory.

So far Godfried Bomans.

Now, let me return to the subject, and continue on a more serious note. The deepest root of The Script stems from two books. The first is 'The Wealth of Nations', published in 1776 by Adam Smith. The second is 'Principles of Political Economy and Taxation' published by David Ricardo in 1817.

In both books, a theory of value was introduced. Within circles of economists, it is known as The Labor Theory of Value.

According to Adam Smith, the value of any good or service is the result of, in modern terms, the labor that has been necessary to produce that good or to create that service.

In Adam Smith's own words. Quote: 'The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose on other people.'

David Ricardo refined it. His book begins with: 'The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labor which is necessary for its production, and not on the greater or lesser compensation which is paid for that labor.'

Maybe this is difficult to grasp immediately. What Ricardo says, is that price does not define value, but that it is the other way around. Value determines price. And value is in its turn determined by how many man-hours of labor are needed to produce commodities.

Ricardo gave an example. He asserted that when the amount of time needed to produce a pen is 10x that needed for the production of a pencil, then the price of that pen is 10x that of that pencil. Therefore, labor-value reveals itself in prices, and not the other way around.

When you unite Adam Smith's definition of value with that of David Ricardo, you arrive at The Labor Theory of Value, which says that the value of any good or any service is the result of the number of man-hours that went into its production or creation.

Marxism is one of the main poisonous results of this definition of value. His whole argument of the exploitation of the Proletariat by the Bourgeoisie is derived straight from The Labor Theory of Value.

Originally, Marx believed that value only arises out of amounts of labor time; numbers of man-hours. Later he modified it somewhat. He became aware, that people who were more trained earned more. Therefore it had to be, that an hour of the labor of a schooled worker had to have more value than that of an unschooled worker. He could not get around that fact.

Yet, one can still explain that with The Labor Theory of Value. Just introduce the term: 'human capital'. This schooling also takes labor. To become more proficient in anything is a matter of hours, sometimes decades of daily practice of several hours per day. You are then changing your own mind, through the labor of training into 'human capital'. One could use this as an argument that defuses this counterargument. Nevertheless, this is a modification of The Labor Theory of Value, which changes it somewhat into something like this: 'the total number of man-hours needed to produce a good or to create a service is a measure of its value'. This 'total number of man-hours' then consists of the actual amount of man-hours spent in producing the good or creating the service, + the total amount of man-hours needed to make the man-hours more valuable.

Therefore, in our Western society, it is this modified Labor Theory of Value that is the foundation of The Script.

The Labor Theory of Value is also the source of envy of the rich! If somebody is a multi-millionaire, and the total amount of time he has spent to get rich is about equal to that of a wage slave, or of a middle-class person, these people see that as dishonest. It is the source of all measures to 'tax the rich'. Or, worse, to erect such terrible social orders like Fascism and Communism, which are all supposed to be better 'social orders' because they 'correct' this problem. They are supposed to correct the structural dishonesty of huge differences in outcome, of equity. (Hitler: 'Arbeit macht Frei!) Translated; Labor creates freedom! These words are above the gate of the entrance of Auschwitz!

But what virtually nobody realizes, is that it is never true that we are paid for the hours we work!

Let me repeat that!

We are never, never, never paid for the number of hours we work! To think we are is itself a hyperreality illusion!

But before I explain that, let me give an example that shows how problematic the concept of value is! One that demolishes all of present-day economics!

Suppose you are on a deserted beach, walking in the sun, far from civilization. Suddenly you see something about 10 meters away in front of you. Something sparkling.

You go there to find out what it is. And then, at your feet, you find a huge diamond! One that is so huge, that, so you realize, you can sell for at least 20 million dollars!

In other words, you have found something of tremendous value!

The question now is this: where does the value of this diamond come from?

Definitely not from labor. You can hardly call walking for meters and pick it up, work!

Economists think they have the answer. They say that this diamond has this huge value because there are not many places on earth where you can find huge diamonds. This has always been so. Therefore there are not many such huge diamonds ever found. And that is mainly because the geological processes that produce such diamonds take billions of years to complete!

You read this correctly. Not millions of years, but billions of years!

Economists, therefore, say, that it is the scarcity of this diamond that is the cause of its value.

But that is a strange explanation! Because, what, exactly, is scarcity?

Economists explain it as follows: 'the number of diamonds lying around is far less than the number of people who want such diamonds. And that is what scarcity is.

But if that is so, then it is not always labor that is the source of the value of that diamond. Apparently, the value of such a diamond does not originate from the labor needed to 'produce' it but has to come from the wants of people. (Economists who assert this, and who therefore reject The Labor Theory of Value are called Austrian economists.)

Indeed! Ludwig von Mises defines value in a totally different way than Smith and Ricardo do. Ludwig von Mises' definition of value is: 'The value of a good or service is the importance an individual attaches to that good or that service.'

Notice that labor does not even appear in this definition! Yet, at first sight, it looks very plausible. The air we breathe, for example, has a tremendous value to us. We cannot live without it. But because it is not scarce, nobody pays for it. That is why its price is zero.

But there are major problems with this definition of value, too!

To begin with, this definition of value is basically a full capitulation of economics as a science! If value depends only on the importance individuals attach to goods and services, it is totally subjective!

A theory based on subjectivity cannot be transformed into a scientific theory, because science, whatever its form, must be independent of the opinions of anyone. Therefore, if value, which is the most central concept of economics, is subjective, it is impossible to develop it into a scientific theory of economic value!

I must say that I look with great amusement to Austrian and Misean economists. I see how they 'twist and squirm' when they get the reproach that their theory is unscientific, exactly because of the subjectivity of value. Ludwig von Mises himself uses very pompous words to try to rationalize himself out of this through obfuscation!

Economics has come to a grinding halt because of this! Only Marxists still believe that they have a scientific theory of economic value. They refuse to see that it is totally wrong! That is why they are such fanatics!

But it is even worse! Economics, at present, offers no help whatsoever to entrepreneurs!

The diamond example shows that The Labor Theory of Value is wrong, but also that its only alternative cannot be used as a basis of a genuine science of economics!

Mind you, this diamond example is not an exception either! That kite will not fly! (That is what Ricardo thought, although he was aware of this, and other exceptions. Rare paintings of dead Masters is another he mentioned.) Wine, put in barrels in wine cellars becomes more valuable the longer the wine is allowed to ripen. That is, the longer nothing is done with it! How can value arise from abstaining from work?

Wheat growing in the fields does not grow because farmers go to the plants, and pull them upwards one by one. Our food grows in nature by itself. The only thing a farmer does is to create optimal conditions for our grains and vegetables to grow. The same can be said about milk and meat production. Just feed the cows, and the milk in them arises. You only have to get it out. Chickens grow by themselves, and not because of some labor applied to eggs. And isn't it also true, that in the Tesla factories of Elon Musk, cars are built by robots? In other words, he does not use laborers as Henry Ford did, but he uses natural forces. Elon Musk does not build cars. He grows cars in his factories! Elon Musk is a car farmer!

Is there a way out?

Can we have a definition of value that can salvage economics?

Can we have a definition of value that can be used to transform economics into a genuine science?

Yes, there is! Yes, it is possible!

However, I shall only continue here, if there is somebody on this forum who wants to have a real understanding of the surprising connection of value to money!

Anybody here interested?'
 
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BizyDad

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To be precise, Charles can make, in one day, one kilo of cheese. But to make one kilo of butter would take him, say, 5 days. Bob on the other hand needs, say, 10 days to make one kilo of butter, and he needs a whopping 20 days to make one kilo of cheese.

Sorry this is the basis of your whole paradigm and it is ridiculous. Charles can solve his need for cheese and butter in six days.

In this exchange, Charles gives up something that has a value to him equal to one day of his production time, the kilo of cheese he produced. But he gets something back that has a value to him equal to 5 days of his production time. Therefore, thanks to his deal he has obtained an advantage of 4 days of avoided production time!

But you want Charles to wait at least 10 days (you actually said a month) and trade Bob for Bob's butter instead of making his own butter in 5 days. So he waits 10 days, how valuable is the 4 days of production savings really?

And you call this trade a win win?

The only way this theory of yours makes sense is if, as you say, we ignore or cannot know truth.

But of course any rational, right thinking person would tell Charles to make his own cheese and butter. Or trade with someone better than Bob.

Bob is time-value priced out of the butter and cheese market. Bob thinks his stuff is worth 10 and 20 days, when everyone else knows you can get cheese made in a day. Bob inflates his prices. Bob's family will go hungry. Bob will be shunned by the butter and cheese market.

Unless Bob's cheese and butter actually tastes better.

But of course the value of taste has no place, no measurement, no "value" in a time delineating definition of value.

Ergo, did I not find a proverbial "diamond" or "natural force" that disproves your theory? For surely it is a fact that the concept of taste is an inherent quality of value.

Keep working at it. Maybe there's something here. I don't think so, but I've been wrong before. Good luck.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Sorry this is the basis of your whole paradigm and it is ridiculous. Charles can solve his need for cheese and butter in six days.



But you want Charles to wait at least 10 days (you actually said a month) and trade Bob for Bob's butter instead of making his own butter in 5 days. So he waits 10 days, how valuable is the 4 days of production savings really?

And you call this trade a win win?

The only way this theory of yours makes sense is if, as you say, we ignore or cannot know truth.

But of course any rational, right thinking person would tell Charles to make his own cheese and butter. Or trade with someone better than Bob.

Bob is time-value priced out of the butter and cheese market. Bob thinks his stuff is worth 10 and 20 days, when everyone else knows you can get cheese made in a day. Bob inflates his prices. Bob's family will go hungry. Bob will be shunned by the butter and cheese market.

Unless Bob's cheese and butter actually tastes better.

But of course the value of taste has no place, no measurement, no "value" in a time delineating definition of value.

Ergo, did I not find a proverbial "diamond" or "natural force" that disproves your theory? For surely it is a fact that the concept of taste is an inherent quality of value.

Keep working at it. Maybe there's something here. I don't think so, but I've been wrong before. Good luck.
You are way too early with your remarks! I already started by warning, that I build up to the complete complexity of the value and money problem. I learned this strategy from Eugen von Böhm-Bawerk, and it is the only way I can show the entire picture.

So I began with a scenario that is, indeed, not realistic. I warned about this at the beginning. And then, step by step, I extend it until it begins to show an entirely different understanding of value and money.

It is not for nothing, that all thinkers of the past have been lost about getting a grip on value and money, ever since it existed. There are lots of things I must explain yet before you 'get it'.

Also, it is impossible to show the realism of my value theory if one cannot think abstractly, in terms of principles. I have begun by explaining value. You confuse value with utility with your remark about taste. That is one of the things I must, indeed, clarify. You also are blinded by a simple thing, namely that Charles can make in one hour one kilo of cheese, while Bob needs 10 days for that, and therefore must wait for 9 days, so that the advantage gets lost. You think I didn't know that?

And, to give an example of 'realistic'. To follow my argument, you must be able to think abstractly. To demonstrate what I mean, can you find out how fast your toenails grow? If you can, give me the answer in miles per hour. Or do you think that this is nonsense, because the speed of the growth of toenails is not in miles per hour, because they grow too slow for that!

It is impossible for me to make my full understanding clear with this one simple example. I must explain it step by step. And I must begin by explaining the principles. This means, given the conditions I have set up, is what I say logically wrong? At this stage, this is the only counterexample that can be given.

As far as I can see, I haven't made a logical error. My calculations are correct, given the conditions. Therefore, if the economy were as simple as this problem, all the things I said follow from it. In particular, my point was, that one gets never paid for the actual amount of labor time one puts into the goods and services

To make this explicit. Adam Smith, and Karl Marx, said, that the amount of labor time a worker needs to produce a good and a service is its value to everybody! And if a laborer is not compensated for his time, then the laborer is exploited!

That is what the theory of Adam Smith and David Ricardo implies. That is what Marx said, and his entire edifice is built on this assumption. And if you understand the principle on the basis of what exchange happens, whcih I have demonstrated even in this simple example, then you fully how thoroughly and utterly false Marxism is!

No wonder that literally hundreds of millions people died because of Marxism, and counting!


To show tha, let me show that by modifying my farmer example, so that it is consistent with the Labor Theory of Value. Bob and Charles would only make an honest exchange between 1 kilo of cheese and 1 kilo of butter, if Bob needed 1 day to make 1 kilo of butter for Charles, and Charles needs 1 day to make 1 kilo of cheese for Bob.

That is what Marx said!

And that is what my even simple example completely demolished!

Why?

Because such an exchange would not make any sense! For if it is that what determines every exchange, then all would be better off by just making everything they want by themselves! Society would then not exist, because animals indeed 'produce' everything they need by themselves, and the only 'exchange' they make is killing one another. So, then we would be right back, economically speaking, in the animal state!

No wonder that so many people died because of Marxism! Marxism, and The Labor Theory of Value transforms people in animals!


Also, The Script is based on this assumption! 'An honest pay for an honest amount of work'. And with 'amount of work' they all mean: amounts of man-hours!

I must still introduce money, explaining, in particular, one amazing thing about money, and then connecting it to this example.

Just to give you an indication of what I still must explain. But I shall not do everything, because that would require an entire book. I only show the principles here.

There is this problem of time difference you talk about. This can be solved if both see each other as sources of butter and cheese on a permanent basis. Therefore Bob can have made his butter 10 days earlier, and Charles can make the one kilo of cheese on the 9th day, and then exchange it on the 10th day.

Also, in a real society, there are many Bobs and Charleses. So, Charles, because he can produce in 10 days 10 kilos of cheese, he can serve 10 people like Bob in those 10 days. The first Bob began 9 days producing the kilo of butter before Charles began producing his first kilo of cheese, so that exactly when Bob is finished, he has spent 10 days in producing one kilo of cheese, and Charles has produced his first kilo of cheese for Bob. The second Bob began 8 days before Charles began producing his second kilo of cheese, etc.

Also there is the question of consumption, and how fast this happens, and how replacements take place. The rate of consumption and the rate of production must also be in sync. The question is: how, exactly, happens that?

Consumption as a part of economics must also be explained in general. After all, an idiot like Keynes has produced an economic theory, whereby he basically asserts that prosperity arises out of consumption! This is as if you say that a plague of locusts is good for farmers! That is the state of economics as it is now taught in schools.

Ridiculous? Keynes once said, that war is good for the economy, because after everything is smashed lots of new production is needed. And that is good for the economy! Even a little common sense should make clear, that there must be something seriously wrong with this argument! But what is it, exactly? Bastiat partly pointed out what the error in this argument is, in his famous: 'the broken glass argument'.

Much of the timing difference problems are solved by money, which I still haven't explained yet. But one needs a description of how money functions and one can then see how money solves the delayed consumption problem you are referring to.

And, indeed, there is the problem of competition. But these only have to do with that you can find a better deal with somebody else. But this is a matter of going into the details of a market that does not just consist of Charles and Bob, and of butter and cheese, but of many others making far more than two products, and what effect that has on exchange ratios. These are all complications and, to treat them all fully (which I have done in my previous publications) requires at least a book of 500 pages! That is why I restrict myself here to the principles.

But you must then realize, that it is that what I do, and not to come up with such over simple counterexamples which betray an enormous number of confusions. But, then again, that is where I am here for. To point those confusions out. But even that requires several articles, wherein I can only give the basic principles one needs to defuse them. Really defusing them requires, as I said, a complete book!

Another thing you are showing being confused about is that there is a fundamental difference between utility or usefulness, and value. They have nothing to do with each other! and this is also a source of major confusion that I must, and shall clarify. In fact, there is an entire direction of economics that has this particular confusion as its foundation. This is the so-called Austrian direction of economics, where they define value as something that arises out of a combination of utility + scarcity. That is also what many people believe. That something has only value, if it has both utility and it is scarce. But computer programs like the Office Suite sold by Microsoft is a counterexample. Whenever somebody buys the office suite, it is, through Internet, immediately installed on his computer. This shows that computer programs, once created, are not scarce! Yet, Microsoft earns a lot of money by selling them. So does Adobe and many other companies are now following suit! This fact cannot be explained by the Austrian theory of Value!

There are also problems you haven't mentioned. There is, for example, the 'commensurability problem'. Also solved, in a surprising way with money. This is the problem that you cannot put a general number on amounts of different goods. How much of an economic good in the form of eggs, for example, are there in a house, seen as an economic good? Or, simpler, if you look at the production of a farmer, who produces butter, cheese, milk, potatoes, and who plays the organ, what is his total production of all these economic goods, expressed as one number? You cannot just say: it is so much money, because the amount of money people pay for concrete goods is not a fixed quantity, because of inflation.

And, to have the full picture of how money works, one also has to consider that goods are not so directly produced as in this example, but they usually consist of many stages. Charles can only make the cheese in a certain amount of time because he has many tools. How does he gets those tools? How do people fit in, that do not produce goods and create services that can be consumed directly, but are only the means for the production of directly consumable goods? Such questions lead to the definition of 'orders of production'. These goods must exist prior his production of cheese. Not to forget the milk. How, exactly, does that fit in?

What I am trying to say, is that the way you think to give 'counterarguments' and then to say that what I say is 'nonsense' is something I can do much better than you! There are lots of things I have not mentioned that can pop up in anybody's mind that, if you don't know about them, can be used as counterarguments.

So, before you give any comment, wait until you have seen my entire argument!

Also, think man! Instead of such superficial criticism that anybody can come up with, and I have definitely considered, just look at what I already have clarified. Namely that even this example, with minor corrections, like the timing problem you mention, it already demolishes many beliefs people have about value alone.

In particular that we are paid for actual amounts of time we work because that is the only source of value people believe in!

Let me tell you something I realized today.

I am investigating the technology of crypto currencies, and how they work. It took me a lot of trouble to see how Bitcoin and Blockchain actually work in practice, and I was horrified by it!

Why?

Because Bitcoin depends on adding blocks to the blockchain. And to allow to add them, there exists something that is called: 'proof of work'.

The basic idea behind this is, again, The Labor Theory of Value! The only extension they implicitly make is that 'labor' does not necessarily have to be done by people. You can also make computers 'work'. So, you can only add a block to the blockchain, and thus create Bitcoins, if the computer solves a hash-code problem. This problem is so difficult, that it requires the most powerful computers equipped with the best graphical cards, or even specialized cards designed to solve this problem.

