Der Sinn des Lebens

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Mit Sprache kann man erstaunliche Dinge tun – z. B. Handlungen vollziehen, die auf nichts anderem als einer Äußerung beruhen:

„Meine Worte hatten dich beleidigen sollen“ – hier wird durch eine Äußerung, eine Tat begangen, sichergestellt, dass ein verletzender Akt als solcher wahrgenommen wird. Die Sprachphilosophie spricht von einer sogenannten performativen Sprachhandlung oder einem illokutionären Akt.

Man kann auch durch die formale Struktur einer spachlichen Äußerung Menschen – wissentlich oder gezielt – in die Irre führen.

Wer eine Frage stellt, löst im Gegenüber unwillkürlich die Erwartung aus, eine Antwort sei erforderlich und möglich.

Ich habe lange gedacht, dies träfe zu, wenn die Frage gestellt wird:

Was ist der Sinn des Lebens?

Man werde durch die grammtikalische Struktur des Fragesatzes quasi in die Pflicht genommen, eine Antwort zu geben, wo es keine gibt.

Ich habe früher darauf geantwortet, dass es DAS LEBEN überhaupt nicht gibt, sondern nur einen Ablauf diskreter Lebensereignisse, die äußerst unterschiedlich sein können und nicht im Zusammenhang zu einander stehen, geschweige denn Teil einer lückenlosen Kette sein müssen. Die Frage suggeriert also ein Objekt, das überhaupt nicht existiert. 

Man kann versuchen, Aspekte des Lebens daraufhin zu bewerten, ob sie sinnvoll sind, einen Sinn ergeben, einen Sinn besitzen. Das Leben als Gesamtheit existiert aber nicht und kann daher nicht auf seinen Sinn hin befragt werden.

Selbst, wenn wir große Zusammenhänge unseres Lebens der Sinnfrage unterwerfen, und das vielleicht auch nach unserem Empfinden mit Erfolg, zeigt sich bei genauerem Hinsehen, dass auch diese „großen Würfe“, nur Ausschnitte sind in einem Ozean an Perspektiven und Gesichtspunkten, nach denen die unendlich vielfältigen Erfahrungen des Leben sich ordnen lassen. 

Vielleicht bestand der Sinn meines Lebens darin, ein Land zu missionieren, und nachdem mir dies gelungen ist, kann ich bekräftigen, dass mein Leben einen Sinn gehabt und sich dieser erfüllt habe. 

Doch wie gesagt, damit hebe ich nur einen Ausschnitt meines Lebens hervor.

Niemand bestreitet, dass man sinnvolle Ziele verfolgen oder ein Leben führen kann, das einem großen Ziel dient, von dem man empfindet, dass es der eigenen Existenz einen Sinn gibt. Freilich kann man sich darin täuschen oder diesem Gefühl, ein Leben zu leben, das durch eine große Sinn-Klammer zusammengehalten wird, verlustig gehen. Auch kann vieles, das zu einem sinnvollen Leben gehören könnte oder sollte, unterdrückt und verpasst werden, wenn man zu sehr auf das eine große Sinnthema hinlebt.

Der gesamte Fluß des Lebens enthält eine unendliche Fülle an Sinnhaftem, vieles davon trivial aber lebenswichtig – ein geordneter Tagesablauf zum Beispiel: genügend Schlaf, gute Nahrung, ausreichend Bewegung, erfolgreiche Tätigkeiten im Beruflichen und in anderen Kontexten. 

Vermutlich ist es sogar ein ganz besonders glückliches Talent, nicht allzu anfällig zu sein für Sirenenrufen, die dem Leben Sinn zu geben versprechen.

Eine Mutter von fanatischer Religiösität, die auf den einen, den ganz großen Sinn des Lebens hinausgreift, kann vielleicht ihre Kinder deswegen vernachlässigen und verdankt es nur ihrer Verblendung, dass sie nicht merkt wie ihr Leben – nach den eigenen Maßstäben – scheitert.

Ich glaube, es ist besser, das Thema zu portionieren und darauf zu achten, dass man Sinnvolles im Leben tut, statt alles auf die eine große Karte zu setzen.

Ich glaube auch, dass die beste Antwort auf die Frage nach dem Sinn des Lebens lautet: Es macht Spaß zu leben – ich lebe gerne.

Denn weder die Welt, in der wir leben, noch wir als Gewächse der Evolution, sind dafür gemacht, auf eine große, quasi lebenanschauliche Überwahrheit hin zu leben – so sehr sich auch Machthaber und ihre Schafe ein grandioses Bühnenbild mit dem totalitären Pomp von Absoluta und Ewiggültigem wünschen.

Der Mensch ist seine eigene Allzweckwaffe. Er ist ausgerüstet mit Dispositionen, Instinkten, starken emotionalen Orientierungshilfen. Wie David Hume es einmal, vielleicht etwas überspitzt ausgedrückt hat: Der Kopf ist der Sklave des Gefühls. Das heißt nicht, dass der Mensch kopflos, unüberlegt und irrational ist. Das Diktum ist darauf gemünzt, dass das, was dem Sinn des Lebens vielleicht am nächsten kommt, die Befriedigung ist, die der Mensch empfindet, wenn er seinen grundlegenden Neigungen gemäß leben kann. Die Logik, zu der unser Hirn fähig ist, verleiht dem Leben nicht seine Vitalkraft, das Gefühl der Lust an ihm. Das kommt aus der Tiefe des Gefühlsmäßigen, der Intuitionen und Instinkte.

Das Leben hat einen Sinn, wenn es Spaß macht – oder ein Iota weniger hedonistisch: wenn man sich in ihm wohlfühlt.

Der Sinn des Lebens ist die Freude am Spiel, das uns begleitet, bis wir sterben.

Natürlich kann auch ein übergreifender und lange durchgehaltener Zweck Teil des Bündels an Dingen sein, die unsrerem Leben Sinn verleihen. Aber in der Regel wird das Maß der Sinnhaftigkeit eines Lebens nicht durch Verfolgung eines Ziels, eines Motivs eine befriedigende Qualität, ein ausgewogenes Niveau erreichen, sondern dadurch, dass man offen bleibt für die Vielfalt der Neigungen, mit denen der Mensch ausgestattet ist als ein Lebewesen, das wie andere Tiere auch, nicht durch Gedanken allein, sondern durch die Empfindungen motiviert wird, in denen der Verstand wurzelt.

Wie dem auch sei, die Frage nach dem Sinn des Lebens ist aber von allgemeinerer Natur als die Inspektion des eigenen Lebensgefühls.

Es ist zweifelhaft, ob sich eine allgemeine, eine objektive, eine allgemein gültige Antwort geben lässt, oder ob es überhaupt erstrebenswert ist eine solche Universalklärung herbeizuführen. Sind daran nicht eher Machtsuchende interessiert, die die breite Bevölkerung auf ihre ideologischen Bedürfnisse einschwören möchten?

Traditionell ist die Frage nach dem Sinn des Lebens oft eine Fangfrage der Pfaffen gewesen, die den gesund Geerdeten – und umso effektiver den Labilen und Unsicheren – in das Durcheinander eines unerwarteten Rätsels stürzen, um ihn gefügig zu machen für ihre vorgestanzten Weisheiten.

Bohr and Heisenberg

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Continued from here.

Time mark 11:15: 

To understand where an electron is, you have to look at it. To look at it, you have to shine a light on it. But when you shine a light on it, that disturbs where the electron is.

[Which is implied but nor strictly elucidated in Michio Kaku's statement; IGTU] 

So, the very fact of observing an object changes its location. Therefore, he realised that uncertainty is an essential part of his picture. 

