Basic economics for Democrats/Socialists

[Seymour Flops]

I offer this as a way to help Democrats/Socialists understand what their economic approach really means. I offer it in good faith, with the heart of a teacher.

Democrats and Socialists get much of their economic understanding from Marx or followers of Marx. I actually don't mind that, because Marx was a brilliant economist/didactic. I disagree with his conclusions, but his simplified explanation of what he called "capital" was pretty accurate.

The problem with Marx' teaching is that it starts with an industrialized economy. Humans did not.

To understand the most basic principle underlying economics, let's imagine a hypothetical human society that has no economics. Suppose a small group of people lived on an island with freshwater stream running through it, and a mild climate. Suppose this island had many fruit bearing trees, and many wild edible vegetables, available for the picking. Suppose it also had freshwater fish in the stream and a lagoon in which fish and crabs were easily gathered.

There would be no economics in that society, because there would be no scarcity. Adults can take care of their own needs easily and families take care of those too young or too old to gather food for themselves. There would be no trade, because everyone has enough of everything. There would be little or no theft because it would be as easy to gather food as to steal what another has gathered. There would be no envy or greed.

Economics arises when there is scarcity. All human being experience scarcity for two reasons: There is no island or area in which food is so easy to come by. Even if there was, it is human nature to want and create more than nature provides.

Suppose on that island, fruits and vegetables had to be planted and harvested, fish are not easy to catch near the island and so must be fished for by skilled fisherman, perhaps using boats, and the weather is often cold, requiring clothing. There would arise a division of labor, with some people making cloth, some making the cloth into clothes, some farming, some making farm tools, some fishing, some making boats, and so on. They would not need money, and could barter for all they need. The fishers could trade fish for clothes, fruits and vegetables, with a share of their catch to the person who made the boat.

There would be in impetus to improve the technology in order to have more goods to trade. More occupations would arise.

I used to ask my high school economics students: Imagine three men go out on a boat and fish all day. When they come back, they divide the fish and then sell them at the market on the docks. One man gets two-thirds of the fish to sell and the other two get on sixth each. What is the most likely reason for the uneven division of the product of their labor.

Some of them surprised me by giving the correct answer: The man who gets two thirds owns the boat.

This is where Democrats/Socialists begin to fail to understand the basics. They see all of the goods available in the modern world the same way that those islanders saw the natural resources of their island. They see no reason why anyone should have more than anyone else.

Fish in the ocean are a natural resource available to all. A boat is not. To understand why the boat owner gets the lion's share of the fish, we have to ask ourselves why he owns the boat.

I'll give you some processing time for that, and then continue.

 

[Moonglow]

With this big stick, I can take all you posses and love from you.

 

[KissMy]

Government spending was 55% of Trump's unsustainable economy.

 

[Concerned American]

Government spending was 55% of Trump's unsustainable economy.

Linkie?

 

[johngaltshrugged]

Government spending was 55% of Trump's unsustainable economy.

And our last supposed rise in GDP was 100% the diaper dude draining our strategic national reserves to sell overseas & increased sales of arms & aid to Ukraine.

Besides, that 55% of the economy is complete BS & you probably know it.
Our economy was over $21 trillion & total local, state & fed govt spending was less than $7.5 trillion. 2019 numbers.

The DEMPANIC!!! where your masters grabbed the wheel & drove us into a ditch isn't indicative of what DT did as President

 

[Mikeoxenormous]

I offer this as a way to help Democrats/Socialists understand what their economic approach really means. I offer it in good faith, with the heart of a teacher.

Democrats and Socialists get much of their economic understanding from Marx or followers of Marx. I actually don't mind that, because Marx was a brilliant economist/didactic. I disagree with his conclusions, but his simplified explanation of what he called "capital" was pretty accurate.

The problem with Marx' teaching is that it starts with an industrialized economy. Humans did not.