The idea behind this is, that money can only have value, if somewhere work has been done!

People just cannot rid themselves of The Labor Theory of Value!

In the case of Bitcoin, this 'work' consists of computers solving a cryptographical puzzle.

The result is, that so much hardware and so much electricity is wasted by thins, that somebody like Elon Musk backed down from Bitcoin, because he saw it as a potential source of environmental problems.

I hope you show some more patience. Maybe you then get it. And if you do, which, after your above remarks, I very much doubt, will change your view on value forever!
 
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BizyDad

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And, to give an example of 'realistic'. To follow my argument, you must be able to think abstractly. To demonstrate what I mean, can you find out how fast your toenails grow? If you can, give me the answer in miles per hour. Or do you think that this is nonsense, because the speed of the growth of toenails is not in miles per hour, because they grow too slow for that!
~0.000000005405078179 mph

I assumed the center of my right big toe nail for the sake of this calculation, since my toenails grow at differing rates.

I could conceivably provide a more precise response.

This also isn't a good example of abstract thinking. This is simple division supported by weird knowledge of the rhythm of my habits and big toes.

It's interesting a Dutch economist chose mph instead of km/h.

In particular, my point was, that one gets never paid for the actual amount of labor time one puts into the goods and services

Yes, I believe I understood this.

Since you have yet to reveal the vastness of the implications, I cannot be certain that I grasped your point, but I feel this is a pretty simple point that didn't require 800 words to "prove".

Of course I'm not a student of Eugen von Böhm-Bawerk, so maybe there's a reason you feel verbosity is the only way to explain it.

which I have done in my previous publications) requires at least a book of 500 pages

Where can one procure this book? If there is an English translation can you link to it please?

As far as I can see, I haven't made a logical error.

Well maybe that's why I felt you didn't adequately address my point. Yes, my response and example was as simplistic as your initial example, but I thought you would understand the nuance.

You confuse value with utility with your remark about taste.

Or maybe this is why I didn't feel my point got addressed, it was merely dismissed. With this remark, you confuse preference with utility. I never mentioned utility, nor did my point about taste have anything to do with the utility of butter or cheese.

all thinkers of the past have been lost about getting a grip on value and money, ever since it existed.

I find it fascinating when a deep profound thinker finds themself in a position of feeling like they are the only person on earth who understands something.

Especially when a common, even a poorly educated person, often has a functional, pretty good working handle on the thing the deep thinker is plagued by.

It's a bit like convincing someone their body is 99% empty space because, you know, atoms. Atoms are one of those funny things where, the more you know about them, the more you realize the less you know about them. How can our hands possibly grasp anything under such conditions?

Another thing you are showing being confused about is that there is a fundamental difference between utility or usefulness, and value. They have nothing to do with each other!

I'll grant you they have little to do with each other, often poorly correlated, and at times they are completely divorced of each other, but you're going to have to work to convince me this is true in all times and all cases.

Maybe you can. Maybe you can't.

You make many assumptions about what I think or how I think. I would appreciate this trait if you were accurate in your assumptions. Since you are not, I find you boorish.

So, before you give any comment, wait until you have seen my entire argument!

On an open forum with reply buttons, you want me to shut up until you regurgitate a synthesized, abridged version of 500 pages representing an alleged lifetime of work?

And you write this comment after asking for feedback and flaws in thinking?

That's a bit of back and forth isn't it? Much like I find your theory thus far, jumping around a bit and contradicting itself.

All I really know about you thus far is you are wordy, haughty, rude and people suspect you are insane.

Chop chop, get to it then genius. Regale us with the breakthrough that no human living or dead, other than MJ, has been able to touch on, much less grasp.

I've been keeping an open mind. I've admitted to being wrong before and could be here. But frankly, when the simple explanations are neither simple nor good explanations, I take that as evidence that this theory has holes.

And when you frequently misstate and misconstrue the theories of other allegedly lesser thinkers in order to inflate your theory, that kind of straw man thinking doesn't bode well for the "logic" being implemented here.

After all, an idiot like Keynes has produced an economic theory...

I'm just saving this remark for later...

---

Since I am not to speak any further until this dissertation is concluded, I do want to ask one question which I am curious if you'll answer someday. What is the distinction between money and currency in your world view? You've used the word money several times in places and ways I would consider the term currency more appropriate.

By the way, completely off topic, you aren't by any chance looking to unload a music catalogue with a valuation supported by this theory of money, are you?

Anyways, good luck completing your incomplete theory. I won't trouble your mind any further here.
 
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Last edited:

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
~0.000000005405078179 mph

I assumed the center of my right big toe nail for the sake of this calculation, since my toenails grow at differing rates.

I could conceivably provide a more precise response.

This also isn't a good example of abstract thinking. This is simple division supported by weird knowledge of the rhythm of my habits and big toes.

It's interesting a Dutch economist chose mph instead of km/h.



Yes, I believe I understood this.

Since you have yet to reveal the vastness of the implications, I cannot be certain that I grasped your point, but I feel this is a pretty simple point that didn't require 800 words to "prove".

Of course I'm not a student of Eugen von Böhm-Bawerk, so maybe there's a reason you feel verbosity is the only way to explain it.



Where can one procure this book? If there is an English translation can you link to it please?



Well maybe that's why I felt you didn't adequately address my point. Yes, my response and example was as simplistic as your initial example, but I thought you would understand the nuance.



Or maybe this is why I didn't feel my point got addressed, it was merely dismissed. With this remark, you confuse preference with utility. I never mentioned utility, nor did my point about taste have anything to do with the utility of butter or cheese.



I find it fascinating when a deep profound thinker finds themself in a position of feeling like they are the only person on earth who understands something.

Especially when a common, even a poorly educated person, often has a functional, pretty good working handle on the thing the deep thinker is plagued by.

It's a bit like convincing someone their body is 99% empty space because, you know, atoms. Atoms are one of those funny things where, the more you know about them, the more you realize the less you know about them. How can our hands possibly grasp anything under such conditions?



I'll grant you they have little to do with each other, often poorly correlated, and at times they are completely divorced of each other, but you're going to have to work to convince me this is true in all times and all cases.

Maybe you can. Maybe you can't.

You make many assumptions about what I think or how I think. I would appreciate this trait if you were accurate in your assumptions. Since you are not, I find you boorish.



On an open forum with reply buttons, you want me to shut up until you regurgitate a synthesized, abridged version of 500 pages representing an alleged lifetime of work?

And you write this comment after asking for feedback and flaws in thinking?

That's a bit of back and forth isn't it? Much like I find your theory thus far, jumping around a bit and contradicting itself.

All I really know about you thus far is you are wordy, haughty, rude and people suspect you are insane.

Chop chop, get to it then genius. Regale us with the breakthrough that no human living or dead, other than MJ, has been able to touch on, much less grasp.

I've been keeping an open mind. I've admitted to being wrong before and could be here. But frankly, when the simple explanations are neither simple nor good explanations, I take that as evidence that this theory has holes.

And when you frequently misstate and misconstrue the theories of other allegedly lesser thinkers in order to inflate your theory, that kind of straw man thinking doesn't bode well for the "logic" being implemented here.



I'm just saving this remark for later...

---

Since I am not to speak any further until this dissertation is concluded, I do want to ask one question which I am curious if you'll answer someday. What is the distinction between money and currency in your world view? You've used the word money several times in places and ways I would consider the term currency more appropriate.

By the way, completely off topic, you aren't by any chance looking to unload a music catalogue with a valuation supported by this theory of money, are you?

Anyways, good luck completing your incomplete theory. I won't trouble your mind any further here.
You are quite right about my rudeness!

Let me tell you at least where this comes from.

Knowing how money functions, I am completely aghast about the complete ignorance about the potential of money. I see people launching wars. I see people do the most extreme atrocities toward each other. And that while I see that this is completely unnecessary!

I see, though, where it comes from.

Economically speaking it comes from The Labor Theory of Value, and the tremendous way it has spread all over the world in the form of Socialism, Marxism and Communism.

I see that people do not get one simple thing. Namely, that division of production and exchange is the only source of survival and even wealth of all of us! The days of the hunter/gatherer are really over!

You said you understand now that we are never paid for the work we do. We are only paid for the results of our production we offer against money. This, and only this gives money its buying power.

And it is the buying power of money, and only the buying power of money all our lives depend on.

Now consider this. If you produce for money, you might be motivated by self-interest, but your actions are for the benefit of others. Therefore, money has the potential to unite all of mankind.

Moreover, through specialization in production, Mr. A becomes better and better in producing X, and Mr. B becomes better and better in producing Y. Which means, that for Mr. A, according to my definition, X gets less and less value. But since Mr. B does not specialize in X, but in Y, the value of X remains high for Mr. B. But for Mr. B Y will have a lower and lower value, because he is specialized in B.

Therefore, Mr. A destroys for himself the value of X, but it remains high for Mr. B. And Mr. B destroys the value of Y for himself, but it remains high for Mr. A. Therefore, if they make an exchange of X against Y, they both give up something of lesser value to themselves for something of greater value to themselves. They provide each other with the value they could not produce for themselves, because, so I assume, their specialization takes all of their attention and energy. You cannot be specialized in everything you need for your survival.

If this happens with thousands of products and thousands of specializations, the world as we see it emerges. Just look at all the stuff you undoubtedly have. Virtually nothing you have made yourself. They are the result of specialization and division of production. Therefore, through this system of division of production and exchange, we all take care of each other motivated by our self-interest.

And, if you really and fully realize that this is the one and only source of the survival of us all, you will see every fellow human being as a potential contributor to your own life.

So, if I then see somebody like you who does not show to see the principle of what I am trying to tell, it makes me literally furious! How can it be, that you didn't get it? How can you make such extremely stupid remarks, even attacking what I said, 'not seeing the gold' as you said, while I had made perfectly clear, and, you admit it even above, that you had understood my point? Namely, that we are never paid for the work we do, but only for the work we make unnecessary for others?

Doesn't that imply, once understood, that this terrible thing that is introduced into our world, Marxism, that has killed literally hundreds of millions of people, and which causes at present the hardship of a quarter of the world population (I speak of China and the Chinese citizens) has been completely unmasked as, to use MJ. DeMarco's words, as hyperreality'?

How can that not be gold?

Thát was it, what made me furious about your remarks!

To dismiss something that can defuse the biggest mistake of humanity, as 'not seeing the gold?'.

In the meantime, I have understood, that my reaction to you was highly inappropriate!

Therefore I apologize!

After all, I realized, you did me a great favor by showing your lack of understanding. At least you communicated it to me! Because if there is one person who says it, there will be 20 to 30 who will have the same lack of understanding, but just keep silent.

It did me realize one thing.

This forum is not the place for me to explain value and money. Not that nobody is interested. But simply because I have to address those things that popped up in your mind, and explain more completely, and more calmly how much you underestimate even this simple example and all that it implies.

It is my task to explain these things, and not for you to think those things through, and find out for yourself all the nuances. It became clear to me, that it took me decades to see those nuances. The biggest obstacle to this was to free myself from the Labor Theory of Value, because it was deep embedded in me. And, so I realize, it has to be deep into the minds of others.

There is also the problem, that if something looks very simple and pure common sense, people usually do not realize how much struggle it might have taken the person to arrive at that clarity. As such it is similar to the following. To multiply two very huge prime numbers to calculate the product is peanuts for any computer to do. But being given the product, and then trying to figure out the two huge prime numbers that, when multiplied, result in the given number given, can takes even the most powerful computer we have many times the lifetime of the universe!

This is why such things as Aristotle's logic which was the very start of Western culture, and was as important as the discovery of fire, Copernicus's description of our solar system, which was the start of real astronomy, Newton's laws, which was the start of physics,, Darwin's evolution theory, which was the start of real biology, Popper's revolutionary solution of the Induction problem, which was the start of modern science, Rothbard's principle of Justice (which not many know of as yet) which is the start of a science of Justice, and, yes, my definition of value, which is the start of a genuine science of economics, are so difficult to come up with!

For me, to have arrived at my definition of value is not just the result of my own 'brilliance', but it is the result of the work of many thinkers since Aristotle, all of whom have uncovered part of it. This includes even Marx, because in his argument of exploitation of the Proletariat by the Bourgeoisie there was one very interesting insight, without which I would have never arrived at my definition of value!

Once you understand each of the above principles, (i.e. Aristotle's logc, Newton's laws, Darwin's evolution etc) , one is astounded by the fact that such simple principles can be so powerful! For example, how if you really understand Darwin's evolution, that you see how God is a vastly inferior explanation for the diversity of life.

In my case, once people understand that every fellow human being is a potential contributor to the lives of every other human being. That is, if only people would understand how society is the thing all of our lives depend on. And that society can only function, and create not only the survival of everybody, but even the wealth of the very rich, all social conflicts will stop, and we can all have a standard of living only the present billionaires can enjoy!

That is what is at stake!

I do not care whether I am seen as intelligent or not. To be honest, I rather live in complete anonimity, and spend all my time figuring things out. And, in fact, I have done this basically my entire life. I have used my knowledge and understaning of money not to become rich as MJ. Demarco did. In fact, I didn't know how to do that. What I did know is how I could, by just working for 2 hours a week, earn enough money to get everything I need. (But barely! That is wy I call myself a Sidewalker!) I could reduce my indenture time to just 2 hours a week, and the rest was free time. I find this enough. And, to be really honest, I have understood the essence of intelligence, through my investigations of computer languages.

Did you know, that it is possible to make a computer program, consisting of just three lines of code, which can generate all bit patterns?

Or, let me say this in ordinary words. One can make a computer program, consisting of just three lines of code that can generate all information patterns that can exist, as long as you let it run long enough. Or, in laymen's terms, you can make a computer program consisting of just three lines of code that will generate anything and everything people will ever think of!

Just three lines of code!

Now, put a selector on this computer program, and you have a computer program that can solve all problems, as long as you let it run long enough. This is what artificial intelligence, the technology that is now emerging, makes possible.

Such a computer program can simulate evolution. And since evolution itself is a form of intelligence, you then have created an intelligent computer. And that from a computer program consisting of just three lines of code and a selector!

This, by the way, explains how from very simple beginnings we ourselves could emerge. These 'three lines of code' can be found in Eukaryotic cells, at work in the form of chemical processes. This is the basic principle behind all forms of existence that move from simple to complex.

In other words, intelligence as such is a pretty primitive phenomenon! Therefore I do not care a hoot about being considered intelligent, or care at all about the intelligence of others. When I hear somebody say how intelligent he is, it sounds to me as stupid as hearing a cheetah bragging about how fast he is!

Intelligence is our nature. Just like running fast is the nature of a cheetah. Basically, all Cheetahs are fast. And all human beings are intelligent. The only difference is, that using intelligence takes effort. And many people avoid that.

Whether you use your intelligence, and what you do with it. That is important!

In any case, I have overestimated my own ability to explain things simple, even if they are simple for me. To really explain value and money requires at least a book. I see now that there is no way around this. And thanks to you I have now understood this.

In any case, I am going to leave this forum. I shall put in a new article what I have written already, but I do not expect others to see the nuances directly anymore.

I have done quite some work leading up to my current understanding. I have published a book on Amazon Kindle, with the title: 'The Six Foundations of Money'. I am not satisfied with that book, because only after having written that book, I understand, in a huge brainwave the point I have already explained. Namely that we are never paid for our labor time. We are not even paid for labor as such. We are paid for production. And that does not only arise out of our labor, but also out of our use of natural forces in the form of tools, our command over life through farming, and through mining. This is something Marx totally overlooked!

In any case, my book, published on Amazon, is close! It shows a description of the distinction between utility and value. It shows exactly what money is and how it functions. So it contains many very important insights about utility, value and money, how they interact, and how money solves a host of problems of barter.

And, to answer your question about the difference between money and currency. There is no difference! My book: 'The Six Foundations of Money' explains that fully, because it at least explains what money is and how it functions.

Here is the link:

Amazon.com: The Six Foundations of Money: If You Really Understand Money, You Can See Far More Ways To Get It. eBook : Swart, Konrad: Kindle Store

So, I shall post here what I already have written, and then devote my time to a more thorough explanation.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
You are quite right about my rudeness!

Let me tell you at least where this comes from.

Knowing how money functions, I am completely aghast about the complete ignorance about the potential of money. I see people launching wars. I see people do the most extreme atrocities toward each other. And that while I see that this is completely unnecessary!

I see, though, where it comes from.

Economically speaking it comes from The Labor Theory of Value, and the tremendous way it has spread all over the world in the form of Socialism, Marxism and Communism.

I see that people do not get one simple thing. Namely, that division of production and exchange is the only source of survival and even wealth of all of us! The days of the hunter/gatherer are really over!

You said you understand now that we are never paid for the work we do. We are only paid for the results of our production we offer against money. This, and only this gives money its buying power.

And it is the buying power of money, and only the buying power of money all our lives depend on.

Now consider this. If you produce for money, you might be motivated by self-interest, but your actions are for the benefit of others. Therefore, money has the potential to unite all of mankind.

Moreover, through specialization in production, Mr. A becomes better and better in producing X, and Mr. B becomes better and better in producing Y. Which means, that for Mr. A, according to my definition, X gets less and less value. But since Mr. B does not specialize in X, but in Y, the value of X remains high for Mr. B. But for Mr. B Y will have a lower and lower value, because he is specialized in B.

Therefore, Mr. A destroys for himself the value of X, but it remains high for Mr. B. And Mr. B destroys the value of Y for himself, but it remains high for Mr. A. Therefore, if they make an exchange of X against Y, they both give up something of lesser value to themselves for something of greater value to themselves. They provide each other with the value they could not produce for themselves, because, so I assume, their specialization takes all of their attention and energy. You cannot be specialized in everything you need for your survival.

If this happens with thousands of products and thousands of specializations, the world as we see it emerges. Just look at all the stuff you undoubtedly have. Virtually nothing you have made yourself. They are the result of specialization and division of production. Therefore, through this system of division of production and exchange, we all take care of each other motivated by our self-interest.

And, if you really and fully realize that this is the one and only source of the survival of us all, you will see every fellow human being as a potential contributor to your own life.