[... The uncertainty principle:] 

The more you know about a particles position, the less you can know about its speed and direction ... The more you know about a particle's speed and direction, the less you can know about where it is at any given time. 

[At this point, Heisenberg] realised he could merge the [Classical] Schrödinger picture with the Bohr-Heisenberg picture to give us the modern day theory of the Quantum principle. In other words: the electron is a point particle, but you don't know quite where it is. And the probability of finding it at any given point is given by a wave — the Schrödinger wave. So, we now have a beautiful synthesis of waves and particles.

Conceptions of Reality — Einstein and Bohr (3)

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Continued from here.

Einstein had proposed a contrivance by which to measure the speed of an atomic particle. Bohr riposted that clock are affected by gravity. hence, one could not hope to measure this property of an atomic particle without changing it in the very act of ascertainment.

Einstein was appalled by the idea that a complete picture of nature — a synopsis of all features of the phenomena of the universe — should not be within our reach.

It is actually quite astounding that Einstein could not accept an idea as simple and plausible as the inevitable selectivity of our knowledge of the universe. 

Even over great distances, atomic particles remain connected to one another — this is a core insight of Bohr's physics. Concepts, he thought, like space and time would not work on the atomic scale. The difficulty was, of course, that Bohr could not follow up this "destructive" insight with something workable to replace these categories. At the same time, Einstein was very attached to space-time and unwilling to give up these concepts easily.

In 1905, Einstein had shown that light could be conceived in terms of both waves and particles (quanta or photons). And this duplex nature holds true of atoms as well.  So, to clarify the situation, it was desirable to account for these phenomena more distinctly. Efforts were made to measure the properties of the atom with greater reliability. But it turned out: observation will inevitably disturb the atomic particle.

Bohr discovered complementarity, i. e. the fact that the form in which atomic particles appear (waves or particles) is affected by interaction with different kinds of measuring apparatuses.

Later crucial experiments, notably by Alain Aspect, provided empirical support for Bohr's hypothesis that the act of observation affects the observed atomic particles.

Einstein hoped that "a mouse could not affect the universe simply by looking at it" and that a crucial experiment could show that local causality determined observational outcomes.  But he was proven wrong. As John Wheeler explains a Bohrian phenomenon becomes a Bohrian phenomenon "when the dragon bites", not before it. The dragon being a nondescript, premature, undeveloped set of conditions awaiting closure. To the extent that it is accessible to us, reality is dependent on observation; to us, it is constituted by it.

The road to the thing in itself, to the Kantian Ding an sich, is barred to the human mind.

Conceptions of Reality — Einstein and Bohr (1)

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Einstein felt that reality exists in effect out there — something independent of us. And the position of Bohr was rather this: [that] reality is only a word, and we have to learn what the right way is to use that word.

John Wheeler

Continued here.

Ökonomie verstehen (3) – Sein oder Nichtsein – Über Spiegel und Gouvernanten

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Continued from here.

Jedes Lebewesen beschäftigt sich damit: – zum Beispiel das Kätzchen, das man vor einen Spiegel setzt – die Frage, was ist oder nicht ist. Das Kätzchen erschrickt, weil im Spiegel plötzlich ein anderes Kätzchen vor ihm auftaucht. Da IST etwas – eher unerwartet. Das Kätzchen schnuppert am Spiegel. Nichts. Das Kätzchen blickt hinter den auf dem Teppichboden gestellten und an die Wand angelehnten Spiegel. Nichts. Es entdeckt eine Seinsform, die ihm neu ist. Und nach weiteren Versuchen, der Sache auf den Grund zu gehen, hat sich ihre Theorie von dem, was ist, und, was nicht ist, verändert. 

Jedes Lebewesen ist ein Philosoph, denn es beschäftigt sich mit einem wichtigen Gebiet der Philosophie, der Ontologie, die sich dem Sein widmet. Wer überleben will, kommt nicht umhin, über Fragen der Existenz nachzudenken, um zu entscheiden, ob etwas existiert, vielleicht auch warum, unter welchen Umständen und mit welchen Konsequenzen. 

Räuber tun so als würden sie nicht existieren, um ihre Beute aus dem Hinterhalt anzugreifen. Beutetiere greifen zur Tarnung, damit Räuber ihre Existenz übersehen.

Die Ökonomie ist auch eine Ontologie, eine Lehre vom Sein, ein Handbuch, in dem wir nachschlagen können, was existiert und was nicht – und was wir infolgedessen, tun dürfen, sollen und müssen und was wir besser unterlassen.

Die Ökonomie greift massiv in unsere Psyche ein und in unser soziales Leben, indem sie uns verrät, was realistisch und gut ist, woran wir glauben sollten und wie wir uns untereinander zu verhalten haben.

Wir sollten uns den Spiegel, in dem sich die Realität der Ökonomie widerspiegelt, sehr genau ansehen. Denn wenn er uns täuscht, sind, kann es sein, dass aus uns andere Menschen werden als wir sie sein sollten und Gemeinschaften bilden, die schlechter sind, als sie es sein müssten.

Die Ökonomie kann wie eine sehr strenge Gouvernante sein, die uns fürs ganze Leben abrichtet, ohne dass wir den zwanghaften Gehorsam bemerken, zu dem sie uns verdammt hat.

Fragen Sie sich, welches Bild von Wirklichkeit zeichnet uns eine ökonomische Lehre, auf welcher Grundlage und mit welchem Recht? Wie überzeugend sind die Belege für ihre Gültigkeit, die uns die beobachtbare Welt liefert? Sind Sie bereit, sich auf Basis dieser Lehre vorschreiben zu lassen, was sie denken und tun dürfen, opfern und unterlassen müssen?

Je nachdem, welcher Ökonomie Sie Ihr Vertrauen schenken, werden sie bereit sein (oder eben nicht), Vollbeschäftigung für möglich und vordringlich anzusehen und glauben, der Staat könne jederzeit dafür sorgen, dass jeder von uns, der dies will, einen Arbeitsplatz hat. 

Je nach Ihrer ökonomischen Ontologie, Ihren Überzeugungen, welche wirtschaftlichen Zusammenhänge existieren oder nicht, werden Sie Staatsausgaben zur Ankurbelung der Wirtschaft begrüßen oder ablehnen. Sie werden Mythen auf dem Leim gehen oder nicht und Maßnahmen gut heißen mit schwerwiegenden Folgen, die viel Gutes bewirken können oder großen Schaden anrichten.

Kurzum: Die Ökonomen verfügen über große Macht, denn sie können Ihnen einreden, was sie sehen und was nicht. Überlassen Sie ihnen dieses Machtmittel nicht ungeprüft.

Money and the Impossibility of Equilibrium

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I commented here:

I wish I could pack as many good points into the space of 13 minutes [see video below]. 

From my very specific point of view, what needs more spelling out is the connection between the ideological compulsion to view the economy as a barter economy (unaffected in its basic relationships by money) and the misconceived idea of a benignly equilibrating system of free markets (capitalism). 

See my  (2) Neutrality of Money — Say's Law and The Need to Believe in a False Theory.

I see a great strength of MMT in its ability to show that money as it operates in a real economy disproves the mechanisms of equilibration asserted by mainstream economics (e. g. loanable funds theory).

Hurricanes, Climate Alarmism, and the Elementary Forms of Religious Life

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Climate alarmism is dissociated from rational analysis. It is perpetuated by a community of believers cultivating certain articles of faith, regardless of the scientific evidence. The hype stays alive by virtue of its adherents' constantly reassuring each other of the urgency and indubitable truth of their beliefs. They are not a community of critical scientists or supporters and appreciative sympathisers of the scientific method; instead they form a totemic society: the shared belief in the elevated and untouchable value of their tenets/fetish/totem is what constitutes the group, lending it a sacred character.

