MAGIC SOOUULLLSSSS Libertarian

name_here · Post by **name_here** » Sun Jul 06, 2014 4:00 am

You know, capital might literally be the only thing in existance that isn't intrinsically scarce, since it's simply an arbitrary representation of value and can be declared to exist in any desired quantity.

It is artificially scarce because that happens to be convenient.

Username17 · Post by **Username17** » Sun Jul 06, 2014 8:59 am

It is always hilarious when Austrians fall back on their 'axioms,' because they are really weird and blatantly false. The 'masterstroke' of any Austrian argument is always to come back to a completely unsupported assertion and expect everyone to be impressed. So while you or I might try to bring an argument around to some empirical data that seems to support our position, Austrians really do just go back to stamping their feet and shouting.

For fuck's sake, ISP is not arguing that there is inherent scarcity to the stock of capital, he's arguing that demand centric understanding of recessions must be totally insane and crankish, because the capital stock has obvious and inherent scarcity. It really is turtles all the way down.

-Username17

Kaelik · Post by **Kaelik** » Sun Jul 06, 2014 9:39 am

Yeah, I'm not actually sure what the dumbest part of that dialogue is.

Like, on the one hand apparently Keynsian economics isn't real and doesn't have the real effects it definitely has had every time it was ever used because Keynes said something he thinks is stupid once, you know, just Like Evolution doesn't occur because Darwin said something wrong once. Relatedly of course, no one who hasn't red the General Theory could possibly understand economics, just like no one who hasn't read The Origin of Species could possibly understand evolution, because the relevant information in those documents has not been restated or improved upon in any subsequent works at all.

But then, on top of that, the "stupid" thing that proves all Keynsian economics to be a figment of your imagination is this bold axiom about how anyone who has ever said Capital is not very scare is clearly a crackpot. Of course, it never at any explains why this statement is false, because as Frank said, it appears to just be an axiom that the author has never put even a seconds thought into justifying.

And then, for completion sake, it attempts to discredit random person number 2 for being unable to refute a bare assertion with no evidence to support it of any kind. Because you know, your inability to accurately debunk some random assholes random assertions on first encounter is totally meaningful at all.

Mistborn · Post by **Mistborn** » Sun Jul 06, 2014 11:56 am

Honestly I'm not sure why we are still engaging with ISP beyond pointing and laughing given he still hasn't walked back his comments about the Somali government being to big.

Also is it just me or have the Dens trolls been riding the Nirvana Falacy pretty hard lately.

Red_Rob · Post by **Red_Rob** » Sun Jul 06, 2014 5:06 pm

I find Kaelik's little disclaimer at the end of each of ISP's posts extra hilarious when the post preceding it is just crazy babbling.

Whipstitch · Post by **Whipstitch** » Sun Jul 06, 2014 6:26 pm

Well, expecting coherence and earnestness from someone posting as "Infected Slut Princess" has always been a bit of a reach.

DSMatticus · Post by **DSMatticus** » Mon Jul 07, 2014 3:50 am

I still want an answer. I don't actually know why ISP thinks capital is scarce. An argument that hasn't been made is awfully tricky to debunk.

Doom · Post by **Doom** » Mon Jul 07, 2014 5:48 am

Comedy gold!

tussock · Post by **tussock** » Mon Jul 07, 2014 6:31 am

Wouldn't capital be scarce because it's nominally a measure of past use of ... capital.

As you can't have actually used infinite capital in the past to build up whatever you call capital now, you can't have infinite capital now either. As capital is thus finite, it is scarce.

Resources are scarce, we will run out of stuff like readily recoverable Helium, much of which will have been lost to space through the production of children's balloons. Conventional oil production peaked in 2005. Whale oil production peaked much earlier. People have been running out of local forests for millennia, and we could run out of global forests over the next century. There's a whole bunch of coal left, but the space to dump the CO2 from burning it is already overfull and externalising significant costs.

Some of those things are infinite at a fairly low rate of consumption and finite at anything higher, which means they're all finite in the real world. Other than sunlight, and the weather it drives, everything is finite.

But if you put a bunch of capital now into making solar electricity, it starts paying for itself and the leftovers can be invested in ... ultimately a finite pile of capital ten thousand times what we have now, but still finite and thus "scarce" in a technical sense.

Kaelik · Post by **Kaelik** » Mon Jul 07, 2014 7:06 am

Being finite does not mean something is scarce. All your listed examples of things running out are in fact not Capital. The point is that Capital will never be lacked. It is literally impossible to have a shortage or lack of Capital. There is no way we could even compute that. It is literally impossible to even conceptualize a situation that would be described as a scarcity of Capital. It literally just doesn't make sense to even call Capital scarce ever.

