Stable Economy 1

I have been hearing a lot recently about inflation. I have had some thoughts about the source of this menace to a rational economy.

Imagine that there was a commodity that could be purposed and repurposed to provide for every physical need for a society to include food, shelter, clothing, transportation as well as every other physical, social and emotional need.

For the sake of simplicity, let’s call this commodity the widget. If a member of society needs food, the widget becomes food. If one needs clothing, the widget becomes the article of clothing. If one needs a car, the widget becomes a car. Further imagine that the widget could be used for education, for childcare, for medicine, indeed for any human need. How then could we determine the value of the widget.

It is easy to see that nothing could become the source of all our needs. The use of the widget as a universal commodity is only for the purpose of making a difficult concept more understandable.

The issue at hand is the relationship between the value of commodities and inflation. By reducing commodities to a common element, we can more easily explore this relationship.

What, then, is the value of a widget? If we were to assess the natural value of the widget, we would be forced to admit that the value of the components of widgets in their natural state is zero. Here let me digress for a moment. Let us declare that sand is a component of the widget. Sand on the beach or in the desert has no value as a commodity. Let me make the further point that the value of the widget that becomes education before anyone has taken the first step to become a teacher or to write a textbook or build a school is zero. It is the labor that provides for the education that gives the education its status as a widget.

It is not until someone uses their labor to collect the sand from the beach or the desert that it becomes a value added component of the widget. The same holds true for all components of the widget. They have no value as a component commodity until labor is added to them.

Here is the source of the concept “labor added value.” At this point, I am going to assert that all value of a commodity is “labor added value.” I include all labor related to the production, administration, distribution, marketing and every other form of labor from the time a physical, social or any other form of commodity lies in its natural state to the time it reaches the hands of consumers.

When “labor added value” is used as the measure of the value of the widget, all of the workers involved in the processes would be able to buy all of the widgets produced. This seems to me to be a simple concept. What it does not account for is that is not what currently happens. It cannot happen when profit enters the equation. This simple, easy to understand model does not answer the question of what happens when profit enters the equation. Profit is not “labor added value.” When profit is added to the value of the widget, all the laborers who participated in the production, administration, marketing, distribution, advertising and every other human endeavor related to the widget as a commodity cannot buy all of the widgets they provide labor to create.

Several things happen here. The reason the workers cannot buy all of the widgets is that the combined rewards for labor is less than the combined value of the widgets. The value of the widgets is inflated beyond the “labor added value.” We can call the difference between the “labor added value” necessary to process the widget from the elementary form in nature to its final destination as a commodity, profit.

The chasm between the “labor added value” and inflated value comes as the result of profit.

The profit motive is then the driving force behind inflation. The question now is what happens to the widgets that workers cannot buy because their combined rewards for labor fall short of the inflated value of the widgets.

My reasoning has shown me that, in such instances, a class of self-proclaimed elite will find a way to enrich themselves by profiteering by valuing the widgets to create empty value based on an unmitigated greed.

This I will tell you, if every person was restricted to the rewards commensurate with their labor and the value of widgets was once again commensurate with “labor added value,” there would be an ample supply of widgets to meet the needs of all the people.

I cannot conceive of a rationale (rational set of beliefs) for individuals who do not participate in the development of widgets to reap the benefits of their use. The concepts are so elementary that they were the basis for the time honored children’s story “The Little Red Hen.”

The Little Red Hen

A Little Red Hen lived in a barnyard. She spent almost all of her time walking about the barnyard in her picketty-pecketty fashion, scratching everywhere for worms.

She dearly loved fat, delicious worms and felt they were absolutely necessary to the health of her children. As often as she found a worm she would call “Chuck-chuck-chuck!” to her chickies.

When they were gathered about her, she would distribute choice morsels of her tid-bit. A busy little body was she!

A cat usually napped lazily in the barn door, not even bothering herself to scare the rat who ran here and there as he pleased. And as for the pig who lived in the sty – he did not care what happened so long as he could eat and grow fat.

One day the Little Red Hen found a Seed. It was a Wheat Seed, but the Little Red Hen was so accustomed to bugs and worms that she supposed this to be some new and perhaps very delicious kind of meat. She bit it gently and found that it resembled a worm in no way whatsoever as to taste although because it was long and slender, a Little Red Hen might easily be fooled by its appearance.

Carrying it about, she made many inquiries as to what it might be. She found it was a Wheat Seed and that, if planted, it would grow up and when ripe it could be made into flour and then into bread.

When she discovered that, she knew it ought to be planted. She was so busy hunting food for herself and her family that, naturally, she thought she ought not to take time to plant it.

So she thought of the Pig – upon whom time must hang heavily and of the Cat who had nothing to do, and of the great fat Rat with his idle hours, and she called loudly:

“Who will plant the Seed?”

But the Pig said, “Not I,” and the Cat said, “Not I,” and the Rat said, “Not I.”

