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We will address two more intangibles here before we evolve, with humankind, into trade and the use of money as part of economics. Those intangibles are religion and art. From the dawn of man to the present, religion has been integral to the human concept of reality and of community, for reasons which may not initially be apparent. Certainly modernity is rife with thinkers who not only challenge the intrinsic value of religion, but declare it a net destructive influence on human survival which should be dispensed with once and for all. It must be argued, however, that early man adopted or created literally nothing which was not of immediate value to survival, and that social patterns which not only fail to help, but actively harm, should, by their own action and their own inertia, vanish from the ken of man. A society which adopts and promotes suicidal patterns and practices should vanish. Yet here is mankind, after millions of years, still practicing religion. How? Why? What possible survival value could inhere in it? And why would people spend the produce of their labors on religion’s priests and its edifices, when there are mouths to feed and houses to build? 

The first and most basic value of religion is superstition. This is an actual value. From the very beginning, religion explained the unexplainable without resort to science or other rigorous examination of reality, such being unavailable at that time. The value of superstition is that it explains events, and it focuses the mind. A person who is frantic, terrified, unable to understand their circumstances, cannot organize their thoughts well enough to take any useful action in pursuit of their own survival. A superstitious person has “explanations” and almost certainly rituals and sacred objects, to calm and focus the mind, enabling coherent planning for survival to take place outside of and beyond religious practice. 

The next value of religion is ritual and ceremony. Dietary laws, for instance, seem largely to have arisen from the observation that (the) God(s) punished people who ate certain things or certain combinations of things which at first blush “should” have been harmless. Dietary laws reduced the incidence of things like trichinosis and food poisoning. Ritual circumcision reduced the spread of disease. Commands to make live sacrifice motivated agrarian peoples to produce surplus food. One way to assure sufficiency is to strive for excess. Mandatory charity has a similar effect, in addition to helping the poor survive and broadening the gene pool. Any number of rituals and ceremonies are without immediate objective value, but are at worst neutral in their effect on community survival for the most part, while others have at least some marginal objective worth. Purely harmful rituals should eventually (sometimes VERY eventually) die out, and can be perpetuated only so long as the authority which preserves them is perceived independently as being essential to the community -as the unhelpfulness of such rituals themselves cannot remain unseen to the adherents of the tradition indefinitely. (The human capacity for self-deception, while seemingly boundless, is in fact limited by what one might refer to as the Darwin effect – whereby reality eventually catches up to the deluded.) 

A third value encompasses cooperation, cohesion and compliance. Religious communities and states are more easily directed into group activity, mutual defense, patterns of “brotherly love” (at least, mutual non-aggression), etc. and, as such, are resilient against adverse conditions and adverse peoples. 

A fourth and final value is less concrete, yet no less real and effective. That value is one of “spiritual survival,” an “afterlife,” multiple “incarnations” or similar. At first blush, this might appear to promote death-seeking, because if one survives death and is already dead, one has forever escaped the dangers inherent in bodily mortality. And certainly, various forms of fanaticism take advantage of this calculation to promote their own ends of coercing the behavior of those peoples they perceive to be adverse to their interests (via suicide attacks, etc.). However, the concept of an afterlife and and ultimate reward or penalty can also be useful in motivating “moral” behavior – which is certainly a societal adhesive and may in many cases also objectively be a route to enhanced survival. 

It would appear, however, that in the vast majority, biological imperative rules the day. The conception that virtuous earthly activity can earn one eternal life helps to promote various virtues, most of which derive initially from mundane observations of what types of behavior promote individual or community survival. The further conception of spiritual brotherhood between humans or between all life forms tends to promote a pattern of thinking which entails an extremely high long-term potential for survival. It causes a human being to attempt to calculate and to act in accordance with such principles and conditions as will promote the long-term survival of the maximum possible numbers of people and species. Granted, this type of calculation is entirely possible without any perceived spiritual component whatever. It could even be said to embody the highest rational calculation of which mortal man is capable. It would appear to be strengthened, however, by some concept of ultimate personal reward, wherein “the universe,” and the individual as an enduring part of it are better for one’s acts. The survival of a single planet in all the universe is a necessarily finite concept and as such is, arguably, a less powerful concept than one that entails more life and more time than earth by itself.