So, if I then see somebody like you who does not show to see the principle of what I am trying to tell, it makes me literally furious! How can it be, that you didn't get it? How can you make such extremely stupid remarks, even attacking what I said, 'not seeing the gold' as you said, while I had made perfectly clear, and, you admit it even above, that you had understood my point? Namely, that we are never paid for the work we do, but only for the work we make unnecessary for others?

Doesn't that imply, once understood, that this terrible thing that is introduced into our world, Marxism, that has killed literally hundreds of millions of people, and which causes at present the hardship of a quarter of the world population (I speak of China and the Chinese citizens) has been completely unmasked as, to use MJ. DeMarco's words, as hyperreality'?

How can that not be gold?

Thát was it, what made me furious about your remarks!

To dismiss something that can defuse the biggest mistake of humanity, as 'not seeing the gold?'.

In the meantime, I have understood, that my reaction to you was highly inappropriate!

Therefore I apologize!

After all, I realized, you did me a great favor by showing your lack of understanding. At least you communicated it to me! Because if there is one person who says it, there will be 20 to 30 who will have the same lack of understanding, but just keep silent.

It did me realize one thing.

This forum is not the place for me to explain value and money. Not that nobody is interested. But simply because I have to address those things that popped up in your mind, and explain more completely, and more calmly how much you underestimate even this simple example and all that it implies.

It is my task to explain these things, and not for you to think those things through, and find out for yourself all the nuances. It became clear to me, that it took me decades to see those nuances. The biggest obstacle to this was to free myself from the Labor Theory of Value, because it was deep embedded in me. And, so I realize, it has to be deep into the minds of others.

There is also the problem, that if something looks very simple and pure common sense, people usually do not realize how much struggle it might have taken the person to arrive at that clarity. As such it is similar to the following. To multiply two very huge prime numbers to calculate the product is peanuts for any computer to do. But being given the product, and then trying to figure out the two huge prime numbers that, when multiplied, result in the given number given, can takes even the most powerful computer we have many times the lifetime of the universe!

This is why such things as Aristotle's logic which was the very start of Western culture, and was as important as the discovery of fire, Copernicus's description of our solar system, which was the start of real astronomy, Newton's laws, which was the start of physics,, Darwin's evolution theory, which was the start of real biology, Popper's revolutionary solution of the Induction problem, which was the start of modern science, Rothbard's principle of Justice (which not many know of as yet) which is the start of a science of Justice, and, yes, my definition of value, which is the start of a genuine science of economics, are so difficult to come up with!

For me, to have arrived at my definition of value is not just the result of my own 'brilliance', but it is the result of the work of many thinkers since Aristotle, all of whom have uncovered part of it. This includes even Marx, because in his argument of exploitation of the Proletariat by the Bourgeoisie there was one very interesting insight, without which I would have never arrived at my definition of value!

Once you understand each of the above principles, (i.e. Aristotle's logc, Newton's laws, Darwin's evolution etc) , one is astounded by the fact that such simple principles can be so powerful! For example, how if you really understand Darwin's evolution, that you see how God is a vastly inferior explanation for the diversity of life.

In my case, once people understand that every fellow human being is a potential contributor to the lives of every other human being. That is, if only people would understand how society is the thing all of our lives depend on. And that society can only function, and create not only the survival of everybody, but even the wealth of the very rich, all social conflicts will stop, and we can all have a standard of living only the present billionaires can enjoy!

That is what is at stake!

I do not care whether I am seen as intelligent or not. To be honest, I rather live in complete anonimity, and spend all my time figuring things out. And, in fact, I have done this basically my entire life. I have used my knowledge and understaning of money not to become rich as MJ. Demarco did. In fact, I didn't know how to do that. What I did know is how I could, by just working for 2 hours a week, earn enough money to get everything I need. (But barely! That is wy I call myself a Sidewalker!) I could reduce my indenture time to just 2 hours a week, and the rest was free time. I find this enough. And, to be really honest, I have understood the essence of intelligence, through my investigations of computer languages.

Did you know, that it is possible to make a computer program, consisting of just three lines of code, which can generate all bit patterns?

Or, let me say this in ordinary words. One can make a computer program, consisting of just three lines of code that can generate all information patterns that can exist, as long as you let it run long enough. Or, in laymen's terms, you can make a computer program consisting of just three lines of code that will generate anything and everything people will ever think of!

Just three lines of code!

Now, put a selector on this computer program, and you have a computer program that can solve all problems, as long as you let it run long enough. This is what artificial intelligence, the technology that is now emerging, makes possible.

Such a computer program can simulate evolution. And since evolution itself is a form of intelligence, you then have created an intelligent computer. And that from a computer program consisting of just three lines of code and a selector!

This, by the way, explains how from very simple beginnings we ourselves could emerge. These 'three lines of code' can be found in Eukaryotic cells, at work in the form of chemical processes. This is the basic principle behind all forms of existence that move from simple to complex.

In other words, intelligence as such is a pretty primitive phenomenon! Therefore I do not care a hoot about being considered intelligent, or care at all about the intelligence of others. When I hear somebody say how intelligent he is, it sounds to me as stupid as hearing a cheetah bragging about how fast he is!

Intelligence is our nature. Just like running fast is the nature of a cheetah. Basically, all Cheetahs are fast. And all human beings are intelligent. The only difference is, that using intelligence takes effort. And many people avoid that.

Whether you use your intelligence, and what you do with it. That is important!

In any case, I have overestimated my own ability to explain things simple, even if they are simple for me. To really explain value and money requires at least a book. I see now that there is no way around this. And thanks to you I have now understood this.

In any case, I am going to leave this forum. I shall put in a new article what I have written already, but I do not expect others to see the nuances directly anymore.

I have done quite some work leading up to my current understanding. I have published a book on Amazon Kindle, with the title: 'The Six Foundations of Money'. I am not satisfied with that book, because only after having written that book, I understand, in a huge brainwave the point I have already explained. Namely that we are never paid for our labor time. We are not even paid for labor as such. We are paid for production. And that does not only arise out of our labor, but also out of our use of natural forces in the form of tools, our command over life through farming, and through mining. This is something Marx totally overlooked!

In any case, my book, published on Amazon, is close! It shows a description of the distinction between utility and value. It shows exactly what money is and how it functions. So it contains many very important insights about utility, value and money, how they interact, and how money solves a host of problems of barter.

And, to answer your question about the difference between money and currency. There is no difference! My book: 'The Six Foundations of Money' explains that fully, because it at least explains what money is and how it functions.

Here is the link:

Amazon.com: The Six Foundations of Money: If You Really Understand Money, You Can See Far More Ways To Get It. eBook : Swart, Konrad: Kindle Store

So, I shall post here what I already have written, and then devote my time to a more thorough explanation.
Here is the rest.

Value​

But, indeed, I have made enough claims. Let me now begin in earnest!

Here is my description of value.

To begin with, value is dependent on the individual, but it is not subjective! Value is not an ordinal quantity, as Ludwig von Mises asserted.

I want to do it step by step. I explain it by a method I learned from Eugen von Böhm-Bawerk, which consists of first starting simple, and then adding more and more to it. The first step is not (yet) realistic. But by adding to it, it gradually becomes consistent with reality. So, if I begin, do not just jump immediately to some exceptions. First, follow the general line.

Imagine an individual, who wants to accomplish something, anything. Something that, for now, I assume, does not yet exist. Now, the time this individual needs to accomplish that result he imagines is the amount of value that result has for this individual.

Time is measurable. Therefore value, defined in this way is measurable. However, since there are huge differences in the amounts of time different individuals need to accomplish the same result, value depends on the individual. In most cases, it depends on how fast an individual is capable of realizing what he imagines, whatever it is.

That what he imagines can be a good, a service, but it can also be that some dictator wants a very powerful bomb to destroy a neighboring country with just this one bomb. So, my definition of value does not only apply to production or building something. It is also possible to apply it to destruction.

Now, let me apply my definition to the simplest example I could find. It is a very simple example, which nevertheless shows the most important aspects of value. It takes a teeny weeny little arithmetic. So don't be put off by that.

Imagine two farmers. Let us call then Charles and Bob. Both can make cheese, and both can make butter. But there is a difference in how fast they can produce either cheese or butter.

To be precise, Charles can make, in one day, one kilo of cheese. But to make one kilo of butter would take him, say, 5 days. Bob on the other hand needs, say, 10 days to make one kilo of butter, and he needs a whopping 20 days to make one kilo of cheese.

Now my last assumption.

Suppose Charles wants one kilo of butter, and Bob wants one kilo of cheese.

According to my definition of value, the value one kilo of cheese has to Charles is equal to one day of production time, and the value one kilo of butter has to him is equal to 5 days. And the value one kilo of cheese has to Bob is equal to 10 days of his production time, while one kilo of cheese has a value to Bob equal to 20 days.

Now, if Charles produces the kilo of butter he wants by himself, he needs 5 days of his production time. And if Bob produces the kilo of cheese he wants by himself, he needs 20 days of his production time.

But now imagine they strike a deal. Charles produces the kilo of cheese Bob wants, and in return Bob produces the kilo of butter Charles wants. Assuming they meet after one month, Charles has spent one day producing 1 kilo of cheese, which has therefore a value to him equal to one day of his production time. And Bob has spent 10 days producing 1 kilo of butter which has a value to him equal to 10 days of his production time.

Charles now gives up the kilo of cheese he has made for Bob, and Bob returns the favor and gives his kilo of butter to Charles.

In this exchange, Charles gives up something that has a value to him equal to one day of his production time, the kilo of cheese he produced. But he gets something back that has a value to him equal to 5 days of his production time. Therefore, thanks to his deal he has obtained an advantage of 4 days of avoided production time!

Likewise, Bob gives up the kilo of butter which has a value to him equal to 10 days of his production time. But he gets something in return that has a value to him equal to 20 days of his production time. Therefore, thanks to this very same deal he has obtained an advantage of 10 days of avoided production time!

Notice several things here.

To begin with, the kilo of cheese has, according to my definition of value, a value to Charles equal to one day. But, even though this kilo is produced by Charles, it still has a value to Bob equal to 20 days! Because that is the amount of production time he would have needed to produce that kilo of cheese by himself. So, it does not matter to Bob that it took Charles just one day to produce that one kilo of cheese. Its value will still be 20 days to him!

Likewise, the fact that Bob needed 10 days to produce the one kilo of butter for Charles does not mean that the amount of value Charles receives in the form of one kilo of butter is 10 days. Nope. the (gross) amount of production time he receives in the form of this one kilo of butter is just 5 days!

This shows, that in exchange the actual amounts of production time parties who exchange with each other to benefit from each other does not play any role whatsoever!

The amount of labor time you spend to produce goods or create services for others is not equal to the amount of value those others receive from you!

Economically speaking, labor does not produce value!

Your expertise and your productivity creates value to others! Indeed, only the results count! Your tools and machines make you more productive, and therefore you can deliver more value to others! By making it unnecessary for others to spend lots of time to produce goods and services they are not good at producing, you deliver value without creating value. In fact, you are doing the exact opposite! Through specialization you are destroying value!

If you realize this, then you also realize that the foundation of our entire Scripted society is totally and utterly wrong!

To be precise, the reward Charles gets from Bob by exchanging his cheese depends only on the amount of production time he is able to avoid! That it took Bob 10 days to produce that kilo of butter was totally unimportant to Charles. His benefit just consists of the amount of production time Charles is able to avoid through that exchange. And that is 4 days.

Also, it is, to Bob, totally irrelevant that Charles could produce this one kilo of cheese in just one day. When he received the cheese, he got something that has a value to him equal to 20 days! And his net advantage is 20 days minus 10 days = 10 days of avoided production time.

Also, notice the following.

Charles needs one day to produce 1 kilo of cheese, while Bob needs 20 days for that. Therefore Charles is 20x more productive in making cheese than Bob is. No surprise here.

But Charles also needs only 5 days to produce 1 kilo of butter, while Bob needs 10 days for that. Therefore Charles is 2x more productive in making butter than in making cheese!

So, although Charles is better, that is, more productive in producing both cheese and butter, both benefit from this exchange. That Bob benefits from Charles is no surprise, because Charles is the more productive of the two. But that Charles can benefit from Bob, while Charles is better in producing butter than Bob is a huge surprise!

Notice also something else that is very strange. The advantage of Charles is just 4 days of avoided production time, while the advantage of Bob is 10 days. If you think about this, you might come to a shocking realization.

Charles, the more productive of the two, has the smallest advantage. He has the smallest advantage exactly because he is the more productive of the two!

This shows a general principle. In a free market, the least productive and competent people benefit the most! They benefit the most exactly because they are less competent and productive!

You might think that this example is not new. You might think that this is just Ricardo's principle of Comparative Cost/Value. But you would be mistaken!

Ricardo formulated his principle in terms of the amounts of butter and cheese produced by two countries. He started with man-hours, and then looked at how much two countries could produce from a given amount of man-hours available, and how specialization means that given a certain amount of man-hours, both parties could have more through exchange. But, by doing so, he had no clear picture what was going on. His principle of comparative cost/value has only been considered a numerical curiosity. But to me it is one of the two foundations of my vision on value and money!

My example is different! I start with how productive the two parties are, and look at how much time each needs to arrive at a certain result. In other words, I have described a reverse problem.

Ricardo, fully entrenched in The Labor Theory of Value, started with man-hours and derived this apparently same surprising result. But he hadn't understood what he had found, because he was blinded by The Labor Theory of Value. He therefore did not realize, that his principle basically refuted the entire Labor Theory of Value.

My example makes clear what is going on. This is because I start with production capability and look at how much time individuals need to arrive at certain results. I even cast it into the very definition of value! And that is a huge difference!

Within mathematics there was, at the end of the 18th century, a problem with elliptical integrals. A scientist, if I remember well, it was Abel, worked for 20 years on a problem involving these mathematical constructs, and he progressed very slowly. And then there was a newcomer, who considered inverse functions, and he produced all the results of this other mathematician in just two weeks! And after that he produced in the next year far more results than this other mathematician could ever get with his approach!

My point is: that inverting problems can have huge consequences!

I have inverted Ricardo's example. And therefore I have now succeeded to describe, in principle, where the advantages of barter come from!

Look again at this example. Neither one is rewarded for the actual amounts of time they needed to produce what the other wanted. In other words, in this exchange, neither one was rewarded for the actual amount of labor or production time they had needed to produce what the other wanted.

This proves my assertion, that we are never rewarded for the actual amount of time we spend producing goods and services. We are only rewarded for the amount of time we make unnecessary for others to have what they want.

The strange thing is that Adam Smith, in his Wealth of Nations, and in his very definition of value, mentioned the the value delivered in exchanges is indeed the amount of labor time the other would not need to spend. His mistake was that he thought that the amount of labor spent is equal to the amount of labor the other would avoid. Adam Smith did not take differences in productivity, and therefore specialization into account.

That was the big mistake of Adam Smith!

Through becoming better in a limited number of things. That is, by becoming more productive through our training, we make what we want to offer to others less valuable for ourselves! Or, to say it more bluntly, if we train in different things, we are training ourselves in destroying the value the things we specialize in to have for us. But, although we destroy the value for ourselves, exactly because we specialize, the value is not destroyed for others, who are not specialized in that what we are specialized in.

If this point is not clear. Suppose Bob, the butter maker, invents a method whereby he can now produce the one kilo of butter in, say, 6 days instead of 10. If he then exchanges one kilo of butter in exchange for one kilo of cheese produced by Charles, his benefit becomes 20 - 6 = 14 days. So, through specialization, Bob has destroyed some of the value a kilo of butter has to him. And, as a result, he receives a greater benefit from his exchange with Charles.

This is how society creates the survival of us all!!

Just look around in your room at everything you have. Imagine that you would need all of it by yourself. How much time would it take you to produce your smartphone by yourself? A hundred thousand years maybe? Maybe a million years? That is the value your smartphone has to you! But thanks to being specialized in just a few things, you obtain the money you need to buy the smartphone in maybe one or two months, if not much sooner!

If you really get all this, you are now prepared for the second part: my explanation of money!

I shall continue with that tomorrow if there is nothing else that will ask for my attention. But for now, I leave it at this.

Continuation of Value and Money​

One person has protested my description of value. He protested, because since Charles needs only one day to make 1 kilo of cheese, while Bob needed 10 days to make 1 kilo of butter, Charles has to wait for 9 days, after having made his kilo of cheese before he can make the exchange. Therefore, this person asserted, my whole argument is moot.

To answer this response. We are dealing with continuous production here. But his objection can be answered more fully, if one considers money.

But even without it I can show that it is not a real objection. Since we are talking about continuous production, after a period of 10 days Charles can make an exchange of 1 kilo cheese against 1 kilo of butter. If he needs 10 days to consume this butter, he only needs to work 1 day after 9 days to produce a kilo of cheese. In the meantime, Bob has made the 1 kilo of butter for Charles.

If this deal did not exist, Charles would need 5 days to produce the 1 kilo of butter by himself. So, thanks to this continuous supply of butter by Bob, each 10 days, Charles has 9 days off instead of 5 days off.

Also, Charles can use the full 10 days to produce 10 kilos of cheese, and serve 10 people like Bob, all of whom are then able to avoid 10 days of production time. This, if Charles consumes 10 kilos of butter in 10 days, and all those Bobs consume 1 kilo of cheese in 10 days.

The whole point of my example is to show principles! I have not anywhere suggested that this is a real scenario!

For a full explanation of all my points, I suggest, order a book from me. I have written two books for sale now. One with the title: ‘The Value of Money’, and the other with the title: ‘The Six Foundations of Money’. I have published this last book on Amazon Kindle. Although that book does not contain the big point I am making here, which is that we are never paid for hours of labor we perform, but we are paid for production time we make unnecessary for others to get what they want. As such it is therefore a full refutation of The Labor Theory of Value, which is the foundation of the existence of both the Sidewalk and the Slowlane.

Money​

So, let me now continue with this explanation. Let us turn our attention to money!

The question now is: what is money? And how is it connected to my example of Charles and Bob?

To introduce this, I will first extend the story of Charles and Bob by introducing money. Then show what happens, and which problems are solved by it. Among them, by the way, this synchronization problem above.

So, what happens if Charles and Bob do not exchange butter and cheese directly, but use money as an indirect medium of exchange? And why should they?

Let me, before I go on, return to my definition of value. Let me change it slightly.

