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Rationally can be understood to mean something like: * Put goods to their highest use * Allocate capital to those who can produce more rather than consume it

Rationally can be understood to mean something like: * Put goods to their highest use * Allocate capital to those who can produce more rather than consume it In general, nothing is given to anyone. Increasing capital (i.e. by a single individual or within a single firm) is quite difficult and getting moreso every day. If 1% of the population is a super-producer, 9% are regular producers, and 90% are largely consumers, then the consumers are best off when the 10% producers have most of the capital. Allocating capital to consumers starts fun and ends poorly.

aninhumer 9y ago
>* Put goods to their highest use That's just dodging the question. What is the "highest use"? >* Allocate capital to those who can produce more rather than consume it And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.
- RickHull 9y ago
  Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost. If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.
  - aninhumer 9y ago
    >Everyone consumes. It's the basis of the economy. Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? Given that we seem to have vast productive capacity, and yet many people in the world seem to still live in poverty, perhaps we're not making the best trade-offs there?
    - RickHull 9y ago
      > You can't just say production is a better use of resources than consumption We're not talking about resources though -- capital is "the means of production". It's not the final good which is consumed. Capital, in the case of an Iowa corn farm, is neither the corn itself nor a choice about how to distribute the corn. Capital would be the land underlying the farm, the "seed corn", the farming implements, and the funding (liquid capital, e.g. money, credit, debt) for the operation. The farm employees and owners are ostensibly human capital but are usually considered separate from "capital" in general. One way to allocate this capital is Zimbabwe or South Africa style, which says give it to the needy. Or Venezuela style which says give it to the public (i.e. government). Again, the question of capital allocation is distinct from the question of consumption good allocation, though the answers tend to be highly correlated. > The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? In general, expanding productive capacity results in producing more consumer goods. Any "lag" concerns are trivial, which would be the only tradeoff here. The best thing for people lacking in consumer goods is to produce more goods by expanding productive capacity. What's the real alternative? How would you propose to allocate capital towards people in poverty? When we get to free nanoreplicators, that will be great in terms of raising living standards for everyone, and this entirely consistent with capital theory, particularly in terms of maximizing consumer welfare. It will be hard to "make a living" as a producer in such an economy, but no one needs to "make a living" beyond pushing the button on their nanoreplicator.
    - crankylinuxuser 9y ago
      > Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. Exactly. We'll put a cost on how much it is to live per day, and if you fail to exceed that, capitalism will slowly kill you. And for a great many people, it does. It kills by pollution in communities that don't have enough to fight the corporations. It kills by depriving basic health care. It kills by malnutrition. It kills by subsidization of refined carbohydrates and sugars. It slowly kills by locking people in jobs in which the upkeep for their bodies is higher than what they make. It further injures the future generations by depriving education to those in impoverished areas. "But hey, we made a killing on the markets. And stock prices went up for the next quarter. And those low wagers we employ, well, ehh, turnover's a thing. It's just another externalization we don't have to care about!"
erikb 9y ago
It might be correct if that would be what happens. However people who create more are usually at the bottom end of the food chain in our current system. People who don't do much more than play political games usually end up at the top, sometimes earning 5 times of what the actual creators earn.

aninhumer 9y ago

>* Put goods to their highest use That's just dodging the question. What is the "highest use"? >* Allocate capital to those who can produce more rather than consume it And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.

RickHull 9y ago
Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost. If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.
- aninhumer 9y ago
  >Everyone consumes. It's the basis of the economy. Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? Given that we seem to have vast productive capacity, and yet many people in the world seem to still live in poverty, perhaps we're not making the best trade-offs there?
  - RickHull 9y ago
    > You can't just say production is a better use of resources than consumption We're not talking about resources though -- capital is "the means of production". It's not the final good which is consumed. Capital, in the case of an Iowa corn farm, is neither the corn itself nor a choice about how to distribute the corn. Capital would be the land underlying the farm, the "seed corn", the farming implements, and the funding (liquid capital, e.g. money, credit, debt) for the operation. The farm employees and owners are ostensibly human capital but are usually considered separate from "capital" in general. One way to allocate this capital is Zimbabwe or South Africa style, which says give it to the needy. Or Venezuela style which says give it to the public (i.e. government). Again, the question of capital allocation is distinct from the question of consumption good allocation, though the answers tend to be highly correlated. > The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? In general, expanding productive capacity results in producing more consumer goods. Any "lag" concerns are trivial, which would be the only tradeoff here. The best thing for people lacking in consumer goods is to produce more goods by expanding productive capacity. What's the real alternative? How would you propose to allocate capital towards people in poverty? When we get to free nanoreplicators, that will be great in terms of raising living standards for everyone, and this entirely consistent with capital theory, particularly in terms of maximizing consumer welfare. It will be hard to "make a living" as a producer in such an economy, but no one needs to "make a living" beyond pushing the button on their nanoreplicator.
  - crankylinuxuser 9y ago
    > Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. Exactly. We'll put a cost on how much it is to live per day, and if you fail to exceed that, capitalism will slowly kill you. And for a great many people, it does. It kills by pollution in communities that don't have enough to fight the corporations. It kills by depriving basic health care. It kills by malnutrition. It kills by subsidization of refined carbohydrates and sugars. It slowly kills by locking people in jobs in which the upkeep for their bodies is higher than what they make. It further injures the future generations by depriving education to those in impoverished areas. "But hey, we made a killing on the markets. And stock prices went up for the next quarter. And those low wagers we employ, well, ehh, turnover's a thing. It's just another externalization we don't have to care about!"

erikb 9y ago

It might be correct if that would be what happens. However people who create more are usually at the bottom end of the food chain in our current system. People who don't do much more than play political games usually end up at the top, sometimes earning 5 times of what the actual creators earn.