For these reasons, religion persists, and all things considered, likely will persist for the foreseeable future. 

Religion having been beaten to death, art will be dealt with more summarily.

Art (and to a lesser degree religion) works upon mood and imagination (one might say “vision”) – two powerful influences upon the individual’s potential for survival.   People of more positive mood, who embrace a vision of future action and future reality, statistically live longer.  These traits both objectively and provably enhance biological sturdiness in an individual, and promote activity by that individual which materially enhances their prospects for survival.  In short, art promotes an positive outlook.  Those with a positive outlook do better and live longer, on average, than those with paucity of spirit and gloomy attitudes.

The survival of both religion and art throughout the history of man are prima facie evidence that they carry intrinsic value, else they would have been abandoned long since.  The brevity of our visit with art should not be taken as a sign that it is of limited importance.  Rather, it is of such great importance that volume upon volume could be written on it and still fail to do it justice.  So I leave that discussion for another time and place.

People pay for, or sponsor, both religion and art. They do this to gain the benefits and rewards of each, which are of objectively verifiable (if not readily quantifiable) value.  This is to say that there is demand for these intangibles, and that makes them part of any economy.

So what about work, value and worth?

So we have looked at the nature of demand, and how its primacy as the progenitor of economics might be understood. We left off at the point where life appears, and the concept of demand becomes possible. What then?

Well, jump forward some aeons, and thinking human life arose. Like its forebears, it needed resources to survive. It needed water, food, and protection from the elements, and hence it did the WORK (about which, more later) to obtain these, thus realizing value, which it then consumed. In human terms, this is the simplest and most basic economics. Things are needed for survival. Man does work to convert resources to the needed items, consumes them, and obtains reward. The first and most basic reward is survival. The drive to live, to survive, to perpetuate a genetic line, could be said to be the wellspring of demand. Reward, at its base, could be said to be the satisfaction of demand.

So it could be said that a working definition of VALUE is: capacity to satisfy demand. A corollary to this would be that value is predicated on demand. If no one wants or needs something, it has no value. And if someone does need or want it, its value is contingent on its capacity to satisfy that demand. Ore in a rock has only potential value. Converted, by work, to metal, it has a capacity to satisfy such demands as its properties are suited to, and its potential value is realized. Copper, for instance, might be suited to electrical conduction, adornment, energy storage or production, roofing, cookware, dishes, containers, utensils, symbolic uses, etc. If there were no need for any of the properties of copper, it would have no value – and work expended to convert it to metal from ore would be wasted.

There is water in a lake. It is a resource. It has POTENTIAL value, but this value is only realized when it is converted into a usable form through work (even if that work is as trivial as cupping it in the hand and bringing it to the lips). Berries on bushes acquire value and become food when picked, cooked, stored, mashed, or fermented. Dinner-on-the-hoof acquires value when successfully hunted and brought down; as its flesh is converted to food, its sinew to cords, its hide to weatherproofing or containers, and its bones to tools of every kind from hammer, to knife, to needle.

Generally speaking, in order for work to be performed, certain primary elements must be present: The first is someone who wants the work done. Next is resources from which to extract value, then the tools or means to accomplish the work, the will or energy (or both) to power the means of work, plus a suitable base from which, or space within which, to perform the work, and last, sufficient time to complete the work. These could be briefly expressed as: 1) someone there, 2) raw materials and “tools” or means, 3) motivation/motive force, 4) place/space to function, and 5) sufficient time. This very closely corresponds to the physics definition of “work,” being effort applied to mass across distance over time.

A second law could be: All value is created or realized by work.
Corollary: Value is a measure of work.