The value that anything that exists has for any individual, is the total time that individual would have needed to realize that anything.

And now that I have given this definition, I want to give another definition that goes with it.

The cost of any result an individual imagines, but which does not yet exists, or which exists but he does not own or has a right to have access to, is the total time he would need, or would have needed to realize that result without the help of anybody else!

Notice that this second definition contains two new things. Ownership and access! I return to the significance of these later.

What I now want to point out, is that my definition of value contains a huge problem. Value, as I define it, depends on the individual!

Hadn’t I asserted, that this dependence on the individual basically means that this is the basic flaw of the whole Austrian approach to economics? Ludwig von Mises defines value as: ‘the importance acting man attaches to ultimate ends’. (Human Action, Page 96 Human Action, Third Revised Edition. Contemporary Books Inc. Chicago.)

However, my definition, although it is different, seems to suffer from the same problem. In my definition, value is measurable, but it depends on the individual also! And if that is the case, my critique that demolished the Austrian school of economics applies to my approach to economics too!

How to fix this?

My solution is in principle this. I want to introduce a definition of a new kind of money, which I call perfect money, which has the same value for every individual, even though value always depends on the individual.

But, you might ask: if value depends on the individual, how can this even be possible?

My solution is: I introduce a kind of money that has an infinite value for everybody!

I shall now introduce a form of money, a substance if you like that can be divided into enough parts so that it can be used as a coin, but whereby every part has an infinite value to everybody. I call this Perfect Money.

This kind of money cannot exist. But whenever something is even just an approximation of this ideal of Perfect Money, it can function as money, because it then has somewhat the property of Perfect Money.

So, theoretically speaking, what might be Perfect Money?

Suppose the earth has been struck by a comet of a substance that has formed by some complicated astronomical process. Say, this substance is formed when two black holes and a sun simultaneously collide with each other, resulting in a very complicated kind of explosion whereby many materials are formed that would never form by any other process. Suppose this extremely rare event has occurred only once. Let us also assume that only one rock of all these rocks consists of a unique substance that nobody would ever succeed in producing in a laboratory.

For example, it is a substance consisting of atoms with an atomic number of 628, and an atomic weight of 30642, say. This is a purely imaginary material. But suppose it exists.

Let us assume that this material can be subdivided so much, that it can consist even of separate atoms, but it is chemically completely inert. Except that it can form into a solid. Moreover, the amount of this material that is left over after it has hit the earth is about ten times the total amount of gold we have ever dug up. In other words, this rock that fell to the earth is the only such rock that can ever exist!

The material looks ugly, therefore it cannot be used as jewelry. The conductivity of this material is so-so, therefore it cannot be used in any electronic device. Its binding is too weak, therefore …. I can go on and on and on. The point is, this material cannot be used in anything and for anything practical! It is, technologically speaking, a totally useless material!

Let us give this material a name. I choose a name from Star Trek Deep Space Nine. A name I got from the Ferengi. Let us call it Latinum.

Now let us look at this material from heaven, this Latinum. Let us cut off a little bit of this Latinum comet. Say one gram, and you receive it. Now ask yourself, given my definition of value. What is the value this gram of Latinum has to you?

Just apply my definition.

Since you cannot produce this Latinum yourself, because it is the result of an extreme astronomical process, this gram of Latinum has an infinite value to you! Not only to you, but it has an infinite value to everybody! That is, if you apply my definition of value to it!

If you don’t have any Latinum, you cannot produce it. Therefore, again, abstractly speaking, the cost of this gram of Latinum to you is also infinite!

This applies to everybody.

This imaginary material has two properties for everybody.

  • It is completely useless!
  • It has an infinite value!
If money is totally useless, but it has an infinite value, then people want it to spend it.
Gold and silver, for example, are not completely useless. Gold can be used because it is, chemically speaking, the least reactive material and a good conductor of electricity. That is why it is used in electronics. Likewise, silver is ideal for wiring, because when it rusts, the rust also conducts electricity. This is not the case with copper.
When money cannot be used in anything, but it also has infinite value, there is only one way to get it. And that is by offering goods and services in exchange. The only reason you would want it is because others offer goods and services in excnange. So, if money is both totally useless but has an infinite value, nobody can produce money directly. Nobody can therefore use his production of money to get goods and services from others without contributing anything. Or, said simpler, if nobody can make money directly, nobody can steal goods and services from others. That is, by the way, why I hate our present banking systems so much! They have legally condoned forms of mass-theft!
If nobody can make money directly, all can only get it by offering goods and services. In other words, everybody can only get it by contributing to its buying powers. Everybody can only get it by contributing to society!

All forms of money ever invented contained the basic flaw, that some people could increase the total amount in circulation. This applies to gold, silver, and even to all cryptocurrencies. Their quantitiers in circulation can all be increased. But the more difficult this is, the greater its value, and the better it is suitable as a money. Only if people begin to use some huge collection of NFT (Non-Fungible Tokens) as an indirect medium of exchange, as a money, you might have something very close to Perfect Money.

Also, if money is totally useless, people only want it to get goods and services in exchange for it. Therefore, paradoxically, all who want money only want it to get rid of it! Because you would only want to have money for buying goods and services, that is, get rid of it at some future date! Therefore, there is never a so-called hoarding problem with money. Either the owner of those who inherit from them will definitely spend it at some future date!

This implies, that all this scary talk of bankers about deflation, and that that is supposed to be a terrible thing, is just scaring tactics so that people keep condoning their mass-stealing!

Theoretically speaking, even if this material, this Latinum does not exist, it shows one thing. It is possible to imagine something that has no utility whatsoever, but has an infinite value! And this example alone shows that all economic theories that are built on a definition of value that contains utility as one of its components are wrong!

In Austrian economics, value is supposed to arise whenever something has both utility and is scarce. Latinum, however, has only one of these two properties. Latinum is scarce but has no utility whatsoever! Therefore, even imagining Latinum shows that utility is not a necessary property for something to have value. It seems that scarcity is enough for something to have value.

Now let us imagine, that people decided to split up this comet into just as many little pieces of equal size as there are people in the world, and to give everybody such a piece. They calculated, that if they do that, everybody in the world will receive ten grams of Latinum. All would then receive something that is completely useless, but the value it will have is infinite. All people in the world would then be in the possession of something that has an equal value to everybody.

This is one step in overcoming the problem that value depends on the individual. But let us continue, and let us now return to Charles and Bob.

Both Charles and Bob now have ten grams of Latinum which they can use as money.

How?

Charles produces one kilo of cheese in one day. Bob hears about it, and goes to Charles and offers him one gram of Latinum for this kilo of cheese. Charles agrees, and the exchange is made. Now Bob has one kilo of cheese and 9 grams of useless Latinum left, and Charles now has 11 grams of this useless Latinum.

This raises a question. Why would Charles accept this deal? After all, the gram of Latinum he receives from Bob is completely useless to him! How did Bob convince Charles to give up one kilo of cheese against one gram of useless Latinum? Maybe he did promise something else?

And, indeed, that is what Bob did! Both Charles and Bob have understood how they benefit from each other through exchange. Both Charles and Bob know, that if they make cheese and butter for each other, they can avoid production times! When Bob offered one gram of Latinum for one kilo of cheese, he also made a promise. He promised Charles that he is working on a kilo of butter, and that it would be ready after 9 days. When the butter is ready, so he promised, Charles could receive one kilo of butter in exchange for one gram of Latinum.

And there you have it! Money is introduced! Thanks to the existence of Latinum, both no longer need to make direct exchanges. Also, even in this stage, using an indirect medium of exchange like Latinum solved the timing problem!

But not only that. Suppose that all people begin to offer and accept Latinum as an indirect medium of exchange. Many other problems of barter would then be solved!

To begin with, the timing problem. But there are other problems using Latinum as money solves. There is, for example, the ‘coincidence of needs’ problem. It might be, that Bob offers just butter in exchange for Latinum. But Charles does not want any butter. He wants a loaf of bread! But, alas, if Bob makes a loaf of bread for Charles, he needs 30 days to do that, while he needs 20 days to make one kilo of cheese!

Fortunately for Bob, there is Bruno. Bruno accepts one kilo of butter in exchange for one loaf of bread. Now Bob goes to Bruno first, exchanges his butter for bread, and then goes to Charles to exchange this loaf of bread against the kilo of cheese he wants.

Notice that this takes a further exchange. Also, Bob does not want the bread for his own consumption. He wants the bread to get a kilo of cheese from Charles. Therefore, the bread functions as a kind of money.

But it can be worse! Bruno does not want butter either! Now Bob has first to find somebody who is willing to exchange one kilo of butter against something Bruno wants. Then he gets the loaf of bread from Bruno, and only then he can go to Charles to exchange the bread against one kilo of cheese.

But there are more complications! Suppose Bruno demands two kilos of butter for one loaf of bread. Now Bob needs 20 hours to produce enough butter to meet the demand of Bruno. But that is the same amount of time he needs to make his own cheese! In that case, direct exchange no longer makes sense. Moreover, Bob must find out that this is a problem.

In other words, with barter we must not only consider which goods or services, but also in what quantities. This is another problem that money solves, because definite quantities of goods or services are exchanged against just one kind of quantity: money.

Barter has even more problems that money solves. In barter, all participants need to know exactly what everybody wants and can produce, and in which quantities! Only then they can calculate whether exchanges lead to reductions in production time. Also, the more goods and services are exchanged, the more exchanges will be potentially needed. Exchanges that also take time! And that would defeat the whole purpose of exchanges.

There is the further complication, that Charles might need only half a kilo of butter, while Bob wants one kilo of cheese. As you can see, there are a lot of problems with barter!

Money solves all of these problems!

Fortunately, in this imagined world there is such a thing as Latinum. After a short time, everybody sees the benefits of indirect exchange. Everybody sees that he can have either goods and services a lot sooner through making exchanges than by producing everything he needs by himself. Everybody sees in Latinum a way to get what they want, because more and more people become aware that there are more and more people being prepared to offer goods and services for money. This persuades more and more people to offer their production results for money, which …

This is an example of a positive feedback loop. An effect becomes its own cause.

The more people are beginning to use this Latinum as an indirect medium of exchange, the more people are prepared to use this Latinum as their preferred indirect medium of exchange. People accept this useless Latinum as money, because they see that money accept this useless Latinum as money. Latinum can be exchanged for ever more goods and services in ever greater quantities. Latinum gets an ever growing buying power!

And that is, what we all want money to have!

Notice several things here.

The value of Latinum is infinite. But the buying power of Latinum depends on how much people are willing and able to offer for it. In fact, the buying power will, in the (not so) long run settle so that the amount of Latinum people are willing to offer for any particular good is also the amount of goods and services people can produce in the meantime. That is, supply and demand will adapt to each other. The speed with which people can get their hands on Latinum through selling the results of their production will become, on average, be equal to the speed with which they will produce goods and services in exchange for Latinum. How this happens exactly requires a more thorough analysis. Let me just say that this is a phenomenon accepted by many economists. It even has a name. It is called ‘the law of supply and demand’.

I have mentioned the commensurability problem earlier. This is the problem that, economically speaking, you cannot tell how much of an economic quantity there is in such different things like eggs and houses. You cannot say that, economically speaking, a house is 400,000 dozens of eggs. You can buy a house for so much Latinum, and a dozen of eggs for a much smaller amount of Latinum. Or, conversely, with a certain amount of Latinum you might be able to buy either 400,000 dozens of eggs or a house. Since a house is a totally different thing than a dozen of eggs, ‘buying power’ is a wrong term. You must speak of buying powers! For each different good or service, and for each different quantity you need a different amount of Latinum.

But you can turn this around, and say that it is the gram of Latinum itself that becomes the measuring unit with which we can express economic magnitudes!

Selling and Buying​

In barter exchanges there exists only one type of action: exchange.

Money replaces this one simple action with two, called selling and buying. If you offer something others want in exchange for money, you are selling. If you exchange money for something you want, you are buying. Where originally there was just one transaction, there are now two.

Charles must first sell his kilo of cheese against one gram of Latinum. Since this gram of Latinum is completely useless, at that moment he is not yet compensated. Only after he has exchanged the gram of Latinum against one kilo of butter, he has what he wants: the kilo of butter. Only then he has succeeded to reduce his total production time from 5 days to one day.

It might seem that replacing one action with two complicated things. But this is just apparent.

To see this, consider a similar problem. That of producing dictionaries between several languages.

If you want to be able to translate English into German and back again, you need two dictionaries. One from English to German, and one from German to English. If you want to translate between three languages, say, English, German and French, you need six dictionaries: English → French, French → English, English → German, German → English and French → German, German → French. If you want to translate between ten languages, you need 90 dictionaries; one from each of the ten languages to the nine others, which is 10x9 = 90 dictionaries.

But suppose we agree to use an in-between language, and indirect translations. We agree to always first translate from any language to this in-between language, say Esperanto. And then from Esperanto to any of the other languages.

With two languages this complicates things, because you need a dictionary from each of the two languages to Esperanto, and back again. That is 2x2 = 4 dictionaries. But if you have 10 languages, you need 10 x = 20 dictionaries, which is a lot less than 90 dictionaries.

This simplification also occurs with money. If there are, say, 20 products in a community people exchange against each other, there are 20 x 19 = 380 different kinds of direct exchanges that must be possible. It is even worse if all require two steps. In that case there are 20 x 19 x 18 = 6840 max! But if you use money, this total number of exchanges is reduced to just 40, namely 20 sales and 20 kinds of buying.

Money has another thing that makes it superior to barter. With barter, you need to know four things.

  • Who wants what.
  • In what quantities.
  • What is he offering in return.
  • Can he be trusted.
These four conditions imply, that people can only use barter if they know each other quite well. And that can only be done in a closed community where there are strict social rules where everybody abides to, or at least can be made accountable, whenever he deviates.

This implies a common ideological basis. Or a common religion or some other social construct. A construct all people must abide to, and therefore must place above themselves. Such a community has very little personal freedom, up to no freedom at all!

With money, you need to know only two things.

  • Whether there are people willing and able to give you money for what you produce.
  • What you can get from others for the money you can get in this way.
Accountability can be assured by laws that put sanctions on everybody who tries to deceive others by not delivering what has been promised. Compensation can then also just be demanded in the form of money.

You don’t have to know anything personal about the sellers, apart from what they offer, and for how much money.

This makes privacy possible!

And that makes independent thinking possible. Because in a barter economy everybody must be 'on his toes' not to offend others, because of the threat of excommunication. But as soon as money is part of society, people can become so rich, just by contributing a lot in a short amount of time, that they can collect so much money they can live from it for the rest of their lives. And then they can do whatever they want, including thinking.

Thinking differently from everybody else is no longer a threat. As long as you just pay others for everything you need and want, they don't care a hoot about who you are or how you think. There can then be people who think totally different, and develop theories that are considered completely outlandish, without needing to fight for those ideas.

That is how geniuses can even exist! And that is why MJ. DeMarco can spread his ideas to us. He understood at a fairly young age that money means the elimination of indenture time, and the creation of free time.

Money is therefore the real origin of science, and the tremendously impressive technologies we now have. Quantum mechanics, for example, is the basis of our computers, smartphones etc. And that while Quantum Mechanics, as a theory, is, logically speaking, utterly insane. Our GPS system depends on General Relativity, another insane theory!

Without money these things would not be possible!

It is therefore no surprise that Ancient Greece, the first culture that used coined money extensively, was the first country wherein science could develop!

If you have money, you can just look at what there is on offer. And there are many people who are offering lots of things for money. You can ‘choose your pick’.

This brings me on the subject of freedom.

What is freedom?

Your freedom is your ability to transform your imagination into your reality. That is, your actual experience.

Do you imagine living in a bigger house? Is that your wish? Look at how much money you have. Is it enough to buy the house? Then you can transform that wish into your reality.

In general, you can look at what you can get in exchange for others for your money. You can see what you can buy. You can therefore see which of your wishes you can transform into an actual experience.

The more money you have, and the more people there are who offer the things you wish for in exchange for money, and the lower the amounts of more they are willing to accept, the greater your freedom!

And that means that the buying power of your money is your freedom!

It is like Dostoyevsky once said: money is minted freedom!

There are many more aspects of money I am not willing to explain here. Too much work, and too little reward (namely no reward!) I mention a few, though.

Money solves the problem of how to define economic quantities. If you combine money with the bookkeeping device called the balance sheet, by looking at what happens if companies not only sell to consumers but also to each other, you can see what a healthy economy, one free from taxation looks like. One can then see how, exactly, taxation destroys freedom. Applying the balance idea is also a first step towards showing how fractional reserve banking, the system of money that exists everywhere now, causes ever bigger economic instabilities.

If you really understand money, you can see that virtually all people are robbed from the result of their contribution to others, the money they earned by their productivity, by two means. Taxation and fractional reserve banking.

Taxation
works like this.

I can promise to give you everything you want. Just give me your money, and I buy it for you! That is how taxation works, with a vengeance, because if you don’t, ….

And fractional reserve banking works like this.

Come to me, the Banker says. Whatever you wish to buy, I can give you the money so that you can buy it immediately. I just type the money you want into your bank account. (That is, create it out of nothing.) However, I am obliged to ask you the money back in the future, because I must eliminate this debt. Otherwise, I cause inflation, and that is not good for the economy. However, I must live also. Therefore, as compensation for this service, I must ask you to give me more than what I have given you. This extra money is then for me because I must be compensated for the fact that I have been stealing from everybody in your name. And I must not get caught!

So, citizens are robbed in two ways. One way is through the threat of violence. This is the governmental way, and it creates sidewalkers. And the other way is through temptation. Since all the money that is created through borrowing and lending is mainly used by companies buying and selling to each other, and therefore consists of investing, this is the ultimate basis of the Slowlane.

Therefore, governments create sidewalkers. And banks create slowlaners.

A few closing remarks about money.

Since societies are only beneficial to their members because of division of production and exchange, and with Perfect Money all contribute to it, and nobody can use money itself to steal, Perfect Money can make all politics completely unndecessary!

