this is from henry george’s book progress and poverty. he explains why there is the “enforced idleness” i.e. unemployment. i quite liked this part but i know its a bit dated and i don’t really get economics. i think this would be one of those macroeconomic explanations for it.
″
[22] All trade, let it be remembered, is the exchange of commodities for commodities, and hence the cessation of demand for some commodities, which marks the depression of trade, is really a cessation in the supply of other commodities. That dealers find their sales declining and manufacturers find orders falling off, while the things which they have to sell, or stand ready to make, are things for which there is yet a widespread desire, simply shows that the supply of other things, which in the course of trade would be given for them, has declined. In common parlance we say that “buyers have no money,” or that “money is becoming scarce,” but in talking in this way we ignore the fact that money is but the medium of exchange. What the would-be buyers really lack is not money, but commodities which they can turn into money—what is really becoming scarcer is produce of some sort. The diminution of the effective demand of consumers is therefore but a result of the diminution of production.
[23] This is seen very clearly by storekeepers in a manufacturing town when the mills are shut down and operatives thrown out of work. It is the cessation of production which deprives the operatives of means to make the purchases they desire, and thus leaves the storekeeper with what, in view of the lessened demand, is a superabundant stock, and forces him to discharge some of his clerks and otherwise reduce his demands. And the cessation of demand (I am speaking, of course, of general cases and not of any alteration in relative demand from such causes as change of fashion), which has left the manufacturer with superabundant stock and compelled him to discharge his hands, must arise in the same way. Somewhere, it may be at the other end of the world, a check in production has produced a check in the demand for consumption. That demand is lessened without want being satisfied, shows that production is somewhere checked.
[24] People want the things the manufacturer makes as much as ever, just as the operatives want the things the storekeeper has to sell. But they do not have as much to give for them. Production has somewhere been checked, and this reduction in the supply of some things has shown itself in cessation of demand for others, the check propagating itself through the whole framework of industry and exchange. Now, the industrial pyramid manifestly rests on the land. The primary and fundamental occupations, which create a demand for all others, are evidently those which extract wealth from nature, and, hence, if we trace from one exchange point to another, and from one occupation to another, this check to production, which shows itself in decreased purchasing power, we must ultimately find it in some obstacle which checks labor in expending itself on land. And that obstacle, it is clear, is the speculative advance in rent, or the value of land, which produces the same effects as (in fact, it is) a lockout of labor and capital by landowners. This check to production, beginning at the basis of interlaced industry, propagates itself from exchange point to exchange point, cessation of supply becoming failure of demand, until, so to speak, the whole machine is thrown out of gear, and the spectacle is everywhere presented of labor going to waste while laborers suffer from want.
[25] This strange and unnatural spectacle of large numbers of willing men who cannot find employment is enough to suggest the true cause to whosoever can think consecutively. For, though custom has dulled us to it, it is a strange and unnatural thing that men who wish to labor, in order to satisfy their wants, cannot find the opportunity—as, since labor is that which produces wealth, the man who seeks to exchange labor for food, clothing, or any other form of wealth, is like one who proposes to give bullion for coin, or wheat for flour. We talk about the supply of labor and the demand for labor, but, evidently, these are only relative terms. The supply of labor is everywhere the same—two hands always come into the world with one mouth, twenty-one boys to every twenty girls; and the demand for labor must always exist as long as men want things which labor alone can procure. We talk about the “want of work,” but, evidently, it is not work that is short while want continues; evidently, the supply of labor cannot be too great, nor the demand for labor too small, when people suffer for the lack of things that labor produces. The real trouble must be that supply is somehow prevented from satisfying demand, that somewhere there is an obstacle which prevents labor from producing the things that laborers want.
[26] Take the case of any one of these vast masses of unemployed men, to whom, though he never heard of Malthus, it today seems that there are too many people in the world. In his own wants, in the needs of his anxious wife, in the demands of his half-cared-for, perhaps even hungry and shivering children, there is demand enough for labor, Heaven knows! In his own willing bands is the supply. Put him on a solitary island, and though cut off from all the enormous advantages which the co-operation, combination, and machinery of a civilized community give to the productive powers of man yet his two hands can fill the mouths and keep warm the backs that depend upon them. Yet where productive power is at its highest development they cannot. Why? Is it not because in the one case he has access to the material and forces of nature, and in the other this access is denied?
