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Archive for June, 2012

The Dark and the Light

When it comes to economics, politics, philosophy and morality, there is a force which binds this intellectual universe together, and it has a light side and a dark side–just like in the Matrix.Recall once again these words of wisdom:

Anger, fear, aggression, the dark side of the force are they.  Easily they flow, quick to join you in a fight but once you start down the dark path, forever will it dominate your destiny.  Consume you it will…..

But anger fear and aggression are not the beginning of the path.  The dark path begins with an ideology which ultimately leads to anger fear and aggression.  And this ideology begins with the notion that trade is exploitative.

What’s in the cave? Objective value of course…

In mainstream economics, value is defined as “what someone is willing to pay for a good.”  This notion of value is completely subjective.  This means that two people can have different values for the same good.  This is the whole basis for trade.  If I have a good which is worth $3 to me and it is worth $5 to you, then we can trade it for $4 and both be better off.  Subjective value allows for mutually beneficial trade.

On the other hand consider the Marxist theory of value which essentially says that the value of a good is defined objectively by the amount of labor it takes to produce it.  In this case, all trade is exploitative.  If the value of a good is $4 (or $4 worth of labor), and I sell it to you for $5, then I exploited you because I sold it for more than it was “worth.”  If I sell it to you for $3, then you exploited me because you paid less than it was worth.  The only way we can trade without one of us exploiting the other is to trade it for exactly $4.  But then neither of us is any better off so what’s the point?

In this context, the theory of value alone, is not capable of explaining why people trade.  If a good is worth $4 objectively, then why would I trade it for $3?  Obviously I wouldn’t do so willingly.  Therefore, trade must not be mutually voluntary.  It must be the result of a vast capitalist conspiracy to force me to do something that isn’t actually in my best interest.  Man I hate those guys!  We should riot!

Dark Side

This notion is lurking under the surface of nearly every intrusive government intervention into our lives.  Listen to David Frum praise Bloomberg for his ban on gargantuan sodas.

In this man’s mind, there is a right amount of soda for everyone to drink and they are not capable of determining it themselves.  If they drink more than this, it is obviously a mistake, it is a sign of their weakness, it is an evil soda merchant exploiting their inability to overcome their hard-wired propensity to make poor decisions.  Therefore, in order to engineer a more perfect society, we need to fill universities with egg-heads to determine what the objectively optimal amount of soda for us to consume is and have the government force that amount on us.  But don’t worry, it’s not our liberty they are taking away, it is the liberty of the evil capitalists who are exploiting us by providing a service we (mistakenly) want at a price we are (mistakenly) willing to pay.  If we were only as smart as Frum and Bloomberg, we would choose what they are imposing on us.  It’s so lucky we have them to look out for us.

If you live in a world of objective value, then you live in a world where exploitation is all around you.  There is no such thing as liberty.  You can forbid any transaction and claim you are taking liberty away from the evil person on  one side in order to save the poor victim on the other.  Every issue comes down to a question of who is the victim and who’s liberty to usurp.  Live and let live is not an option.  There is only anger fear and aggression.  The only decision to make is at whom it should be directed.  Of course, the object of this anger, fear and aggression could be easily manipulated if, in fact, there were a vast evil conspiracy….

On the other hand, if you believe in subjective value and mutually beneficial trade, then you have a whole other set of options which involve just leaving people alone and letting them decide for themselves what is the right amount of soda to consume.  If I am evolutionarily hard-wired to like soda, but it’s bad for me, does that mean I shouldn’t drink it?  Just because you can explain a desire using evolution, doesn’t make that desire an illusion.  I still get pleasure from drinking a Coke.  David Frum and Michael Bloomberg may not care about that pleasure that I get.  And maybe they do care how fat I get.  But I don’t care what they care about.  So who should decide how immense my Coke should be?  Whose body is it anyway?  Mine or Michael Bloomberg’s?

There is a type of zen that comes from believing in mutually beneficial trade.  You don’t feel the need to micromanage everyone else’s decisions.  You are no longer surrounded by victims and oppressors (except for people like Bloomberg).  You realize that prohibiting a trade is infringing upon the liberty of both parties.  You can live in a soda-free house, with a neighbor who drinks mammoth Mountain Dews living on one side of you and a convenience store owner on the other, and you can all be friends and you never have to feel like you need to save one of them or persecute one of them. (Notice that it helps if you aren’t being forced to pay for their diabetes medicine.)  You have no need for anger, fear and aggression.

Subjective value is the foundation of an ideology which allows people to all live together in peace and harmony despite their differences.  It is the ideological foundation of a real utopian society–not the scarcity-free kind of utopia but the kind which is actually possible.  It is the light side of the force.  Use it.

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A Theory of the State on RRC

This will not be new to regular readers of this blog if you feel like reading about hunters and farmers again here is the latest version.

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