I calll a society based on only Perfect Money a Catallactic society. Money then replaces all voting. People who have earned lots of money can only have achieved that, if they have provided others with ways to get what they want faster. That is, through contributing to the lives of others. All who have paid for his products or his services have basically voted on him and his actions. Therefore now he has a lot of money, and he can vote on others who contribute to his life. In this way we are all voting on each other. We are all 'politicians' so to speak. But this is not a democracy! This is because those who have contributed the most to the most have earned the greatest voting power, that is, the power to do what he wants in their own interest. Therefore, in a Catallactic society there is no political power. There is only economcal power. And those who have been the greatest contributors to the lives of others, have the greatest amount of economic power. They are the one's who can set up the largest businesses, and risk their own money doing so. And when they do that, they are basically the replacers of the Big, and mostly corrupt Politicians that are now our 'leaders' chosen through democratic means.

And look what that does! You can have a genius like Trump be the leader of the USA, with the result that America florishes. But you can also have this utterly corrupt and demented fool as Biden become president of the USA, with the all too predictable that he makes a mess of it that is so huge, that nobody would ever have thought this possible a year ago!

I shall be a short while available to react to comments, if they come. But after this I shall be gone very soon.

For now. Bye!
 
Last edited:

zhangmin_007

New Contributor
Read Fastlane!
Jun 25, 2019
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Here is the rest.

Value​

But, indeed, I have made enough claims. Let me now begin in earnest!

Here is my description of value.

To begin with, value is dependent on the individual, but it is not subjective! Value is not an ordinal quantity, as Ludwig von Mises asserted.

I want to do it step by step. I explain it by a method I learned from Eugen von Böhm-Bawerk, which consists of first starting simple, and then adding more and more to it. The first step is not (yet) realistic. But by adding to it, it gradually becomes consistent with reality. So, if I begin, do not just jump immediately to some exceptions. First, follow the general line.

Imagine an individual, who wants to accomplish something, anything. Something that, for now, I assume, does not yet exist. Now, the time this individual needs to accomplish that result he imagines is the amount of value that result has for this individual.

Time is measurable. Therefore value, defined in this way is measurable. However, since there are huge differences in the amounts of time different individuals need to accomplish the same result, value depends on the individual. In most cases, it depends on how fast an individual is capable of realizing what he imagines, whatever it is.

That what he imagines can be a good, a service, but it can also be that some dictator wants a very powerful bomb to destroy a neighboring country with just this one bomb. So, my definition of value does not only apply to production or building something. It is also possible to apply it to destruction.

Now, let me apply my definition to the simplest example I could find. It is a very simple example, which nevertheless shows the most important aspects of value. It takes a teeny weeny little arithmetic. So don't be put off by that.

Imagine two farmers. Let us call then Charles and Bob. Both can make cheese, and both can make butter. But there is a difference in how fast they can produce either cheese or butter.

To be precise, Charles can make, in one day, one kilo of cheese. But to make one kilo of butter would take him, say, 5 days. Bob on the other hand needs, say, 10 days to make one kilo of butter, and he needs a whopping 20 days to make one kilo of cheese.

Now my last assumption.

Suppose Charles wants one kilo of butter, and Bob wants one kilo of cheese.

According to my definition of value, the value one kilo of cheese has to Charles is equal to one day of production time, and the value one kilo of butter has to him is equal to 5 days. And the value one kilo of cheese has to Bob is equal to 10 days of his production time, while one kilo of cheese has a value to Bob equal to 20 days.

Now, if Charles produces the kilo of butter he wants by himself, he needs 5 days of his production time. And if Bob produces the kilo of cheese he wants by himself, he needs 20 days of his production time.

But now imagine they strike a deal. Charles produces the kilo of cheese Bob wants, and in return Bob produces the kilo of butter Charles wants. Assuming they meet after one month, Charles has spent one day producing 1 kilo of cheese, which has therefore a value to him equal to one day of his production time. And Bob has spent 10 days producing 1 kilo of butter which has a value to him equal to 10 days of his production time.

Charles now gives up the kilo of cheese he has made for Bob, and Bob returns the favor and gives his kilo of butter to Charles.

In this exchange, Charles gives up something that has a value to him equal to one day of his production time, the kilo of cheese he produced. But he gets something back that has a value to him equal to 5 days of his production time. Therefore, thanks to his deal he has obtained an advantage of 4 days of avoided production time!

Likewise, Bob gives up the kilo of butter which has a value to him equal to 10 days of his production time. But he gets something in return that has a value to him equal to 20 days of his production time. Therefore, thanks to this very same deal he has obtained an advantage of 10 days of avoided production time!

Notice several things here.

To begin with, the kilo of cheese has, according to my definition of value, a value to Charles equal to one day. But, even though this kilo is produced by Charles, it still has a value to Bob equal to 20 days! Because that is the amount of production time he would have needed to produce that kilo of cheese by himself. So, it does not matter to Bob that it took Charles just one day to produce that one kilo of cheese. Its value will still be 20 days to him!

Likewise, the fact that Bob needed 10 days to produce the one kilo of butter for Charles does not mean that the amount of value Charles receives in the form of one kilo of butter is 10 days. Nope. the (gross) amount of production time he receives in the form of this one kilo of butter is just 5 days!

This shows, that in exchange the actual amounts of production time parties who exchange with each other to benefit from each other does not play any role whatsoever!

The amount of labor time you spend to produce goods or create services for others is not equal to the amount of value those others receive from you!

Economically speaking, labor does not produce value!

Your expertise and your productivity creates value to others! Indeed, only the results count! Your tools and machines make you more productive, and therefore you can deliver more value to others! By making it unnecessary for others to spend lots of time to produce goods and services they are not good at producing, you deliver value without creating value. In fact, you are doing the exact opposite! Through specialization you are destroying value!

If you realize this, then you also realize that the foundation of our entire Scripted society is totally and utterly wrong!

To be precise, the reward Charles gets from Bob by exchanging his cheese depends only on the amount of production time he is able to avoid! That it took Bob 10 days to produce that kilo of butter was totally unimportant to Charles. His benefit just consists of the amount of production time Charles is able to avoid through that exchange. And that is 4 days.

Also, it is, to Bob, totally irrelevant that Charles could produce this one kilo of cheese in just one day. When he received the cheese, he got something that has a value to him equal to 20 days! And his net advantage is 20 days minus 10 days = 10 days of avoided production time.

Also, notice the following.

Charles needs one day to produce 1 kilo of cheese, while Bob needs 20 days for that. Therefore Charles is 20x more productive in making cheese than Bob is. No surprise here.

But Charles also needs only 5 days to produce 1 kilo of butter, while Bob needs 10 days for that. Therefore Charles is 2x more productive in making butter than in making cheese!

So, although Charles is better, that is, more productive in producing both cheese and butter, both benefit from this exchange. That Bob benefits from Charles is no surprise, because Charles is the more productive of the two. But that Charles can benefit from Bob, while Charles is better in producing butter than Bob is a huge surprise!

Notice also something else that is very strange. The advantage of Charles is just 4 days of avoided production time, while the advantage of Bob is 10 days. If you think about this, you might come to a shocking realization.

Charles, the more productive of the two, has the smallest advantage. He has the smallest advantage exactly because he is the more productive of the two!

This shows a general principle. In a free market, the least productive and competent people benefit the most! They benefit the most exactly because they are less competent and productive!

You might think that this example is not new. You might think that this is just Ricardo's principle of Comparative Cost/Value. But you would be mistaken!

Ricardo formulated his principle in terms of the amounts of butter and cheese produced by two countries. He started with man-hours, and then looked at how much two countries could produce from a given amount of man-hours available, and how specialization means that given a certain amount of man-hours, both parties could have more through exchange. But, by doing so, he had no clear picture what was going on. His principle of comparative cost/value has only been considered a numerical curiosity. But to me it is one of the two foundations of my vision on value and money!

My example is different! I start with how productive the two parties are, and look at how much time each needs to arrive at a certain result. In other words, I have described a reverse problem.

Ricardo, fully entrenched in The Labor Theory of Value, started with man-hours and derived this apparently same surprising result. But he hadn't understood what he had found, because he was blinded by The Labor Theory of Value. He therefore did not realize, that his principle basically refuted the entire Labor Theory of Value.

My example makes clear what is going on. This is because I start with production capability and look at how much time individuals need to arrive at certain results. I even cast it into the very definition of value! And that is a huge difference!

Within mathematics there was, at the end of the 18th century, a problem with elliptical integrals. A scientist, if I remember well, it was Abel, worked for 20 years on a problem involving these mathematical constructs, and he progressed very slowly. And then there was a newcomer, who considered inverse functions, and he produced all the results of this other mathematician in just two weeks! And after that he produced in the next year far more results than this other mathematician could ever get with his approach!

My point is: that inverting problems can have huge consequences!

I have inverted Ricardo's example. And therefore I have now succeeded to describe, in principle, where the advantages of barter come from!

Look again at this example. Neither one is rewarded for the actual amounts of time they needed to produce what the other wanted. In other words, in this exchange, neither one was rewarded for the actual amount of labor or production time they had needed to produce what the other wanted.

This proves my assertion, that we are never rewarded for the actual amount of time we spend producing goods and services. We are only rewarded for the amount of time we make unnecessary for others to have what they want.

The strange thing is that Adam Smith, in his Wealth of Nations, and in his very definition of value, mentioned the the value delivered in exchanges is indeed the amount of labor time the other would not need to spend. His mistake was that he thought that the amount of labor spent is equal to the amount of labor the other would avoid. Adam Smith did not take differences in productivity, and therefore specialization into account.

That was the big mistake of Adam Smith!

Through becoming better in a limited number of things. That is, by becoming more productive through our training, we make what we want to offer to others less valuable for ourselves! Or, to say it more bluntly, if we train in different things, we are training ourselves in destroying the value the things we specialize in to have for us. But, although we destroy the value for ourselves, exactly because we specialize, the value is not destroyed for others, who are not specialized in that what we are specialized in.

If this point is not clear. Suppose Bob, the butter maker, invents a method whereby he can now produce the one kilo of butter in, say, 6 days instead of 10. If he then exchanges one kilo of butter in exchange for one kilo of cheese produced by Charles, his benefit becomes 20 - 6 = 14 days. So, through specialization, Bob has destroyed some of the value a kilo of butter has to him. And, as a result, he receives a greater benefit from his exchange with Charles.

This is how society creates the survival of us all!!

Just look around in your room at everything you have. Imagine that you would need all of it by yourself. How much time would it take you to produce your smartphone by yourself? A hundred thousand years maybe? Maybe a million years? That is the value your smartphone has to you! But thanks to being specialized in just a few things, you obtain the money you need to buy the smartphone in maybe one or two months, if not much sooner!

If you really get all this, you are now prepared for the second part: my explanation of money!

I shall continue with that tomorrow if there is nothing else that will ask for my attention. But for now, I leave it at this.

Continuation of Value and Money​

One person has protested my description of value. He protested, because since Charles needs only one day to make 1 kilo of cheese, while Bob needed 10 days to make 1 kilo of butter, Charles has to wait for 9 days, after having made his kilo of cheese before he can make the exchange. Therefore, this person asserted, my whole argument is moot.

To answer this response. We are dealing with continuous production here. But his objection can be answered more fully, if one considers money.

But even without it I can show that it is not a real objection. Since we are talking about continuous production, after a period of 10 days Charles can make an exchange of 1 kilo cheese against 1 kilo of butter. If he needs 10 days to consume this butter, he only needs to work 1 day after 9 days to produce a kilo of cheese. In the meantime, Bob has made the 1 kilo of butter for Charles.

If this deal did not exist, Charles would need 5 days to produce the 1 kilo of butter by himself. So, thanks to this continuous supply of butter by Bob, each 10 days, Charles has 9 days off instead of 5 days off.

Also, Charles can use the full 10 days to produce 10 kilos of cheese, and serve 10 people like Bob, all of whom are then able to avoid 10 days of production time. This, if Charles consumes 10 kilos of butter in 10 days, and all those Bobs consume 1 kilo of cheese in 10 days.

The whole point of my example is to show principles! I have not anywhere suggested that this is a real scenario!

For a full explanation of all my points, I suggest, order a book from me. I have written two books for sale now. One with the title: ‘The Value of Money’, and the other with the title: ‘The Six Foundations of Money’. I have published this last book on Amazon Kindle. Although that book does not contain the big point I am making here, which is that we are never paid for hours of labor we perform, but we are paid for production time we make unnecessary for others to get what they want. As such it is therefore a full refutation of The Labor Theory of Value, which is the foundation of the existence of both the Sidewalk and the Slowlane.

Money​

So, let me now continue with this explanation. Let us turn our attention to money!

The question now is: what is money? And how is it connected to my example of Charles and Bob?

To introduce this, I will first extend the story of Charles and Bob by introducing money. Then show what happens, and which problems are solved by it. Among them, by the way, this synchronization problem above.

So, what happens if Charles and Bob do not exchange butter and cheese directly, but use money as an indirect medium of exchange? And why should they?

Let me, before I go on, return to my definition of value. Let me change it slightly.

The value that anything that exists has for any individual, is the total time that individual would have needed to realize that anything.

And now that I have given this definition, I want to give another definition that goes with it.

The cost of any result an individual imagines, but which does not yet exists, or which exists but he does not own or has a right to have access to, is the total time he would need, or would have needed to realize that result without the help of anybody else!

Notice that this second definition contains two new things. Ownership and access! I return to the significance of these later.

What I now want to point out, is that my definition of value contains a huge problem. Value, as I define it, depends on the individual!

Hadn’t I asserted, that this dependence on the individual basically means that this is the basic flaw of the whole Austrian approach to economics? Ludwig von Mises defines value as: ‘the importance acting man attaches to ultimate ends’. (Human Action, Page 96 Human Action, Third Revised Edition. Contemporary Books Inc. Chicago.)

However, my definition, although it is different, seems to suffer from the same problem. In my definition, value is measurable, but it depends on the individual also! And if that is the case, my critique that demolished the Austrian school of economics applies to my approach to economics too!

How to fix this?

My solution is in principle this. I want to introduce a definition of a new kind of money, which I call perfect money, which has the same value for every individual, even though value always depends on the individual.

But, you might ask: if value depends on the individual, how can this even be possible?

My solution is: I introduce a kind of money that has an infinite value for everybody!

I shall now introduce a form of money, a substance if you like that can be divided into enough parts so that it can be used as a coin, but whereby every part has an infinite value to everybody. I call this Perfect Money.

This kind of money cannot exist. But whenever something is even just an approximation of this ideal of Perfect Money, it can function as money, because it then has somewhat the property of Perfect Money.

So, theoretically speaking, what might be Perfect Money?

Suppose the earth has been struck by a comet of a substance that has formed by some complicated astronomical process. Say, this substance is formed when two black holes and a sun simultaneously collide with each other, resulting in a very complicated kind of explosion whereby many materials are formed that would never form by any other process. Suppose this extremely rare event has occurred only once. Let us also assume that only one rock of all these rocks consists of a unique substance that nobody would ever succeed in producing in a laboratory.

For example, it is a substance consisting of atoms with an atomic number of 628, and an atomic weight of 30642, say. This is a purely imaginary material. But suppose it exists.

Let us assume that this material can be subdivided so much, that it can consist even of separate atoms, but it is chemically completely inert. Except that it can form into a solid. Moreover, the amount of this material that is left over after it has hit the earth is about ten times the total amount of gold we have ever dug up. In other words, this rock that fell to the earth is the only such rock that can ever exist!

The material looks ugly, therefore it cannot be used as jewelry. The conductivity of this material is so-so, therefore it cannot be used in any electronic device. Its binding is too weak, therefore …. I can go on and on and on. The point is, this material cannot be used in anything and for anything practical! It is, technologically speaking, a totally useless material!

Let us give this material a name. I choose a name from Star Trek Deep Space Nine. A name I got from the Ferengi. Let us call it Latinum.

Now let us look at this material from heaven, this Latinum. Let us cut off a little bit of this Latinum comet. Say one gram, and you receive it. Now ask yourself, given my definition of value. What is the value this gram of Latinum has to you?

Just apply my definition.

Since you cannot produce this Latinum yourself, because it is the result of an extreme astronomical process, this gram of Latinum has an infinite value to you! Not only to you, but it has an infinite value to everybody! That is, if you apply my definition of value to it!

If you don’t have any Latinum, you cannot produce it. Therefore, again, abstractly speaking, the cost of this gram of Latinum to you is also infinite!

This applies to everybody.

This imaginary material has two properties for everybody.

  • It is completely useless!
  • It has an infinite value!
If money is totally useless, but it has an infinite value, then people want it to spend it.
Gold and silver, for example, are not completely useless. Gold can be used because it is, chemically speaking, the least reactive material and a good conductor of electricity. That is why it is used in electronics. Likewise, silver is ideal for wiring, because when it rusts, the rust also conducts electricity. This is not the case with copper.
When money cannot be used in anything, but it also has infinite value, there is only one way to get it. And that is by offering goods and services in exchange. The only reason you would want it is because others offer goods and services in excnange. So, if money is both totally useless but has an infinite value, nobody can produce money directly. Nobody can therefore use his production of money to get goods and services from others without contributing anything. Or, said simpler, if nobody can make money directly, nobody can steal goods and services from others. That is, by the way, why I hate our present banking systems so much! They have legally condoned forms of mass-theft!
If nobody can make money directly, all can only get it by offering goods and services. In other words, everybody can only get it by contributing to its buying powers. Everybody can only get it by contributing to society!

All forms of money ever invented contained the basic flaw, that some people could increase the total amount in circulation. This applies to gold, silver, and even to all cryptocurrencies. Their quantitiers in circulation can all be increased. But the more difficult this is, the greater its value, and the better it is suitable as a money. Only if people begin to use some huge collection of NFT (Non-Fungible Tokens) as an indirect medium of exchange, as a money, you might have something very close to Perfect Money.

Also, if money is totally useless, people only want it to get goods and services in exchange for it. Therefore, paradoxically, all who want money only want it to get rid of it! Because you would only want to have money for buying goods and services, that is, get rid of it at some future date! Therefore, there is never a so-called hoarding problem with money. Either the owner of those who inherit from them will definitely spend it at some future date!

This implies, that all this scary talk of bankers about deflation, and that that is supposed to be a terrible thing, is just scaring tactics so that people keep condoning their mass-stealing!

Theoretically speaking, even if this material, this Latinum does not exist, it shows one thing. It is possible to imagine something that has no utility whatsoever, but has an infinite value! And this example alone shows that all economic theories that are built on a definition of value that contains utility as one of its components are wrong!