[27] Is it not the fact that labor is thus shut off from nature which can alone explain the state of things that compels men to stand idle who would willingly supply their wants by their labor? The proximate cause of enforced idleness with one set of men may be the cessation of demand on the part of other men for the particular things they produce, but trace this cause from point to point, from occupation to occupation, and you will find that enforced idleness in one trade is caused by enforced idleness in another, and that the paralysis which produces dullness in all trades cannot be said to spring from too great a supply of labor or too small a demand for labor, but must proceed from the fact that supply cannot meet demand by producing the things which satisfy want and are the object of labor.”
His claim that a shortfall in supply can cause a shortfall in demand makes sense. But he goes beyond that and claims without any real justification that every shortfall in demand is the consequence of a shortfall in supply, which contradicts modern economic thought. One reason that quantity demanded might decline other than a production problem would be if there’s an increase in production by a competitor whose goods are superior or cheaper than yours. Another potential reason would be an increase in uncertainty—if say, a country is on the brink of war, people in that country will be inclined to hold on to their money rather than to spend it on luxury goods, and this can cause an economic contraction.
I guess in a roundabout nonfalsifiable kind of way it might be hypothetically possible that a shortage in supply on the other side of the globe is the indirect root cause of the war, but this isn’t very helpful for figuring out anything useful about the economy even if it does happen to be true, and we have no reason to think that’s so.
He kind of comes close to conflating “shortfall in supply” with “scarcity”, but those are two different concepts in economic thought. A shortfall in supply is someone not producing as much as they ought to have to maximize their company’s profit. Scarcity is the idea that no matter how much is produced people will always want more.
Disclaimer: barely paid attention when this was explained to me in class.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor was it even known to us in the past. However, the Sun’s energy can effect demand nonetheless—for example, ice cream might become more popular if the sun heats up.. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in (quantity of) ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be purchased. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company thought the demand for ice cream would increase as a consequence of the heat wave. If there was no anticipation of increased demand due to external reasons, the ice cream company would not increase production and thus would miss out on potential profit.
Just to make completely sure I understand you here… you went looking for something that’s not a natural resource underlying major economic issues, but could still affect those issues, and the best answer you could come up with was the sun ? The local star, that gigantic nuclear furnace whose radiant energy is the source of power for all photosynthetic life on earth, excepting maybe some geothermal-powered grow-lights in Greenland or something. That sun, that’s the one you’re referring to?
If solar energy flux abruptly changed by even one percent, up or down, or was widely anticipated to do so, i don’t think unemployed ice cream manufacturers and salespeople would be the main economic consequence, or even noticeable among all the other chaos.
Supply is defined as that which is produced by human beings, not that which is made of physical matter. Otherwise, saying that demand only responds to changes in supply would fail to constrain our expectations any more than the laws of physics do. But we’re pursuing a different level of analysis when we engage economic questions.
You are looking at aspects of my example that are irrelevant to my argument. My point is that human decisions and innovations are not the only factors behind changes in demand. Whether or not we restrict our analysis to the ice cream market alone, the point stands that demand would be changed if the Sun’s behavior changed and thus we need to look at things other than changes to supply if we want to accurately predict changes in demand.
Henry George was looking at the labor market, and pointing out that you can’t really understand the causes of large-scale unemployment, “the paralysis which produces dullness in all trades,” without looking all the way back up the supply chain, if necessary to natural resources and how they’re being used or prevented from use, until you find something necessary that’s not being supplied. Can you find a counterexample to THAT claim, a cause for general unemployment which can’t be traced back to a lack of supply?
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market.
There might not be enough resources for people to do any work that’s in demand. For example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market but help society.
There might not be enough resources for people to do any work that’s in demand. To look at a small example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market but help society.
There might not be enough resources for people to do any work that’s in demand. For example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
Supply is defined as that which is produced by human beings, not that which is made of physical matter. Scarcity is the word referring to limitation of resources, not supply.
You’re intentionally looking at aspects of my example that are irrelevant to the point I was making. My point is that human decisions and innovations are not the only factors that change demand. Whether or not we restrict our analysis to the ice cream market alone, the point stands.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did. None of these seem to have anything to do with supply shortages.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
The neighbor is possibly going to attack… why? Maybe because they want something you have, that they could seize by killing you? Such as your land? The term “lebensraum” comes to mind.