The essence of religion, Durkheim finds, is the concept of the sacred, the only phenomenon which unites all religions. "A religion," writes Durkheim, "is a unified system of beliefs and practices relative to sacred things, that is to say, things set apart and forbidden—beliefs and practices which unite into a single moral community called a Church, all those who adhere to them."

It is not what they believe in that matters but the intensity with which their beliefs are held and the ability thereby to strengthen and perpetuate the cohesion of the totemic community.

The hallmark of a member of a totemic group is not reason and insight matter but devoutness and compliance with specific convictions. 

The hurricane is one of the totems of the community of climate alarmists. The belief in this community-forming symbol contrasts strongly with the scientific evidence, exposing the religious dogmatism underlying the movement.

Writes Kenneth Richard, who also provides ample references supporting his contention,

It is well documented in the scientific literature that a cooler climate is associated with more weather extremes and hurricane activity, whereas a warmer climate leads to a reduction in weather extremes and hurricane activity. [...] 

The Washington Post editorial board has apparently decided that conclusions found in the scientific literature are subservient to their political aims. 

Therefore, they may be justified in blaming out-of-favor politicians and those who “deny” that humans cause extreme weather events for the devastating consequences of an impending landfalling hurricane. 

Below are several scientific papers published within the last year that do not seem to support the Post‘s angle that says we can reduce hurricane landfall frequencies if only we can agree to believe, rather than deny, that humans are responsible.

The source.

See also here.

Marx and "Effective Reality" (Gramsci) — Marx' Socialism: A Raging Impossibility

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I left this comment here:

Like Nick Johnson and Geoffrey Hodgson, I acknowledge that Marx made important contributions to the social sciences including economics. After all he discovered the phenomenon of "effective demand" before Keynes (and anyone else? Possibly). 

Marx advertised capitalism as a progressive force, a feature of Marxism largely and tragically underappreciated by its adepts. 

Bill Warren deals with this aspect in his "Imperialism: Pioneer of Capitalism." 

John Sender and Sheila Smith in their "The Development of Capitalism in Africa" demonstrate how paying attention to "effective reality" (Gramsci) requires a detailed and unprejudiced look at capitalist social relations as they actually unfold, in order to be able to correctly conceptualise and implement progressive policies rather than merely paying lip-service to politically sterile ideological stereotypes. 

Temperamentally, Marx was not equipped to take this approach. 

My first reaction on reading Hodgson above was of a somewhat skeptical nature. I did not like the destiny-argument. However, ultimately Hodgson is right: as substantial an analyst Marx may have been with regard to contemporary politics and social issues, his visions of socialism/communism were lacking any of that analytic rigour and sense of reality, being purely Utopian, mere products of fantasy and faith. 

It appears that a strong component of pure faith is indispensable for any movement to become radically totalitarian. Marx and Engels certainly provided that component. 

In contemplating the future, ever the idealistic Hegelian dreamer, Marx got carried away with his metaphysics of preordained history, when he should have remained down to earth and look for feasible improvements for the working class and the capitalist system.
Social democracy did this job for him. 

Marx was psychologically incapable of giving up his implacable hatred of capitalism and seek compromises in recognition of the insurmountable constraints and the huge positive potential presented by "effective reality". 

Marx was the source and the leader and the authentic saint of a socialist/communist movement based on Utopian faith and inexhaustible hatred for any form of reality that did not resemble Marx's figments of socialist/communist society. 

At the end of the day, Marx was not a materialist at all, but a religious type, preferring the lure and exhilaration of the total, the ultimate, the perfect to dealing with sober, pedestrian and messy "effective reality". 

Marx left socialism/communism without a home in reality—a raging impossibility. And rage it did.

(1)*** Studying Modern Monetary Theory (MMT) — Why It Is Worth Your While

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Here are some reasons why studying Modern Monetary Theory (MMT) is worth the effort. 

First, increasingly, the economically literate are expected to be acquainted with MMT. 

Second, MMT shines a new light on the economy and the customary ways of looking at it. 

Third, MMT provides a systematic critique of mainstream economics within a framework that itself offers an alternative to the target of its criticism. 

A theory worth its salt ought to remain open to sensible challenges at any time. 

Economics is not exempted from this proviso. Though it is not the most common habit of economists to call their science into question.

However, studying economics and challenging it should be intertwined activities. 

Attempting to refute what the student learns is what lends the exercise of education its scientific character.

Mainstream economics is often presented to the student as a monolithic block of settled wisdom, rather than as a body of thought in need of permanent corroboration and renewal.

Apart from the promise of its own interesting picture of the economy, MMT is perfectly suited to putting established economics to the test.

By reading this book you get to know an alternative approach to economics, acquainting yourself with (a) a different view of the economy and (b) a means to practicing economics according to the scientific way, learning economics by being critical of it.

No matter how you assess MMT in ideological and political terms, and independent of findings that may prove MMT or aspects of it wrong, you will gain by studying it along the lines of the present book.

We never know whether the theory we happen to be studying will be refuted one day. We should always expect refutation to be possible and, indeed, seek to accomplish the rebuttal of the theory we are studying. If we are successful at refutation, what is there to lose? Having been proven wrong, there is a good chance that the theory will improve or it will be replaced by a more robust theory, telling us more insightful things about our world than its precursor.

So, let us begin studying economics by doubting it.

Continued here.

Incessantly Growing Human Needs — A Succesful Strategy for Survival

Another great post. Discussing the relationship between man and nature is too important to be left to religious fanatics, who unfortunately dominate the public discourse. I sigh with relief when the debates about nature and the environment are joined by people with an open mind, capable of critical thinking and willing to let fallible science guide them to the closest approximations to truth that we are capable of. James Lovelock seems to be one of them. Thanks for pointing me to him (and many other authors well worth reading), Nick. 

Human by Virtue of Language

In fact, the key to cultural evolution is the human language which is different from any other animal language in that it enables humans to systematically describe things, thus literally objectifying (turning into an object open to public assessment) what people feel and think. From the objectifying descriptive function of human language, man derives the argumentative function, the ability to probe, assess and criticise what others say and think. No other animal can do that. These peculiar functions of the human language and the resultant ability to argue and systematically question matters in an unending quest to learn more about the world he lives in — this is what makes human beings human beings. Which is, incidentally, why dogmatism, which suppresses this fundamental quality of being a human, is actually inhumane.

Now, the link between the anthropological theory of man as the critical animal — the animal capable of systematic criticism — and economics is provided by my theory of human adaptation for survival.

Man — Creator of Needs

Owing to his ability to question their surroundings, humans have come to evolve a unique way of survival. They survive by inventing new needs. Which is why humans have central heating unlike any other animals who would welcome pleasant innovations if only they had the ability to bring them about.

We Survive By Inventing New Desires

Surviving by creating new needs is so natural to us that we hardly notice our practising it daily.  Say, all of a sudden something is wrong with the tea pot: its wobbling on the kitchen table. It has never done that before. Now you are likely to develop desires that you never had before. You start inspecting the tea pot in novel ways, testing it in different ways until you begin to understand what the problem is. Now you will continue to develop new desires: you come up with theories and visions of repairing the pot, perhaps affixing a certain piece to its bottom so as to stabilise it again. Animals do not repair pots because they are not particularly inventive; man cannot help being inventive because of its developed critical faculties. In this fashion man survives by altering its environment. 

