I shall endeavour to explain [exchangable value] as fully and distinctly as I can for which I must very earnestly entreat reader's patience and attention:
I created SORAnomics from the works of Adam Smith, David Hume, and Plato as an alternative to modern Economics which has caused crises as recurring Panics, Depressions, and Recessions.
The ultimate cause of the problem is its focus on the self, as selfish interest. This causes it to promote the wrong idea of prices, which then fluctuate as to cause those crises.
SORAnomics is different because it is based on society instead of the self. This allows it to look at prices and value at a bigger perspective, which Smith calls the view of the impartial spectator, and which Plato calls Dialectics. To simplify things, it views prices as particles and value as waves*.
* My proposed science of Superphysics states that everything in Existence is a physically-perceivable particle which comes from metaphysical idea-waves of the Supreme Entity. David Hume calls this true atheism.
SORAnomics is then a branch of Superphysics that deals with perceptions within society.
I define 'value' to mean abstract feelings of worth (from Latin valere or worth), and 'price' (from Latin pretium or reward or prize) to mean objective ideas of worth, manifesting as a discrete number. Value has the same dynamics as waves, while price has the dynamics of particles. Value is more fudamental than prices just as waves are more fundamental than particles*.
* This is proven by the Chinese character for value '', and those for price ''. Fundamental perceptions like person '' and day '' get one character, while their derivative ideas like American person '' and Tuesday '' have characters added on them. I could use instead of to defeat the objections of Westerners. However, as this post is written in Roman alphabets, using Latin words like price and value would be more consistent.
We can say that value is the cause, and price is just the effect. You can hand out prizes such as trophies, but not the value that they represent such as being brightest in class. The cause of value then is the feeling, of which the strongest is the ego or the feeling of the self.
Value is then divided into Use-value and Exchangeable-value.
Exchangeable value vanishes when one is removed from society (other egos) and only Use-value remains:
To one who was to live alone in a desolate island it might be a matter of doubt, perhaps, whether a palace, or a collection of such small conveniencies as..contained in a tweezer-case, would contribute most to his happiness and enjoyment.Theory of Moral Sentiments 4.1.8
Economics uses the difference between use-value and exchangeable value to create a non-problem called the paradox of value. This 'paradox' states that water is essential to life but is cheap, while diamonds are expensive. So economists create the concept of marginal utility to 'solve' the paradox.
The evil and unnatural effect of this is that it merges personal use-value with social exchangeable-value -- things that are naturally separate. It turns private subjective preferences, biases, and desires into objective ones that are measurable by society in numbers so that they can be compared and exchanged. This comparison and exchange is then perfected in its child-concept called profit maximization, causing everyone to sacrifice their 'priceless', highly useful subjective assets such as health, morals, family, sprituality, friendship, ecology, etc. in order to get exchangeable objects such as money and property. SORAnomics undoes this 'neoclassical synthesis' by splitting up use-value and exchangeable value and putting use-value ultimately in the hands of governments, and exchangeable-value to markets. This then leads to clear policy positions on nationalization and privatization.
To Smith and SORAnomics, water has less exchangeable value than diamonds because it is abundant while diamonds are rare. The proper comparison of exchangeable value and use value is therefore not between water and diamonds, but between water and iron. A gallon of water and a kilo of scrap iron both have low exchangable-value and high-use values. No paradox is created.
Now that we have put Use-value away, we now can analyze Exchangeable Value in isolation.
Since ego is the determiner of value, the exchangeable value of a thing for the self alone is totally arbitrary. We call this the nominal value. The validity of this value is verified if other egos agree to it and proven by their purchase. At that point, it becomes its real value, or value to the self and others. An example is me baking a cake that I think is delicious (nominal value). It will become real if others taste it and agree to buy it. If they don't agree, then my nominal value was wrong and the cake is never exchanged and never acquires a real value.
You could say that nominal value is the value that the self (seller) wants the others to believe (which may or may not be real), and is thus subjective, while the real value of a thing is its actual importance to others (not yet to society), ultimately measured in the "toil and trouble toil of acquiring it (or) saved in disposing it" and is objective from the perspective of society as an organism in itself.
In the cake example, the others will buy my cake because it saves them from having to learn how to make such a delicious cake themselves. If I price my cake too high (a sign that I have a too-high regard for my ego), then they will try to make their own cake instead. Thus, we can say that the freedom to compete and create products and services by ourselves naturally check the egos in society. Allowing free competition in economics* is therefore as essential to commerce just as allowing changes in leadership is essential in politics.
