Re: Re: Surplus Wealth; Geopoltical Expansion; the New Frontier

[TPMacD@xxxxxxx by emout14.mail.aol.com (8.7.6/8.7.3/AOL-2.0.0) Tue, 7 Oct 1997 09:56:14 -0400 (EDT)]

In response to some questions and comments by Chas Andersen:

Chas:
<<Why does voluntary saving in the form of an asset require a reward?>>
---
TPM

Who said anything about "saving" or "rewards"?

My observation is on the existence of excess wealth that cannot be spent
meeting one's personal needs.  This is neither voluntary, nor involuntary,
but structural.   It is not saving.  It is surplus.  And it exists by virtue
of the correlation between two real world phenomena: the "limted needs"
structure of the human personality (and our limited capacity, in the extreme,
to consume) and the "volume production" structure of technology (which always
produces more of a given solution than any one of us could ever use to meet
our own, individual needs).  So, my proposition is that surplus exists by
virtue of our use of technology - rather than Nature - to meet our needs.  It
is an ontological fact, not a manufactured reality.

In the modern American economy, this observation may be empirically valid for
as little as only, say, the top 1% of the population, measured in terms of
personal income and net worth.  People like Bill Gates and Warren Buffet, who
have so much money that they simply cannot spend it all on their own personal
wants and desires, no matter how hard they try.

But these extreme examples of extremely wealthy people nonetheless prove that
if we remove considerations of constraint on purchasing power, we end up not
with JMK's infinite propensity to consume, but with a limited need for
solutions that results in the formation of excess purchasing power - or
surplus.

Chas:

<<Then, there are no constraints on the capacity to produce!>>

TPM:

Actually, there are numerous constraints on our capacity to produce- mostly
related to physical limitations on the availability of Energy, Materials and
the Knowledge of how to use them.  But that brings me to my point.  Most of
these constraints have been effectively overcome by what I call
production-centered economics.

The problems of production no longer define the frontier for advance in
Economics.  Instead, a New Frontier is emerging, one that accepts the
accomplishments of Production Economics, and uses it as a foundation for a
more expansive inquiry into a new and different set of questions.

Still,  I don't see how the the assertion that there are structural limits on
our capacity to consume (in the extreme) leads to the conclusion that there
are no limits on our capacity to produce (in the extreme).  To the contrary,
I am arguing that these two (consumption and production) are independant, not
co-dependant, variables.
---
Chas:

<<Does the rejection of economics lead to the rejection of UM theory or is
it the other way around?>>

Who is rejecting economics?  I'm only arguing that the axiomatic assumption
of an infinite capacity to consume that has been used by Production-centered
Economics as a device for putting the problems of Surplus Production to one
side is empirically contradicted by the fact that Bill Gates makes more money
than he can spend. I respect the use of this axiom as a perfectly legitimate
anlaytical device when employed to focus the inquiry on the problem of
developing techniques for overcoming scarcity as a constraint on our capacity
to produce, but I reject it as anything more than that.

So far, I've argued only from the extreme example of the extremely wealthy
individual who experiences no real world limitation on his effective demand
for solutions to his own, personal requirements to the conclusion that our
capacity to consume is not, in the limit, unlimited. I haven't yet begun to
address the question of how choices get made from among perceived
alternatives, so I haven't yet considered how much of Utility Maximization
Theory can be useful in moving Production-centered Theory and into the New
Frontier.

I expect, in fact, that Utility Maximization Theory will actually come into
its own (albeit, in a significantly modified form) as we move into that New
Frontier.