In Austrian economics, value is supposed to arise whenever something has both utility and is scarce. Latinum, however, has only one of these two properties. Latinum is scarce but has no utility whatsoever! Therefore, even imagining Latinum shows that utility is not a necessary property for something to have value. It seems that scarcity is enough for something to have value.

Now let us imagine, that people decided to split up this comet into just as many little pieces of equal size as there are people in the world, and to give everybody such a piece. They calculated, that if they do that, everybody in the world will receive ten grams of Latinum. All would then receive something that is completely useless, but the value it will have is infinite. All people in the world would then be in the possession of something that has an equal value to everybody.

This is one step in overcoming the problem that value depends on the individual. But let us continue, and let us now return to Charles and Bob.

Both Charles and Bob now have ten grams of Latinum which they can use as money.

How?

Charles produces one kilo of cheese in one day. Bob hears about it, and goes to Charles and offers him one gram of Latinum for this kilo of cheese. Charles agrees, and the exchange is made. Now Bob has one kilo of cheese and 9 grams of useless Latinum left, and Charles now has 11 grams of this useless Latinum.

This raises a question. Why would Charles accept this deal? After all, the gram of Latinum he receives from Bob is completely useless to him! How did Bob convince Charles to give up one kilo of cheese against one gram of useless Latinum? Maybe he did promise something else?

And, indeed, that is what Bob did! Both Charles and Bob have understood how they benefit from each other through exchange. Both Charles and Bob know, that if they make cheese and butter for each other, they can avoid production times! When Bob offered one gram of Latinum for one kilo of cheese, he also made a promise. He promised Charles that he is working on a kilo of butter, and that it would be ready after 9 days. When the butter is ready, so he promised, Charles could receive one kilo of butter in exchange for one gram of Latinum.

And there you have it! Money is introduced! Thanks to the existence of Latinum, both no longer need to make direct exchanges. Also, even in this stage, using an indirect medium of exchange like Latinum solved the timing problem!

But not only that. Suppose that all people begin to offer and accept Latinum as an indirect medium of exchange. Many other problems of barter would then be solved!

To begin with, the timing problem. But there are other problems using Latinum as money solves. There is, for example, the ‘coincidence of needs’ problem. It might be, that Bob offers just butter in exchange for Latinum. But Charles does not want any butter. He wants a loaf of bread! But, alas, if Bob makes a loaf of bread for Charles, he needs 30 days to do that, while he needs 20 days to make one kilo of cheese!

Fortunately for Bob, there is Bruno. Bruno accepts one kilo of butter in exchange for one loaf of bread. Now Bob goes to Bruno first, exchanges his butter for bread, and then goes to Charles to exchange this loaf of bread against the kilo of cheese he wants.

Notice that this takes a further exchange. Also, Bob does not want the bread for his own consumption. He wants the bread to get a kilo of cheese from Charles. Therefore, the bread functions as a kind of money.

But it can be worse! Bruno does not want butter either! Now Bob has first to find somebody who is willing to exchange one kilo of butter against something Bruno wants. Then he gets the loaf of bread from Bruno, and only then he can go to Charles to exchange the bread against one kilo of cheese.

But there are more complications! Suppose Bruno demands two kilos of butter for one loaf of bread. Now Bob needs 20 hours to produce enough butter to meet the demand of Bruno. But that is the same amount of time he needs to make his own cheese! In that case, direct exchange no longer makes sense. Moreover, Bob must find out that this is a problem.

In other words, with barter we must not only consider which goods or services, but also in what quantities. This is another problem that money solves, because definite quantities of goods or services are exchanged against just one kind of quantity: money.

Barter has even more problems that money solves. In barter, all participants need to know exactly what everybody wants and can produce, and in which quantities! Only then they can calculate whether exchanges lead to reductions in production time. Also, the more goods and services are exchanged, the more exchanges will be potentially needed. Exchanges that also take time! And that would defeat the whole purpose of exchanges.

There is the further complication, that Charles might need only half a kilo of butter, while Bob wants one kilo of cheese. As you can see, there are a lot of problems with barter!

Money solves all of these problems!

Fortunately, in this imagined world there is such a thing as Latinum. After a short time, everybody sees the benefits of indirect exchange. Everybody sees that he can have either goods and services a lot sooner through making exchanges than by producing everything he needs by himself. Everybody sees in Latinum a way to get what they want, because more and more people become aware that there are more and more people being prepared to offer goods and services for money. This persuades more and more people to offer their production results for money, which …

This is an example of a positive feedback loop. An effect becomes its own cause.

The more people are beginning to use this Latinum as an indirect medium of exchange, the more people are prepared to use this Latinum as their preferred indirect medium of exchange. People accept this useless Latinum as money, because they see that money accept this useless Latinum as money. Latinum can be exchanged for ever more goods and services in ever greater quantities. Latinum gets an ever growing buying power!

And that is, what we all want money to have!

Notice several things here.

The value of Latinum is infinite. But the buying power of Latinum depends on how much people are willing and able to offer for it. In fact, the buying power will, in the (not so) long run settle so that the amount of Latinum people are willing to offer for any particular good is also the amount of goods and services people can produce in the meantime. That is, supply and demand will adapt to each other. The speed with which people can get their hands on Latinum through selling the results of their production will become, on average, be equal to the speed with which they will produce goods and services in exchange for Latinum. How this happens exactly requires a more thorough analysis. Let me just say that this is a phenomenon accepted by many economists. It even has a name. It is called ‘the law of supply and demand’.

I have mentioned the commensurability problem earlier. This is the problem that, economically speaking, you cannot tell how much of an economic quantity there is in such different things like eggs and houses. You cannot say that, economically speaking, a house is 400,000 dozens of eggs. You can buy a house for so much Latinum, and a dozen of eggs for a much smaller amount of Latinum. Or, conversely, with a certain amount of Latinum you might be able to buy either 400,000 dozens of eggs or a house. Since a house is a totally different thing than a dozen of eggs, ‘buying power’ is a wrong term. You must speak of buying powers! For each different good or service, and for each different quantity you need a different amount of Latinum.

But you can turn this around, and say that it is the gram of Latinum itself that becomes the measuring unit with which we can express economic magnitudes!

Selling and Buying​

In barter exchanges there exists only one type of action: exchange.

Money replaces this one simple action with two, called selling and buying. If you offer something others want in exchange for money, you are selling. If you exchange money for something you want, you are buying. Where originally there was just one transaction, there are now two.

Charles must first sell his kilo of cheese against one gram of Latinum. Since this gram of Latinum is completely useless, at that moment he is not yet compensated. Only after he has exchanged the gram of Latinum against one kilo of butter, he has what he wants: the kilo of butter. Only then he has succeeded to reduce his total production time from 5 days to one day.

It might seem that replacing one action with two complicated things. But this is just apparent.

To see this, consider a similar problem. That of producing dictionaries between several languages.

If you want to be able to translate English into German and back again, you need two dictionaries. One from English to German, and one from German to English. If you want to translate between three languages, say, English, German and French, you need six dictionaries: English → French, French → English, English → German, German → English and French → German, German → French. If you want to translate between ten languages, you need 90 dictionaries; one from each of the ten languages to the nine others, which is 10x9 = 90 dictionaries.

But suppose we agree to use an in-between language, and indirect translations. We agree to always first translate from any language to this in-between language, say Esperanto. And then from Esperanto to any of the other languages.

With two languages this complicates things, because you need a dictionary from each of the two languages to Esperanto, and back again. That is 2x2 = 4 dictionaries. But if you have 10 languages, you need 10 x = 20 dictionaries, which is a lot less than 90 dictionaries.

This simplification also occurs with money. If there are, say, 20 products in a community people exchange against each other, there are 20 x 19 = 380 different kinds of direct exchanges that must be possible. It is even worse if all require two steps. In that case there are 20 x 19 x 18 = 6840 max! But if you use money, this total number of exchanges is reduced to just 40, namely 20 sales and 20 kinds of buying.

Money has another thing that makes it superior to barter. With barter, you need to know four things.

  • Who wants what.
  • In what quantities.
  • What is he offering in return.
  • Can he be trusted.
These four conditions imply, that people can only use barter if they know each other quite well. And that can only be done in a closed community where there are strict social rules where everybody abides to, or at least can be made accountable, whenever he deviates.

This implies a common ideological basis. Or a common religion or some other social construct. A construct all people must abide to, and therefore must place above themselves. Such a community has very little personal freedom, up to no freedom at all!

With money, you need to know only two things.

  • Whether there are people willing and able to give you money for what you produce.
  • What you can get from others for the money you can get in this way.
Accountability can be assured by laws that put sanctions on everybody who tries to deceive others by not delivering what has been promised. Compensation can then also just be demanded in the form of money.

You don’t have to know anything personal about the sellers, apart from what they offer, and for how much money.

This makes privacy possible!

And that makes independent thinking possible. Because in a barter economy everybody must be 'on his toes' not to offend others, because of the threat of excommunication. But as soon as money is part of society, people can become so rich, just by contributing a lot in a short amount of time, that they can collect so much money they can live from it for the rest of their lives. And then they can do whatever they want, including thinking.

Thinking differently from everybody else is no longer a threat. As long as you just pay others for everything you need and want, they don't care a hoot about who you are or how you think. There can then be people who think totally different, and develop theories that are considered completely outlandish, without needing to fight for those ideas.

That is how geniuses can even exist! And that is why MJ. DeMarco can spread his ideas to us. He understood at a fairly young age that money means the elimination of indenture time, and the creation of free time.

Money is therefore the real origin of science, and the tremendously impressive technologies we now have. Quantum mechanics, for example, is the basis of our computers, smartphones etc. And that while Quantum Mechanics, as a theory, is, logically speaking, utterly insane. Our GPS system depends on General Relativity, another insane theory!

Without money these things would not be possible!

It is therefore no surprise that Ancient Greece, the first culture that used coined money extensively, was the first country wherein science could develop!

If you have money, you can just look at what there is on offer. And there are many people who are offering lots of things for money. You can ‘choose your pick’.

This brings me on the subject of freedom.

What is freedom?

Your freedom is your ability to transform your imagination into your reality. That is, your actual experience.

Do you imagine living in a bigger house? Is that your wish? Look at how much money you have. Is it enough to buy the house? Then you can transform that wish into your reality.

In general, you can look at what you can get in exchange for others for your money. You can see what you can buy. You can therefore see which of your wishes you can transform into an actual experience.

The more money you have, and the more people there are who offer the things you wish for in exchange for money, and the lower the amounts of more they are willing to accept, the greater your freedom!

And that means that the buying power of your money is your freedom!

It is like Dostoyevsky once said: money is minted freedom!

There are many more aspects of money I am not willing to explain here. Too much work, and too little reward (namely no reward!) I mention a few, though.

Money solves the problem of how to define economic quantities. If you combine money with the bookkeeping device called the balance sheet, by looking at what happens if companies not only sell to consumers but also to each other, you can see what a healthy economy, one free from taxation looks like. One can then see how, exactly, taxation destroys freedom. Applying the balance idea is also a first step towards showing how fractional reserve banking, the system of money that exists everywhere now, causes ever bigger economic instabilities.

If you really understand money, you can see that virtually all people are robbed from the result of their contribution to others, the money they earned by their productivity, by two means. Taxation and fractional reserve banking.

Taxation
works like this.

I can promise to give you everything you want. Just give me your money, and I buy it for you! That is how taxation works, with a vengeance, because if you don’t, ….

And fractional reserve banking works like this.

Come to me, the Banker says. Whatever you wish to buy, I can give you the money so that you can buy it immediately. I just type the money you want into your bank account. (That is, create it out of nothing.) However, I am obliged to ask you the money back in the future, because I must eliminate this debt. Otherwise, I cause inflation, and that is not good for the economy. However, I must live also. Therefore, as compensation for this service, I must ask you to give me more than what I have given you. This extra money is then for me because I must be compensated for the fact that I have been stealing from everybody in your name. And I must not get caught!

So, citizens are robbed in two ways. One way is through the threat of violence. This is the governmental way, and it creates sidewalkers. And the other way is through temptation. Since all the money that is created through borrowing and lending is mainly used by companies buying and selling to each other, and therefore consists of investing, this is the ultimate basis of the Slowlane.

Therefore, governments create sidewalkers. And banks create slowlaners.

A few closing remarks about money.

Since societies are only beneficial to their members because of division of production and exchange, and with Perfect Money all contribute to it, and nobody can use money itself to steal, Perfect Money can make all politics completely unndecessary!

I calll a society based on only Perfect Money a Catallactic society. Money then replaces all voting. People who have earned lots of money can only have achieved that, if they have provided others with ways to get what they want faster. That is, through contributing to the lives of others. All who have paid for his products or his services have basically voted on him and his actions. Therefore now he has a lot of money, and he can vote on others who contribute to his life. In this way we are all voting on each other. We are all 'politicians' so to speak. But this is not a democracy! This is because those who have contributed the most to the most have earned the greatest voting power, that is, the power to do what he wants in their own interest. Therefore, in a Catallactic society there is no political power. There is only economcal power. And those who have been the greatest contributors to the lives of others, have the greatest amount of economic power. They are the one's who can set up the largest businesses, and risk their own money doing so. And when they do that, they are basically the replacers of the Big, and mostly corrupt Politicians that are now our 'leaders' chosen through democratic means.

And look what that does! You can have a genius like Trump be the leader of the USA, with the result that America florishes. But you can also have this utterly corrupt and demented fool as Biden become president of the USA, with the all too predictable that he makes a mess of it that is so huge, that nobody would ever have thought this possible a year ago!

I shall be a short while available to react to comments, if they come. But after this I shall be gone very soon.

For now. Bye!
Thank you very much for share
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Thank you very much for share
I finally got my FTE, my F*ck This event two days ago!

It is a little bit different from others, I think. I also understand now, what this forum is about. I mistook it for a kind of Facebook, which is not what this forum is about!

It is about sharing experiences while moving on the Fastlane, and nothing else.

I completely misunderstood it! So, I decided to do the thing MJ. DeMarco has created this forum for. Sharing my experiences.

After re-reading a chapter of Unscripted , I got it now.

My F*ck This Event is this:

When I was 25, after an encounter with a phony Zen Master, who nevertheless put me into a Koan-like situation, I 'solved' the Koan. But it had major negative repercussions! Such an event transforms the brain itself. And, as a side-effect I developed epilepsy! My brain was obviously not prepared for such a transformation!

I didn't know that I had epilepsy. I thought it was part of the Zen experience. So I needed about 5 years to get this epilepsy under control, using many hours of meditation per day. At the end of these five years I had it so much under control, that I could let it happen, and stop whenever I wanted. But, again, I didn't know it was epilepsy. I also didn't know what epilepsy exactly does with the brain, and why it develops.

The negative effect it had on me, was that I became scared of what my brain could do with me. Therefore, since then, I didn't dare to use the full capacity of my brain. I always hold back, whatever I tried to accomplish. Still, I have solved some very fundamental puzzles. Knowing exactly what economic value is, is just one of them. Other things are knowing what time is. Another is, deriving special relativity from a generalization of quantum mechanics, including the 3-dimensional nature of space. But I never dared to publish it.

Now, about 6 years ago, I got into a pretty heavy bicycle accident. I went down a slope on my bike, and thought it was a bicycle lane. But it was a lane for pedestrians! At the end, there was a sudden drop and a pole. My head hit that pole, and my skull was cracked, and my capacity to think and learn didn't work so well any more.

However, I am very much aware that we live only once. I do not believe in the fairy tales of an after life in whatever form. If you are dead, you are gone. And that is something I have accepted my entire life. But this has consequences! In fact, I get my strength from having accepted this completely!

So, although I was in big trouble, I knew that I had to deal with it the best I could. Therefore, to try to repair my brain, I turned again to meditation. But I wasn't aware of the severity of my brain damage, because although I couldn't think straight, it didn't feel that bad.

To make my brain function again, I started, again, long sessions of meditation, and tried, with great caution to try to study again. But most of my time was spent in meditating. Again, for 5 hours a day. Also, even light studies caused me to have severe attacks of headaches!

And then, about 6 months after that accident, I was meditating, and suddenly an extreme and terrible headache came up, with the epilepsy attacks returning! Also, the slightest studying made my brain unstable.

In any case, I continued the meditating, and forced my brain to learn again. I even succeeded to learn German in the end! And that is tough for somebody of my age! Then, gradually, I got the epilepsy attacks not only under control, but my intense meditating eliminated them altogether! When I now try to trigger them, these attacks no longer occur, but 'Tai Chi' like motions happen. Something else takes over the control over my body. Something I still don't understand. But I have accepted my ignorance about it, because whenever I let this happen in my meditations, I always feel afterwards some relief. So, whatever this is, it must be something good!

What has this to do with a FTE?

Up till the day before yesterday, I was afraid that these attacks would return, as soon as I would take on something difficult. But in my meditation last Sunday I realized, that it is exactly this fear of my brain becoming unstable, that keeps me from really 'taking on the world' so to speak. I realize that if I let this fear hold me back, I would never accomplish the things I want to accomplish in my life. And that is making the functioning of value and money clear to the world.

Also, I didn't take MJ. DeMarco fully seriously. I thought that it would be possible to just 'spread my message' in the situation I am in now. But now I realize, that the things I want to accomplish can only become reality if I create sources of real money. I see now that The Fastlane is the only way to achieve them.

So, what is it, that I say: 'F*ck it!' to?

It is my own head! It is the possibility, that my brain becomes unstable again, by one or another event. I have faced this fear, and have conquered it!

As I said. It is maybe a strange: 'F*ck It' event. But it is as genuine as it can get!

So, from time to time I shall return to this forum, and tell something about my progress, or my setbacks, so that others, who are struggling and have been struggling maybe for a long time, might recognize something of themselves in it.

I also decided to share this, because I wanted to show, that 'F*ck This' events do not necessarily consist of certain circumstances or situations you are in that hold you back. For example, having to support your wife and your children. Sometimes a 'F*ck This' event can also consist of overcoming an inner demon!

Till next time, fellow 'warriors'!

I am now returning to the studies I must do to reach my goal! At present this is studying Blockchain programming.
 