“Well, then,” said the Little Red Hen, “I will.”

And she did.

Then she went on with her daily duties through the long summer days, scratching for worms and feeding her chicks, while the Pig grew fat, and the Cat grew fat, and the Rat grew fat, and the Wheat grew tall and ready for harvest.

So one day the Little Red Hen chanced to notice how large the Wheat was and that the grain was ripe, so she ran about calling briskly: “Who will cut the Wheat?”

The Pig said, “Not I,” the Cat said, “Not I,” and the Rat said, “Not I.”

“Well, then,” said the Little Red Hen, “I will.”

And she did.

She got the sickle from among the farmer’s tools in the barn and proceeded to cut off all of the big plant of Wheat.

On the ground lay the nicely cut Wheat, ready to be gathered and threshed, but the newest and yellowest and downiest of Mrs. Hen’s chicks set up a “peep-peep-peeping” in their most vigorous fashion, proclaiming to the world at large, but most particularly to their mother, that she was neglecting them.

Poor Little Red Hen! She felt quite bewildered and hardly knew where to turn.

Her attention was sorely divided between her duty to her children and her duty to the Wheat, for which she felt responsible.

So, again, in a very hopeful tone, she called out, “Who will thresh the Wheat?”

But the Pig, with a grunt, said, “Not I,” and the Cat, with a meow, said, “Not I,” and the Rat, with a squeak, said, “Not I.”

So the Little Red Hen, looking, it must be admitted, rather discouraged, said, “Well, I will, then.”

And she did.

Of course, she had to feed her babies first, though, and when she had gotten them all to sleep for their afternoon nap, she went out and threshed the Wheat. Then she called out: “Who will carry the Wheat to the mill to be ground?”

Turning their backs with snippy glee, that Pig said, “Not I,” and that Cat said, “Not I,” and that Rat said, “Not I.”

So the good Little Red Hen could do nothing but say, “I will then.” And she did.

Carrying the sack of Wheat, she trudged off to the distant mill. There she ordered the Wheat ground into beautiful white flour. When the miller brought her the flour she walked slowly back all the way to her own barnyard in her own picketty-pecketty fashion.

She even managed, in spite of her load, to catch a nice juicy worm now and then and had one left for the babies when she reached them. Those cunning little fluff-balls were so glad to see their mother. For the first time, they really appreciated her.

After this really strenuous day Mrs. Hen retired to her slumbers earlier than usual – indeed, before the colors came into the sky to herald the setting of the sun, her usual bedtime hour.

She would have liked to sleep late in the morning, but her chicks, joining in the morning chorus of the hen yard, drove away all hopes of such a luxury.

Even as she sleepily half opened one eye, the thought came to her that to-day that Wheat must, somehow, be made into bread.

She was not in the habit of making bread, although, of course, anyone can make it if he or she follows the recipe with care, and she knew perfectly well that she could do it if necessary.

So after her children were fed and made sweet and fresh for the day, she hunted up the Pig, the Cat and the Rat.

Still confident that they would surely help her some day she sang out, “Who will make the bread?”

Alas for the Little Red Hen! Once more her hopes were dashed! For the Pig said, “Not I,” the Cat said, “Not I,” and the Rat said, “Not I.”

So the Little Red Hen said once more, “I will then,” and she did.

Feeling that she might have known all the time that she would have to do it all herself, she went and put on a fresh apron and spotless cook’s cap. First of all she set the dough, as was proper. When it was time she brought out the moulding board and the baking tins, moulded the bread, divided it into loaves, and put them into the oven to bake. All the while the Cat sat lazily by, giggling and chuckling.

And close at hand the vain Rat powdered his nose and admired himself in a mirror.

In the distance could be heard the long-drawn snores of the dozing Pig.

At last the great moment arrived. A delicious odor was wafted upon the autumn breeze. Everywhere the barnyard citizens sniffed the air with delight.

The Red Hen ambled in her picketty-pecketty way toward the source of all this excitement.

Although she appeared to be perfectly calm, in reality she could only with difficulty restrain an impulse to dance and sing, for had she not done all the work on this wonderful bread?

Small wonder that she was the most excited person in the barnyard!

She did not know whether the bread would be fit to eat, but – joy of joys! – when the lovely brown loaves came out of the oven, they were done to perfection.

Then, probably because she had acquired the habit, the Red Hen called: “Who will eat the Bread?”

All the animals in the barnyard were watching hungrily and smacking their lips in anticipation, and the Pig said, “I will,” the Cat said, “I will,” the Rat said, “I will.”

But the Little Red Hen said,

“No, you won’t. I will.”

And she did.

In the history of the faith community I belong to, one of the early economic principles was succinctly stated as “The idler will not eat his bread in Zion”.

All of this leads me to the conclusion that the only stable value of a commodity is “labor added value”. But this is just the beginning of an exploration of the relationship between the stable value of a commodity (the widget), inflation, and the value of labor. More to follow.

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