Natural Resources Do Not Exist, Only Human-Induced Resources

There are no such things as natural resources. Something becomes a resource because man discovers/invents a way to link a useless object with a practical way to make it serve a human desire. Only if this process has been completed does a "natural resource" spring into life. And man's ability to come up with ingenious solutions is unlimited unlike those useless things that man might turn into a resource.

(Economic) Growth Is the Natural and the Right Condition of a Planet Inhabited by Humans

By his nature man grows his resources. Defining new desires all the time and realising a large number of them is the fundamental characteristic of the human being. In other words, she will always tend toward the growth of her wealth, her ability to satisfy her desires and thus generate economic growth if no one hinders her to do so.

Why Man Is a Masterful Steward of Nature

The fact that man incessantly pursues the fulfillment of his desires is of itself the reason why he has been such a masterful steward of nature. Ultimately, when we speak of nature, we mean the relationship between man and nature. For nature per se does not exist. Nature exists only through the conceptions man has of her. Perversions, such as the green myth that man is a net destroyer of nature, and dead-ends aside, man naturally seeks a balance with nature. That is, he endeavours to overcome nature's hostility to him and turn her into his maiden. Nature is neither a subject with her own views, nor does she deserve to be worshiped for her own sake, as if she were a God, as the green cult suggests. 

Nature ought to be man's instrument, and if this instrument helps us satisfy our needs then nature is in balance, she is being treated right and is protected (in her capacity to serve man). 

Because he so skillfully subjects nature to his desires, man has been able to constantly increase his resource base. The greatest triumph of all was the surmounting of the Malthusian trap, perhaps 250 years ago. Nature lost her capacity to deny (by diminishing returns to land) mankind the constant growth of per capita income. This was the end of the greatest environmental degradation of all: land that cannot sustain human being. Our species has learnt to ensure the environment is in her healthiest state, i. e. fit to support the growing wealth, convenience, and security of the human being.

Backwardness

 

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Continued from here.

[Bear with me, the text is a bit repetitive, I have written it spontaneously, while trying to assure myself of the correctness of my thinking.]

Maybe this is only semantics: I refuse to accept the idea that there are advantages to being backward (relative to not being backward). Backwardness is by definition disadvantageous. It is not an advantage to be poor, less healthy, to live a shorter live etc. There are advantages of being able to develop and catch up efficiently, but these advantages are not caused or effected by being backward, but rather by becoming more developed. Is it an advantage to have a very low per capital income, low levels of productivity? Is it an advantage to be so poor as to show promise for strong growth some time in the future? My answer is no. It is the ability to climb out of poverty/backwardness that is advantageous — not poverty or backwardness per se. The elements making for progress are themselves not features of backwardness, but belong to the arsenal of development, progress, improvement that is not available from backwardness.

So it is the ability to copy or partake in other ways in the features of more advanced stages of development that are advantageous. A country can be as backward as it likes, it will not draw any advantage from that, to the contrary. The advantage of being able to catch up is derived (or "imported", if you like) from more mature stages of development.

Is it better to be poor (backward) today than 500 years ago? Perhaps the right answer is: yes, because backward countries are liable to catch up faster (and have more access to the joys/benefits of the more developed world) today than in earlier times. But again, that does not make backwardness advantageous or the cause of substantial progress.

You write: "Can you expand on your point that ‘it is always better to be advanced in terms of economic development rather than backward’? Better in what way? By the simple virtue of being wealthier already, or in terms of growth potential?"

I would argue that a country on an advanced level of development (as opposed to a backward one) will be wealthier and have a sounder growth path, and combine both to reinforce one another. In fact, this is a possible definition of development, of being developed as a opposed to being backward.

You write:

"Those latecomer countries that have caught up economically and joined the rich country club surely show that in such cases, they were able to exploit the advantages of backwardness. Does this not make your first point context-dependent?"

These countries have not enjoyed the advantages of backwardness, they have enjoyed the advantages of the developed world, and have learned to make use of them to be able to escape from backwardness. The drivers of this escape are elements from the modern advanced world: technology, know-how, mores, experiences, proven practices of the developed world.

At the risk of becoming excessively repetitive: no one catches up "like hell" because they are backward; they catch up because they have found ways to partake in features that make advanced countries advanced: appropriately modern business practices, legal techniques, forms of business organisation, technological progress etc.

Backwardness and Exports

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My comment here:

(1) I don't like the third paragraph as the author seems to suggest that there is a net cost in moving first and a net benefit of being backward. Maybe I am misconstruing his wording. At any rate, I think, it is one thing to be backward (with the enormous costs associated with this) and another being in a position to take advantage of the achievements of first movers (saving costs and gaining benefits compared to reinventing the wheel). Also, the costs of moving first will almost certainly be lower than the costs of being backward and entail benefits clearly surpassing costs (early and long-lasting wealth). In short: it is always better to be advanced in terms of economic development rather than backward.

Of course, the author is right that backward nations ought to optimise the follower's advantage (saving the costs of reinventing the wheel).

(2) Like the previous post, this post encourages me to think that exports play a pivotal role in successful development, a fact that belies the weird categorical MMT-proposition "imports = benefits", "exports = costs". It is wrong to dichotomise exports and imports as they are inextricably interlinked. Both involve benefits and costs.

See also here and here. 

Continued here.

(2) A Puzzle: Exports = Cost, Imports = Benefit ?

 

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Continued from here.

I received this reply to my comment.

Dear Lector (at 2018/05/25 at 5:31 am)

Thanks for the kind comments.

Joan Robinson was talking about a world economy under the Bretton Woods agreement (fixed exchange rates). The constraints that system imposed on governments and nations no longer apply – where nations adopted fiat currencies with floating exchange rates.

A world of difference.

best wishes

My response is here:

 

Bill,

Thank you for your reply.

I fail to see how a regime of floating exchange rates invalidates what these gentlemen have to say about the benefits of engaging in exporting:

    Between whatever places foreign trade is carried on, they all of them derive two distinct benefits from it. It carries the surplus part of the produce of their land and labour for which there is no demand among them, and brings back in return something else for which there is a demand. It gives value to their superfluities, by exchanging them for something else, which may satisfy part of their wants and increase their enjoyments. By means of it, the narrowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being carried to the highest perfection. By opening a more extensive market for whatever part of the produce of their labour may exceed the home consumption, it encourages them to improve its productive powers and to augment its annual produce to the utmost, and thereby to increase the real revenue of wealth and society.

Adam Smith, The Wealth of Nations, Chap I, Commercial System, p. 181

While Adam Smith emphasises trade and thus exporting as "a vent for surplus production and as a means of widening the market thereby improving the division of labour and the level of productivity" (Thirlwall), the latter author continues to write in his "Growth and Development" (1990, p. 430),

    ... export growth plays a major part in the overall growth process by stimulating demand and encouraging saving and investment, including foreign direct investment from abroad, and by increasing the supply potential of the economy by raising the capacity to import.

And he adds on p. 431 with respect to the most successful among the developing and (not only recently) industrialised countries

    ... there is no way in which these countries could have grown as rapidly as they did without the rapid growth of exports. Apart from all the externalities associated with trade and encouragement of domestic and foreign investment, they simply would not have had the foreign exchange to pay for all the imports.

If this is true, and I have no doubt it is, how can one claim that exporting is an impoverishing activity and nothing but an impoverishing activity (Neil Wilson above), a cost and nothing but a cost, not eligible to be ascribed any benefit(s) ?

