Demand, continued

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.