A World Without Prices or Profit

[Xerographica]

I guess people just don't understand what happened in the USSR, and need to find out the hard way.

Hmmm...I guess you might have missed my question the first time. So let me ask again. Why did the USSR fail?

 

[imagep]

...

Why does every thread the OP makes turn out so incredibly foolish?

I think that it is because he intends it to be like that. Not to make him look foolish (he's playing the roll of the devils advocate), but to point out how our current method of distributing tax money is foolish. Basically he is pushing a non-related example to the absurd, then trying to apply that same absurdity to the topic of government allocation of resources.

 

[Fisher]

I think that it is because he intends it to be like that. Not to make him look foolish (he's playing the roll of the devils advocate), but to point out how our current method of distributing tax money is foolish. Basically he is pushing a non-related example to the absurd, then trying to apply that same absurdity to the topic of government allocation of resources.

Yeah I disagree with you to the extent that I think the preference revelation non-sense applied to government is going to end up being absurd no matter how you start off the journey.

 

[obvious Child]

Facebook likes and money are similar in the sense that they both communicate preferences. However, the difference is that money allows you to effectively communicate the intensity of your preferences. This is because you exchanged your life for your money. You sacrificed your limited time on this planet for your money. You gave up valuable time with your friends and family for your money. In economic terms, earning your money had significant opportunity costs.

Except that in your fantasyland of crazyvilla, money has no value because there are no prices. Without valuation benchmarks, money is worthless.

You have no method of valuing assets. Hence why your argument makes no sense.

 

[imagep]

Except that in your fantasyland of crazyvilla, money has no value because there are no prices. Without valuation benchmarks, money is worthless.

You have no method of valuing assets. Hence why your argument makes no sense.

I assume that "likes" would be substituted for money. The issue would be that since people can poof up likes at no cost, they are pretty much valueless, unless some centralized planning entity has a monopoly on creating likes, and someway to distribute them.

Sounds like a roll for the FLB ("federal like bank") to me. They could create all the likes that we need (out of thin air), and then lend them into circulation. Sounds familiar.

 

[Xerographica]

Except that in your fantasyland of crazyvilla, money has no value because there are no prices. Without valuation benchmarks, money is worthless.

You have no method of valuing assets. Hence why your argument makes no sense.

Which uses of society's limited resources will provide us with the maximum value? We can answer this question by allowing each and every individual to consider how much they value the alternative uses of their resources. Whichever use they choose is the one that they value most at that given point in time.

For example, how many different uses of your time are there? An infinite amount? Let's pick two. You can use your time to discuss economics with me...or you can use your time to do jumping jacks. Which use of your time do you value most? Whichever one you pick is the one that you value most. The result is that we derive the maximum value from society's limited resources.

The concept of opportunity cost is equally applicable to money. How many different ways are there to use your money? An infinite amount? Let's pick two. You can spend a dollar on protecting the environment...or you can spend a dollar on feeding the hungry. Which use of your dollar do you value most? Whichever one you pick is the one that you value most. The result is that we derive the maximum value from society's limited resources.

 

[obvious Child]

Which uses of society's limited resources will provide us with the maximum value? We can answer this question by allowing each and every individual to consider how much they value the alternative uses of their resources. Whichever use they choose is the one that they value most at that given point in time.

For example, how many different uses of your time are there? An infinite amount? Let's pick two. You can use your time to discuss economics with me...or you can use your time to do jumping jacks. Which use of your time do you value most? Whichever one you pick is the one that you value most. The result is that we derive the maximum value from society's limited resources.

The concept of opportunity cost is equally applicable to money. How many different ways are there to use your money? An infinite amount? Let's pick two. You can spend a dollar on protecting the environment...or you can spend a dollar on feeding the hungry. Which use of your dollar do you value most? Whichever one you pick is the one that you value most. The result is that we derive the maximum value from society's limited resources.