Are you saying all of these benefits do not exist? Alternatively, are you saying that if these benefits exist their effects are fully annihilated, made to disappear, leaving no traces of their positive side by the fact that an exporter is "giving up some real things" of domestic origin? Are you arguing in favour of total autarky? No, you are not, because you posit that imports are a benefit (and nothing but a benefit). But as you acknowledge yourself, exports have the benefit of making imports possible. How does that benefit disappear, when it is claimed that exports are nothing but disadvantageous, void of benefits, a cost and nothing but a cost?

You write:

    But being able to export is clearly particularly important for a nation that cannot feed itself or run electricity systems with the resources it has at its disposal [sic] with trade.

You are avoiding the term "benefit", but still a benefit it is. Then you write: 

    Which means that the cost [that export is] is best considered as an investment in generating benefits, which in this case, might be an increased capacity to purchase imports.

The ability to afford the cost of importing "some real things" is a benefit derived from export. If export would not bring forth this benefit, I would not be able to benefit from import. Restricting export to its cost side is as inadmissible as claiming that a salary is a cost for its receiver, say, for all of it is spent. Well I could not spend anything unless my salalry had the benefit of being worth enough to afford the cost that sellers erect like a wall between my desires and the things I would like to acquire. This cost (of purchasing imports) is not generated by export, but by the importers legitimate inclination not to give away things for free, and that cost is met by the exporter's ability (i. e. the great benefit of export) to offer something sufficiently valuable to entice the importer to make a purchase. So export can be looked at from the point of view of benefits (e. g. it gives me purchasing power) as well as costs (I have to give up certain things to enjoy the benefits of export).

To claim that within the conceptual framework of costs and benefits, only the concept of cost applies to export is not true. It (export as cost) applies in the form of special cases.

It is not clear to me what one hopes to gain by claiming that a proposition is more general than it actually is.

Also, the advantages and disadvantages (costs and benefits) of exporting and importing can not be exhaustively accounted for by concentrating exclusively on the question whether the domestic availability and the domestic use of domestic resources are increased (supposedly categorically good) or reduced (supposedly categorically bad). Why should one use domestic resources domestically, when they are more productively and profitably applied by producing and selling export goods?

To the extent that trade involves international imbalances as well as winners and losers, this still does not justify the conceptual truncation whereby exports are said to be a cost and only a cost, and not amenable to being (perceived as) anything else, and imports are said to be a benefit and only a benefit, and not amenable to being (perceived as) anything else.

I think, this is the core reason why many people do not go along with "export = cost, import = benefit."

A claim is made that the proposition is virtually self-evident, easy to state and understand, when it is not, for it purports to express a generally applicable statement, when in fact it can be challenged by valid counter examples.

The claim is confidently introduced as simple and clear and of the most general nature, but further discussion quickly reveals that sophisticated complementary arguments are required to support it.

It seems to me that a rephrasing is required that avoids the above shortcomings.

I write this as someone who is willing to try very hard to understand MMT, because I have amply experienced how exceptionally valuable this way of looking at the economy is.

(1) A Puzzle: Exports = Cost, Imports = Benefit ?

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DRAFT 1

Bill Mitchell argues:

... exports are a cost and imports are a benefit.
Giving some real thing away is a cost. Getting some real thing is a benefit.

I beg to differ.

It is clearly not true that 

• (a) giving away some real thing is a cost, or 

• (b) getting some real thing is a benefit 

under all circumstances.

I may give away that old bicycle that clutters my garage and whose sight I loath and be the better off for it, as getting (or rather still having) it is a cost, i. e. something negative, something that reduces my wealth (i. e. my possession of something whose presence and availability to me creates an advantage or gain compared to it not being present or available to me). Giving the bicycle away is a benefit, something that increases my wealth (as defined above in the bracketed phrase).

I can "give away some real thing", creating thereby a benefit, as we have seen, and at the same time "get some real thing", creating thereby a cost. The complete reversal of Mitchell's tenet. For this is what happens when I trade the loathed bicycle in for beautiful flowers that, however, turn out to be of the instantly withering kind, smelly, dirty and poisonous, in short: just one hell of a cost.

It is immaterial that I may have misjudged, thinking I am getting a benefit by "importing" these real things, The fact is: I have got a real thing and thereby incurred a cost instead of reaping a benefit.

Consider the case of country A whose demand for X is satisfied, while the X-producing factories would be able to enhance the country's wealth by selling many more Xs before reaching their capacity limit. Clearly, in this case, giving away some real thing brings about a benefit.

Considering the case of exporting in order to be able to import it seems rather obvious to me that export is a benefit in so far as it facilitates another benefit (derived from importing some other real thing): if I wish to import Y, it is indispensable for me to export X. The benefit entailed in importing Y is not available unless one exports X. So clearly "giving away some real thing" produces in this case the intermediary benefit of being able to get what I want.

Imagine a country B where people are very healthy, in large measure because they do not consume the bad kind of sugar that makes so many people in the West unhealthy. B is developing fast and increasingly engaging in trade. At some point it begins to import bad sugar from the West, which proves to be in enormous demand. Soon per capita consumption of bad sugar in B is the largest in the world. Sugar-related diseases spread among the population. It stands to reason that in this case "getting some real thing" involves a cost. 

Conclusion

I think, what I have established is that "giving away of some real thing" (including the case of exporting some real thing) can be shown to produce a benefit/benefits, while "getting some real thing" (including the case of importing some real thing) can be shown to entail a cost/costs.

For him who wishes to take a look at exports and imports from the point of view of costs and benefits it would seem to be more fruitful to treat each category as a bundle of costs and benefits, rather than insisting that the category of cost can only be applied to exports (but not imports)  and the category of benefit can only be applied to imports (but not exports). After all both tend to be interdependent, being mutually beneficial while both also being capable of generating costs.

The propositions in question — (a) and (b) above — are special cases at best, they are not generally true.

The phrasing is therefore unfortunate in that it creates confusion, for it can be easily shown that "giving away something real" may be associated with a benefit, and "getting some real things" may come at a cost. 

The advantages and diadvantages (costs and benefits) of exporting and importing can not be exhaustively accounted for by concentrating exclusively on the question whether the domestic availability and the domestic use of domestic resources are increased (supposedly good) or reduced (supposedly bad). Why should one use domestic resources domestically, when they are more productively and profitably applied by producing export goods?

It is not clear to me what one hopes to gain by claiming that a proposition is more general than it actually is.

Also I do not see in how far these propositions are central to MMT or any of its main arguments.

PS

Writes Mitchell,

It just states the obvious fact that exports, by definition, involve sacrificing real resources and depriving a nation of their use.

Imports on the other hand clearly involve receiving final goods and services where the real resource sacrifice has been made by the exporting nation.

The propositions in question — (a) and (b) above — are special cases at best, they are not generally true.

The phrasing is therefore unfortunate in that it creates confusion, for it can be easily shown that "giving away something real" may be associated with a benefit, and "getting some real things" may come at a cost. 

The advantages and diadvantages (costs and benefits) of exporting and importing can not be exhaustively accounted for by concentrating exclusively on the question whether the domestic availability and the domestic use of domestic resources are increased (supposedly good) or reduced (supposedly bad). Why should one use domestic resources domestically, when they are more productively and profitably applied by producing export goods?

It is not clear to me what one hopes to gain by claiming that a proposition is more general than it actually is.

DRAFT 2 (for a different purpose)

The below propositions are special cases at best, they are not generally true.

... exports are a cost and imports are a benefit.
Giving some real thing away is a cost. Getting some real thing is a benefit.

...

It just states the obvious fact that exports, by definition, involve sacrificing real resources and depriving a nation of their use.

Imports on the other hand clearly involve receiving final goods and services where the real resource sacrifice has been made by the exporting nation.