To understand the most basic principle underlying economics, let's imagine a hypothetical human society that has no economics. Suppose a small group of people lived on an island with freshwater stream running through it, and a mild climate. Suppose this island had many fruit bearing trees, and many wild edible vegetables, available for the picking. Suppose it also had freshwater fish in the stream and a lagoon in which fish and crabs were easily gathered.

There would be no economics in that society, because there would be no scarcity. Adults can take care of their own needs easily and families take care of those too young or too old to gather food for themselves. There would be no trade, because everyone has enough of everything. There would be little or no theft because it would be as easy to gather food as to steal what another has gathered. There would be no envy or greed.

Economics arises when there is scarcity. All human being experience scarcity for two reasons: There is no island or area in which food is so easy to come by. Even if there was, it is human nature to want and create more than nature provides.

Suppose on that island, fruits and vegetables had to be planted and harvested, fish are not easy to catch near the island and so must be fished for by skilled fisherman, perhaps using boats, and the weather is often cold, requiring clothing. There would arise a division of labor, with some people making cloth, some making the cloth into clothes, some farming, some making farm tools, some fishing, some making boats, and so on. They would not need money, and could barter for all they need. The fishers could trade fish for clothes, fruits and vegetables, with a share of their catch to the person who made the boat.

There would be in impetus to improve the technology in order to have more goods to trade. More occupations would arise.

I used to ask my high school economics students: Imagine three men go out on a boat and fish all day. When they come back, they divide the fish and then sell them at the market on the docks. One man gets two-thirds of the fish to sell and the other two get on sixth each. What is the most likely reason for the uneven division of the product of their labor.

Some of them surprised me by giving the correct answer: The man who gets two thirds owns the boat.

This is where Democrats/Socialists begin to fail to understand the basics. They see all of the goods available in the modern world the same way that those islanders saw the natural resources of their island. They see no reason why anyone should have more than anyone else.

Fish in the ocean are a natural resource available to all. A boat is not. To understand why the boat owner gets the lion's share of the fish, we have to ask ourselves why he owns the boat.

I'll give you some processing time for that, and then continue.

Marx's idea was the humanity could be like an Ant Colony, where the collective good would be a great idea. Humans though are not insect thinking(do everything for the queen), but individuals with goals and wants that differ from the next guy. That is why capitalism is the way of the United States. Those that work hard and take risks get the greatest rewards, while those who sit on their lazy liberal asses and bitch and moan all the time, dont get rewards.

 

[georgephillip]

This is where Democrats/Socialists begin to fail to understand the basics. They see all of the goods available in the modern world the same way that those islanders saw the natural resources of their island. They see no reason why anyone should have more than anyone else.

Are you assuming scarcity exists as a neutral or independent condition?

Topic suggestion: Scarcity and Inequality

"Historically, scarcity has been used ideologically as if it were some sort of neutral or independent condition, rather than being shaped by society and history.

"In such ideologies, if scarcity exists (usually presumed), then some who want will get and others who want will not since supply is less than demand.

"Inequality then follows from scarcity and is not to be blamed on anyone nor attributed to changeable social conditions.

"Logically, scarcity can lead to an infinity of possible distributions of the scarce objects.

"For example, those who get today do not get tomorrow; those with larger families get more than those with small families, and so on endlessly.

"No necessity for inequalities as we normally define and discuss them is entailed logically by scarcity."

 

[Seymour Flops]

Are you assuming scarcity exists as a neutral or independent condition?

No! Very good question!

On my hypothetical island of no scarcity (call it the Island of Enough), there is no scarcity because there are no goods produced, there are only natural resources easily harvested and immediately consumed, so there is enough for everyone. That is often the situation with animals that graze in herds, hunt in packs, or live as a band while plucking the trees for fruit or scavenging nests or corpses.

"Historically, scarcity has been used ideologically as if it were some sort of neutral or independent condition, rather than being shaped by society and history.

Yes it has, most often by people smart enough not to believe it. They claim that scarcity is natural, or neutral, when it is they who are responsible for the scarcity.