Does anyone else think this guy has absolutely no idea what the hell he's talking about?

 

[imagep]

Does anyone else think this guy has absolutely no idea what the hell he's talking about?

he knows exactly what he is talking about. It's just all the rest of us who are confused about what he is talking about.

 

[Xerographica]

he knows exactly what he is talking about. It's just all the rest of us who are confused about what he is talking about.

Why are the rest of you confused about the opportunity cost concept? Does my explanation differ from textbook explanations? Are the rest of you even familiar with the textbook explanations?

Give me something to work with here.

 

[obvious Child]

Why are the rest of you confused about the opportunity cost concept? Does my explanation differ from textbook explanations? Are the rest of you even familiar with the textbook explanations?

Give me something to work with here.

You are using currency in a theoretical system that has no valuation or asset benchmarks. For all intensive purposes, money in your fantasy world is equivalent to Facebook Likes.

Thus, we're looking at you like you're one, insane and two, this topic is pointless.

 

[Xerographica]

You are using currency in a theoretical system that has no valuation or asset benchmarks. For all intensive purposes, money in your fantasy world is equivalent to Facebook Likes.

Thus, we're looking at you like you're one, insane and two, this topic is pointless.

The elimination of prices does not eliminate valuation. Right now you're not doing jumping jacks. Why? It's because you have more valuable uses of your time. Right now you're not giving $100 to the NRA. Why? It's because you have more valuable uses of your money. Right now you're spending your time discussing economics. Why? It's because you're willing to sacrifice the alternative uses of your time.

Jumping jacks, donating to the NRA, discussing economics...none of these things have price tags. Yet, individual valuation is still possible because you can evaluate the alternative uses of your limited resources.

 

[obvious Child]

The elimination of prices does not eliminate valuation.

Yes it does in the context of a currency system. A barter system would retain valuation via usage. But that's not what you are discussing.

Right now you're not doing jumping jacks. Why? It's because you have more valuable uses of your time. Right now you're not giving $100 to the NRA. Why? It's because you have more valuable uses of your money. Right now you're spending your time discussing economics. Why? It's because you're willing to sacrifice the alternative uses of your time.

Hence why I made the comment on Facebook Likes.

Jumping jacks, donating to the NRA, discussing economics...none of these things have price tags. Yet, individual valuation is still possible because you can evaluate the alternative uses of your limited resources.

But when money itself has no value as there is no asset valuation or benchmark, money becomes Facebook Likes. Money only works because there is an accepted valuation benchmark that everyone more or less accepts. What you propose is a system with money that has no such valuation benchmark, and hence why money is about as valuable as Facebook Likes.

I don't get why you're having a problem understanding how currency doesn't work without valuation benchmarks. The dollar works because we all value it largely the same and we've agreed upon prices. Without such a framework, currency is meaningless.

 

[Xerographica]

I don't get why you're having a problem understanding how currency doesn't work without valuation benchmarks. The dollar works because we all value it largely the same and we've agreed upon prices. Without such a framework, currency is meaningless.

The dollar works because we had to earn it...not because of prices. Earning money means sacrificing the alternative uses of your time...many of which you also value. Here's a quote from a great movie..."The Names of Love"...

As he likes painting, Dad becomes a painter. He works hard so we want for nothing. So we want for nothing... but the presence of my father who works hard so we want for nothing.

Here's the same exact concept, but far more developed and from the perspective of a father...

By preferring my work, simply by giving it my time, my attention, by preferring my activity as a citizen or as a professional philosopher, writing and speaking here in a public language, French in my case, I am perhaps fulfilling my duty. But I am sacrificing and betraying at every moment all my other obligations: my obligation to the other others whom I know or don’t know, the billions of my fellows (without mentioning the animals that are even more other others than my fellows), my fellows who are dying of starvation or sickness. I betray my fidelity or my obligations to other citizens, to those who don't speak my language and to whom I neither speak or respond, to each of those who listen or read, and to whom I neither respond nor address myself in the proper manner, that is, in a singular manner (this is for the so-called public space to which I sacrifice my so-called private space), thus also to those I love in private, my own, my family, my son, each of whom is the only son I sacrifice to the other, every one being sacrificed to every one else in this land of Moriah that is our habitat every second of every day. - Jacques Derrida, The Gift of Death

Your "facebook likes" critique would be relevant if everybody was given their own money printing press. Then, and only then, would money have as little value as facebook likes.

