Absent a rich uncle conveniently dying or a fairy godmother
waving a magic wand to grant three wishes (neither of which, for various
reasons, is something we should count on), there is only way to get out of
debt: produce enough to cover your current consumption needs, make up for what
you consumed in the past that you didn’t produce, and put something aside for a
rainy day . . . which means a year’s worth of income to cover yourself because
rain spoiled the annual harvest.
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| You can't eat what doesn't exist. |
That is, as we pointed out yesterday, the purpose of
production being consumption, the obvious corollary is that unless something
has been produced and exists, you can’t consume it. If you didn’t produce something, somebody
else had to. If you didn’t trade
something to the producer, you still owe him.
That, as we also pointed out yesterday, is Say’s Law of
Markets, which can be summarized briefly (and somewhat inaccurately) as “production
equals income, therefore, supply generates its own demand, and demand its own
supply.” Unfortunately, a lot of people
— especially economists and politicians — don’t have a firm grasp (or in some
cases any grasp at all) on such esoteric concepts as “production,” “income,”
“supply,” and “demand,” or the related concepts of “property,” “money,”
“credit,” “banking,” and “finance.”
Take, for instance, Karl Marx and John Maynard Keynes, both
of whom rejected Say’s Law of Markets.
Why? Because they assumed that human
labor is the only real factor of production.
Land and natural resources are only productive if you “mix” human labor
with “the gratuitous offerings of nature.”
In Marx’s and Keynes’s Ricardian world, human artifacts — technology —
consist only of the labor used to create them, and must be considered accumulated
or congealed labor.
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| "If there is no value, labor is not labor." |
At best, technology “enhances” human labor, and cannot be
considered independently productive.
Only labor adds value. And if
whatever is produced with labor turns out to be worthless? Marx has yer back, Jack: then the labor
doesn’t count as labor . . . making it at one and the same time the standard of
value, and a thing of no value in and of itself.
That is not, however, the principle in moral philosophy,
Smithian classical economics, or binary economics. Labor is not the sole factor of production,
and it is not due everything from production.
As Pope Pius XI explained,
“But not every
distribution among human beings of property and wealth is of a character to
attain either completely or to a satisfactory degree of perfection the end
which God intends. Therefore, the riches that economic-social developments
constantly increase ought to be so distributed among individual persons and
classes that the common advantage of all, which Leo XIII had praised, will be
safeguarded; in other words, that the common good of all society will be kept
inviolate. By this law of social justice, one class is forbidden to exclude the
other from sharing in the benefits. Hence the class of the wealthy violates
this law no less, when, as if free from care on account of its wealth, it
thinks it the right order of things for it to get everything and the worker
nothing, than does the non-owning working class when, angered deeply at
outraged justice and too ready to assert wrongly the one right it is conscious
of, it demands for itself everything as if produced by its own hands, and
attacks and seeks to abolish, therefore, all property and returns or incomes,
of whatever kind they are or whatever the function they perform in human
society, that have not been obtained by labor, and for no other reason save
that they are of such a nature. And in this connection We must not pass over
the unwarranted and unmerited appeal made by some to the Apostle when he said:
‘If any man will not work neither let him eat.’ For the Apostle is passing
judgment on those who are unwilling to work, although they can and ought to,
and he admonishes us that we ought diligently to use our time and energies of
body, and mind and not be a burden to others when we can provide for ourselves.
But the Apostle in no wise teaches that labor is the sole title to a living or
an income.” (Quadragesimo Anno, §
57.)
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| "I am, like, so into this ... ribbit." |
We have to get a little Zen here. Does anything count as produced if human
labor is not involved? If a tree
produces apples and nobody picks them, do those apples exist? If gold and silver are not mined or oil
pumped, is it still there? What is the
sound of one hand clapping?
The answer to all three questions is, “It depends.” It depends on how you define “produce,”
“existence,” “clap,” and a host of other concepts that are implied, even if not
stated, such as property, money, credit, banking, savings, finance . . .
The bottom line is that if you don’t define your concept or
principles adequately, then what you build on or extrapolate from those
principles might be true, correct, or good — but it might, just as easily, be a
complete disaster. As both Aristotle and
Aquinas noted, it is from small errors that big errors grow. And grow, and grow, and grow. . . .