Sunday, September 04, 2011

Breaking it down: Economics is the means, not the end

Quoth Marco: How would you judge economic activities by not for profit organizations over normal private companies doing similar things?

What I am going to say is not at all original and is probably half-remembered from Chesterton, or Simone Weil, or possibly Proudhon. 

The unit of economic activity is the man-hour. 

A field of wheat has no economic value without someone to harvest it; a mountain of iron ore has no economic value without people to smelt it and beat it into plowshares; a law has no economic value except to the extent that it changes the way people spend their time.

Money is a superbly effective instrument for doing two things. First, for convincing people to spend man-hours in ways they would not do spontaneously by giving them a way to command the time of other people with different skills and different access to resources. Second, for distributing man-hours efficiently in time and space so that most people in most places get most things they need, things they could never possibly get if they were just one person with a plot of land, a hut, some seeds and a sharp stick.

Now, for sourcing goods, money is a good thing, since it allows us to use the labour of people all over the world to take resources and transform them into neat stuff. For sourcing services, I think the health of a society is directly proportional to the fraction of services that are given voluntarily and do not show up in the money economy. A country that relies on a volunteer militia and posses and barn raisings is socially healthier than one that has a standing army and a police force and a regulated construction industry. You can call this Distributism or Anarchism or nostalgia for an imaginary 18th century New England if you like, since those are only names.

This way of seeing things also puts technology at the very centre and shows how technology-driven productivity increases could make England the economic powerhouse of the world at a time it was pursuing economic policies that we can all agree were stupid.

Hmm, and rather than quoting a slab of the Chesterton essay I referred to on Marco's blog, I will just find it on the interwebz and put a link to the whole thing here.


Marco said...

I guess I could ask then, how does one objectively calculate whether the ends justify the means if you cannot place a value judgement of one that is comparable to the other? If an end can be garnered with less dubious means, that obviously makes it better right?

Marco said...

Hah. I'm using some of your ideas in an upcoming Marconomics post re economics. I want to get the reasoning from first principles of why Government should invest in infrastructure and private entities should invest in products.

Dr Clam said...

If an end can be garnered with less dubious means, that obviously makes it better right?


Remembering that politics is "the art of the possible", so the theoretically less dubious means might not be a goer. I have been away a few days and will blink foggily at your other comments and make a reply tommorrow! :)