Communist ideology, likewise, exists to promote communist political policies, which have a number of major differences from capitalist (or, say, monarchist) policies when it comes to how natural resources should be exploited on industrial scales and how the products of that industry should be directed. Workers controlling the means of production, and so on.
As for falsifiability, it would be easy enough to imagine people going to war over a set of political issues (let’s say, calendar reform or the right to be openly homosexual) which have no clear implications one way or another for industry. It’s just, that doesn’t happen. Gulf War 2? Oil. American civil war? Cotton, by way of slavery. WWII? Germany and Japan trying to bootstrap. Sub-saharan bloodbaths? Closely correlated to droughts, with a time lag as food scarcity propagates through the system. Without an underlying resource conflict, no war occurs.
There’s always more to it than that, of course, because people are complicated. The first world war, for example, was a horrific morass of misplaced optimism and lost purposes, but when you look at the promises the leaders were making, it was always “no, really, we’ll be able to push ahead and capture valuable territory at low cost THIS time!” and the reparations afterward were transparently a transfer of resources from the losers to the winners.
Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did.
“Labor-saving” innovations are simply increases in efficiency. If the new process allows more of the same (or equivalent) goods to be produced with less inputs, the price will drop and demand will increase. Significantly lower cost might even open up completely new applications for the goods.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor was it even known to us in the past. However, the Sun’s energy can effect demand nonetheless—for example, ice cream might become more popular if the sun heats up.. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be purchased. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company increased production because they thought the demand for ice cream would increase. Heat itself is meaningless except in its anticipated consequence for demand, therefore the counterexample is valid. If there was no anticipation of increased demand due to external reasons, the company would not increase their production and would miss out on potential profit.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor even known to us. However, the Sun’s energy will effect demand nonetheless—ice cream will become more popular if the sun heats up, and it will be purchased more often. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be consumed. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company increased production because they thought the demand for ice cream would increase. Heat itself is meaningless except in its anticipated consequence for demand, therefore the counterexample is valid.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did. None of these seem to have anything to do with supply shortages.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company can thus higher fewer workers than the first one did.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
I don’t know think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company can thus higher fewer workers than the first one did.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
Apologies, but I’m somewhat new here. I’m not seeing an easy way to delete a comment here (as opposed to retracting it); could you be so kind as to tell me how it’s done? (Sorry again for any trouble!)
No problem, you’re actually being very nice and helpful.
I’m not sure if there’s any easier official way it’s supposed to be done, but I normally click on the retract button in the bottom right of the comment, then refresh the page, and then click on the button in the bottom right of the comment (which will now be the delete button).
Edit: I don’t see any button for my above comment. I think we have to delete all the upstream comments first before it lets us delete these ones. Or maybe these lower comments aren’t allowed to be deleted at all, in which case I’m sorry about this, lol. Thanks for trying, if that’s what’s happened!
LOL this is hilarious. I vote we just leave this for posterity, (or let a moderator clean it up). I think we’ll only make things worse if this keeps going. Thanks for the fun.
this is from henry george’s book progress and poverty. he explains why there is the “enforced idleness” i.e. unemployment. i quite liked this part but i know its a bit dated and i don’t really get economics. i think this would be one of those macroeconomic explanations for it.
″ [22] All trade, let it be remembered, is the exchange of commodities for commodities, and hence the cessation of demand for some commodities, which marks the depression of trade, is really a cessation in the supply of other commodities. That dealers find their sales declining and manufacturers find orders falling off, while the things which they have to sell, or stand ready to make, are things for which there is yet a widespread desire, simply shows that the supply of other things, which in the course of trade would be given for them, has declined. In common parlance we say that “buyers have no money,” or that “money is becoming scarce,” but in talking in this way we ignore the fact that money is but the medium of exchange. What the would-be buyers really lack is not money, but commodities which they can turn into money—what is really becoming scarcer is produce of some sort. The diminution of the effective demand of consumers is therefore but a result of the diminution of production.