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Raoul Duke

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RussRussman18

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Tell me if I'm wrong... my interpretation of your theory of value is that value is actually created when humans cooperate using each other's biologically varied skillsets in tandem via barter?
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
Tell me if I'm wrong... my interpretation of your theory of value is that value is actually created when humans cooperate using each other's biologically varied skillsets in tandem via barter?
I hadn't quite finished my explanation. In particular, there was one point I didn't yet explain, but which is crucial to understand how earning money really works!

Forgive me, if this text is a little bit long. I promise you, however, that if you get this, you have understood something very significant about earning money! Something not many people (as yet) understand!

In fact, it is the Big Brain Wave I had a few weeks ago!

This is also the first time I write it down. Therefore this text is not polished. It is not the shortest way to explain what I want to say. It might be tiresome at some points because you must follow a few simple calculations.

It also contains some English mistakes. I shall go over it, and try to correct them, because some of them are confusing.

Look at my definitions.

To begin with, value arises when we overcome some obstacle. Simply said, and I got this from Frédéric Bastiat, although he didn't quite get it. The simplest definition of value I can give is this:

The amount of value of anything each of us wants is the amount of time we need to overcome an obstacle between and what we want. The value of anything we want therefore depends both on each of us individually and on what it is we want. This makes value dependent on the individual, but it is nevertheless not subjective. Time is measurable, and therefore objective. Value consists of time measurements, which differ, dependent on how productive each of us is. The value one kilo of cheese has for Charles is one day of obstacle/removal = production time. Therefore this one kilo of cheese has a value to him equal to one day. Bob needs 20 days to remove the obstacle between him and having the kilo of cheese. Therefore to Bob, the value of one kilo of cheese is 20 days.

So, one kilo of cheese has a value to Charles equal to one day of his production time, and 20 days to Bob. It does not matter where the cheese comes from. Either one could have obtained from another cheese producer, say, Henry.

When there is something we need or want, but neither we nor anybody else has produced it yet, then the obstacle exists, and requires time to overcome. In that case I call this time the cost of that what one wants. Through production, cost transforms into value.

This, by the way, is something many people 'felt, intuitively', and this is where The Labor Theory of Value comes from!

A fwe examples to illustrate that 'removal of obstacle time by individuals' is the origin of economic value. And not something like labor time, (I think I have made that point now sufficiently clear) but also not something subjective like: 'the importance acting man attaches to some result' as Ludwig von Mises asserts. And also not something like utility + scarcity, what, I think, almost all economists believe.

Under normal circumstances, the air we breathe does not require any time to get for anybody. There is no obstacle between wanting air and getting it. Therefore air has no value to anybody. It is not because air is not scarce, but because nobody needs any time to produce the air he needs to live.

The absence of scarcity is the absence of obstacles. But the converse is not true. There can be an obstacle between wanting something and not having it, while that what we want is not scarce! So, things can have value, even though they are not scarce.

Computer programs, for example, are easy to copy and therefore not scarce. It is, to Microsoft, so easy to produce the Office suite that if you order it, they install it through internet on your computer fully automaticall. The Office suite is produced by your very own computer! If you pay for the Office suite, it does not even yet exist! So how can they get money for it, even though it is not scarce?

Of course you know the answer. There is a copy protection on the Office suite. If you copy it, and try to run it on another computer, it does not work, or works for a short time. This copy protection is an obstacle!
So, if you develop a computer program it is, to you, not scarce. If you just give it away, then it is also not scarce for anybody else. Not fully realinzing this has killed the Cakewalk company, who made their flagship program free to copy for everybody.

But if you provide a computer program with an obstacle in the form of a copy protection that makes them difficult to copy, then that computer program still has no value to you, but it has value to anybody you want to sell it to! It has value to them, because either they must find out ways to remove that copy protection, which takes time. Or they pay you to remove the copy protection so that it can run on the one computer you want to run it on.

In other words, the source of all value lies in the existence of obstacles. You can earn money with computer programs if you realize that obstacles are, economically speaking, the only sources of value! Value arises always and only through the power to remove obstacles.

That is what Frédéric Bastiat almost discovered! He was just a hair's breath removed from this understanding! I would never have realized it myself, if I hadn't read his book: 'Economic Harmonies'.

Another example. If we would create a hotel at the bottom of some lake, there is an obstacle between wanting air in the hotel and actually having it there. Therefore the air in that hotel would have value, and customers would be willing or obliged to pay for it.

Look now at my farmer example. It takes Charles 1 day to make one kilo of cheese, but 5 days to make 1 kilo of butter. And it takes Bob 10 days to make 1 kilo of butter, but 20 days to make one kilo of cheese.

Therefore, if Charles makes one kilo of cheese for Bob in return for one kilo of butter, then thanks to Bob agreeing to this deal, Bob makes the life of Charles easier, because Charles can get a kilo of butter, having a value to him of five days, in return for one kilo of cheese that has only a value of one day to him. So, thanks to this exchange, Charles can get what he wants from Bob by giving up something that has a lesser value to him and receiving something that has a greater value to him. Therefore, Bob helps Charles to reduce the cost of getting one kilo of butter from 5 days to one day. You might therefore say, that Charles receives, through this deal, a net amount of value from Bob equal to 4 days. And this causes Charles to consider Bob as valuable to him!

Maybe now you see, where your own statement comes from? You said: ' my interpretation of your theory of value is that value is actually created when humans cooperate using each other's biologically varied skillsets in tandem via barter?'

Apart from 'biologically', you express an intuition that is basically correct. I do not believe in 'biologically', or innate differences. I do not believe in talent, as far as the mind is concerned. You can have a biological advantage if, for example, you are a woman who wants to sell her beauty for commercial purposes. Or if you can satisfy the sex urge of men without the demand to be married first, which involves a huge obstacle to many men to get sex from a 'honorable' woman. Such women who make themselves available for just one man are expensive! A prostitute is a lot cheaper. And satisfying your sex urge by pornography is even (much) cheaper!

Apart from being beautiful, (most of which also involves a lot of work, in the form of exercise, and knowing how to use make-up) I think all people have the same potential to become specialized into anything. It is just a matter of 'keeping up long enough with a process', as MJ DeMarco so well describes in his book. I am a strong believer in the 10.000 hour process, which can turn everybody in a specialist. Our mental powers to create, in us, the skill to attract money does not even require 10.000 hours! In many cases, just 20 hours can do it!

View: https://youtu.be/5MgBikgcWnY


and

How To Learn Anything in 20 Hours

and

The First 20 Hours: How to Learn Anything . . . Fast! by Josh Kaufman - PDF Drive


Of course, you can only reach 'sidewalk level'!

To return to Charles and Bob. In their deal, Bob gives up one kilo of butter having a value to him equal to 10 days, but he receives one kilo of cheese in return, having a value to him equal to 20 days. Therefore, Charles helps Bob to reduce his cost for obtaining one kilo of cheese from 20 days to 10 days.

So, through specialization and division of production, we can all reduce each other's costs. Through specialization and division of production, we can all have the things we want in far less time. And this is what the real reason for the existence of societies is! This is the origin of the survival of us all!

In other words, what we do is not create value. No, what we are doing is destroying value! The more we specialize and make organizations through which we divide production, the smaller the amounts of time we need to overcome obstacles to get what we want! But we can only reduce our obstacles for a limited number of things. This means, that we can only reduce or destroy the value results have to us for a limited number of things. If we then all train ourselves to do just that, others destroy the value other results have to them, which remain to have a large value to us. And that is where exchange comes in!

As I said in my example. In a magical world where every wish of everybody is realized instantly. That is, in a world wherein there are no obstacles between what we want and what we can have; in a world where nobody would need to spend any time getting what he wants. the value of everything would be zero for everybody! This world would be, economically speaking, the absolute best!

I gave that example, to illustrate that value is not a good thing. For an individual, it can be a good thing if he has something that is valuable to others. But economically speaking, it is the task of economics to find out ever better conditions wherein value is destroyed!

The smaller the value of goods and services, the wealthier we are, because wealth does not consist of value, but it consists of our ability to fulfill our needs ( = reducing our pains or discomforts) or to satisfy our desires ( = creating pleasures for ourselves.)

Now, what I have failed to explain just yet, is what significance this has for earning money!

Earning money works like this:

To begin with, money itself must be very difficult to impossible for anybody to produce directly. The amount of time to produce money directly should therefore be as large as possible! And that means, according to my definition of value, that any amount of money must have the highest amount of value possible. Ideally, money should have such a huge value to everybody, that nobody would even consider producing it directly! All of us should see only one way to get money. And that is by producing goods and services, and offering that in exchange for money.

A second property money should have, is that it is not capable of fulfilling any needs or satisfying any desires directly. It should be useless! It should be impossible to use money for making jewelry like what can be done with gold or silver. If money itself is useless, it will guarantee, that nobody wants to have money for its own sake. Making money useless for anything, except as an indirect medium of exchange would prevent all hoarding!

Why? Strangely emough, if people only want money to buy stuff, they want it to get rid of it! Of course, in exchange for something else. But there would not be a problematic 'demand to hold', as some economists express this. In fact, even if the buying power of money would increase more and more, many people will want to hold on to it. But only if they see that, at any future time, they will be able to exchange it against future goods and services. Therefore, 'hoarding', which I think does not really exist, will never be an economic problem.

Seen from money itself, this would mean that many people would be willing to offer goods and services for money, exactly because they can exchange it against that what can fulfill their nees or satisfy their desires. So, if you have money, you can get the goods and services others offer in exchange for that money.

Of course, his is so obvious that it barely justifies spelling it out. Still, so few people have a real understanding of money, that I have taken the trouble to describe all this here. For some, I hope, it is an eye-opener.

But what is important, is that if Charles gets one kilo of butter from Bob, then it is, for Charles absolutely unimportant how much time Bob actually needed to produce that kilo of butter.

In other words: labor does not produce value!

If you understand this fully, you also understand that Socialism, Communism, and Nazism ( = National Socialism) which are all based on one way or another on the belief, that labor produces value, is a huge mistake! Or. as MJ DeMarco calls it, if you understand all of this, you also understand that Socialism, Communism, Nazism, and the Super-Nazism of China, called 'Communism with Chinese Characteristics' are all hyper-realities! They are all social visions in violation with any form of sound Communism.

But, to return to the subject.

If Charles gives one kilo of cheese to Bob in exchange for one kilo of butter, the only thing that matters to Charles is that he can, thanks to this deal, shorten the amount of time he otherwise would have needed to get the kilo of butter he wants.

So, Charles does not reward Bob for the 10 days of production time Bob needed. No, Charles rewards Bob for the fact, that he could reduce his own cost of getting one kilo of butter, from 5 days to one day. And this is in all exchanges the determining factor.

We help each other to get what each of us wants a lot sooner, through specialization, division of production, and exchange.

Okay. Now, what does this mean for earning money? How does that work?

Now I must consider competition!

Let me first tell you where I am heading. What I want to show is that competition is money attraction. The better you can compete, the greater your ability to attract money. And I want to show you how this works!

I am going to explain The Law of Attraction!


So, bear with me. This is the most important point to understand about money!

Let me introduce Henry. Henry is in a worse condition than Bob. He needs 20 days to make one kilo of cheese, but 15 days to make one kilo of butter. Therefore, in 10 days Henry can make 10/15 = 2/3 kilo of butter. And that is his best offer for one kilo of cheese he can make to Charles. As you might realize, I make a lot of simplifications here. But I want to make a point! So bear with me!

Charles needs one kilo of butter, and he is only prepared to give up one kilo of cheese for that. Therefore he will not accept Henry's offer, although even in that offer Charles is better off. To be precise, Charles needs 2/3 x 5 days = 3 1/3 day to make 2/3 kilos of butter. Therefore, his advantage in a deal with Henry is 2 1/3 days, while the advantage he gets from an exchange with Bob is 4 days.

If I work this out with money, then Bob asks for one kilo of butter one gram of Latinum, while Henry asks 1 1/2 gram of Latinum.

Bob offers his butter for less money!

And he can do this, because he is more productive than his competitor, Henry!

In other words, because Bob is more productive in making butter, he can ask for less money in exchange for his butter than Henry. And that means that he has a greater ability to attract money!

This is the part I hadn't explained yet.

Just look at what this means!

I first proved that we are never paid for the actual amounts of time we work. Or, as I want to say it, taking resources, (land, mines), tools, and machines into account, we are never paid for the actual amounts of production times we need to produce goods or create services.

But, the above example shows that we are paid if we satisfy two conditions.

1. We can reduce the costs others would have by offering that what they want in return for something that takes them less time to produce.
2. We can, through making ourselves more specialized, develop the ability to produce anything in less time. This gives us the opportunity to offer our goods and services for less money, and in this way, we become better money-attractors!

To give a simple example of what this means. Suppose I can produce, and sell 10 widgets a day for 10 grams of Latinum. My price is therefore 1 gram of Latinum for one Widget.

Suppose I invent a method whereby I can suddenly increase my production from 10 to 100 widgets a day!

Will I still sell them for 1 gram of Latinum per widget?

I think not! And that is because at that price level the market could be, and probably is saturated. All people willing to pay one widget for one gram of Latinum do so. If the producers of the widgets would ask for more money, there would not be enough buyers. There would be overproduction. Therefore, to sell more at a price of one gram of Latinum per widget would need a greater effort to find more customers. The obstacle of marketing this greater production has increased!

This marketing problem could be so severe, that it might annihilate the advantage of this increase in production.

But this marketing problem can be solved in a simple way. I can just lower the price, and ask for 1 widget only 1/4th gram of Latinum. This would mean, that if I could sell all 100 widgets every day I would have an income of 25 grams of Latinum instead of only 10 grams of Latinum. Moreover, it is very likely, that if I reduce the price by 75%, I would attract more buyers! This solves my marketing problem!

In other words, because I succeeded in increasing my production, I have created, for myself, a situation whereby I could lower my prices, therefore become a better money-attractor, and simultaneously increase my income with (25/10) x 100% = 250%!

This is The Law of Attraction MJ. DeMarco made fun of it in his books!

But he is wrong!

There is a Law of Attraction!

And this is it!


And this was the tremendous brain wave I had a few weeks ago!

If you grasp this explanation fully, you now understand a lot more about how money works!

So, to return to your question. How can I summarize all of this?

In the end, we are not paid for the labor we do. We are also not paid for the actual amounts of goods and/or services we produce.

We are paid for our intelligence!
 
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Last edited:

zhangmin_007

New Contributor
Read Fastlane!
Jun 25, 2019
26
5
I hadn't quite finished my explanation. In particular, there was one point I didn't yet explain, but which is crucial to understand how earning money really works!

Forgive me, if this text is a little bit long. I promise you, however, that if you get this, you have understood something very significant about earning money! Something not many people (as yet) understand!

In fact, it is the Big Brain Wave I had a few weeks ago!

This is also the first time I write it down. Therefore this text is not polished. It is not the shortest way to explain what I want to say. It might be tiresome at some points because you must follow a few simple calculations.

It also contains some English mistakes. I shall go over it, and try to correct them, because some of them are confusing.

Look at my definitions.

To begin with, value arises when we overcome some obstacle. Simply said, and I got this from Frédéric Bastiat, although he didn't quite get it. The simplest definition of value I can give is this:

The amount of value of anything each of us wants is the amount of time we need to overcome an obstacle between and what we want. The value of anything we want therefore depends both on each of us individually and on what it is we want. This makes value dependent on the individual, but it is nevertheless not subjective. Time is measurable, and therefore objective. Value consists of time measurements, which differ, dependent on how productive each of us is. The value one kilo of cheese has for Charles is one day of obstacle/removal = production time. Therefore this one kilo of cheese has a value to him equal to one day. Bob needs 20 days to remove the obstacle between him and having the kilo of cheese. Therefore to Bob, the value of one kilo of cheese is 20 days.

So, one kilo of cheese has a value to Charles equal to one day of his production time, and 20 days to Bob. It does not matter where the cheese comes from. Either one could have obtained from another cheese producer, say, Henry.

When there is something we need or want, but neither we nor anybody else has produced it yet, then the obstacle exists, and requires time to overcome. In that case I call this time the cost of that what one wants. Through production, cost transforms into value.

This, by the way, is something many people 'felt, intuitively', and this is where The Labor Theory of Value comes from!

A fwe examples to illustrate that 'removal of obstacle time by individuals' is the origin of economic value. And not something like labor time, (I think I have made that point now sufficiently clear) but also not something subjective like: 'the importance acting man attaches to some result' as Ludwig von Mises asserts. And also not something like utility + scarcity, what, I think, almost all economists believe.

Under normal circumstances, the air we breathe does not require any time to get for anybody. There is no obstacle between wanting air and getting it. Therefore air has no value to anybody. It is not because air is not scarce, but because nobody needs any time to produce the air he needs to live.

The absence of scarcity is the absence of obstacles. But the converse is not true. There can be an obstacle between wanting something and not having it, while that what we want is not scarce! So, things can have value, even though they are not scarce.

Computer programs, for example, are easy to copy and therefore not scarce. It is, to Microsoft, so easy to produce the Office suite that if you order it, they install it through internet on your computer fully automaticall. The Office suite is produced by your very own computer! If you pay for the Office suite, it does not even yet exist! So how can they get money for it, even though it is not scarce?

Of course you know the answer. There is a copy protection on the Office suite. If you copy it, and try to run it on another computer, it does not work, or works for a short time. This copy protection is an obstacle!
So, if you develop a computer program it is, to you, not scarce. If you just give it away, then it is also not scarce for anybody else. Not fully realinzing this has killed the Cakewalk company, who made their flagship program free to copy for everybody.

But if you provide a computer program with an obstacle in the form of a copy protection that makes them difficult to copy, then that computer program still has no value to you, but it has value to anybody you want to sell it to! It has value to them, because either they must find out ways to remove that copy protection, which takes time. Or they pay you to remove the copy protection so that it can run on the one computer you want to run it on.

In other words, the source of all value lies in the existence of obstacles. You can earn money with computer programs if you realize that obstacles are, economically speaking, the only sources of value! Value arises always and only through the power to remove obstacles.

That is what Frédéric Bastiat almost discovered! He was just a hair's breath removed from this understanding! I would never have realized it myself, if I hadn't read his book: 'Economic Harmonies'.