 

[obvious Child]

The dollar works because we had to earn it...not because of prices.

If your dollar cannot be used as a medium of accepted exchange, it does not work. Without valuations, currency does not function.

Earning money means sacrificing the alternative uses of your time...many of which you also value. Here's a quote from a great movie..."The Names of Love"..

That's irrelevant to functionality. Furthermore, how can you earn money when you don't have prices? Your wage is a price to your employer. Without prices, how can you agree to compensation?

Your basis of getting money doesn't even work.

Your "facebook likes" critique would be relevant if everybody was given their own money printing press. Then, and only then, would money have as little value as facebook likes.

Let's step back first. You said no prices. So how does anyone agree on compensation for money at all? Who would take a job where the boss could pay you whatever they want whenever they want?
And it's still valid. Some people value Facebook Likes highly. Some value it lowly. Some people give them out freely and some give them out sparingly. That's the same when you have no prices and people are free to give or not give as they so please. You have Facebook Like Promiscuous people and you have Facebook Like Rarely users.

 

[Xerographica]

If your dollar cannot be used as a medium of accepted exchange, it does not work. Without valuations, currency does not function.

Just like you can go to the Red Cross website and make a donation of any amount...you would be able to go to your bakery's website and make a donation of any amount.

Why do people make donations to the Red Cross? When they do make donations...do they go sit by the door waiting for the mailman to deliver a big box of disaster relief?

That's irrelevant to functionality. Furthermore, how can you earn money when you don't have prices? Your wage is a price to your employer. Without prices, how can you agree to compensation?

Your basis of getting money doesn't even work.

Without prices, how can we possibly know how long to continue this discussion? Whether or not there's prices...there are always trade-offs. You're always giving up one thing for another. The goal is to exchange something of less value for something of greater value.

You never "know" to agree to the compensation. But you can make a good guess if the person is running a successful organization. How do you know the organization is successful? Because it's receiving quite a bit of revenue. It's receiving quite a bit of revenue because the person in charge is giving enough money to the people who are providing the inputs that the organization needs to produce the goods/services that donors value.

If I bake you a pie...are you going to give me any money if I get the balance of ingredients really wrong? Nope. So the only way I would know that I got the balance of ingredients right would be if you give me money.

Whether we're talking about the ingredients that go into bread...or the inputs that go into a bakery...it's always about adjusting the balance to better match the preferences of consumers. The point is, the person in charge of the bakery has an incentive to use society's limited resources to benefit as many other people as possible...which requires that he provide enough money to the people who are supplying the inputs that he needs to satisfy the preferences of consumers.

 

[Captain Adverse]

Good reviews and pay what you want do not feed families and make ends meet. It would not work.

If I own a butcher shop and some citizen comes in and tells me he is taking a pound of steak, then I have to wait until he reviews my services and finds he donates $1.00 for the meat? Am I supposed to go the the cattle supplier and say give me 100 pounds of steak and then donate $1.00 after giving him a good review? This is the silliest idea I have ever heard. :screwy

My employees will want a steady wage to ensure they can buy things for themselves and their families. I have to pay overhead costs, payroll, benefits, and still make enough to cover my OWN family expenses. I need to set prices to ensure this occurs, I can't depend on the "goodwill" and "hope" of sufficient donations. :naughty

Sorry bud, this is just silly and could not possibly work except in fantasy land. :twocents:

 

[obvious Child]

Just like you can go to the Red Cross website and make a donation of any amount

Except that you know how your money will help the Red Cross. You can estimate how much stuff they can buy to fulfill their job. Because of prices.

