Nightmare in Econ 101

I was just looking for a video that had been on YouTube that gave a very clear and very concise definition of capitalism as an economic system. Can't find that video. Instead, came across dozens of others that would have been funny except that they were so very painful to watch. When you get a headache while you're thinking about something -- I mean your head just starts to ache as you try to wrap your brain around a certain idea -- usually it's because the idea is fundamentally flawed and so full of contradictions that it can't be assimilated by anything as stubbornly logical as the human mind. 

After listening very sincerely to some of these poor people on YouTube, I think I discovered what their problem is: They've all been taught Marxism as a sort of "economic truth." And Marxism really doesn't make a damn bit of sense when you hold it up against REALITY. The confusion, and the headache, come in as you try to reconcile what you see all around you with Marx's interpretation of it. 

First of all, Marx says that labor is the basis of economic value. No. Not necessarily. Not unless you want it to be. According to that standard, wildflowers would have no value, since they require no human labor to produce. Is it true that wildflowers have no value? What do they mean to you personally? 

You see, nothing in the world contains within itself what we, as human beings, would call "value." Gold, diamonds and things like that are said to have an "intrinsic value" due to their scarcity. But who cares if they're scarce? We care, the human race cares, so we assign them a value. 

Is oil valuable? Up until the middle of the 1800s or thereabouts, crude bubbling up out of the ground was collected by con artists, packaged into small bottles with ornate labels, and sold as cure-alls (the infamous "snake oil.") The smelly, tarry stuff had not much other value, and it certainly didn't cure anything. Until somebody figured out how to make kerosene out of it to replace whale oil for use in lamps. Then Rockefeller started mining and marketing it. 

Takes lobsters... please. I don't like lobster and once asked a guy, "What on earth possessed someone to actually eat something that looked like that?" Easy answer: Starvation. I suppose if I was starving in Maine or someplace, I'd assign some value to lobster.

OK, so compare this to labor-as-the-source-of-value. All of you cogs in the corporate machinery, who sit all day taking one column of numbers and turning it into two or three other columns of numbers... Do you value those columns you've created? I mean, do they have any value for you? You've invested your labor in them. According to Marx, they should be of extreme importance to you. Are they?

On the other hand, you might own a little hat that your mother knitted for you from a ball of cheap yarn. She probably invested a couple hours in the hat's creation. Is it the labor that makes it valuable, or is it because it is your mother's labor? You give it value; the poor little hat probably doesn't mean much to anyone else.

In one video on YouTube, you can see this one tormented wannabe economic scholar sinking ever more deeply into the quicksand of confusion as he claims that "early capitalists" wanted monopolies so that they could sell "commodities" for more than they were worth. Here's a hint, earnest little dude, you can't sell commodities or anything else for more than they're worth. The buyer pays only what it's worth to him or he doesn't buy it. The price he's willing to pay is one way to measure its value TO HIM. It may not be as valuable to someone else. And what other value does the commodity have? Compared to what? Where ELSE does this commodity get value, except from people who assign a specific value to it? 

If the seller prices a thing too high, potential buyers will find or create substitutes. Labor, priced too high, is substituted with machinery. AUW, SEIU, Teamsters, beware. No one really has to put up with your demands and if you price your skill and labor too high, well, too bad for you. 

And this is what a "market" is:  A place where buyers and sellers determine the economic value of things. Doesn't matter how much labor it took to create a thing. Doesn't always matter much what it's made of. The buyer and seller get together and determine -- How much is this worth?

There simply is no other source of value, economic or otherwise, in human civilization, except the human capacity for identifying and organizing things. In addition, the markets and the value they generate for things is extremely fluid. A while back, some people would stand out in the rain in front of Toys R Us and pay anything for a Cabbage Patch doll. What do you think these dolls are going for now? Not a fraction of the current "value" of the latest iPad, apparently.

Another example, people who do crafts can sit for hours producing a single lovely cut-out paper snowflake, or a crocheted afghan, or a handmade sweater. The fact that these items might represent hours of somebody's labor doesn't give them any kind of value -- not when they're exchanged in a market where all of these items can be made by machine much more quickly and usually to a higher standard of quality. 

So Marx is full of crap. He's just one more guy who contrived a metaphor for the world he saw around him. We all do. We all have our way of interpreting the world around us. Some use religious precepts as their way to organize and evaluate their lives and the world around them. Others use money exclusively. Others prioritize and value things according to their usefulness for their children, spouses, or pets. 

The metaphor Marx came up with apparently suited his own purposes -- or at least his friend, Engels, was willing to pay Marx's bills to keep Marx producing -- but Marxism is not a very accurate description of the world or of human civilization, and therefore not a very useful interpretation of economics. 

Keynes doesn't really work, either. If anything, Keynesian economics only demonstrates the principle that Milton Friedman described as the economy being like a balloon -- if you pinch one end of it, the air inside only bulges out somewhere else. (And, of course, pinched too tight all around, or inflated beyond capacity, the balloon can also explode....)

You know, life is not all that complicated -- until misguided professors and others compel you to view the world through a distorted lens. Suddenly nothing makes any sense. Here comes that damn headache.

So what to do? Live by your own lights. Organize and evaluate the world according to what makes you comfortable and satisfied. I think Jefferson called this "the pursuit of happiness." You have to have some personal liberty to have any chance at that at all. And you  have to have some confidence in your own individual judgment. Don't be afraid to try and fail. That's how you learn, as in, "Man, that socialist thing is totally screwed up!" Tried and failed. 

Save the Republic!