Another example. If we would create a hotel at the bottom of some lake, there is an obstacle between wanting air in the hotel and actually having it there. Therefore the air in that hotel would have value, and customers would be willing or obliged to pay for it.

Look now at my farmer example. It takes Charles 1 day to make one kilo of cheese, but 5 days to make 1 kilo of butter. And it takes Bob 10 days to make 1 kilo of butter, but 20 days to make one kilo of cheese.

Therefore, if Charles makes one kilo of cheese for Bob in return for one kilo of butter, then thanks to Bob agreeing to this deal, Bob makes the life of Charles easier, because Charles can get a kilo of butter, having a value to him of five days, in return for one kilo of cheese that has only a value of one day to him. So, thanks to this exchange, Charles can get what he wants from Bob by giving up something that has a lesser value to him and receiving something that has a greater value to him. Therefore, Bob helps Charles to reduce the cost of getting one kilo of butter from 5 days to one day. You might therefore say, that Charles receives, through this deal, a net amount of value from Bob equal to 4 days. And this causes Charles to consider Bob as valuable to him!

Maybe now you see, where your own statement comes from? You said: ' my interpretation of your theory of value is that value is actually created when humans cooperate using each other's biologically varied skillsets in tandem via barter?'

Apart from 'biologically', you express an intuition that is basically correct. I do not believe in 'biologically', or innate differences. I do not believe in talent, as far as the mind is concerned. You can have a biological advantage if, for example, you are a woman who wants to sell her beauty for commercial purposes. Or if you can satisfy the sex urge of men without the demand to be married first, which involves a huge obstacle to many men to get sex from a 'honorable' woman. Such women who make themselves available for just one man are expensive! A prostitute is a lot cheaper. And satisfying your sex urge by pornography is even (much) cheaper!

Apart from being beautiful, (most of which also involves a lot of work, in the form of exercise, and knowing how to use make-up) I think all people have the same potential to become specialized into anything. It is just a matter of 'keeping up long enough with a process', as MJ DeMarco so well describes in his book. I am a strong believer in the 10.000 hour process, which can turn everybody in a specialist. Our mental powers to create, in us, the skill to attract money does not even require 10.000 hours! In many cases, just 20 hours can do it!

View: https://youtu.be/5MgBikgcWnY



and

How To Learn Anything in 20 Hours

and

The First 20 Hours: How to Learn Anything . . . Fast! by Josh Kaufman - PDF Drive


Of course, you can only reach 'sidewalk level'!

To return to Charles and Bob. In their deal, Bob gives up one kilo of butter having a value to him equal to 10 days, but he receives one kilo of cheese in return, having a value to him equal to 20 days. Therefore, Charles helps Bob to reduce his cost for obtaining one kilo of cheese from 20 days to 10 days.

So, through specialization and division of production, we can all reduce each other's costs. Through specialization and division of production, we can all have the things we want in far less time. And this is what the real reason for the existence of societies is! This is the origin of the survival of us all!

In other words, what we do is not create value. No, what we are doing is destroying value! The more we specialize and make organizations through which we divide production, the smaller the amounts of time we need to overcome obstacles to get what we want! But we can only reduce our obstacles for a limited number of things. This means, that we can only reduce or destroy the value results have to us for a limited number of things. If we then all train ourselves to do just that, others destroy the value other results have to them, which remain to have a large value to us. And that is where exchange comes in!

As I said in my example. In a magical world where every wish of everybody is realized instantly. That is, in a world wherein there are no obstacles between what we want and what we can have; in a world where nobody would need to spend any time getting what he wants. the value of everything would be zero for everybody! This world would be, economically speaking, the absolute best!

I gave that example, to illustrate that value is not a good thing. For an individual, it can be a good thing if he has something that is valuable to others. But economically speaking, it is the task of economics to find out ever better conditions wherein value is destroyed!

The smaller the value of goods and services, the wealthier we are, because wealth does not consist of value, but it consists of our ability to fulfill our needs ( = reducing our pains or discomforts) or to satisfy our desires ( = creating pleasures for ourselves.)

Now, what I have failed to explain just yet, is what significance this has for earning money!

Earning money works like this:

To begin with, money itself must be very difficult to impossible for anybody to produce directly. The amount of time to produce money directly should therefore be as large as possible! And that means, according to my definition of value, that any amount of money must have the highest amount of value possible. Ideally, money should have such a huge value to everybody, that nobody would even consider producing it directly! All of us should see only one way to get money. And that is by producing goods and services, and offering that in exchange for money.

A second property money should have, is that it is not capable of fulfilling any needs or satisfying any desires directly. It should be useless! It should be impossible to use money for making jewelry like what can be done with gold or silver. If money itself is useless, it will guarantee, that nobody wants to have money for its own sake. Making money useless for anything, except as an indirect medium of exchange would prevent all hoarding!

Why? Strangely emough, if people only want money to buy stuff, they want it to get rid of it! Of course, in exchange for something else. But there would not be a problematic 'demand to hold', as some economists express this. In fact, even if the buying power of money would increase more and more, many people will want to hold on to it. But only if they see that, at any future time, they will be able to exchange it against future goods and services. Therefore, 'hoarding', which I think does not really exist, will never be an economic problem.

Seen from money itself, this would mean that many people would be willing to offer goods and services for money, exactly because they can exchange it against that what can fulfill their nees or satisfy their desires. So, if you have money, you can get the goods and services others offer in exchange for that money.

Of course, his is so obvious that it barely justifies spelling it out. Still, so few people have a real understanding of money, that I have taken the trouble to describe all this here. For some, I hope, it is an eye-opener.

But what is important, is that if Charles gets one kilo of butter from Bob, then it is, for Charles absolutely unimportant how much time Bob actually needed to produce that kilo of butter.

In other words: labor does not produce value!

If you understand this fully, you also understand that Socialism, Communism, and Nazism ( = National Socialism) which are all based on one way or another on the belief, that labor produces value, is a huge mistake! Or. as MJ DeMarco calls it, if you understand all of this, you also understand that Socialism, Communism, Nazism, and the Super-Nazism of China, called 'Communism with Chinese Characteristics' are all hyper-realities! They are all social visions in violation with any form of sound Communism.

But, to return to the subject.

If Charles gives one kilo of cheese to Bob in exchange for one kilo of butter, the only thing that matters to Charles is that he can, thanks to this deal, shorten the amount of time he otherwise would have needed to get the kilo of butter he wants.

So, Charles does not reward Bob for the 10 days of production time Bob needed. No, Charles rewards Bob for the fact, that he could reduce his own cost of getting one kilo of butter, from 5 days to one day. And this is in all exchanges the determining factor.

We help each other to get what each of us wants a lot sooner, through specialization, division of production, and exchange.

Okay. Now, what does this mean for earning money? How does that work?

Now I must consider competition!

Let me first tell you where I am heading. What I want to show is that competition is money attraction. The better you can compete, the greater your ability to attract money. And I want to show you how this works!

I am going to explain The Law of Attraction!


So, bear with me. This is the most important point to understand about money!

Let me introduce Henry. Henry is in a worse condition than Bob. He needs 20 days to make one kilo of cheese, but 15 days to make one kilo of butter. Therefore, in 10 days Henry can make 10/15 = 2/3 kilo of butter. And that is his best offer for one kilo of cheese he can make to Charles. As you might realize, I make a lot of simplifications here. But I want to make a point! So bear with me!

Charles needs one kilo of butter, and he is only prepared to give up one kilo of cheese for that. Therefore he will not accept Henry's offer, although even in that offer Charles is better off. To be precise, Charles needs 2/3 x 5 days = 3 1/3 day to make 2/3 kilos of butter. Therefore, his advantage in a deal with Henry is 2 1/3 days, while the advantage he gets from an exchange with Bob is 4 days.

If I work this out with money, then Bob asks for one kilo of butter one gram of Latinum, while Henry asks 1 1/2 gram of Latinum.

Bob offers his butter for less money!

And he can do this, because he is more productive than his competitor, Henry!

In other words, because Bob is more productive in making butter, he can ask for less money in exchange for his butter than Henry. And that means that he has a greater ability to attract money!

This is the part I hadn't explained yet.

Just look at what this means!

I first proved that we are never paid for the actual amounts of time we work. Or, as I want to say it, taking resources, (land, mines), tools, and machines into account, we are never paid for the actual amounts of production times we need to produce goods or create services.

But, the above example shows that we are paid if we satisfy two conditions.

1. We can reduce the costs others would have by offering that what they want in return for something that takes them less time to produce.
2. We can, through making ourselves more specialized, develop the ability to produce anything in less time. This gives us the opportunity to offer our goods and services for less money, and in this way, we become better money-attractors!

To give a simple example of what this means. Suppose I can produce, and sell 10 widgets a day for 10 grams of Latinum. My price is therefore 1 gram of Latinum for one Widget.

Suppose I invent a method whereby I can suddenly increase my production from 10 to 100 widgets a day!

Will I still sell them for 1 gram of Latinum per widget?

I think not! And that is because at that price level the market could be, and probably is saturated. All people willing to pay one widget for one gram of Latinum do so. If the producers of the widgets would ask for more money, there would not be enough buyers. There would be overproduction. Therefore, to sell more at a price of one gram of Latinum per widget would need a greater effort to find more customers. The obstacle of marketing this greater production has increased!

This marketing problem could be so severe, that it might annihilate the advantage of this increase in production.

But this marketing problem can be solved in a simple way. I can just lower the price, and ask for 1 widget only 1/4th gram of Latinum. This would mean, that if I could sell all 100 widgets every day I would have an income of 25 grams of Latinum instead of only 10 grams of Latinum. Moreover, it is very likely, that if I reduce the price by 75%, I would attract more buyers! This solves my marketing problem!

In other words, because I succeeded in increasing my production, I have created, for myself, a situation whereby I could lower my prices, therefore become a better money-attractor, and simultaneously increase my income with (25/10) x 100% = 250%!

This is The Law of Attraction MJ. DeMarco made fun of it in his books!

But he is wrong!

There is a Law of Attraction!

And this is it!


And this was the tremendous brain wave I had a few weeks ago!

If you grasp this explanation fully, you now understand a lot more about how money works!

So, to return to your question. How can I summarize all of this?

In the end, we are not paid for the labor we do. We are also not paid for the actual amounts of goods and/or services we produce.

We are paid for our intelligence!
I think the "CENTS" business is the fastlane to make money,as MJ said.
 

KonradSwart

Contributor
May 3, 2022
18
23
The Hague, The Netherlands
I think the "CENTS" business is the fastlane to make money,as MJ said.
Yes. And my description of how money works globally is completely consistent with Control, Entry, Need, Time and Scale. (I find the order in The Millionaire's Fastlane more logical, where it is: Need, Entry, Control, Scale, Time = CENTS.)

Not only that. The first book I wrote about money, contains something I call the Staircase Diagram. It shows how, monetarily speaking, the entire society looks like when it is a Catallactic society.

The Catallactic society is a society, whereby the Fastlane is the default. Virtually everybody in a Catallactic society is a Fastlaner.

The staircase diagram is a depiction of how all money flows through society, by ordering all companies in society by their order of production. Consumption is of zero order. The bread you buy from a baker is, to the baker, a first-order production good, because he doesn't eat this bread, but sells it to you. You eat it, and therefore you are the consumer. The baker needs flour and ovens, production goods of the second order. To make these ovens, the manufacturer needs steel, a third-order production good, etc.

What I have done, is, theoretically, look at the balance sheets of all these companies, and make them match. The total income of the baker is from everything he sells. There are others who sell cheese, others who sell rice. The grocer sells a lot of different goods. I look at the sum of all their balance sheets, the debit side is the totality of their income. The credit side is the totality of their investment. (All things you find in a shop are first paid for by the shop owner. Only after he has paid for them, and put into his shop, you can buy them. Therefore all the things you find in any shop are investment goods, or capital goods of the first order, and not consumption goods. They become consumption goods after you have bought them, and paid for them!) Through paying for them, he loses ownership over them, and they become your property. The money you have paid him then becomes his property after he has handed over the thing you wanted to buy.

Out of this investment all higher-order goods, raw materials, and all wages are paid. This, by the way, leads to a total refutation of Keynes, who asserted that the economy is based on consumption, which it is not. The so-called 'consumer confidence' has zero impact on the economy. It is the producer confidence that keeps the economy running!

My staircase diagram shows that all wages, payments for raw materials, and all money paid for higher-order production goods comes from investments and investments alone! Nothing comes from consumers! This then leads to the conclusion that if society makes laws against the so-called rich, through taxation, for example, they are hampering the whole production structure, up to destruction, as happens under Socialism and Communism! That is why all forms of socialism and Communism, and even Fascism are, from an economic standpoint, fundamentally flawed. That is why they all collapse.

I show here, without elaborate explanation, (that would require a complete book) my Staircase Diagram. Just try to follow my explanation, and you will understand something very interesting about profits!

StaircaseDiagram.png

The staircase diagram represents where all money is, in a society whereby everybody is a Fastlaner!

You see pairs of bars. The yellow + light blue bars on the left are the credit sides. The bars on the right, consisting of a blue part, a brown part, a red part, and, again, a light blue part, represent the debit sides. So the left sides show where all the money comes from, and the right side shows where the money is going.

To be precise, the yellow bars show how all the money in an economy distributes itself over the various production stages. The total amount of money in a society is equal to the sum of all the amounts represented by the yellow bars + one of the leftmost bar, consisting of the brown, red, and light blue parts. This shows that virtually all money in a society is present in the production structure.

I think this conclusion is important for many on this forum because it shows that 'the most money' can be made if you succeed to sell to business owners, companies, or large firms, and not to consumers, because that is where most of the money in society is!

I must warn, however, that if you add the income and expenditures of governments to this staircase diagram, it radically changes. This leads to another staircase diagram, which shows that most money exists either in the form of investment or in the form of government income + expenditures. But that diagram is quite messy, and I think most will not even understand this staircase diagram without an extensive explanation, which I am not going to give here!

The yellow left bars consisting of three yellow parts represent all investments in every order of production. It consists of the amount of money each business owner puts into his business, of income out of stocks, and the light blue part is his profit from the earlier investments. The right bars show where the entrepreneurs then spend all this money. They spend it, first of all, on capital goods of higher-order (the blue bars), on raw materials (the brown parts) on wages (the red parts), and on their own consumption (the light blue part on top of the right bars.)

The two extreme right bars, consisting of one having a brown part, a red part, and a light blue part show the total expenditure on wages, raw materials, and the income out of all profits summed together. The right blue part is then the money that is offered against all consumption goods that are the result of all the production that has taken place in society. After all, capital goods are just a by-product, financed out of investments. And, to complete the description, the large right bar in the leftmost pair is the totality of all consumption goods produced by the entire production structure. This is the part of the total buying power of money put against all consumption goods.

There are two things this bar diagram shows that are right against what many economists (= apologists of governments and banks) claim.

Firstly, all production must be preceded by investment. Therefore, the economic contribution of consumers is nil, nada, zilch, zero! Consumers only consume. They destroy the result of all production. But they must exist because they form the basis of the entire capital structure. After all, the reason why production exists is in its ultimate goal; to make consumption possible. But that is not an economic contribution! In fact, the fewer people consume, the more money is available to support the capital structure, and the greater the number of stages there can be in an economy, the more goods and services there will be produced, and the greater our wealth becomes. This is the exact opposite of what Keynes asserted, and which all people who spread the nonsense of Consumer Confidence assert!

Nevertheless, the investors own the total production structure. And that is a good thing, because when there are a lot of investors, that is, rich people, there is also a lot of money available to support the entire capital structure. In other words, without investors, that is, rich people, the whole capital structure would not exist! There would be no jobs, no machines, no mining, no mass-production, ... no wealth whatsoever!

Furthermore, look at the light blue parts. These are both the consumption expenditures of 'the rich' and their income. They are the result of all investments. They are the difference between investment and income out of sales.

From this, it follows that all profits are the result of the consumption expenditures of the rich!

These two conclusions basically demolish virtually every textbook written about macroeconomics.

My theory on money and value destroys about every belief almost everybody has about how money functions on the micro-scale (= microeconomics)

This part which I have not yet published is not only the work of me but of about 150 years of the best economists who have ever existed, (I have just integrated their work in this simple staircase diagram) It demolishes virtually every textbook on macro-economics I know of, with one exception. The book Capitalism by George Reisman. About at the end of his book, he shows a diagram which I call 'the spiderweb diagram', which is not as good as the above one, but which basically contains the same understanding as is represented in this staircase diagram, with one huge emission.

He hasn't connected it to balance sheets!

Also, this staircase diagram has a forerunner in the main book of Carl Menger, one of the three books on Capital and Interest by Eugen von Böhm-Bawerk, and one of the books of Murray N. Rothbard.

Also, the conclusion that all profits originate from the consumption expenditure of the investors comes from George Reisman! I cannot claim that for myself. It was from a video I found somewhere on Internet, which turned out to be made by him, where he stated and explained this conclusion. This conclusion was so outrageous, that most didn't even hear what he said! Let alone understand it!

After having read Reisman's book for the first time, which I did after I had constructed the above diagram, I recognized in his diagram my own staircase diagram. So he and I have discovered this pattern of Capitalism independently from each other.

In fact, it almost led to a fight between the two of us. I showed it to him, and he then accused me of plagiarism because he could not believe that somebody else had come up with the same understanding! He thought he was unique! In our exchange, I pointed out what my sources of the discovery of this pattern were. He knew then that I had come up with it, independently from him, because these were also his sources.

So, fortunately, our exchange did not escalate into a battle like that one between Newton and Leibniz about the priority of the discovery of integration theory.

I must add, however, that neither the book of Eugen von Böhm-Bawerk, nor that of George Reisman, Carl Menger, or Murray N. Rothbard, realized that this pattern could be derived by connecting production stages to balance sheets! That is where my own contribution to this pattern lies.

Now, what has this to do with CENTS?

Everything!

Because this staircase diagram shows what the financial structure of a Catallactic society looks like. In other words, it shows the monetary structure of a society, whereby everybody 'is on the Fastlane', so to speak. Because all own a piece of this entire staircase diagram.

This staircase diagram, in short, shows that and how it is possible to have a society without governments, without war, and whereby everybody is on the Fastlane, living according to the principle of CENTS!
 
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