Keith, You know the right questions!
If this is a bit too labored, I apologize. It's not that you need great care to understand, but rather I'm not competent enough to dance through the ideas. I have to plod. However, tuck these basics under your belt and already the economic world will look different. I hope you enjoy this. Of course you'll have questions. That's what E-Mail is all about. Let me know what you think. You ask how I treat the basic concepts. First, I'll give you the classical terms - then I'll show how I've amended them. As you are aware, the name doesn't matter. The defined concept it is attached to does matter. Names should perhaps be sensible but, if you wish, a defined concept can be called Rumpelstiltskin. The label is less important than the concept. You will find, not only on this list, but everywhere else, torrid battles taking place over a word to which each side ascribes a different meaning. They can never agree because they are talking around a word that means different things. "When I use a word," Humpty Dumpty said, "it means just what I choose it to mean-neither more nor less." "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master, that's all." That was logician and mathematician Charles Dodgson in "Through the Looking Glass" If we wish to think scientifically we must early go through a process of defining concepts. We develop a concept in our minds, but it can be pretty wooly. The immediate task is to define our concept, which means putting a fence around it. Inside the fence is nothing but the concept. Outside the fence, there is no part of the concept. Defining is, pretty obviously, the hard part of the operation. This is how the 19th century economists and particularly Henry George went about creating a common language. Using their imaginations, they removed Man and his works from the planet. What was left they called "Natural Resources" - and later, LAND. So, the oceans, air, sunshine, the electromagnetic spectrum are all natural resources and are therefore LAND. The Pacific is LAND as it is a natural resource. Then, the ancients put people back on earth. They called people LABOR. The subject of a study should always be a separate class. Thus, if we were studying bears, no doubt the first job would be to set out just what is a bear - then relate other things to this defined concept. So, we now have two mutually exclusive defined concepts, LAND and LABOR. Once Labor is back on earth he has to survive, so he puts his exertion to work to produce food, clothing, and shelter. These material products of his exertion (both physical and mental) are in neither of our first two classes. So, they were given another name - WEALTH. You walk through the forest and you see an apple tree. From the apple tree (Land), you (Labor) pick an apple (Wealth). We now have three mutually exclusive defined products: LAND, LABOR, and WEALTH. This is all you need when Labor produces things for himself - where he is both producer and consumer. Political Economy doesn't concern itself with family production. If you produce your food and other things in your own home and garden, you are not part of the study. Doesn't mean that intra-family relationships aren't important. They are simply part of another science. The study of Political Economy begins with the first exchange outside the family, when producer and consumer are different people. Products on their way to market increase in value. The table worth $10 in your workshop may be worth $20 at the market. That's why you take it there. Trade is a Wealth producer. Your material product on its way to market is still being produced and will continue in production until it reaches the consumer, whereupon it will be used, or consumed. Goods in production will increase in value, goods in the hands of the consumer will diminish in value. So again, we have two defined concepts. As well as those in the course of exchange, products in the production process as tools, or partly produced goods, or goods stored waiting for the best time to sell - all are material products that are part of the production process. Such products have not reached the consumer and are given the name CAPITAL. When they reach the consumer production is finished and are then WEALTH. So, there they are - Land, Labor, Capital, and Wealth - the four terms with which everything in the universe - and more practically, everything on earth can be described. Whatever it may be, you will find it in only one of these four terms: Land, Labor, Capital, and Wealth. The first three were called the Factors of Production. Modern economists often give lip-service to them - but they are hardly rigorous in their treatment. I don't use these terms quite as they were originally presented. I look at them this way. I take the most important characteristic of each of the Factors of Production and use it. You know the old real estate maxim: "The three most important things about land are location, location, location." The most important characteristic about land is indeed location, but with an address, so that is what I use. It should be noted that you can produce nothing on Natural Resources. You produce on a "location with an address". You grow wheat on the "North 40". You drill for oil in Long Beach Harbor. You build a house on the north-east corner of Cross and High St. - and so on. You never build on Land - you always build on a "location with an address" which is the defined concept to which I attach the term LAND. The major characteristic of Labor is exertion. Exertion is your manifest connection to the outside world. Everything that is Keith Hudson will show up in the way he exerts - including things one doesn't think of as economics. How you love and hate, whether you are happy or miserable, whether you are intelligent or not - everything that is you is mirrored in what you do. If I could write with the elegance and flair of Ray, I might suggest that the way you exert is a window into your soul. I'll just say: "Don't believe what people say, believe what they do." So, when I use LABOR it stands for the defined concept of human exertion. Finally, we come to CAPITAL. Capital introduces the concept of time - the final part of the production equation. You have built a yacht. As you watch the last coat of varnish dry, up comes your friend Ted. "Hey!" he says. "That's just what I want for our trip to the Mediterranean. Could I borrow it for a month." You say: "Are you crazy? I just spent a year building it. Now, I want to enjoy it." I'll cut it short. After negotiation, you agree to let him have the boat - if he takes out insurance against wear and loss and pays you 200 pounds a day. Now, the Wealth you intended to produce has become Capital and is producing 200 pounds a day and will do so for as long as it remains Capital. So, what is the prime characteristic of Capital? It is Time. So, in my variation of the basic Factors of Production, we have 'A location with an address' - 'Human exertion' - and 'Time', BUT I still call them Land, Labor, and Capital. How would Henry George feel about my desecration of his Truth? Well, he adjured his readers to "Think for yourself" "In nothing trust in me." I don't think he would have cared. Of course, he would have argued! Harry --------------------------------------------------------------------------------------- Keith wrote: >Hi Harry, > >The paragraph you wrote in reply to Ray: > ><<<< >You have to observe - and hope you won't mess up the observation by being >part of it. Over generations, the classical thinkers found their basic >concepts and stuck labels on them. Henry George's great advance was not >land-value taxation, but his fine tuning of the basic concepts to make them >mutually exclusive. > >>>> > >reminds me that I am very interested to know how you define Henry George's >basic concepts (Land, Labour, Capital and Wealth) in mutually exclusive terms. > >Keith > >___________________________________________________________________ > >Keith Hudson, General Editor, Calus <http://www.calus.org> >6 Upper Camden Place, Bath BA1 5HX, England >Tel: +44 1225 312622; Fax: +44 1225 447727; >mailto:[EMAIL PROTECTED] >________________________________________________________________________ ****************************** Harry Pollard Henry George School of LA Box 655 Tujunga CA 91042 Tel: (818) 352-4141 Fax: (818) 353-2242 *******************************