Distant place and time
Point of sale or same place and time
Subjective and Variable
value in currency
value to the buyer
Objective and Natural or Invariable
value in grain or labour
value to the seller
Distant place and time
Point of sale or same place and time
Market value or price
Economics has no Objective or Invariable concept of value as it would prevent arbitrage and profit maximization
Another example of real and nominal value is a singer auditioning for American Idol. He thinks that he is the best (highest nominal value). It is only when the judges give their decision will his nominal value be proven to be real or not real. If real, then this value can then be validated as a natural value when the votes of the audience comes in. More votes mean a higher natural value which can then be converted to a high market value when he starts selling his records to the public.
The social end result of the journey from nominal to real to natural value is therefore market value. In the past, this was done through barter, making circulation slow and arbitrage difficult. The growth of wealth correlates directly with the circulation of value. This is why civilizations (organized societies), such as the ancient Romans and Chinese, naturally invented money to speed up the process so that everyone could get their feelings satisfied faster. This created objective market prices, allowing widespread arbitrage and subsequently the opportunity to address demand with supply.
Arbitrage is the taking advantage of the difference between the real and pretended importance of an object, by buying something cheaply and selling it expensively. Business science, whether in selling bread or achieving 5x corporate valuation, can thus be summed up as merely buying low and selling high. It would be very difficult to do arbitrage in a barter system, and so businesses and Economists will naturally go against barter. But this difficulty is exactly what gives it the stability that the money-based system frequently loses***.
When done naturally, this performs the work of the invisible hand of human dharma as a natural resource allocation tool using profits to "make nearly the same distribution of life’s necessities.. and afford the means to multiply the species," something that animal dharma is incapable of. However, when monopolized and overtraded, it leads to the ruin of society by imposing a lot of toil and trouble on others:
To maximize the arbitrage, Economic systems pool money together as firms and corporations to make, buy, and sell real goods and services in society. In time, this naturally creates an oligarchy which then naturally competes with the government and the society itself. This whole cycle leads to tyranny and social collapse* as revolution or wars that reboot all society, oligarchs included. Notice how 'businesses' is a huge entity in the Circular Flow of Economics.
The Circular Flow of SORAnomics, on the other hand, views trade equally between individual egos and collection of egos as organizations (remember that SORAnomics separates use-values and exchangeable values). This prevents too-big-to-fail companies and oligarchs from gaining power because they are checked by the constant natural competition between egos.
The dominance of business, arbitrage, and profit maximization in Economics leads to one common observable thing in all Economic systems: high market prices. After money is invented, it is pooled into corporations which is used to
Such laws then prevent competition that could hamper the egos of those oligarchs and corporations. The common justification is that by protecting their interests, employment is preserved and social order is maintained. This is so easily countered by the fact that people can employ themselves as entrepreneurs, and each other as partnerships. This is especially true after the invention of the internet.
An easy example is the high price of iPhones wherein Apple works hard to protect its intellectual propertyand brand through the (in)justice system. This gives it high profits as unnatural prices which then benefits its investors or a tiny segment of society. In addition, the public is unable to use its advanced technology to solve their pain points in other fields such as in the military or in medicine.
The falling Android prices below reflect a more natural price due to competition, falling with time as natural market prices, far below the unnaturally high market price of iOS.
High market prices have led to revolution ever since money was invented. High market prices of assets such as stocks and property have led to stock and real estate crashes which destroy value and savings, which then destroy the accumulated work done. This regular destruction of wealth and low purchasing power of savings then implies that people are really just working everyday for food, rent, and utilities in order to keep on working for food, rent, and utilities -- not so different from a slave.
The natural price is thelowest..he is likely to sell them for any considerable time.. [It is]..the central price, to which the prices of all commodities are continually gravitating.
The market price..is regulated by the proportion between the quantity..actually brought to market, and the demand of those who are willing to pay the natural price.
All of these then lead us to create one of the main goals of SORAnomics which is zero inflation. This is different from the goal of Economics which is an inflation of 2-4%. To explain why a 2% inflation target is bad, we first have to define inflation and deflation in Part 2. Part 3will then explain how Economics and its 2% inflation target leads to inequality and how it favors the oligarch or business class, at the expense of the working class. These then explain why economic crises, poverty, and inequality still persist despite over 100 years of Economics.
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