[23] This is seen very clearly by storekeepers in a manufacturing town when the mills are shut down and operatives thrown out of work. It is the cessation of production which deprives the operatives of means to make the purchases they desire, and thus leaves the storekeeper with what, in view of the lessened demand, is a superabundant stock, and forces him to discharge some of his clerks and otherwise reduce his demands. And the cessation of demand (I am speaking, of course, of general cases and not of any alteration in relative demand from such causes as change of fashion), which has left the manufacturer with superabundant stock and compelled him to discharge his hands, must arise in the same way. Somewhere, it may be at the other end of the world, a check in production has produced a check in the demand for consumption. That demand is lessened without want being satisfied, shows that production is somewhere checked.
[24] People want the things the manufacturer makes as much as ever, just as the operatives want the things the storekeeper has to sell. But they do not have as much to give for them. Production has somewhere been checked, and this reduction in the supply of some things has shown itself in cessation of demand for others, the check propagating itself through the whole framework of industry and exchange. Now, the industrial pyramid manifestly rests on the land. The primary and fundamental occupations, which create a demand for all others, are evidently those which extract wealth from nature, and, hence, if we trace from one exchange point to another, and from one occupation to another, this check to production, which shows itself in decreased purchasing power, we must ultimately find it in some obstacle which checks labor in expending itself on land. And that obstacle, it is clear, is the speculative advance in rent, or the value of land, which produces the same effects as (in fact, it is) a lockout of labor and capital by landowners. This check to production, beginning at the basis of interlaced industry, propagates itself from exchange point to exchange point, cessation of supply becoming failure of demand, until, so to speak, the whole machine is thrown out of gear, and the spectacle is everywhere presented of labor going to waste while laborers suffer from want.
[25] This strange and unnatural spectacle of large numbers of willing men who cannot find employment is enough to suggest the true cause to whosoever can think consecutively. For, though custom has dulled us to it, it is a strange and unnatural thing that men who wish to labor, in order to satisfy their wants, cannot find the opportunity—as, since labor is that which produces wealth, the man who seeks to exchange labor for food, clothing, or any other form of wealth, is like one who proposes to give bullion for coin, or wheat for flour. We talk about the supply of labor and the demand for labor, but, evidently, these are only relative terms. The supply of labor is everywhere the same—two hands always come into the world with one mouth, twenty-one boys to every twenty girls; and the demand for labor must always exist as long as men want things which labor alone can procure. We talk about the “want of work,” but, evidently, it is not work that is short while want continues; evidently, the supply of labor cannot be too great, nor the demand for labor too small, when people suffer for the lack of things that labor produces. The real trouble must be that supply is somehow prevented from satisfying demand, that somewhere there is an obstacle which prevents labor from producing the things that laborers want.
[26] Take the case of any one of these vast masses of unemployed men, to whom, though he never heard of Malthus, it today seems that there are too many people in the world. In his own wants, in the needs of his anxious wife, in the demands of his half-cared-for, perhaps even hungry and shivering children, there is demand enough for labor, Heaven knows! In his own willing bands is the supply. Put him on a solitary island, and though cut off from all the enormous advantages which the co-operation, combination, and machinery of a civilized community give to the productive powers of man yet his two hands can fill the mouths and keep warm the backs that depend upon them. Yet where productive power is at its highest development they cannot. Why? Is it not because in the one case he has access to the material and forces of nature, and in the other this access is denied?
[27] Is it not the fact that labor is thus shut off from nature which can alone explain the state of things that compels men to stand idle who would willingly supply their wants by their labor? The proximate cause of enforced idleness with one set of men may be the cessation of demand on the part of other men for the particular things they produce, but trace this cause from point to point, from occupation to occupation, and you will find that enforced idleness in one trade is caused by enforced idleness in another, and that the paralysis which produces dullness in all trades cannot be said to spring from too great a supply of labor or too small a demand for labor, but must proceed from the fact that supply cannot meet demand by producing the things which satisfy want and are the object of labor.”
His claim that a shortfall in supply can cause a shortfall in demand makes sense. But he goes beyond that and claims without any real justification that every shortfall in demand is the consequence of a shortfall in supply, which contradicts modern economic thought. One reason that quantity demanded might decline other than a production problem would be if there’s an increase in production by a competitor whose goods are superior or cheaper than yours. Another potential reason would be an increase in uncertainty—if say, a country is on the brink of war, people in that country will be inclined to hold on to their money rather than to spend it on luxury goods, and this can cause an economic contraction.