But your source skips a big step between the hypothetical Island of Enough, and a society in which scarcity exists.

On the Island of Enough, suppose a couple of the islanders began to farm the vegetable instead of just picking the wild ones, or domesticate animals for meat, or create houses, furniture, and clothes. There will not instantly be enough for everyone. Now the Island of Enough is the Island of scarcity of certain goods.

People whose grandparents were happy to be naked fruit gatherers, sleeping on the ground, now want to eat farmed vegetables, domestic meat wearing comfortable clothes and sleeping on beds in a dwelling.

Those things will not be instantly available to all as soon as the first prototype appears. Now, there is scarcity of those goods created by the desire of people to have them, and the impossiblity of instant access by all.

"In such ideologies, if scarcity exists (usually presumed), then some who want will get and others who want will not since supply is less than demand.

"Inequality then follows from scarcity and is not to be blamed on anyone nor attributed to changeable social conditions.

Then that is not my ideology. Inequality does follow from scarcity always, but the level of scarcity and the degree of inequality ars always attributable to changeable social conditions.

"Logically, scarcity can lead to an infinity of possible distributions of the scarce objects.

"For example, those who get today do not get tomorrow; those with larger families get more than those with small families, and so on endlessly.

Yes.

"No necessity for inequalities as we normally define and discuss them is entailed logically by scarcity."

I believe that scarcity always leads to inequalities, almost by definition, so I disagree with your source there. But I may need to know what the source means by “as we normally define and discuss them.” I may not disagree completely.

More later, and I thank you for waking up this thread!

 

[Seymour Flops]

georgephillip I went to your link to see more, but there was only one rather rude sentence, which I guess you left out to avoid the rudeness. For that I thank you.

I’ll add some more.

Suppose the Island of Enough and the Island of Scarcity of Certain Items existed near each other, but could not communicate with each other in any way. Suppose you had the option to move to one or the other, and that our choice would be binding on your next hundred generations.

If your only concern is equality, the Island of Enough is your clear choice. If you are concerned with equality, but also with quality, i.e. quality of life as defined by material things, such as enjoyable food, comfortable clothes, warm housing, arts and entertainment, technological advances in travel, medicine, mechanization and automation, then you will want your descendants to live on the Island of Scarcity of Certain Items.

There will always be inequality on the ISCI, and it will likely grow. Everyone may learn the basics to build houses and farm vegetables, but some will inevitably be better than others. Some will be so bad that they will have to revert back to dwellingless fruit gatherers. Unless farmers and carpenters who are particularly good at those things provide the less competent with food and shelter in exchange for work.

That system will snowball quickly, and there will be growing wealth and growing inequality. There will be inequality between the wealth of the haves and have nots, because of the inequality of ability between the cans and the cannots.

If the comforts of material plenty are the goal for your progeny, you will want them on the island of Scarcity. You don’t know for sure whether they will be the skilled producers, or will rely on the talents of skilled producers who provide them jobs., but you will know that they will be on the Island of Scarcity-driven production, so they will have the opportunity to live in what will almost surely become the Island of Plenty. Far superior from a materialist point of view than the Island of Enough, if if they do not get an equal share of the plenty.

If you only want them to pursue some sort of non-materialistic spiritual life, you may want them to live on the Island of Enough, but I believe that would be a fallacy, which I will explain in a later post.

 

[The Sage of Main Street]

Marx's idea was the humanity could be like an Ant Colony, where the collective good would be a great idea. Humans though are not insect thinking(do everything for the queen), but individuals with goals and wants that differ from the next guy. That is why capitalism is the way of the United States. Those that work hard and take risks get the greatest rewards, while those who sit on their lazy liberal asses and bitch and moan all the time, dont get rewards.

Texts Are Camouflage

You're too hypnotized by these dishonest scribbles. Marx offers an absolute dictatorship because of what he preaches is the final and inevitable outcome of economic development. Any interference with that conceited conclusion is futile and must be banned for unnecessarily obstructing its progress.

