Radically Inept
Thursday, August 05, 2004
  Explaining Everything II

Note: Several things are still going on. Part of the lack of recent posts is due to the continuing effort to fix our printer problem, which appears to be resolvable only by buying a new printer. The decision would be easier if we had not so recently invested in new print cartridges for our current printer. Also, as usual I came home and got sucked into C-SPAN. This time it was a hearing on the 9/11 Commissions report. It was an excellent hearing that occurred today, though I caught in repeat, and if I understood their scheduling correctly, will be re-aired yet again starting at 0300 hrs 0330 hrs EST tonight. Catch it if you can.

Another factor, apparently due to a strange providence, is the fact that I found a copy of The Worldly Philosophers : The Lives, Times And Ideas Of The Great Economic Thinkers by Robert Heilbroner on my book shelf in the basement. I have no idea when and where I got this copy, but my guess is that it was in a book lot at an auction or estate sale based on the fact that it has a pencil mark of $1.50 on the front cover. I happened to have found a 1953 paper back addition, which appears to be an original printing. It is worn, but it looks like wear from years of shlepping, not reading. Though between the fact that the clue has tried out, and the binding is decomposing as I read, and that I'm underlining specific passages as I go, I doubt it will retain any resale value when I finish. I had no idea it was considered a classic, and am surprised to find it is still in print. On the other hand, it is an excellent book. It puts the 'great economists' in real historical context, and is a well balanced (so far) presentation. I don't know how many years I've had the copy, but I'm glad I decided to pick it up. A fascinating read, and really representative of it's time. I don't know the last time I've heard Africans and the Maori referred to as savages. Probably not since the 60s. It certainly represents its time, and is still just a wonderful read. Just the chapter on Adam Smith is worth whatever the price of the book currently lists for, though, you might want to check your local library. I'm about a third of the way through, and I don't think I've ever read a book on economics that I've found to be a page turner, and regret having to put down. That alone should tell you this is a great book.

I'd like to finish deports work on The Society of the Spectacle, but I hate reading from the monitor and am waiting to resolve the printer problem. I may take Bruce's, from The River, offer to loan me his copy. The two works offer a great contrast in outlooks.

I ended the previous post in this vein, Explaining Everything, with an attempt to define 'value', and while I liked the simple definition that I used
So, what is value? I don't know, but a lot has been written about it, but I'm not sure how adequate the explanations are, but for now, let's operate under the simple definition that "something's value is directly proportional to the effort I am willing to put into acquiring it." Let's add to this, that you may value something to a different degree than I value it - higher or lower.
there is more to explore. In fact, while I wouldn't call this series of posts a treatise in the sense of having a final outcome in mind, I might be willing to use the term with the idea of "A written composition on a particular subject, in which its principles are discussed or explained; a tract - --Chaucer" but only with caveat of "A treatise implies more form and method than an essay, but may fall short of the fullness and completeness of a systematic exposition." It is probably more in tune with the latter that I'm posting this.

So, back to the point of value. I wanted to present a premise here, that I think I may be able to develop further as I go along: Value is largely determined by an anticipation of future gain/profit. I may even be able to take out the caveat of 'largely', by the time I finish. But for right now, I'd like to explore the concept of value within the context of a news story I happened to hear on NPR yesterday. I didn't listen to all of the details, and just caught a few scraps while I was doing something else, but it did seem have real potential as a thought experiment to further my exploration of this topic.

All I heard of the story, and I am intentionally not following up on the details nor linking to it, is that in Paraguay yesterday, 410 people died in a department store fire, and that a security guard was quoted as saying he was told to lock the doors when the fire broke out. I decided that I would presume to make a few presumptions in relation to the event, and see were it would lead me in terms of further defining 'value(s).

Let's assume that the fire started small, and that in the first moments, none of the people involved understood how quickly the consequences would escalate and result in such a large loss of life.

So, in these imagined first moments, we have decisions being made based on the decision maker's values. And one of those decisions was to lock the doors/block the egress. I'd say there are probably two good candidates for that role here: 1) The 'owner' of the department store and 2) The department manager. Both might arrive at the same decision, but the decisions might be based on very different values.

Let's suppose that it was 'the owner' who made that decision. I am willing to bet that it was based on his fear that people would try to steal his products on the way out during the cover of the confusion. He valued his stock. Actually, I am willing to bet that it was not his stock that he valued, but the future gain in profits from the sale of the items. I doubt he valued the blanket or the doll or the flatware or...He valued it's potential monetary value. And, it might well by, that what he really valued was the ability that money would give him to provide for his family and mistresses (this is Latin America we are speaking of, afterall).

Let's take it even further, he valued what he, himself, could do with the money from the sale of the items in his stock. Money that hasn't left your pocket, has no value, except as potential. It is potential value vs. The kinetic value it assume when it is exchanged for something else. In fact, money spends most of it's time in the state of potential value, and very little time as kinetic value, except possibly in a casino, where it may well be in a kinetic state quite frequently. So, in effect, the stock has potential value to be exchanged for cash which then has potential value. And, the kinetic value of money, from the buyer's perspective, is converted to the potential value of whatever he receives in exchange.

The hypothetical manager's decision, probably has almost nothing to do with the value of the stock, except in relation to how it's loss would potentially affect his employment, and hence his ability to take care of his own family and mistresses.

And the security guard in the story, his decision was whether to or not to follow the orders given to him, and similarly to the manager, the decision probably involved his future employment.

And, I will argue that no one made the decision with the idea that 410 people would die. Their decisions, likely made in haste, did not take into account the potential resultant loss of life. No one said the value of department store's goods were worth 410 lives. Besides, the stock, and the building were lost as well as the lives. It was a case of insufficient thinking, foresight and/or knowledge of the consequences of the decision to lock the doors to the store.

For instance...

Note: I have not been able to come back to this post. I started it last night, but again, real life has intruded on blogging. Regardless, what I've written so far, is beginning to look an awful like an exploration of Game Theory, which is fine. I've always been intrigued by it, and working through it on a solo basis, may well give me greater insight in to its workings. I do think there may be truth to the idea that all transactions can ultimately by viewed to be based on potential. Hence, it may be true, that all 'value' is based on a temporal displacement to the future, and each time I think I've stumbled on to a contra argument, I seem to be able to rationalize it as in some manner to be based on an expected future pay off. I'm sure it's not a unique idea, but I am enjoying exploring the issue. If anyone has an obvious argument against it that I've overlooked, though please realize I haven't even had the opportunity to post the argument to the extent I've already developed it, but...

I've just finished the chapter on Marx in The Worldly Philosophers : The Lives, Times And Ideas Of The Great Economic Thinkers, and have moved on to a set of economists I've not ever heard of, and apparently are not much cited today. Let me state again, it is an excellent book. And rest assured I will be citing many passages from it in future posts. I do hope to post an "Explaining Everything III" tomorrow continuing where I left off on this one.

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