So when people say that capital is totally scarce for real, and you are a crackpot if you think otherwise the onus is on them to describe any economic definition of Capital and scarcity that somehow allows us to make meaningful statements about when Capital is or isn't scarce, and whether this is a problem, and how to fix it. But since literally no existing framework for those terms can possibly address those problems, it is beyond ridiculous to allege this as an axiom of your argument.

DSMatticus · Post by **DSMatticus** » Mon Jul 07, 2014 8:53 am

I really didn't want to start giving away answers before I got a response, but what the hell, let's be honest: he's not gonna say shit.

First thing to note: something being finite does not imply it is scarce. Everything about an economy is finite in any given window of time, but we don't also say that everything about that economy is scarce in that same window. Scarcity is actually defined loosely based on the relationship between our ability to produce and our propensity to consume, such that things are scarce when we cannot produce as much as we want and things are abundant when we can - that paints scarcity as a continuous spectrum, which it very much is. If we can produce capital sufficient to meet our needs for capital without significant economic burden or trade-off, then we would say capital is not scarce.

Second thing to note: capital and resources are not the same thing. While it is the case that the production of certain capital consumes resources, and those resources can be finite (or even scarce, which as above, are not the same thing), it does not follow from this observation that even that specific type of capital would be scarce. Remember: capital is defined as goods used during the process of production that are not appreciably consumed by their use. It is a one-off investment of resources to produce capital, by definition. Even capital which depends on a scarce resource may not necessarily be scarce because producing that capital could represent such a pitifully small expenditure of that resource as to be negligible.

Third thing to note: even if it were the case that a specific kind of capital were scarce (i.e., we could not produce enough of it to fulfill our needs for it), it would not follow that all capital is scarce. In the same way that it does not follow from the fact that my car is red that all cars are red. Indeed, if a particular type of capital were scarce you would expect to see the price of that capital rise such that other kinds of capital became comparatively more attractive.

Keynes actual argument (paraphrased horribly by your's truly) is that you should have full employment and that this will require a low rate of interest, but when those conditions are met the willingness of individuals to produce capital (i.e. invest in the creation of firms) will exceed society's needs for capital (i.e. make new shit for them to buy, which has a real ceiling - aggregate demand isn't and never will be infinity).

I don't know what part of this ISP doesn't understand. He may not know what capital means. He may not know how scarcity works. He may have just lifted his entire argument off the conservative blogosphere and repeating it may have been the extent of thought he put into it. It may be some entirely different kind of stupid. We'll probably never know. But it definitely is stupid, and he almost certainly doesn't understand the text he's mocking.

tussock · Post by **tussock** » Mon Jul 07, 2014 1:48 pm

Thanks for the explanations, saves me looking stuff up when I don't really know where to start, and am lazy.

So in the modern world, or future I suppose, not quite here yet, when everyone's on a universal living wage because there's just not enough jobs even with most of them bullshit, and their every need is met because all capital is abundant, what happens? The service economy looks bullshit when we can just serve ourselves with a click that directs the solar-powered robots to get busy.

Do we just all try to grab fleeting social feels by making games for each other? Does that work when the automated universal game winning calculator ... oh, that's right, I don't believe in computers actually getting a whole lot smarter than people (because people use dumb computers to make themselves smart, duh). So games it is. Awesome, already there. Ninja'd it.

Laertes · Post by **Laertes** » Mon Jul 07, 2014 2:09 pm

John Kenneth Gailbraith was known to speculate that the real challenge wasn't economics: the real challenge is what we're going to do with our free time once we've solved economics.

name_here · Post by **name_here** » Mon Jul 07, 2014 2:10 pm

I wouldn't worry about it; we have been quite ingenious in finding ways to waste colossal amounts of time.

Koumei · Post by **Koumei** » Mon Jul 07, 2014 2:12 pm

Did John exist in a world before the Internet? These days, wasting time is a very easy task.

Laertes · Post by **Laertes** » Mon Jul 07, 2014 2:36 pm

Gailbraith died in 2006; so yes, the web existed at the time. Mind you, he said that earlier sentence in the 1970s in The Affluent Society, which is a creepily prescient book in many regards.

DSMatticus · Post by **DSMatticus** » Mon Jul 07, 2014 8:40 pm

tussock wrote:So in the modern world, or future I suppose, not quite here yet, when everyone's on a universal living wage because there's just not enough jobs even with most of them bullshit, and their every need is met because all capital is abundant, what happens?

The fact that capital is abundant does not imply that goods are abundant. The utilization of capital still requires a continuous input of resources (such as labor), and those resources are unlikely to ever be abundant (for example, if you find that labor is abundant, that is actually an economic problem you should find a way to solve. Idle hands should be put to work).

