Economic Solution 1

Ending The Great Economic Swindle Of

Many Economic Worlds

(The Paradox Of Value In Economics) *

There is one certainty in Economics: it is a science wholly conceived and defined within the human mind. There are no natural laws or first causes, except those born in human needs and wants. The causes and effects of human motivations are the only causal system at work here; and its history is written in the past processes of the ‘market’, and their evolution through these same ‘causes’. Thus economics stands wholly as a product of humanity; and its success, or folly, wholly created through the definitions humanity has supplied to define it, and the human motivations used to create these specific definitions.

Among these definitions is the definition of value. This chimerical ‘thing’, which to this day still seems to be something wholly disputed, is, yet, at a glance, very plain and undisputed in its physical embodiment, money. Where lies the problem?

We need this thing called value to make the comparison of commodities possible. But here lies that very same problem I have mentioned. To make value viable in the money we use, it must itself become a commodity. But is this a correct assumption?

Many years ago, Bertrand Russell, in his investigations into the foundations of mathematics and set theory, discovered problems in this theory. These problems showed up as paradoxes, which threatened all mathematical deductions; they came to be known as Russell’s Paradox. Simply stated, this paradox came about through allowing the possibility of a set to be a member of itself. In removing this possibility, the paradoxes disappeared.

Now in economic theory, value is primarily thought to be either, utility 1 , or a type of human labor 2 , both representing a measuring scale against which commodities are valued. Now, if we examine value in the physical sciences, there seems to be a clear-cut definition of it. It is an unchangeable scale against which something is measured, its units allowing a certain set of things to be compared. This idea of value, as the unit against which some set of things are compared, and thus, measured against each other, is a straightforward idea, which allows the whole of science to take on a firm legitimacy. But in economics, this legitimacy is lost, because here the values change in the same way that the things they are measuring do, and at the same time the measuring takes place. Do values need to be commodities bought and sold in their own market; in their own turn, fluctuating according to market pressures, just as the commodities they measure? Is this not the same paradox as Russell described, where the class itself is used as a member of itself; the value, money, representing itself as any commodity, therefore being itself the class of all commodities used in the guise of a member of that same class?

Think on it. Is an ‘inch’ the same as the length of the thing measured? Or is it a unit of value used to represent a quality of length, which allows length to be measured? The value, or its unit, is a token, not the thing itself. In being this token it is a thing apart from the thing it measures, not itself the same thing. In the physical sciences, there are multiple units of measure, many values (inches, centimeters, etc.); but they are all consistent within the value used, i.e. the values remain unchangeable. But in economics, the values change as the commodities do because they are themselves commodities, and are even sold in their own market. So suddenly, we have a situation similar to what would happen if a workman used a ruler to build a house, and that ruler stretched and contracted as the workman worked. We can imagine the house constructed! We can also see the results in the economies that have resulted from this state of affairs, and their dire consequences for the human societies that utilize them.

Again, what we are talking about here are the values used to measure commodities against each other, not human values; but the nonsensical use of these measuring values, as units without consistency, reek of the perverse human values used to create this system 3 . Here is Russell’s paradox (the paradox being the inequality of human labor according to geographic location), imbedded in the economic flesh of a perverse global economy, to allow the value of human labor to be determined by a monetary market that has found a way to swindle the laborer of his rightful due, and profit from his losses.

Whatever the motivations used to originally create this system, or perpetuate it, the results are plain: another order of magnitude of uncertainty, placed on top of an economy already totally immersed in uncertainty, and therefore plagued by unpredictable emergencies and collapses. Remember, this is not a system given to us by Mother Nature or, in any way preconditioned by it; it is a system conceived and implemented by humans, for human use.

As I mentioned above, all of this need not be; the uncontrollable can be made controllable by creating a system where there is only one money, used by all nations and societies on this earth, that is an unchangeable unit of measure of commodities, and allows them to be measured absolutely, relative to each other. Money therefore would no longer be itself a commodity, but a token of its measure (not being itself bought or sold like a commodity). This would create one unit of utility, or unit of labor, for all human beings, which does not vary according to geographic location. It will also give labor the same value throughout the world, creating economies that support their own societies throughout the world 4 .

The true purpose of economics is to allow societies to find a way to continue to exist. The more the methods chosen eliminate chance from the system, the more they fulfill this purpose, and create a more predictable system that can continue to benefit societies. Eliminating many monies and their monetary markets, will remove a whole layer of needless complexity, and will solve many of the problems that are destroying the whole system, and hurting societies, by the needless inclusion of more uncertainty within the system.


To return to note's origin click the footnote number at left

* See also my previous essay "A Step Toward Fiscal Sanity"

1 According to Jevons.

2 According to Marx.

3 This is, of course, the perverse human value of greed, the same greed that is turning free enterprise into a racket to use society as its victim, instead of its beneficiary.

4 This lack of support of society by its own economy is a major problem in all societies throughout the world today. This comes about largely because of the difference in the cost of labor, because of the existence of many monies, and the inequality in values caused by market pressures. Many believe the reason this occurred was to create this source of cheap labor, yet allow wages to be higher in the same society without raising prices for goods there. But the results were the migration of jobs and plants to where the cheap labor existed, and the lack of labor support for the society by the businesses of that same society. All of this would be circumvented by having labor costs the same all over the world, resulting in a monetary system no longer under the control of speculators and the super-rich.



Originally Published:

December 5, 2011


January 2, 2014