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> Economics is an attempt to explain how wealth and prosperity are created. Overly simplistic view from scratch: Individuals start businesses to offer other in

> Economics is an attempt to explain how wealth and prosperity are created. Overly simplistic view from scratch: Individuals start businesses to offer other individuals and businesses goods and services. Wealth transfers daily to and from many individuals/businesses. Where does this definition fall apart/breakdown as you start to zoom in (or out)?

biotinker 5y ago
I think it breaks down when you start trying to look at emergent behavior that only becomes apparent at large scale. An analogy would be to start looking at a water molecule, H2O, and then trying to explain glaciers and oceans without any sort of similar system to use as a model.
tibbetts 5y ago
Breaks down instantly when you try to define which activities count as businesses, or try to define why individuals are offering goods and services to one another.
- fighterpilot 5y ago
  "define why individuals are offering goods and services to one another." Because these individuals think it's mutually beneficial to enter into the trade. This explains all voluntary cooperation including barter and modern trade. I sell my goods and services to someone who needs them because I can then go and buy food with that money. Currency obfuscates this picture a bit but its only role is to solve double coincidence of wants. Underneath it is just barter via a layer of indirection.
- MuffinFlavored 5y ago
  How is an individual offering goods and services to one another not a business?
  - Ieghaehia9 5y ago
    Is a Wikipedia author participating in a business when they update an article, thus contributing to the service of a better encyclopedia? Is an open-source programmer doing business when they post their GPLed source on the web? Is gift-giving (offering a good) business? That definition seems to be a bit too broad. So maybe there needs to be compensation. But then the determinists would say that even gift-giving has compensation (in the form of reciprocity) and thus isn't much different from credit. So the compensation should be something closer to monetary compensation. But then barter economies have no businesses. Etc.
- deleted 5y ago
  [deleted]
jtolmar 5y ago
These abstract businesses are going to have an awful lot of trouble producing anything of value without employees. The three-way relationship between worker, owner, and customer is required to meaningfully model anything about our economy.
- jokethrowaway 5y ago
  Employees are just other businesses providing a service in exchange for money with a strict contact regulating that supply of service (and tons of regulations)
fighterpilot 5y ago
I would clarify the sentence "Wealth transfers daily to and from". What's important to keep in mind is that while money may transfer, utility doesn't. Utility is generally increasing on both sides of the exchange, otherwise one party wouldn't have entered the exchange. This isn't always true (e.g gambling or opioid addiction), but it's true enough most of the time and explains why trade happens in the very first place.

biotinker 5y ago

I think it breaks down when you start trying to look at emergent behavior that only becomes apparent at large scale. An analogy would be to start looking at a water molecule, H2O, and then trying to explain glaciers and oceans without any sort of similar system to use as a model.

tibbetts 5y ago

Breaks down instantly when you try to define which activities count as businesses, or try to define why individuals are offering goods and services to one another.

fighterpilot 5y ago
"define why individuals are offering goods and services to one another." Because these individuals think it's mutually beneficial to enter into the trade. This explains all voluntary cooperation including barter and modern trade. I sell my goods and services to someone who needs them because I can then go and buy food with that money. Currency obfuscates this picture a bit but its only role is to solve double coincidence of wants. Underneath it is just barter via a layer of indirection.
MuffinFlavored 5y ago
How is an individual offering goods and services to one another not a business?
- Ieghaehia9 5y ago
  Is a Wikipedia author participating in a business when they update an article, thus contributing to the service of a better encyclopedia? Is an open-source programmer doing business when they post their GPLed source on the web? Is gift-giving (offering a good) business? That definition seems to be a bit too broad. So maybe there needs to be compensation. But then the determinists would say that even gift-giving has compensation (in the form of reciprocity) and thus isn't much different from credit. So the compensation should be something closer to monetary compensation. But then barter economies have no businesses. Etc.
deleted 5y ago
[deleted]

jtolmar 5y ago

These abstract businesses are going to have an awful lot of trouble producing anything of value without employees. The three-way relationship between worker, owner, and customer is required to meaningfully model anything about our economy.

jokethrowaway 5y ago
Employees are just other businesses providing a service in exchange for money with a strict contact regulating that supply of service (and tons of regulations)

fighterpilot 5y ago

I would clarify the sentence "Wealth transfers daily to and from". What's important to keep in mind is that while money may transfer, utility doesn't. Utility is generally increasing on both sides of the exchange, otherwise one party wouldn't have entered the exchange. This isn't always true (e.g gambling or opioid addiction), but it's true enough most of the time and explains why trade happens in the very first place.