I guess in a roundabout nonfalsifiable kind of way it might be hypothetically possible that a shortage in supply on the other side of the globe is the indirect root cause of the war, but this isn’t very helpful for figuring out anything useful about the economy even if it does happen to be true, and we have no reason to think that’s so.
He kind of comes close to conflating “shortfall in supply” with “scarcity”, but those are two different concepts in economic thought. A shortfall in supply is someone not producing as much as they ought to have to maximize their company’s profit. Scarcity is the idea that no matter how much is produced people will always want more.
Disclaimer: barely paid attention when this was explained to me in class.
Superior competitors don’t tend to cause widespread unemployment, though. People just go work for the company that’s on the rise.
As for uncertainty about a coming war… he’s saying that it all comes back to natural resources, access to land, and sure enough that tends to be what wars are about.
Okay, thought things through.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor was it even known to us in the past. However, the Sun’s energy can effect demand nonetheless—for example, ice cream might become more popular if the sun heats up.. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in (quantity of) ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be purchased. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company thought the demand for ice cream would increase as a consequence of the heat wave. If there was no anticipation of increased demand due to external reasons, the ice cream company would not increase production and thus would miss out on potential profit.
Just to make completely sure I understand you here… you went looking for something that’s not a natural resource underlying major economic issues, but could still affect those issues, and the best answer you could come up with was the sun ? The local star, that gigantic nuclear furnace whose radiant energy is the source of power for all photosynthetic life on earth, excepting maybe some geothermal-powered grow-lights in Greenland or something. That sun, that’s the one you’re referring to?
If solar energy flux abruptly changed by even one percent, up or down, or was widely anticipated to do so, i don’t think unemployed ice cream manufacturers and salespeople would be the main economic consequence, or even noticeable among all the other chaos.
Supply is defined as that which is produced by human beings, not that which is made of physical matter. Otherwise, saying that demand only responds to changes in supply would fail to constrain our expectations any more than the laws of physics do. But we’re pursuing a different level of analysis when we engage economic questions.
You are looking at aspects of my example that are irrelevant to my argument. My point is that human decisions and innovations are not the only factors behind changes in demand. Whether or not we restrict our analysis to the ice cream market alone, the point stands that demand would be changed if the Sun’s behavior changed and thus we need to look at things other than changes to supply if we want to accurately predict changes in demand.
Henry George was looking at the labor market, and pointing out that you can’t really understand the causes of large-scale unemployment, “the paralysis which produces dullness in all trades,” without looking all the way back up the supply chain, if necessary to natural resources and how they’re being used or prevented from use, until you find something necessary that’s not being supplied. Can you find a counterexample to THAT claim, a cause for general unemployment which can’t be traced back to a lack of supply?
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market.
There might not be enough resources for people to do any work that’s in demand. For example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market but help society.
There might not be enough resources for people to do any work that’s in demand. To look at a small example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
If by necessary you mean “in demand”, then yes I agree, otherwise I don’t know what you mean. You need to look at what products have unmet demand if you think the market’s being prevented from reaching full employment. But examining supply chains from the ground up isn’t a requirement for this, and actually no one understands the economy that well as it’s computationally impossible. So we look at intermediate simplified components of the supply chain and at demand itself. There are times when looking at an extremely detailed picture is necessary, but I don’t think that’s always so.
Two exceptions to this:
Governments can employ people to do jobs that aren’t demanded by the market but help society.
There might not be enough resources for people to do any work that’s in demand. For example, if I am a farmer in a developing country and foreign food imports are priced lower than what my costs are, I will probably not be a farmer for much longer.
Supply is defined as that which is produced by human beings, not that which is made of physical matter. Scarcity is the word referring to limitation of resources, not supply.
You’re intentionally looking at aspects of my example that are irrelevant to the point I was making. My point is that human decisions and innovations are not the only factors that change demand. Whether or not we restrict our analysis to the ice cream market alone, the point stands.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did. None of these seem to have anything to do with supply shortages.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
The neighbor is possibly going to attack… why? Maybe because they want something you have, that they could seize by killing you? Such as your land? The term “lebensraum” comes to mind.
Communist ideology, likewise, exists to promote communist political policies, which have a number of major differences from capitalist (or, say, monarchist) policies when it comes to how natural resources should be exploited on industrial scales and how the products of that industry should be directed. Workers controlling the means of production, and so on.
