We continue the braincell-killing exercise /slash/ Den self-flagellation that is reading The Natural Dividend. #1515430, #1565551, #1588944
In this episode, the authors -- successful Norwegian academics whose cognitive deficiencies are on full display throughout the book -- get shockingly close to understanding subjective value theory. And then, very predictably, botch the entire exercise.
We also learn a little bit about their biases and where this shit is coming from
First, the asshats give a pair of nonsensical conditions — incorrect even according to their own frameworks.
Because (a) fails by implication in their view, since nature was made by nobody... But how could value then ever flow back to the "maker"? They already raged against God (#1588955), and Darwin doesn't have a bank account. In the real world of sane economics, the value does flow back to the producers, since the producer isn't God or nature but the guy who extracted the thing (oil, metals, wind, fish etc etc). The eeeentreeeepreeeeneeeeur.
(If you think this error still just hinges on market "value," you're right... but please just wait up; don't beat me to it...)
Second, nature is now alive and well, acting in Mises' framework:
We have already recognized that nature is not of our making; it exists independently of our efforts. This section aims to demonstrate that this independent nature can create value, which can be subsequently commodified and sold on the market. (39)
Yeah, no. Talk about misunderstanding value...
Cmon, fuck heads, just crack open an economics textbook — any of them! — and check subjective valuation and labor theory of value stuff (even that defunct and outdated worldview would have rescued them from such errors).
Next page, they get stunningly close to getting it:
Again, the "productive forces of nature itself" is shockingly anthropomorphic... Yeah, sure, nature is alive and demands a paycheck for its hard work crushing organic matter or hurling gale-force winds at you.
Plus, of course "the political authorities that regulate access to nature" are the default owners (#1588944). ugh.
"Imagine a pool of oil lying deep below the ocean bottom"
...ok, ok, ok! Now we're getting somewhere!! I'm excited!
... This oil, lying untouched in the raw, has no market value; it only has the potential to become valuable.
Yes yes yes, okay. Good! And how? Who brings the valueless thing alive/to market and makes it valuable, what about the physical nature of the oil shifts between the ocean floor and the refinery?? Aah, yes, you guys are so close!
... The same can be said of the labour and capital inputs we attribute to the [owner]: without access to the raw materials (provided by nature), labour and capital inputs are worthless
Aaah, no: that's an error. Labour and (almost all) capital have secondary, alternative use! They are and can be deployed elsewhere. Their "reservation price" isn't zero, like the oil at the bottom of the sea nobody can do anything with.
Oooh look at that "brought together" idea... I wonder, the government as an entrepreneur, making things happen... Where have I heard that before??
"In making this argument, we hope to avoid the quagmire that is the valuation problem in contemporary economics"
Oh boy. There's no valuation problem and certain not in contemporary economics. This was all worked out largely a hundred years ago, between the marginal revolution (#1471628) and subjective value, the socialist calculation debate and the Cambridge capital controversy. And sidestepping "value" is precisely the core error of your whole book!
...but let's check that sneaky footnote (fn10) and see what's up:
It's Mariana Mazzucato, the author of The Entrepreneurial State!! And here, the authors cited her follow-up book, The Value of Everything... in addition to an overview book by two Marxists about a supposed value conflict, from 1982. (Like cooome the fuck oooon!!). As if Ms Mazzucato is anything but a fringe, irrelevant, non-representational figure in "contemporary economics." As if MARXIST AUTHORS have anything meaningful or important to say about CONTEMPORARY ECONOMICS.
My. Fucking. God. I ask, as one of my professors at Oxford liked to quip in seminars:
It got worse later in the morning reading... @Undisciplined
Economics of commodities are wrong, no upward-sloping supply curve for natural resources.
Like what... I know these guys don't understand neither "scarcity" nor "resource" but holy mother of flying fucks, are you insane?? Is your brain on crack cocaine?!
We explore for/extract/produce more oil when price is high and expected to be high; mines go on overtime when commodity prices are high.
The physical quantity of e.g. iron in the ground (in the universe?!) obvs doesn't change, but that's economically irrelevant
Confusing supply and stock is easy to do (thinking of you, @Scoresby).
We do in fact produce more nature when we build infrastructure that makes it easier to access, ironically reducing the total stock of nature in the process.
