Hi Harry, Thank you for your posting (see below). I agree that your definitions of Land, Labour and Capital are mutually exclusive. (Previously I was intrigued to know how you defined Wealth, but I see that you regard this as synonymous with Capital.)
I have said previously that I regard economics as a 'literary' science at the present time because human nature has to be taken into account and this, while being scientifically investigated from many angles in different disciplines, is not yet in a condition to be consilient with economics. So, to make economics into a science, some sort of bridge-building seems to be required from both sides of the river. You're building it from your side by defining your basic terms. Science, in the form of subjects such as game theory, evolutionary psychology and so on, is building the bridge from the other side. But there's another 'in-hoise' reason why economics cannot yet be regarded as a science because modern economists have tried to build the bridge (that is, towards the shore of explaining everyday life) by using aggregate numbers involving units of money. This is doomed to failure because money cannot be measured (or equated to Land, Labour, Capital) in any objective way. For the last century or so since money was taken off the gold standard, the nominal value of currencies have been subject to decisions of government (and/or central banks). The nominal value of currencies appears as the current rate of exchange and change from minute to minute on the Exchanges. However, these exchange values are but superficial snapshots of a multitude of different consequences, cross-currents and economic decisions which have been set in motion by previous governmental decisions. And, importantly, these consequences have different time lags. So the data that economists use are always out of date -- and to varying extents because the lengths of all the different time lags can never be known. Although the nominal value of all currencies at any one instant may be known to several decimal points, their real values and their real effects on the underlying economy may be different -- sometimes quite different. At any one time, immense counter-intuitive effects may be occurring which are hardly invisible and don't appear in the statistics for years. In fact, your quote of Humpty-Dumpty is very apt. Economics at present is a Humpty-Dumpty world. It's not so much that economists define the words they use in different ways, but that the data they select are a consequence of both real and non-real factors. The real factors are decided by sellers and buyers, and the non-real factors decided by governments -- these are arbitrary, no matter how rational and persuasive are the reasons given (and usually in terms of the latest fashionable economic theory!). If, however, the value of money could be tied irrevocably to something with real value (gold or platinum, perhaps, or better, a basket of essential goods) and quite outside the monetary decisions of governments, then its value would vary according to the value of the other real factors in the economy. Even though the world-wide economy would still be a complex affair with the different time lags of various processes still going on, it has a chance of being analysed more scientifically because one of its most important factors, government decisions, can be held constant. That's how I see it. But back to you now, Harry. I'd be fascinated to know how much further you build your bridge, now that you've defined Land, Labour and Capital (Wealth). Keith At 09:44 16/10/01 -0700, you wrote: >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 >******************************* > > > > > ___________________________________________________________________ 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] ________________________________________________________________________