The above phrasing is infelicitous, for it can be easily shown that "giving some real thing away" may be associated with a benefit, and "getting some real things" may come at a cost. 

On a more specific level: why should exports generate ONLY costs (in the form of sacrificing real resources)? Consider the case of cross-border know-how transfer: this kind of exporting may actually bring benefits to both exporter (learning experiences to be made use of domestically) and importer (enhanced knowledge) simultaneously, say: by solving a problem in the know-how-importing country, the exporter is able to figure out and instantly communicate back home how to finally solve a domestic problem. 

Exports need not require sacrificing real resources in the sense of these being no longer available to the exporting nation in a regrettable or disadvantageous way as in the case where (see above) domestic demand is insufficient to exploit increasing returns to scale. The resources are not wanted at home, while being able to generate more domestic wealth by being offered abroad.

The idea that every transfer of resources from an exporting country to an importing country has ipso facto an impoverishing and only an impoverishing effect on the former strikes me as unconvincing. These resources may well be put to better use as part of a roundabout and interdependent cross-frontier flow rather than remaining tied up domestically. Thus, the dichotomous perspective expressed in the above quote also ignores the dynamic gains from trade (stimulus to competition; the acquisition of new knowledge, new ideas and the dissemination of technical knowledge; the possibility of accompanying capital flows through foreign direct investment, and changes in attitudes and institutions).

For him who wishes to take a look at exports and imports from the point of view of costs and benefits it would seem to be more fruitful to treat each category as a bundle of costs and benefits, rather than insisting that the category of cost can only be applied to exports (but not imports)  and the category of benefit can only be applied to imports (but not exports). After all export and import tend to be interdependent, being often mutually beneficial with both also being capable of generating costs. 

Continued here.

Man's Mesocosm: Halfway between the Macrocosmic Sun and the Microcosmic Atom

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Man lives in the mesocosm, to which he is particularly well adapted. All the more astounding are his excursions into the alien realms of the macrocosm and the microcosm.

Der Mensch lebt im Mesokosmos und ist diesem in besonderer Weise angepasst. Umso erstaunlicher seine Ausflüge in die ihm fremden Welten des Makrokosmos und des Mikrokosmos.

... the height of a man (2 m) is about halfway between the diameter of an atom (2 x 10^–10 m) and that of the Sun (2 x 10⁹ m): “Nearly midway in scale between the atom and the star there is another structure no less marvellous: the human body”.

The source. 

... die Körpergröße eines Menschen (von 2 Metern) liegt etwa auf halber Strecke zwischen dem Umfang eines Atoms (2 x 10^–10 m) und dem der Sonne (2 x 10⁹ m): „Fast in der Mitte zwischen der Größe eines Atoms und [der Sonne] befindet sich eine weitere Struktur, die nicht weniger wunderbar ist: der menschliche Körper.“

Wealth — A Discussion

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Only available in English.


Here are some thoughts and replies from the comments section of this post by Willis Eschenbach: 

MY INITIAL COMMENT:


I have two philosophical points to make that do not necessarily affect your main argument, but still may be of interest:

1) There is a fourth way of creating wealth: trade / exchange. Say, you have a pack of chocolate but you hate chocolate, while you absolutely love gummy bears. You meet somebody with the inverse set of likes and dislikes. So, you exchange your sweets, and each one has created wealth, where it had not been available to him before.

This leads me to the definition of wealth: The essence of wealth is the ability to satisfy a desire (at one’s discretion). The successful fulfilment of a desire may be classified as a gain, a benefit or an advantage vis-à-vis a state of affairs, when no such fulfilment has been accomplished.

By extension then “creating wealth” refers to an act that provides one with “a gain, a benefit, an advantage” ( i. e. results of the fulfilment at one’s discretion of a desire/desires).

2) On these grounds, I would challenge your thesis:

“Everything [except the above three ways of creating wealth] else is services—bankers, barbers, bookkeepers, surgeons, stylists, singers. They are important, some are life-and-death important … but they don’t create any wealth.”

Services like cutting somebody’s hair do create wealth. For instance, assuming a “normal” human being, if I [or a doctor] manage[s] to heal my broken little finger, I have been provided “with a gain, a benefit, or an advantage” that I have strongly desired and whose immediate provision at my urgent discretion represents a capacity that we call wealthiness. I suspect, most wealth creating services may be classified with other forms of manufacturing.

THE REPLY

Georg Thomas says:

I have two philosophical points to make that do not necessarily affect your main argument, but still may be of interest:

1) There is a fourth way of creating wealth: trade / exchange. Say, you have a pack of chocolate but you hate chocolate, while you absolutely love gummy bears. You meet somebody with the inverse set of likes and dislikes. So, you exchange your sweets, and each one has created wealth, where it had not been available to him before.

Clearly you are not an accountant. Since I am one, I can assure you that trading assets does NOT create wealth. If I give you $100 worth of coffee and you give me $100 worth of tea, there is no wealth created. Ask your accountant, or the IRS, if you don’t believe me.

You also say:

Services like cutting somebody’s hair do create wealth. For instance, assuming a “normal” human being, if I [or a doctor] manage[s] to heal my broken little finger, I have been provided “with a gain, a benefit, or an advantage” that I have strongly desired and whose immediate provision at my urgent discretion represents a capacity that we call wealthiness. I suspect, most wealth creating services may be classified with other forms of manufacturing.

I’m sorry, but that is not true. To understand this, suppose there are two couples on a tropical island. One person fishes, one has a garden, one gathers food and building materials from the forest, one makes clothes from local fiber. They could go on for a long time that way, they are creating real wealth. They will live in comfortable houses, and eat and dress well.

But suppose on the next tropical island there are two couples, and one person is a barber, one is a doctor, one is a journalist, and one is a musician, noble occupations all but services all … that society will have nothing to eat, nothing to wear, nothing to keep them from the rain. They will starve to death naked outdoors. None of those occupations create wealth, while all of the activities on the first island all do create wealth.

Best regards,

w.

MY REPLY

Thank you for your answer. 

I am puzzled.

First you argue wealth is what your accountant or the IRS tells you what it is. Then, you arbitrarily and needlessly impoverish the term “wealth” by equating it with “indispensable requirements for basic survival”. Even your accountant has a broader notion of wealth than you do.

What do you not like about my wider definition of wealth?

Different people have different notions, different classifications of wealth. While the accounting classification may or may not overlap with other classifications (such as mine), it does not invalidate the logic of my reasoning: chocolate does not represent a (wealth-establishing) benefit to me, but gummy bears do (see above). So being able to trade makes the difference between enhancing my wealth and not-enhancing my wealth.

THE REPLY TO MY REPLY:

Thank you for your answer.

I am puzzled.

First you argue wealth is what your accountant or the IRS tells you what it is. Then, you arbitrarily and needlessly impoverish the term “wealth” by equating it with “indispensable requirements for basic survival”. Even your accountant has a broader notion of wealth than you do.

Georg, I didn’t say that “wealth is what your accountant or the IRS tells you what it is”. I said nothing of the sort.

I said that both the IRS and an accountant will tell you that trading an asset for another asset doesn’t create wealth.

Best regards,
w.

MY REPLY:

 You write: “Georg, I didn’t say that “wealth is what your accountant or the IRS tells you what it is”. I said nothing of the sort.” You are right. I apologise for misrepresenting your statement.


REPLY TO MY REPLY:


Georg, you are a gentleman indeed. My thanks.
w.