...you would be able to go to your bakery's website and make a donation of any amount.

How is that the same thing? One you are donating to a cause for no exchange. The other you are buying something, except that your proposal doesn't make any sense as people can essentially get things for free from the bakery by exchanging nothing or very little.

Why do people make donations to the Red Cross? When they do make donations...do they go sit by the door waiting for the mailman to deliver a big box of disaster relief?

Huh? Did you read this before you typed it? That makes no sense.

Without prices, how can we possibly know how long to continue this discussion? Whether or not there's prices...there are always trade-offs. You're always giving up one thing for another. The goal is to exchange something of less value for something of greater value.

First, we're not paying money for this. So your argument goes out the window right there.

You never "know" to agree to the compensation. But you can make a good guess if the person is running a successful organization. How do you know the organization is successful? Because it's receiving quite a bit of revenue. It's receiving quite a bit of revenue because the person in charge is giving enough money to the people who are providing the inputs that the organization needs to produce the goods/services that donors value.

Okay, you've never had a real job. What is the point of revenue when you have no benchmarks for what revenue means? Why do you insist upon using currency in a world where currency's basic measurement doesn't exist? This makes no sense.

If I bake you a pie...are you going to give me any money if I get the balance of ingredients really wrong? Nope. So the only way I would know that I got the balance of ingredients right would be if you give me money.

I could give you less than you paid for the ingredients. Do you read what you post before you post it? And you just promoted the notion of effectively theft. That people don't have to pay for anything they don't want to. On top of that, your argument fails to account for varying tastes. Just because you put the balance how some people like it doesn't mean everyone will like it. Your homogenous world doesn't make sense.

Whether we're talking about the ingredients that go into bread...or the inputs that go into a bakery...it's always about adjusting the balance to better match the preferences of consumers. The point is, the person in charge of the bakery has an incentive to use society's limited resources to benefit as many other people as possible...which requires that he provide enough money to the people who are supplying the inputs that he needs to satisfy the preferences of consumers.

Except in a world without valuation for currency, currency is still useless. You aren't even trying to address this.

 

[Xerographica]

Good reviews and pay what you want do not feed families and make ends meet. It would not work.

So you want to start a butcher organization?

Mr. Butcher: Hi Mr. Cattle...I'd like to start a butcher organization
Mr. Cattle: Oh, that's really great! Where do you plan on starting it?
Mr. Butcher: Vegetarian City
Mr. Cattle: No cows for you

Fail, let's try again.

Mr. Butcher: Hi Mr. Cattle...I'd like to start a butcher organization
Mr. Cattle: Oh, that's really great! Where do you plan on starting it?
Mr. Butcher: Meat Lovers Heaven
Mr. Cattle: If you'd done your homework you'd know that I'm already invested in 10 butcher organizations there. No cows for you.

Fail, let's try again.

Mr. Butcher: Hi Mr. Cattle...I'd like to start a butcher organization
Mr. Cattle: Oh, that's really great! Where do you plan on starting it?
Mr. Butcher: Meat Lovers Paradise
Mr. Cattle: Great! I'm going to invest 10 cows in your organization. *hands Mr. Butcher 10 cows*

1 month later

Mr. Butcher: Here's a ton of positive feedback *hands Mr. Cattle a lot of money*
Mr. Cattle: Thanks! Have 20 cows! *hands Mr. Butcher 20 cows*

See...Mr. Cattle has cows to give because he doesn't waste his cows. He invests them wisely. Maybe not always, but more often than his competitors. If it turns out that you're one of the exceptions...if you waste the meat...then you're not going to receive a lot of positive feedback (money) from consumers...and Mr. Cattle is going to cut his loses.