What the abundance of capital implies is what Keynes called "the euthanasia of the rentier." If capital is abundant, then simply owning capital is not an exclusive privilege which can be leveraged to demand profits in gross excess of what a fair market would indicate. It's actually a fairly optimistic statement about the power of capitalism to not be an exercise in fellatio of the plutocrats, provided the governments acts as necessary to maintain full employment.

tussock · Post by **tussock** » Tue Jul 08, 2014 8:24 am

How is labour a resource? I know they call us "human resources", but surely Labour is properly capital. We're not used up, we increase production with investment and lose production without proper maintenance, and there's always people.

What, all capital is also a resource when measured by the hour? Fair enough.

Anyhoo, most goods have deliberately designed to fall apart so you have to buy a new one for nearly a century. The only reason they're not abundant now is they're not made to be. Hell, most western homes are overflowing with crap they never use and would break if they did.

But we know what happens when everyone has what they need: modern Japan. It's supposed to be a bad thing because there's no growth, but growth's just another thing which becomes superfluous as far as I can see.

Green Party here notes the future is doing more with less and living better despite flat or negative economic growth (assumes you measure "better" in some way other than GDP/capita, and probably requires a spot of levelling IMO). Which, to me, seems vastly more sensible than subsidising up a storm of giant mortgages that will never be paid for an industry that is poisoning the landscape like the current bunch prefer, for the GDPs.

schpeelah · Post by **schpeelah** » Tue Jul 08, 2014 9:06 am

tussock wrote:How is labour a resource? I know they call us "human resources", but surely Labour is properly capital. We're not used up, we increase production with investment and lose production without proper maintenance, and there's always people.

What, all capital is also a resource when measured by the hour? Fair enough.

Capital is when you buy something paying upfront and then it works for you for little further cost - but in case of people, we don't have slavery or indentured servitude anymore. Businesses buy man-hours on a continuous basis and production consumes those man-hours - just like any other resource. Human capital is a thing, but refers more to skills of the workers involved. People are just a source of labor - you may as well declare iron not a resource because an iron mine is capital.

DSMatticus · Post by **DSMatticus** » Tue Jul 08, 2014 9:26 am

tussock wrote:How is labour a resource? I know they call us "human resources", but surely Labour is properly capital. We're not used up, we increase production with investment and lose production without proper maintenance, and there's always people.

You're confusing labourers with the labour they produce. Labour is absolutely a resource that gets produced and consumed, even if at the end of the day the labourer is (hopefully) still alive to produce more labour.

What, all capital is also a resource when measured by the hour? Fair enough.

The limiting factor being discussed isn't capital-hours or whatever. It's the fact that no matter how many factories you have, you still have to put things into them (labour included) to get products out of them, which is true no matter how much capital or how many (potential) capital-hours you have. The gist isn't that abundant capital means abundant everything, it's that because capital is abundant, should any capital owner attempt to charge an excessive rent on access to his capital or his goods, [whoever he is trying to fuck, employees or consumers or whatever] can go elsewhere. Because, again, capital is abundant.

That obviously wouldn't be enough today; the game is ridiculously amazing rigged. But it couldn't hurt. Especially the first part of the plan, which begins with achieving and maintaining full employment. That sure would be nice.

Occluded Sun · Post by **Occluded Sun** » Tue Jul 08, 2014 7:51 pm

name_here wrote:You know, capital might literally be the only thing in existance that isn't intrinsically scarce, since it's simply an arbitrary representation of value and can be declared to exist in any desired quantity.

The value that capital symbolizes, however, cannot be so declared.

Username17 · Post by **Username17** » Tue Jul 08, 2014 8:16 pm

Occluded Sun wrote:
name_here wrote:You know, capital might literally be the only thing in existance that isn't intrinsically scarce, since it's simply an arbitrary representation of value and can be declared to exist in any desired quantity.
The value that capital symbolizes, however, cannot be so declared.

That is pretty hilarious. Value being a thing which by definition is merely declared arbitrarily. The value of anything can be declared to be anything.

-Username17

Occluded Sun · Post by **Occluded Sun** » Tue Jul 08, 2014 8:54 pm

So you really think you could declare the leaves on trees to be valuable and make everyone rich in the process?

That is not how money works.

LR · Post by LR » Tue Jul 08, 2014 9:28 pm

Occluded Sun wrote:So you really think you could declare the leaves on trees to be valuable and make everyone rich in the process?

That is not how money works.

Did you somehow miss that the world's most stable economy does all of its trading in worthless slips of cotton? Or that places where everyone has relatively even amounts of government banknotes are the happiest places in the world? The things you are saying can't be done are things that were done before you were ever born.

Occluded Sun · Post by **Occluded Sun** » Tue Jul 08, 2014 11:15 pm

LR wrote:Did you somehow miss that the world's most stable economy does all of its trading in worthless slips of cotton?

Did you somehow miss that printing more paper money is tightly controlled, it's highly controversial when the total supply is increased or decreased, and counterfeiting is treated as a major crime?

Do you have any idea what happens when the symbolic markers for value are created at will? Bad things.