See my math comment above.
The trouble when using verbal argumentation is people use words with overloaded and flexible meanings (e.g. supply) to talk about things that are better understood as specific mathematical objects.
I don’t see how math helps with the actual interesting parts of this: nature is a valued thing that is basically unownable by definition.
What set of non-arbitrary rules can provision the optimal amount of it, when we can’t use profit and loss?
I think you're referring to existence value, or perhaps some unknowable option value from biodiversity or natural preservation. But I don't think that's what the book is debating. I think the book is sorting through the question of how to assign value to something that just exists, but also has to be transformed to be brought to market. (That's my read of it anyway).
In which case, you write down a model that has the thing that exists as an object, as well as the transformation process as an endogenous outcome. You write down the model of the agents' behavior, and derive equations that are plausibly defensible as value measures, and see how the natural objects enter in.
Of course, the exercise is purely descriptive. The model doesn't (and can't really) make any normative claims. However, looking at precise definitions of value within the model can help us think more carefully about what increases or decreases the model's version of value, which helps us to think morally about more universal values that come from outside the model.
Also, I think forcing the Natural Dividend authors to write down a model where value can only accrue to people, and the government is some function of human decision making, may be clarifying for them and perhaps limit some of their claims. (I don't really know, because I haven't read the book carefully, but @denlillaapan insists that they're off their rockers)
For some of their applications, I think the answers are trivial and uninteresting. If someone has to incur costs to extract a resource through any sort of transformation, it just ceases to be nature.
The more interesting ones are things like recreational value tied to a lack of intentional transformation.
I agree the authors would benefit from formalizing their thoughts but they’d also benefit from being berated by Den for saying dumb things that don’t actually grapple with current economic thinking. I’m agnostic as to which would help them more but have a strong preference for the latter.
I agree, that's an interesting one. It'd probably touch on the economics of the commons and public goods, though. Which inevitably brings in the gubment. Which is where these thinkers always head.
I don’t grant, absent a compelling argument, that creating an organization to initiate violence against peaceful people can be logically derived from an enjoyment of nature.
Yes, ish. That was my hope in reading it, but they seem waaaay more aggressive and ideological about the unfairness and unequal distribution from the fact that someone develops/uses nature (for free) and brings its "value" to market without paying for it
(And they should pay us, the people, because all your nature are belong to us)
Why don't they go out and fucking do it then, lazy asses
@delete in 48 hours
I believe people used to be thanked for going out into nature and bringing back useful shit.
Do you believe that math is useful for econ now, and that not using math makes your brain wander off into fanciful territory? It's super easy to understand the role of nature in the economy if you use a model.
Here's a simple model with nature:
Ok, we're done. Nature's role in the economy is now understood.
Nope.
What about this modelling exercise is some sort of relevant revelation?
I understand that algebra is clarifying to some people, but what exactly do you think this example illustrates that words about dynamics/market pricing/subjective value/optimization don't?
It's not about what it can illustrate that words can't. it's about what it can't illustrate that words can (wrongly)
Not following. Maybe try a graph to get your point across?
(See what I did there!)
Forcing people who think about economics to formalize their thoughts catches bad logic and sneaky assumptions. It eliminates arguments that might sound reasonable when using words, but becomes untenable when you try to formalize it. You accused the authors of this book of faulty logic, well the purpose of formalization is to gatekeep the faulty thinking.
From the snippets you've posted about The Natural Dividend, the thing I'd ask them to formalize is their definition of value in this system of decision-makers, where nature is a force that imposes conditions, but isn't an acting agent. Value can only be defined with respect to the acting agents.
I don't suppose they'll see that any more clearly with a mathematical formula.
Put differently: you can always make a formula/arrange the algebra so your favoured idea comes out, no?
Perhaps they don't want to see clearly and would give up if asked to formalize their arguments ^_^
Sort of but not really. You can get a model to say whatever you want, but it may also require transparently dumb assumptions, and you'd get called out for it.
It's better for you if they keep getting stupidly close and then crashing the plane.
Not for my brain cells and mental well-being.
There's only so much asinine stupidity a purple monkey can deal with
But, if you want to eventually figure this thing out, you need to see the failed past attempts.
Not the annihilation of neurons—I would call it semiotic barbarism.