MORE THOUGHTS OF MINE EXPRESSED IN THAT TREAD:

By way of supplement:

(1) By equating subsistence level production with wealth — and limiting the term "wealth" to that meaning — we would not be able to recognise a difference between US-citizens (who survive) and citizens of Sudan (those, who survive) — they're both wealthy by virtue of being able to survive. It is not trivial to claim that the wealth difference is in actual fact gigantic, and matters tremendously from the point of view of humanism.

(2) Erik Reinert explains in his excellent book how less developed countries can get trapped as eternal low-value-added producers in a comparative advantage world of free trade, requiring protectionist measures to develop and shore up high-value-added domestic industry. I tend to agree with this position. The matter is different with highly developed countries.

However, if we are committed to free trade, we have got to be honest about it. The US-administration is right to call us — hypocritical Europeans — on being the more egregious protectionists.

MORE THOUGHTS OF MINE:

By way of supplement: whether we grow wealth, extract it, manufacture it or realise it by trade/exchange or theft, every form of wealth depends on preconditions antecedent to growth, extraction, manufacture, trade/exchange or theft. Growing wealth, for instance, presupposes a host of physical, biological etc. preconditions. So, the fact that most wealth realised by exchange or theft has further necessary prior conditions (such as the earlier production of the wealth to be realised by exchange or theft) is not unique to trade as a wealth creator. In fact, in a society with a high degree of division of labour growth, extraction or manufacturing will not suffice to ensure the realisation of wealth. Trade will have to do the trick. 

To put it differently: capitalism runs on sales. 

REPLY BY WILLIS:

In fact, in a society with a high degree of division of labour growth, extraction or manufacturing will not suffice to ensure the realisation of wealth. Trade will have to do the trick.

Two points:

First, when I was a kid, our foreign trade was about zero … and the country was flourishing. So the idea that we must have trade doesn’t pass the historical test.

Second, I have no problem with foreign trade … as long as we sell manufactured goods and import raw materials. Doing it the other way around, as we are doing with China, is hugely damaging to our economy by moving our manufacturing, the main way to create wealth, offshore …

That’s just foolish.

w.

MY REPLY TO WILLIS' REPLY: 

You may produce as much goods and services that potentially represent wealth, if you do not act to realise that wealth, there will be no wealth available. In modern societies like the USA, wealth is mostly realised via exchange. Not even (most of) the few who produce our food and clothes (and other basic needs) are autonomous producers, having instead to realise whatever wealth will be available to them eventually via trade/exchange. The quality of our basic and non-basic goods and services would be considerably lower and we could sustain only a fraction of today's populations, if we abandoned trading with one another and regressed to forming communities of autarkic households. Trade is an indispensable condition of wealth in our society. This holds true irrespective of how one assesses the US' current account, the US' terms of trade with other countries or which kind of foreign trade policy one favours.

FURTHER THOUGHTS OF MINE:

My definition of wealth, (see above):

“The essence of wealth is the ability to satisfy a desire (at one’s discretion). The successful fulfilment of a desire may be classified as a gain, a benefit or an advantage vis-à-vis a state of affairs, when no such fulfilment has been accomplished.

By extension then “creating wealth” refers to an act that provides one with “a gain, a benefit, an advantage” ( i. e. results of the fulfilment at one’s discretion of a desire/desires).”

If my definition of wealth is acceptable, then you are factually wrong in claiming that only products derived from activities ensuring basic survival may count as wealth. (Also, you are needlessly burdened with the obligation to list – if called upon to do so – what activities/products count as being able to ensure basic survival ( = wealth)).

Further, there is no practicable or indeed sensible way to disentangle wealth-as-subsistence from wealth-in-non-subsistence-form in a modern economy with a very intricate and deep division of labour and roundabout ways of production (even on the subsistence level).

Wealth in modern society is precisely characterised by the fact that very few people engage in ensuring subsistence, with the majority involved in non-subsistence activities whose provision is key to their being able to survive at the level of basic needs. Also, these non-subsistence activities keep improving, even revolutionising the way in which we ensure basic survival (engineers don’t grow potatoes but they greatly improve the products quality and level of output).

We fare better acknowledging wealth creation in all its forms and ramifications, instead of privileging some activities as being capable of producing wealth while leaving others out of the picture.

STILL FURTHER THOUGHTS OF MINE:

The most important and most fundamental reason why I prefer a fairly broad definition of wealth has to do with the anthropology that I espouse.

My core hypothesis is: man differs from other animals in that he adapts to his environment, survives and thrives by constantly inventing/discovering new desires/needs and constantly trying to fulfil these desires. He never ceases to invent or discover, he never stops attempting to attain a newly conceived benefit (a new element within the arsenal that we call “wealth”). Constitutively, man is a wealth creator— a universal wealth creator, he applies this natural reflex to all aspects of life, not just the part required to ensure basic survival. 

That is also why I believe economic growth is a natural extension of the human condition. Man lives and prevails in his environment by permanently going for new solutions, new benefits, new needs. To deny man his universal drive to create wealth — subject to reasonable moral provisos — is to curtail his humanity. Sir Karl Popper puts is well in his phrase: “all life is problem-solving”. And all this problem-solving is driven by the conception of new needs while being directed toward fulfilment of new human desires.

This shows even in trivial events, such as when you have just toppled your tea-pot. Looking carefully at the way you try to improve the situation, you will find that you are developing desires you have never been pursuing before (you try a new place to keep the pot safely or you do something about the working surface in your kitchen or you discover an uneven part at the bottom of the pot and try to repair it etc.) We are constantly working toward gains, benefits, advantages — and that is how we accumulate and maintain wealth.

FURTHER THOUGHTS OF MINE:

(1) You write: “To understand this, suppose there are two couples on a tropical island. One person fishes, one has a garden, one gathers food and building materials from the forest, one makes clothes from local fiber. They could go on for a long time that way, they are creating real wealth.
 
But suppose on the next tropical island there are two couples, and one person is a barber, one is a surgeon, one is a librarian, and one is a musician—noble occupations all but services all … that society will have nothing to eat, nothing to wear, nothing to keep them from the rain. Those occupations don’t create wealth, while the activities on the first island all do.”
 
Link them via trade and the problem is solved. And all are wealthier.

(2) Once again: You may produce as much goods and services that potentially represent wealth as you like, if you do not act to realise that wealth, there will be no wealth available. In modern societies like the USA, wealth is mostly realised via exchange. Not even (most of) the few who produce our food and clothes (and other basic needs) are autonomous producers, having instead to realise whatever wealth will be available to them eventually via trade/exchange. The quality of our basic and non-basic goods and services would be considerably lower and we could sustain only a fraction of today’s populations, if we abandoned trading with one another and regressed to forming communities of autarkic households. Trade is an indispensable condition of wealth in our society. This holds true irrespective of how one assesses the US’ current account, the US’ terms of trade with other countries or which kind of foreign trade policy one favours.

(3) I don’t think you are right in reducing “real wealth” to activities and goods that ensure basic survival (see my explanations in earlier comments). If wealth of the basic-need-fulfilling-type can be shown to have the same features as wealth of the more-than-just-basic-needs-fulfilling-type, it is factually wrong to equate wealth = subsistence, as you do. Wealth is our ability to fulfil human desires at our discretion. And it is patently wrong to claim that human desires are confined to basic needs and that wealth creation (= the ability to fulfill human desires at our discretion) is confined to fulfilling basic needs.

As I have written above, human beings differ from other animals in that they are wealth-creating machines, they survive, adapt to their environment and thrive by creating and enhancing wealth constantly, far beyond basic needs. This fundamental human trait does not suddenly evaporate when basic needs have been fulfilled. Restricting (the ability to create) wealth to (the ability to fulfill) basic needs is to truncate human nature, denying its true richness.
 