So he appeals to the spoiled pushy brats who feel they are "Born to Rule." The words in his books are just a costume to make it seem deeper than that simple sales pitch.

 

[The Sage of Main Street]

Marx's idea was the humanity could be like an Ant Colony, where the collective good would be a great idea. Humans though are not insect thinking(do everything for the queen), but individuals with goals and wants that differ from the next guy. That is why capitalism is the way of the United States.

Hereditary Power, Property, Wealth, and Influence Contradict and Destroy Capitalism

 

[Seymour Flops]

Hereditary Power, Property, Wealth, and Influence Contradict and Destroy Capitalism

One of the very few benefits of large corporations is that they allow capital to continue to provide more and more material goods, even when those who inherit the wealth are incompetent to manage it. Often they are incompetent because they are disinterested in the hard work that their parents put into building the company. But they can easily sell the shares to stockholders who will elect competent management, absent interference.

In the rare event that an heir to a great company tries and fails to manage it, the physical capital is not lost. When the bankruptcy occurs, the land, the factory, and the tools can be bought by more capable people.

Hereditary power and influence, on the other hand, does not fare so well. Rarely do American political families stay in power for more than two generations. Who is the most powerful Kennedy? That guy from Louisiana who is not even one of “those” Kennedy’s. President Bush was followed by President Bush, but the rest of them seem not to be climbing the ladder, there being stiff competition from leaders from more humble origins.

The monarchy in England and other nations survive specifically by not exercising power and influence.

 

[georgephillip]

More later, and I thank you for waking up this thread!

You're very welcome, and thank-you for creating a thread dedicated to economic understanding instead of partisanship and vitriol.

 

[georgephillip]

But your source skips a big step between the hypothetical Island of Enough, and a society in which scarcity exists.

Your Island of Enough sounds a litle like the Garden of Eden, and if we put aside mythology, I think you may be ignoring an even bigger step between what amounts to primitive communism and "civilizations" organized around palaces and temples.

Which of the following paradigms to you find most likely as an explanation of money's origin?

David Graeber’s history of debt

How commerce is implemented, based on whether money is a unit of trust or scarcity, has severe implications on the degree to which people and markets are actually free.

fynn.substack.com

 

[Seymour Flops]

Your Island of Enough sounds a litle like the Garden of Eden, and if we put aside mythology, I think you may be ignoring an even bigger step between what amounts to primitive communism and "civilizations" organized around palaces and temples.

I honestly hadn't thought about the Garden of Eden connection. I suppose that my Island of Enough model would have been the economy of that mythical location.

I was actually thinking of societies that were basically stone age and managed to stay that way for more than a thousand years. In particular the Tribal People of North America who lived on the Plains. They didn't have the wheel, they didn't have a way to start a fire other than the friction method, they didn't have the plow, they did not have any sort of combustion based power or weaponry, and prior to the introduction of the horse, they did not have transportation other than walking.

But they had the buffalo, and the buffalo was enough. It provided a wide variety of raw material that virtually anyone could use to create all that their society considered essential. They were harvested by bow and arrow, and bow and arrow making was a craft that nearly all were proficient in, there were not specialists from whom those hunting weapons had to be bought. That combined with wild plants, and stones for toolmaking and they had enough.

The Inuits had the same in seals and fish, and were willing to live in conditions most of us would consider worse than poverty.

If one of their men died, it was not an economic hardship. Nobody worried that he did not show up for work the next day, nor that he took some specialized skill with him. One less male meant one less hunter, but also one less mouth to feed so it evened out. His wife and children could be pretty easily taken care of by the other members willingness to share, or by re-marriage to a male who had lost his mate. I believe that is what you mean by primitive communism.

It worked because there was nothing in particular to be jealous of. No one worried that by supporting a manless female, they would not be able to afford the nice home they had their eye on.

