Re: [Futurework] But what is the cause? (was RE: [Futurework] http://www.glaesernemanufaktur.de/

[Ed Weick]

Keith, it still sounds a little too focused on one or two things to me.  Yes indeed cars do impart status, but they also are, and since their invention were, a truly useful appliance, as is and was the refrigerator, which nobody seems to buy for the sake of status, though perhaps some people did at one time.  Personally, I still prefer Schumpeter's concept of innovation, major breakthroughs in production that drive the economy along for a time.  I think that, if you looked at the industrial revolution as a sequential process, you would find it to be that kind of thing.  The steam engine was initially invented because horses could not pump enough water out of deepening mines.  Steam was then applied to all kinds of other uses, then replaced by the internal combustion engine, which enabled the invention of the automobile, aircraft, etc.  There is a basic, driving process that leads to all kinds of refinement and adaptation, but the that process is essentially supply driven, though admittedly pulled along by demand and the manipulation of demand as it moves along. No, you've got me wrong. There are certain new types of goods which are status goods because they carry a high profit margin. Unlike positional goods (with which they have some similarities), status goods are then capable of mass production and thereby make their way downwards through all the socio-economic strata, creating bow-waves of profits and investment along the way. I suggest that the vast majority of goods produced today even if they are new ones (like 3G mobile phones which are a sub-category of a previous status good -- the telephone ) are not status goods because they carry too little profit margin to stimulate the economy. They sell widely from the start. Innovative goods may initially carry high profit margins per unit of product because producers have to meet development and marketing costs, or so producers would typically argue.  Drug companies argue this to maintain their patent protection, even though generic drug makers have demonstrated that the drugs can be produced profitably without protection.  Costs per unit and profit margins per unit will typically fall as the market begins to be saturated, but the total profits of producers may not necessarily fall.  Besides, there is always replacement once the market is saturated.  Things wear out and often, driven by advertising (status maintenance?), consumers can be convinced that they wear out faster than they actually do.   I don't deny that your concept of 'status goods' has some validity, but frankly I don't see what it really adds to the theory of how markets and the economy incorporate new and innovative technologies that then become the impetus for a prolonged wave of growth.  If there is a difference between us, it may be that I am thinking of relatively long waves, such as that produced by the internal combustion engine or the microchip, while you tend to think in terms of particular applications of these innovations.  We may both be right, each in his own way.   Ed   ----- Original Message ----- From: Keith Hudson To: Ed Weick Cc: [EMAIL PROTECTED] Sent: Saturday, December 13, 2003 10:13 AM Subject: Re: [Futurework] But what is the cause? (was RE: [Futurework] http://www.glaesernemanufaktur.de/ Ed, At 09:20 13/12/2003 -0500, you wrote: Keith, I do think that you push the status thing a little too hard.  I am the consumer of all kinds of goods and services for all kinds of reasons.  I consume bread and cereal, and have always done so, because it is part of a healthy diet.  I rather doubt that the first person to have consumed such things had special status; everybody has consumed them for a very long time. Food is not involved. Food never had to be traded initially, nor for thousands of years. Think about it. If we'd had to trade for food, then man as a species couldn't have got started in the first place.   I consume the services of my doctor and dentist not because I like to, or because I think the latest pills or gadgets they have give me special status, but because I need to.  I'd like to think that employers or clients have consumed my services because of the status that imparts, but I don't think that's been the case.  What about innovation?  People buy something new simply because it works better than something old.  Can openers are a good example.  What about security?  A lot of things that people did not purchase ordinarily were consumed post 9/11 because of the fear of terror.  People did not look at one another and say 'Wow! he's got the latest germ protective suit!  I gotta have one too!'  They bought because they were scared. Well, doctors and can-openers are subsidiary to the main economy. I've never intended to say that all consumer goods have been status goods. But all new goods that are in a new category (as, surely, the car was in the last century) have been status goods (so long as they have some intrinsic interest or novelty) because they are in high demand by the well-off.   I think you are too focused on one thing.  