7 ms·

"In a typical transaction, no value is created. If I give you an apple and you give me an orange, the total amount of fruit in the economy remains constant. We

"In a typical transaction, no value is created. If I give you an apple and you give me an orange, the total amount of fruit in the economy remains constant. We can’t create fruit by bartering with it. We can only do so by foraging or cultivating an orchard." That seems wrong. If I trade, that means I value whatever I get more than what I gave up; and likewise for the counterparty. Isn't that a net positive even though nothing was physically created?

Kalium 6y ago
It makes sense if you believe value to be an objective thing, where each good has a fixed value that is a fact. In a slightly more complicated model - or the real world - the value of a good or service is informed by things like control and location. Value is not objective, but subjective. Value can be and often is created by moving good from a location where they are values little to a location where they are valued highly.
- chmod600 6y ago
  "It makes sense if you believe value to be an objective thing" Does any serious economic philosophy actually believe that foolishness?
  - Kalium 6y ago
    In feudal times, merchants were often derided for supposedly charging a price different from the "true price" of products. So perhaps not in any serious modern economic philosophy, but people definitely arrive at this idea in naive ways.
    - anoncake 6y ago
      And rightly so. Value may be subjective, but cost – and thus the correct price of a good – is not.
aidenn0 6y ago
Shortly after that he does acknowledge that collective labor may be more valuable than individual labor. However we can all agree that Amazon doesn't create $91B of value when it buys something for $91B in cash. The entire supply chain behind creating the thing Amazon buys, plus the raw inputs, creates something of value that Amazon then consumes. You could maybe argue that in a market without Amazon, the workers may have been paid only, say, $85B, so Amazon has transferred $6B from consumers to workers. Even then, the value of transferring $6B from consumers to workers is unlikely to be $6B. If I tighten the last bolt on a car that is worth $20k, I have not created anywhere near $20k in value.
- chmod600 6y ago
  I agree that the overall value that amazon is claiming is dubious at best. It's conflating consumer/producer surplus with net profits and conflating both of those with wages. But the whole point of the article is to debunk these distortions and add clarity. Adding its own confusion and distortions is not a good way to start.
Pfhreak 6y ago
There are colloquial usages of 'value' that make this conversation more complicated. We might describe the value as the utility or desirability of the object -- use value -- where I value food because I can eat it. Or the exchange value, ie, how many apples is this iron worth. Or the labor value, ie, how much labor went into producing this item. Or the price, ie, how much is this item worth in money. It seems that in reading this sentence, the author is talking about the labor value of the fruits. The various parties may have different ideas about exchange values, prices, and use values, but the labor value doesn't change because the items have exchanged owners.
- chmod600 6y ago
  Doesn't it take labor to facilitate the matchmaking, transportation, and transaction costs associated with barter?
simonh 6y ago
The problem with accepting this premise is that it violates the core principle of socialism that only labour creates value. But yes, of course, if I have an orange grove and you have chickens, if we trade then the diets and nutrition of both of us improve. Identifying imbalances in supply and demand and resolving them absolutely crates value, but that's the root of big scary nasty evil capitalism, so we can't be having it. Not that Bezos' sums make and real sense at all either, but this critique is way off base.
grecy 6y ago
The best explanation I've heard: If I pay you $10,000 to eat a pile of horse manure, then you pay me $10,000 to eat a pile of horse manure we have: Created $20,000 of "value" for the economy and increased GDP $20,000. That's all great for PR! In reality we both just have s--t eating grins.
- skybrian 6y ago
  So okay, fraudulent transactions exist. That doesn’t tell you whether a particular transaction is fraudulent. The shipping industry is useful and using it to ship bricks for some fraudulent scheme doesn’t change that. The value of a physical action isn’t inherent in the action itself, but rather depends on what purpose it serves.
- khazhoux 6y ago
  This actually creates 1BTC.
- chmod600 6y ago
  While funny, that doesn't really apply here. We're exchanging an apple for an orange. That is a very reasonable barter transaction and I see no reason that it doesn't create value. In fact, the value is likely to be undercounted by GDP. People are taxed on income, so casual transactions like the orange-for-apple trade are likely to be left out of GDP simply because they are unreported. Your example is the opposite: over-counting GDP and the participants paying thousands of dollars in taxes.
- robocat 6y ago
  And unless you both pay your tax on your $10,000 income, you are defrauding the IRS (assuming you are in the US).
deleted 6y ago
[deleted]
dools 6y ago
I think the point is that value is created here when the fruit is grown not because we swap the fruit
- pas 6y ago
  The point is that there's no objective value to fruit (or anything for that matter). For someone with allergy to that fruit it's worthless. Aggregated preferences usually show that specialization (comparative advantage) helps satisfy everyone's preferences more that if everyone would just do their owns things. (Hence trade usually brings prosperity.)
pwinnski 6y ago
To each person participating in the transaction, it's a net zero transaction. Person A values the item they're getting more than the item they've giving, but that also means they believe that Person B is getting the short end of the stick. So +1 for Person A is -1 for Person B. However, Person B obviously feels the opposite, as if +1 for Person B is -1 for Person A. An outsider, Person C, might say that each of them has given up a fruit (-1), and gained a fruit (+1), so both Person A and Person B end up at 0. This is the point the writer was making.
- gweinberg 6y ago
  No, each person does not believe the other person is getting the shorty end of the stick. They have different preferences, they both know this, so they both know that they are both better off after the exchange. The third party know this also.