There is a movie called "The Gods Must be Crazy," that depicts a "tribe of enough" that shares everything whose societal norms are turned upside down when an old-school hard glass coca-cola bottle is suddenly dropped from a passing plane. It turns out to be useful in many ways, but started strife because it was scarce, being the only one. It's a comedy, but with that sociology lesson embedded.

The Gods Must Be Crazy (1980) ⭐ 7.3 | Adventure, Comedy

1h 49m | PG

www.imdb.com

Which of the following paradigms to you find most likely as an explanation of money's origin?

David Graeber’s history of debt

How commerce is implemented, based on whether money is a unit of trust or scarcity, has severe implications on the degree to which people and markets are actually free.

fynn.substack.com

Well that is very interesting, and I'd never seen any suggestion like that. I'm not sure whether Graeber is arguing that The bottom paradigm is more likely or that the bottom paradigm is more desirable (or both).

 

[georgephillip]

Well that is very interesting, and I'd never seen any suggestion like that. I'm not sure whether Graeber is arguing that The bottom paradigm is more likely or that the bottom paradigm is more desirable (or both).

David Graeber experienced a very untimely death; however, Michal Hudson has views on the subject that David helped to shape:

"Neolithic and Bronze Age economies operated mainly on credit.

"Because of the time gap between planting and harvesting, few payments were made at the time of purchase.

"When Babylonians went to the local alehouse, they did not pay by carrying grain around in their pockets.

"They ran up a tab to be settled at harvest time on the threshing floor.

"The ale women who ran these 'pubs' would then pay most of this grain to the palace for consignments advanced to them during the crop year.

"These payments were financial in character, not on-the-spot barter-type exchange."

Palatial Credit: Origins of Money and Interest | Michael Hudson

Hudson is the godson of Leon Trotsky who worked closely with Herman Kahn; Herman was one of the historical inspirations for the Dr. Strangelove character in Kubrick's 1964 classic movie.

 

[The Sage of Main Street]

I honestly hadn't thought about the Garden of Eden connection. I suppose that my Island of Enough model would have been the economy of that mythical location.

I was actually thinking of societies that were basically stone age and managed to stay that way for more than a thousand years. In particular the Tribal People of North America who lived on the Plains. They didn't have the wheel, they didn't have a way to start a fire other than the friction method, they didn't have the plow, they did not have any sort of combustion based power or weaponry, and prior to the introduction of the horse, they did not have transportation other than walking.

But they had the buffalo, and the buffalo was enough. It provided a wide variety of raw material that virtually anyone could use to create all that their society considered essential. They were harvested by bow and arrow, and bow and arrow making was a craft that nearly all were proficient in, there were not specialists from whom those hunting weapons had to be bought. That combined with wild plants, and stones for toolmaking and they had enough.

The Inuits had the same in seals and fish, and were willing to live in conditions most of us would consider worse than poverty.

If one of their men died, it was not an economic hardship. Nobody worried that he did not show up for work the next day, nor that he took some specialized skill with him. One less male meant one less hunter, but also one less mouth to feed so it evened out. His wife and children could be pretty easily taken care of by the other members willingness to share, or by re-marriage to a male who had lost his mate. I believe that is what you mean by primitive communism.

It worked because there was nothing in particular to be jealous of. No one worried that by supporting a manless female, they would not be able to afford the nice home they had their eye on.

There is a movie called "The Gods Must be Crazy," that depicts a "tribe of enough" that shares everything whose societal norms are turned upside down when an old-school hard glass coca-cola bottle is suddenly dropped from a passing plane. It turns out to be useful in many ways, but started strife because it was scarce, being the only one. It's a comedy, but with that sociology lesson embedded.

The Gods Must Be Crazy (1980) ⭐ 7.3 | Adventure, Comedy

1h 49m | PG

www.imdb.com

Well that is very interesting, and I'd never seen any suggestion like that. I'm not sure whether Graeber is arguing that The bottom paradigm is more likely or that the bottom paradigm is more desirable (or both).