As for falsifiability, it would be easy enough to imagine people going to war over a set of political issues (let’s say, calendar reform or the right to be openly homosexual) which have no clear implications one way or another for industry. It’s just, that doesn’t happen. Gulf War 2? Oil. American civil war? Cotton, by way of slavery. WWII? Germany and Japan trying to bootstrap. Sub-saharan bloodbaths? Closely correlated to droughts, with a time lag as food scarcity propagates through the system. Without an underlying resource conflict, no war occurs.
There’s always more to it than that, of course, because people are complicated. The first world war, for example, was a horrific morass of misplaced optimism and lost purposes, but when you look at the promises the leaders were making, it was always “no, really, we’ll be able to push ahead and capture valuable territory at low cost THIS time!” and the reparations afterward were transparently a transfer of resources from the losers to the winners.
“Labor-saving” innovations are simply increases in efficiency. If the new process allows more of the same (or equivalent) goods to be produced with less inputs, the price will drop and demand will increase. Significantly lower cost might even open up completely new applications for the goods.
I think I need to start over. Give me a while to think.
Okay, thought things through.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor was it even known to us in the past. However, the Sun’s energy can effect demand nonetheless—for example, ice cream might become more popular if the sun heats up.. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be purchased. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company increased production because they thought the demand for ice cream would increase. Heat itself is meaningless except in its anticipated consequence for demand, therefore the counterexample is valid. If there was no anticipation of increased demand due to external reasons, the company would not increase their production and would miss out on potential profit.
Okay, thought things through.
Not every change in material resources is a change in supply. For example, the rate at which the Sun burns energy is not controlled by humans, nor even known to us. However, the Sun’s energy will effect demand nonetheless—ice cream will become more popular if the sun heats up, and it will be purchased more often. Thus the sun is a counterexample to the claim that changes in demand are all the result of changes in supply.
You might claim that the change in ice cream demanded is actually the consequence of increased ice cream production. That is true in the sense that if no more ice cream was produced then no more ice cream would be consumed. But we can also ask what caused the company to choose to increase production, and the clear answer is that the company increased production because they thought the demand for ice cream would increase. Heat itself is meaningless except in its anticipated consequence for demand, therefore the counterexample is valid.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did. None of these seem to have anything to do with supply shortages.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company uses technology that lets it fewer workers than the first one did.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
I don’t think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company can thus higher fewer workers than the first one did.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
I don’t know think it’s this simple. Suppose skills are nontransferable. Suppose the other company is in a different country. Suppose there’s only a limited demand for the goods produced and the other company can thus higher fewer workers than the first one did.
Not exactly. Wars are about a lot of things, like fear one will be attacked by a neighbor or the desire to stop Communist ideology. The claim that every war is at root an issue of natural resources is only defensible if you make it extremely complex and thus impossible to falsify. Additionally, like I said before, that kind of situation is less about insufficient supply and more about living under conditions of scarcity which no economy can avoid.
Uh… not to be a pedant, but are you sure you didn’t mean “hire” there?
You’ve retracted your comment. Will you now delete it? I want to make this entire chain of comments disappear including the empty box above.
Apologies, but I’m somewhat new here. I’m not seeing an easy way to delete a comment here (as opposed to retracting it); could you be so kind as to tell me how it’s done? (Sorry again for any trouble!)
No problem, you’re actually being very nice and helpful.
I’m not sure if there’s any easier official way it’s supposed to be done, but I normally click on the retract button in the bottom right of the comment, then refresh the page, and then click on the button in the bottom right of the comment (which will now be the delete button).
Edit: I don’t see any button for my above comment. I think we have to delete all the upstream comments first before it lets us delete these ones. Or maybe these lower comments aren’t allowed to be deleted at all, in which case I’m sorry about this, lol. Thanks for trying, if that’s what’s happened!
Did you get my PM?
Edit: Yep, now that this comment doesn’t have any replies attached, it is indeed delete-able. We’ll have to work our way up, if that’s okay with you.
Edit2: Please send me a PM if you see this message; then I’ll know it’s safe to delete it.
LOL this is hilarious. I vote we just leave this for posterity, (or let a moderator clean it up). I think we’ll only make things worse if this keeps going. Thanks for the fun.
Apologies, would you mind deleting your comment here? I was trying to avoid the ugly edit star.