The thing is...it sounds like you're imagining an extensive free-rider problem. Is the free-rider problem going to be so bad that nobody's going to want to give enough positive feedback (money) to the butchers? As a result, we're all going to become vegetarians?

Ok, here's my theory. If you think the free-rider problem is a serious and genuine problem...then with our current system...you'd probably be happy with a 60% tax rate. Am I close?

 

[RabidAlpaca]

Are prices or profit really necessary? For fun let's try and imagine a world without either.

If you wanted bread, you could go to your local bakery and select the quantity of bread that matched your preferences. You wouldn't have to pay for it...but the employees of the bakery would have the final say on your selection. They would approve or decline your selection when they were scanning your items for inventory purposes.

If you were happy with the experience and wanted to give the bakery positive feedback...then you could go to their website and make a contribution of any amount. Their website would display exactly how much positive feedback (revenue) they received.

When bakeries ordered flour from the same supplier...the supplier would use each bakery's revenue to help determine how to divvy up the flour. More revenue means more flour. Same thing with the wheat farmer. He would look at how much positive feedback the suppliers had received in order to determine how best to allocate his wheat.

Would you have an incentive to work hard? Let's say that you worked in a bakery. If you failed to work hard...if you did not improve on your recipes...if you wasted your flour...if you took really long lunch breaks...if you were rude to the customers...then your bakery would lose revenue and competing bakeries would gain revenue. If your bakery lost revenue then your boss wouldn't be able to give you as much positive feedback.

If you received less positive feedback...then you would have less influence over how society's limited resources were used. You wouldn't be able to give your favorite bands...favorite authors...favorite restaurants...as much positive feedback as you felt they deserved. Plus, your living accommodations and transportation wouldn't be as nice.

So would it work? No prices...or profit...but you'd still have the freedom to give positive feedback to those who were using society's limited resources for your benefit. And the amount of influence you had would depend on how much positive feedback other people gave you.

I want to say this in the nicest way possible... But this is the worst idea I've ever heard. Not only is there no motivation to strive and innovate, it simply wouldn't work. Too many people would simply free-ride.

Not to mention the entire world would have to simultaneously switch or we'd have nothing to pay anybody with.

How would you have any money if you didn't work at the bakery? If you didn't have any money then how could you influence how society's limited resources were used?

If you get everything for free and can live your life as you choose, why would you give a flying rat's ass what society does with itself?

 

[Xerographica]

Except that you know how your money will help the Red Cross. You can estimate how much stuff they can buy to fulfill their job. Because of prices.

Let's try and keep this really simple. One premise at a time to identify where the bug in the code is.

Can any given resource, say copper, be used in more than one way?

 

[Xerographica]

I want to say this in the nicest way possible... But this is the worst idea I've ever heard. Not only is there no motivation to strive and innovate, it simply wouldn't work. Too many people would simply free-ride.

Too many free-riders? Interesting. So with our current system...what do you think the tax rate should be?

 

[obvious Child]

Let's try and keep this really simple. One premise at a time to identify where the bug in the code is.

Can any given resource, say copper, be used in more than one way?

Copper has multiple tangible material uses. Money does not. Money is a medium of exchange. When you have no asset valuation benchmarks, you cannot have a medium of exchange

 

[Fisher]

Copper has multiple tangible material uses. Money does not. Money is a medium of exchange. When you have no asset valuation benchmarks, you cannot have a medium of exchange

can't play quarters without a quarter :drink

 

[Xerographica]

Copper has multiple tangible material uses. Money does not. Money is a medium of exchange. When you have no asset valuation benchmarks, you cannot have a medium of exchange

How could copper have an intangible use?

Money doesn't have multiple uses? You can't use it to clog a toilet?




I didn't ask you how many GOOD uses a resource could have. I asked whether any given resource could be used in more than one way.

 

[obvious Child]

can't play quarters without a quarter :drink

You can play quarters with essentially any coin.

Also, quarters is disgusting. Beer Pong is way more sanitary.