The Iron Law of Human Progress Is USE IT OR LOSE IT

The hunter-gatherer lifestyle of mindless unevolved races was inadequate to feed them. They survived by intertribal genocide and seizure of territory from their neighbors in order to temporarily get enough food to live on.

The dumb savages who originally occupied Iowa could only get to a population of 20,000, with all the mass murder and imaginary medicine keeping their population from ever going higher than that. The Whites who justifiably replaced these Indigenees have been able to support 3 million people, with room for much more, without acting like wild animals. The subhuman lifestyle was war of all against all, all the time.

 

[Concerned American]

The Iron Law of Human Progress Is USE IT OR LOSE IT

The hunter-gatherer lifestyle of mindless unevolved races was inadequate to feed them. They survived by intertribal genocide and seizure of territory from their neighbors in order to temporarily get enough food to live on.

The dumb savages who originally occupied Iowa could only get to a population of 20,000, with all the mass murder and imaginary medicine keeping their population from ever going higher than that. The Whites who justifiably replaced these Indigenees have been able to support 3 million people, with room for much more, without acting like wild animals. The subhuman lifestyle was war of all against all, all the time.

What has changed? Only the nature of the war. Humans have been and always will be at war with all, all the time. It is the nature of the beast.

 

[Seymour Flops]

David Graeber experienced a very untimely death; however, Michal Hudson has views on the subject that David helped to shape:

"Neolithic and Bronze Age economies operated mainly on credit.

"Because of the time gap between planting and harvesting, few payments were made at the time of purchase.

"When Babylonians went to the local alehouse, they did not pay by carrying grain around in their pockets.

"They ran up a tab to be settled at harvest time on the threshing floor.

"The ale women who ran these 'pubs' would then pay most of this grain to the palace for consignments advanced to them during the crop year.

"These payments were financial in character, not on-the-spot barter-type exchange."

Palatial Credit: Origins of Money and Interest | Michael Hudson

Hudson is the godson of Leon Trotsky who worked closely with Herman Kahn; Herman was one of the historical inspirations for the Dr. Strangelove character in Kubrick's 1964 classic movie.

Well that is very interesting and makes a lot of sense. As soon as people started trading those IOU’s for other goods, with the understanding that the seller of goods would cash the IOU with the original borrower, those IOU’s were indeed a form of money. It makes sense for them to have been the first form of money, with shell money, precious metal money, and precious metal backed paper coming later.

I’m glad you brought up agriculture. Of course it was agriculture that was the game changer away from the communal “Enough” economy of hunter-gatherers.

Interestingly, while agriculture made excess production possible, i.e. producing more by one’s labor than one can consume, it also preceded frequent periods of famine that were not seen by hunter-gatherers.

I’ll discuss that more later.

 

[Curried Goats]

But your source skips a big step between the hypothetical Island of Enough, and a society in which scarcity exists.

On the Island of Enough, suppose a couple of the islanders began to farm the vegetable instead of just picking the wild ones, or domesticate animals for meat, or create houses, furniture, and clothes. There will not instantly be enough for everyone. Now the Island of Enough is the Island of scarcity of certain goods.

People whose grandparents were happy to be naked fruit gatherers, sleeping on the ground, now want to eat farmed vegetables, domestic meat wearing comfortable clothes and sleeping on beds in a dwelling.

Those things will not be instantly available to all as soon as the first prototype appears. Now, there is scarcity of those goods created by the desire of people to have them, and the impossiblity of instant access by all.

Then that is not my ideology. Inequality does follow from scarcity always, but the level of scarcity and the degree of inequality ars always attributable to changeable social conditions.

I believe that scarcity always leads to inequalities, almost by definition, so I disagree with your source there. But I may need to know what the source means by “as we normally define and discuss them.” I may not disagree completely.

More later, and I thank you for waking up this thread!

In this hypothetical situation your entrepreneurs created scarcity where none existed before. Scarcity wasn't created because resources were reshaped, scarcity was created because some claimed ownership of the resources that were once shared among all.