I know that you are trying to make the argument that certain goods move the economy forward because of the status they impart, but the separation of status from utility, fear, fashion or fancy is never that clear. No, you've got me wrong. There are certain new types of goods which are status goods because they carry a high profit margin. Unlike positional goods (with which they have some similarities), status goods are then capable of mass production and thereby make their way downwards through all the socio-economic strata, creating bow-waves of profits and investment along the way. I suggest that the vast majority of goods produced today even if they are new ones (like 3G mobile phones which are a sub-category of a previous status good -- the telephone ) are not status goods because they carry too little profit margin to stimulate the economy. They sell widely from the start. Keith Ed ----- Original Message ----- From: Keith Hudson To: Harry Pollard Cc: [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] Sent: Saturday, December 13, 2003 2:56 AM Subject: [Futurework] But what is the cause? (was RE: [Futurework] http://www.glaesernemanufaktur.de/ Harry, Just as "natural history" in Victorian times was formative in the development of botany, zoology, biology and evolutionary theory, the traditional description of economics as dealing with the "Nature, the Production, and the Distribution of Wealth" shows that it still at an early stage of understanding. We can only move towards economics being regarded as a science when we start to examine the *causes* of economics and trade. Why did the whole business start in the first place?  If we were able to trace back the history of every single item of consumer goods -- however trivial it may seem to us today --  we will discover that, in every case (apart from food), it first made its appearance as a item desired for its enhancement of status. Status, as in every social mammal sepcies, is the means by which selection is made for sexual activity, the strongest of our instincts apart from eating, and for its only slightly lesser byproduct -- though still valuable -- of social inclusion with the group or community. Today, the whole world of politics and business, is in a dither. Economists can give us no guidance of where we're heading. Unfortunately, the classical economists can give us no guidance. Major figures though they were, they had not yet started to ask the Why question. Until we do so -- and in my view appreciate that economic activity is mainly driven by new consumer goods bought for status only -- then we can make no sensible forecasts of just where modern society in developed countries is heading. Until we do, economics will remain as a purely descriptive activity --  as at the 'beetle collection stage' of the biological sciences 200 years ago or, to change the metaphor, the various economic nostrums that are prescribed today are no better than the weird variety of medicines that doctors gave to their patients 200 years ago before medical science started looking for causes of diseases. Keith  At 23:00 12/12/2003 -0800, you wrote: Arthur, Wouldn't you know it? You almost repeated - word for word - what Henry George said in 1878. Great minds think alike! It's the reason why Classical Political Economy is described as "The Science that deals with the Nature, the Production, and the Distribution of Wealth. That "Distribution" bit is the essence of Political Economy. Would that modern economists would start thinking about why the distribution is so unfair, instead of devising ways to patch the system by taking from the rich and giving to the poor. Harry ******************************************** Henry George School of Social Science of Los Angeles Box 655  Tujunga  CA  91042 Tel: 818 352-4141  --  Fax: 818 353-2242 http://haledward.home.comcast.net ********************************************   -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Wednesday, December 10, 2003 5:26 PM To: [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Subject: RE: [Futurework] http://www.glaesernemanufaktur.de/ We have "solved" the production problem but can't seem to deal with the issue of distribution. Arthur -----Original Message----- From: Harry Pollard [mailto:[EMAIL PROTECTED]] Sent: Wednesday, December 10, 2003 5:15 PM To: 'Brad McCormick, Ed.D.'; 'Ed Weick' Cc: 'futurework' Subject: RE: [Futurework] http://www.glaesernemanufaktur.de/ Brad, We are discussing these problems in a society where the power to produce has reached unbelievable proportions (After many have been thrown out of work, the industries they left behind are actually producing more. Productivity hasn't fallen even though there are far fewer workers employed.) Why these "problems"? Harry --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.548 / Virus Database: 341 - Release Date: 12/5/2003   _______________________________________________ Futurework mailing list [EMAIL PROTECTED] http://scribe.uwaterloo.ca/mailman/listinfo/futurework Keith Hudson, Bath, England, <www.evolutionary-economics.org> Keith Hudson, Bath, England, <www.evolutionary-economics.org>