Keith, I must apologize for the delay. So many good things come up in the FW posts, I've been somewhat sidetracked. However, I'll continue going through the basics of Classical Political Economy.
We were discussing the basic language of Political Economy - the four terms. LAND, which stands for natural resources (including oceans, sunlight, and the air). LABOR, which is the name given to humans engaged in production. CAPITAL, which is the name given to Labor products in the production process. WEALTH, which is the name given to products that are in the hands of the consumer. These four terms cover everything in the universe and have begun your "simplification" and Ray's "diminution of complexity". I mentioned that Keynes biographer, Roy Harrod, said that this was the most important event in economic history and made all progress possible. I'm not a Keynesian, but like that quote. Incidentally, in General Theory Keynes inserted an essay at the back of the book on the free market. It was excellent - perhaps because he said it was the best thing since sliced bread - though not quite in those terms. I'm curious. I wonder if the newer editions of General Theory contain that essay? But, back to business. You said: KEITH : "I was impressed with the exclusivity of your terms, Land, Labour, Capital (Wealth). However, if they could be represented by the terms Resources, Skills and Benefits then they're not so surcharged with emotions and ideology." Important is the defined concept. The name is least important. Any name can be used, so long as you don't change the defined concept it names. This, both for your own thinking and for useful communication with others. Most of the problems on this and all other lists is that people are frequently using the same words with different meanings. I like your suggestions - Resources, Skills and Benefits. Unfortunately, the neoclassicals have already messed those words up, so now we have natural resources, human resources, capital resources. You would need knowledge to be included with Skills, while Benefits might include your fortunate ability to handle choral work publication as well as the actual material. On the other hand, how can Land include lakes and oceans? Labor surely means digging ditches. And of course everyone knows that Capital is a lot of little squiggles on your bank's computer screen. Land, Labor, Capital, and Wealth are a couple of centuries old, so perhaps that's an advantage. A bigger advantage yet would be something other than a bare mention of the terms in modern texts. I recall an analysis of University text-books about 25 years ago. The author was appalled because 6 of the 14 studied did not appear to mention Wealth at all. (A peculiar circumstance, he pointed out, when the Father of the Science wrote "The Wealth of Nations".) Incidentally, the author pointed out that there is nothing wrong with changing terms that have outlived their usefulness - but at least you should tell someone about it! For teaching purposes, some time ago I changed the defined concepts - without stepping away from the original meanings. My defined concepts use the major characteristic of each of the three terms. Natural resources is a descriptive word of everything but Man and his products. However, it is a hopeless word to use in economics. One doesn't plant corn in natural resources. One plants corn in the North 40 field. One drills for oil 200 yards east of the north-east corner of Route 1 and the Main St. highway. One builds a house on lot 10 of the . . . . . Well, you get the picture. Real estate people say the three most important things about land are location, location, and location. I would change that to "location with an address". So, my defined concept is "a location with an address". I keep the ancient term Land for that concept - but I could easily call it "Location". The characteristic most evident with human beings is their exertion. This is the manifest evidence of everything about a person - how well he thinks, what his loves and hates are, whether he is competent or incompetent. All that is the human being is reflected in what he does. My courses point out to the kids that they should listen less to what a person says and more to observing what he does. Again, I keep the ancient term Labor, but I could easily make the second basic term "Exertion". When "Location" and "Exertion" get together, they produce a product. If you pick an apple and eat it, you are both producer and consumer, so the apple is Wealth. If time intervenes, and you take it to market - the apple becomes Capital until it is sold to a consumer and becomes Wealth. For Capital is a product in the course of production, while Wealth is the name for a product in the hands of a consumer. Capital is not essential for production, but one cannot imagine much human production without it. An advantage of using Land, Labor, and Capital in discourse is that while you may use the terms precisely while others don't - much of your meaning will be communicated anyway. Finally, in production, the part of production that goes to Land is called Rent, the part to Labor is called Wages, the part to Capital is called Interest. It has been said that the most important thing that Henry George wrote was that all production is divided into Rent, Wages, and Interest - and nothing else. So, with two Basic Assumptions and seven defined concepts, you can begin thinking about how behave and produce in society. Wow! Classical Political Economy really simplifies things - or at least, diminishes the complexity - thus proving you are an economic expert. You continue: KEITH : "other emotive terms, such as Profits." Profit is an accounting term and has nothing to do with Political Economy. Profit can be Rent, Wages, or Interest - or any mixture of the three. Depending on what defined concept (if any) the economist is using today. With regard to making contact with other human sciences, absolutely essential to every such study are the two Assumptions of human behavior (or something similar). "Man's desires are unlimited" "Man seeks to satisfy his desires with the least exertion." Otherwise, I think the study will go downhill. If we spend a lot of time on this, it's because essential to a structure is a good foundation. Harry ______________________________________________________ Keith wrote: >Ho Harry, > >Sitting here this morning with my pre-dogwalk, pre-breakfast, pipe and pot >of tea, I've been thinking that the terms that economists use have become >so suffused with pejorative meanings in the last century ot two that we >ought to substitute neutral terms. > >I was impressed with the exclusivity of your terms, Land, Labour, Capital >(Wealth). However, if they could be represented by the terms Resources, >Skills and Benefits then they're not so surcharged with emotions and >ideology. If anything, the latter are more accurate terms. Resources, >Skills and Benefits are more inclusive for their own purposes, yet >remaining exclusive with respect to the others. > >Also, other emotive terms, such as Profits, can also be more usefully >included in Benefits. When we apply Skills to Resources and produce a >Benefit, the last can be consumed, retained or traded for someone else's >Benefit. > >Indeed, the whimsical thought occurs to me that by using such terms we can >not only attempt to build bridges towards the human sciences, but also >towards the science of cosmology. Inwards and outwards, if you like! > >For example, it is becoming increasingly clear from cosmological research >that our Resources not only include the gifts of the earth, and the energy >we receive from the sun but also the very structure of the universe. If the >physical constants (or the 'laws') of the universe were ever so slightly >different from inception then the universe would be such a different place >that galaxies, solar systems, planetary systems and life-forms would simply >not have happened. Indeed, some cosmologists believe that there might well >be a multiplicity of universes (of which we can have no possible knowledge) >in which life-forms could not possibly exist. > >However, I won't insist in using Resources, Skills, Benefits for now. Let's >keep your terms. I'm looking forward to your further thoughts as to where >your definitions take you. > >Keith ****************************** Harry Pollard Henry George School of LA Box 655 Tujunga CA 91042 Tel: (818) 352-4141 Fax: (818) 353-2242 *******************************