Kalium 6y ago

It makes sense if you believe value to be an objective thing, where each good has a fixed value that is a fact. In a slightly more complicated model - or the real world - the value of a good or service is informed by things like control and location. Value is not objective, but subjective. Value can be and often is created by moving good from a location where they are values little to a location where they are valued highly.

chmod600 6y ago
"It makes sense if you believe value to be an objective thing" Does any serious economic philosophy actually believe that foolishness?
- Kalium 6y ago
  In feudal times, merchants were often derided for supposedly charging a price different from the "true price" of products. So perhaps not in any serious modern economic philosophy, but people definitely arrive at this idea in naive ways.
  - anoncake 6y ago
    And rightly so. Value may be subjective, but cost – and thus the correct price of a good – is not.

aidenn0 6y ago

Shortly after that he does acknowledge that collective labor may be more valuable than individual labor. However we can all agree that Amazon doesn't create $91B of value when it buys something for $91B in cash. The entire supply chain behind creating the thing Amazon buys, plus the raw inputs, creates something of value that Amazon then consumes. You could maybe argue that in a market without Amazon, the workers may have been paid only, say, $85B, so Amazon has transferred $6B from consumers to workers. Even then, the value of transferring $6B from consumers to workers is unlikely to be $6B. If I tighten the last bolt on a car that is worth $20k, I have not created anywhere near $20k in value.

chmod600 6y ago
I agree that the overall value that amazon is claiming is dubious at best. It's conflating consumer/producer surplus with net profits and conflating both of those with wages. But the whole point of the article is to debunk these distortions and add clarity. Adding its own confusion and distortions is not a good way to start.

Pfhreak 6y ago

There are colloquial usages of 'value' that make this conversation more complicated. We might describe the value as the utility or desirability of the object -- use value -- where I value food because I can eat it. Or the exchange value, ie, how many apples is this iron worth. Or the labor value, ie, how much labor went into producing this item. Or the price, ie, how much is this item worth in money. It seems that in reading this sentence, the author is talking about the labor value of the fruits. The various parties may have different ideas about exchange values, prices, and use values, but the labor value doesn't change because the items have exchanged owners.

chmod600 6y ago
Doesn't it take labor to facilitate the matchmaking, transportation, and transaction costs associated with barter?

simonh 6y ago

The problem with accepting this premise is that it violates the core principle of socialism that only labour creates value. But yes, of course, if I have an orange grove and you have chickens, if we trade then the diets and nutrition of both of us improve. Identifying imbalances in supply and demand and resolving them absolutely crates value, but that's the root of big scary nasty evil capitalism, so we can't be having it. Not that Bezos' sums make and real sense at all either, but this critique is way off base.

grecy 6y ago

The best explanation I've heard: If I pay you $10,000 to eat a pile of horse manure, then you pay me $10,000 to eat a pile of horse manure we have: Created $20,000 of "value" for the economy and increased GDP $20,000. That's all great for PR! In reality we both just have s--t eating grins.

skybrian 6y ago
So okay, fraudulent transactions exist. That doesn’t tell you whether a particular transaction is fraudulent. The shipping industry is useful and using it to ship bricks for some fraudulent scheme doesn’t change that. The value of a physical action isn’t inherent in the action itself, but rather depends on what purpose it serves.
khazhoux 6y ago
This actually creates 1BTC.
chmod600 6y ago
While funny, that doesn't really apply here. We're exchanging an apple for an orange. That is a very reasonable barter transaction and I see no reason that it doesn't create value. In fact, the value is likely to be undercounted by GDP. People are taxed on income, so casual transactions like the orange-for-apple trade are likely to be left out of GDP simply because they are unreported. Your example is the opposite: over-counting GDP and the participants paying thousands of dollars in taxes.
robocat 6y ago
And unless you both pay your tax on your $10,000 income, you are defrauding the IRS (assuming you are in the US).

deleted 6y ago

[deleted]

dools 6y ago

I think the point is that value is created here when the fruit is grown not because we swap the fruit

pas 6y ago
The point is that there's no objective value to fruit (or anything for that matter). For someone with allergy to that fruit it's worthless. Aggregated preferences usually show that specialization (comparative advantage) helps satisfy everyone's preferences more that if everyone would just do their owns things. (Hence trade usually brings prosperity.)

pwinnski 6y ago

To each person participating in the transaction, it's a net zero transaction. Person A values the item they're getting more than the item they've giving, but that also means they believe that Person B is getting the short end of the stick. So +1 for Person A is -1 for Person B. However, Person B obviously feels the opposite, as if +1 for Person B is -1 for Person A. An outsider, Person C, might say that each of them has given up a fruit (-1), and gained a fruit (+1), so both Person A and Person B end up at 0. This is the point the writer was making.

gweinberg 6y ago
No, each person does not believe the other person is getting the shorty end of the stick. They have different preferences, they both know this, so they both know that they are both better off after the exchange. The third party know this also.