Wealth in modern society is precisely characterised by the fact that very few people engage in ensuring subsistence, with the majority involved in non-subsistence activities whose provision is key to their being able to survive at the level of basic needs. Also, these non-subsistence activities keep improving, even revolutionising the way in which we ensure basic survival.

REPLY:

Let me attempt to reconcile these two apparently different views. Wish me luck. And I won’t mention the island where everybody survives by taking in each other’s laundry.

On one island lives a surgeon, all alone. His “wealth” doesn’t make him rich.

On the other island lives a fisherman, all alone. He gets by until he gets sick.

The fisherman agrees to trade some fish for some health service.

First, YMMV and Bear and all, thanks for your comments.
 
Next, YMMV, at the start of your story, we have two healthy people and one fish.
 
At the end of the story, we have two healthy people and one fish.
Explain to me again about all the wealth that the surgeon has created …
w.

MY REPLY:

You write: “YMMV, at the start of your story, we have two healthy people and one fish [sic].
 
At the end of the story, we have two healthy people and one fish [sic].
 
[YMMV did not say there was “one fish” involved but “some fish”]
Explain to me again about all the wealth that the surgeon has created …”
 
Well, the fisherman got sick and required a cure to get better. Remember: I define wealth as “the fulfillment of a human desire at one’s discretion”. The human desire was to get well. And the surgeon fulfilled that desire enriching his client or adding to his client’s wealth, as opposed to lacking that instance of wealth, and remaining ill.

A REPLY TO MY REPLY:

Remember: I define wealth as “the fulfillment of a human desire at one’s discretion”

Say what? So if I desire to breathe, and I do breathe, I’m creating wealth? If I desire to punch someone in the nose, and I fulfill that desire at my discretion, I’m creating wealth?
 
In the context of economics, or pretty much any context for that matter, that definition makes no sense at all. My last job was the Chief Financial Officer for a company with $40 million dollars in sales per year … if you try to run that definition of “wealth” past your accountant he’ll just laugh.
w.

MY REPLY:

You write: “If I desire to punch someone in the nose, and I fulfill that desire at my discretion, I’m creating wealth?” 

Of course, I am. Bouncers or policemen create wealth that way. It is another matter, if I can get this sort of wealth-seeking socially recognised. Wealth creation is subject to numerous (social etc.) provisos — which is true with respect to any wealth-creating activities including those relating to basic needs —, but this does not invalidate my broad definition as such. Or can you show me that it does?

You write: “… if you try to run that definition of “wealth” past your accountant he’ll just laugh.”

Well, if you try to convince your accountant — or the IRS, for that matter — that wealth creating activities are restricted to the provision of basic needs … let’s see what reaction you get.

REPLY TO MY REPLY:

Georg, I didn’t ask about bouncers or policemen. If I desire to punch you in the nose, and I fulfill that desire at my discretion, have I created wealth? Because that is what you are claiming …
In addition, you seem to be confusing making money with creating wealth … they are far from the same. I can make money cutting hair, but that does not create wealth.
w.

MY REPLY:

You write: ” … you seem to be confusing making money with creating wealth … they are far from the same. I can make money cutting hair, but that does not create wealth.”
 
(1) From my definition of wealth, which you quote, it is indubitable that I do not confuse (equate) creating wealth with making money — my definition is capable of covering both wealth that is accounted for in monetary terms as well as wealth not so documented.
 
Of wealth, we may speak, in my classification, when we have been able to attain a gain, a benefit, an advantage, having reached a higher level of satisfaction compared to a situation when the desired gain, benefit or advantage is absent/unachieved.
So if the service of a barber fulfills that condition, lifting you to a comparatively higher level of satisfaction, he is capable of providing you with wealth.
 
(2) When a bouncer legitimately punches someone’s nose he creates wealth in at least two ways: he achieves a benefit to himself in being able to do the job he is being paid for (here violently but legally fending off an intruder or attacker). And he creates wealth for the person who provides him with income, in that the bouncer ensures the protection from intruders or attackers that his employer seeks. 

Incidentally, the bouncer’s wealth creation by punching noses can be in fulfillment of a basic need (not to get killed) — which provides us with one more example of why confining wealth to basic needs (which bouncing may not appear to be) involves a needlessly and absurdly truncated definition of wealth. Handling basic needs may be significantly improved by activities that may not be classified as serving basic needs ( — is curiosity relating to aerodynamics a basic need?). Another case: your wealth creating islanders may get into a situation where the only basic, survival ensuring need is to be treated by a supposedly non-wealth-creating medical professional, the surgeon.
 
Human needs are an intricate and highly dynamic realm with complex interconnections. People constantly find out about what they need or don’t and in what hierarchy these things are to be fitted. Attempts at wealth creation, understood as the search for new and higher levels of satisfaction, are the epitome of human resourcefulness.
 
To come up with a finite list of wealth-creating (excluding all non-wealth-creating) activities reminds me of the conceit and narrow-mindedness of a command economy where people are directed to engage in “production for use”, based on a central canon that determines which are legitimate and worthy activities and which are not.
 
And once again: by equating subsistence level production (fulfillment of basic needs) with wealth — and limiting the term “wealth” to that meaning — we would not be able to recognise a difference between US-citizens (who survive) and citizens of Sudan (those, who survive) — they are both wealthy by virtue of being able to survive.
 
It is not a trivial matter that the wealth difference is in actual fact gigantic and that difference matters tremendously from the point of view of humanism.

A THOUGHT BY WILLIS: 

Look, suppose I start one of those “send a dollar to every person on this list, cross out the top name, and write your name at the bottom” deals. I will definitely make money, Ponzi proved that … but no wealth is created in the process. For everyone who gained a dollar, someone lost a dollar. All I’ve done is move the money around.
It’s the difference between the baker and the bread store. The baker creates wealth by manufacturing it out of flour and yeast. The bread store does not create wealth.

MY REPLY:

(1) Assuming that a vastly expanded personal budget lifts Ponzi to a higher level of satisfaction (greater gain, the attainment of desired benefits), he clearly realises wealth for himself.
 
We may look at attempts at realising wealth from a hundred different perspectives — legal, moral, social etc. And thus we may condemn or prohibit certain attempts at realising wealth, but this does not affect my basic definition of wealth, rather it affects the admissibility/assessment of attempts at realising wealth in legal, moral, social etc. terms.
 
When we talk about realised wealth, we will see in each case that the criteria laid down in my definition are satisfied.
 
Hence:
 
(2) The bread store is not likely to remain a viable proposition for long unless it realises wealth for itself and helps other people realise wealth, say by optimising and expanding distribution (creating greater convenience to its customers, positive price effects thanks to economies of scale etc.), thereby helping bakers to survive or sell more bread than they would otherwise/or force bakers to cut out inefficiencies, and so on. There are thousands of ways in which a bread store can promote the realisation of wealth for itself and others, for instance by adding a cosy café to the sales counter, a place people love to go to socialise (lifting themselves to a higher level of satisfaction).
 
(3) It is not you, Willis, who decides whether your buyer realises wealth for herself. It is the person that is paying you twice as much as you did at the flea market, who decides whether the purchase is wealth-enhancing to her.
 
I have a friend who always buys very expensive coats. He tells me he feels better to wear the expensive designer ones, it safes him the pain of studying hundreds of different coats, and the difference in money terms just does not matter to him, he is rich enough. He realises wealth for himself (assurance to be dressed socially correct, time saving) notwithstanding the fact that he might have been able to fetch a perfectly acceptable coat at half the price.