From the above law arises questions of amount of work versus amount of value, and that relationship can be understood as “worth.” Is it “worth” an entire day’s labor to obtain the food value of a single berry? Unlikely. Conversely, is the survival potential created by a drink of water “worth” the effort to dip it out of a stream? With certainty. So humankind, from its earliest beginnings, has been engaged in the estimation of the balance between work and the value created thereby. Objectively, it is always “worth” working if the capacity of the value thereby created to satisfy survival demands, is greater than the survival cost of performing the work itself. In raw calories, for instance, bringing down a single buck is worth at least the energy expended to fashion weapons with which to hunt plus the work of the hunt itself, because it extends the survival potential of the hunter for perhaps up to a month. The value created by this work is a net gain. As it happens, due to entropy, (which will be addressed more in depth later) a net gain from work is necessary to survival. If one expends more energy than one gains from work on a continual basis, the ability of the organism to maintain the organized state necessary for survival breaks down, gradually or quickly depending on the magnitude of the imbalance, and death is hastened.

So far, we have been looking at an essentially closed system – the economics of individual survival by tooth and claw. No trade, exchange or money have taken place, but the familiar economic concepts of demand, resources, work, value, consumption and worth are on full display.

When we introduce an additional survival unit, cooperation and exchange may begin to take place. Within a single family, members provide goods and services to each other in exchange for goods and services in return – some tangible, some less so. Intangible “services” or rewards for service that children provide to their parents (in exchange for being fed, sheltered, educated, etc.) before the children can themselves do work, include the stimulation of endorphin release that accompanies holding and interacting with infants, and the intellectual concept of the continuation of the genetic line. This latter reward should not be undervalued, as the very concept of genetic perpetuation is hard-coded into all of life. So on the very most basic level, and at all times, individuals are engaged in a continuous process of exchange with others, providing each other with both the will and the means to continue the species. This is a hidden economy that subtly underpins more visible and explicit economic activity.

As always, more later.

MUSINGS ON ECONOMICS AND THE NATURE OF DEMAND

Consider: No one ever got rich by producing things no one wanted, and that no one needed. Then, too, no one ever got rich producing things no one could buy. In order for a producer of something to profit from said production, some must need/want what is produced, and those who need/want it must be capable of doing, producing or furnishing whatever is sufficient to obtain it.

These facts are non-controversial to the point of being truisms.

In spite of the self-evident truth of the foregoing assertions, it appears that in some circles, the primacy of demand as the progenitor of economies, markets and financial systems does appear to be controversial. Still, even in the age of money, and the decoupling of money from value, one can scarcely see how that could be possible.

Therefore, it may be beneficial to examine the mechanisms of supply/provision and demand/need in a somewhat more prosaic sense – even to the point of over-simplification – so that, with ideology, complexity and symbolism stripped away, the bedrock basics of economics can be observed at their root.

Merriam Webster online describes economics as “a science concerned with the process or system by which goods and services are produced, sold, and bought.” This is perhaps one of the less complicated, and more realistic definitions available, and yet something more basic can be offered.

To begin with, all that is required is to read two different economics texts or treatises – any two – to be pretty thoroughly disabused of the notion that, in this day and age, there is anything approaching science involved in economics. The kindest thing that could be said about the modern study of economics is that it is just that – a study. The amount of opinion and supposition that accompanies this study on every hand largely precludes any idea that it could be characterized as a “science.” The next part of this definition with which one would take issue would be the idea of buying and selling. These pretty much presuppose the use of money. To get to the root of the matter, we must look at the mechanisms which are at work before money ever enters the picture. In other words, the mechanisms which created the preconditions for the invention of money.

It is enough, initially, to look at economics as being “the study concerned with the processes or systems whereby goods and services are produced, consumed, and traded.”

Later, money and monetization can (and should) be looked at, but there is economics before there is money, and the laws that govern it transcend its symbolic (monetary) representation. Insofar as there ARE laws, they must be as immutable as those of physics, mathematics, or any hard science, or they are not laws at all.

And the first law is this: Demand is the root of economics.

Consider: The moment there was life on planet Earth, it needed resources to survive, and demand was born. It may be argued that before there was life there WERE resources, and that life came from them. However, before there was life there was no meaning, and so the value of resources was as a nullity, because there was no one to need them. The moment a potential resource was useful, or needed, it became a resource, and the potential for “value” was only then implicit in it.

More later.  🙂