Sujato's Questions (2): can money be defined solely in units relative to the value of human life?

Yes, the documentary from which the video below is from (The Corporation) explores the changes in law and capitalism which allowed companies and enterprises to not be limited anymore, by the advent of what we call corporations.

Interesting is the fact that it was the end of slavery in US that also freed the legal persons which became corporations! :sweat_smile:

This then created these unlimited corporations, immortal legal persons in practice, which basically transcended time and allow the capital accumulation pursuit to extend itself into the future and well beyond the individuals involved (be them owners, workers or consumers).

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Yes, the basic problem is cultural, not systemic. Any set of rules can be subverted by the people who oversee their creation and enforcement. So, it’s not the writing of the rules that’s the long term trouble, it’s keeping the overseers believing in them. For that, you need a proper and enduring culture that instills the right ethics well enough. Marxism was a fantastic disaster not because the theory was so flawed, but that the worst sort of people took the reigns of power in short order and subverted it. It turned out that if you threw out normal civil ethics in favor of violent revolution, you end up with barbaric leaders running the revolution. It was similar with the French Revolution as well.

It seems to me that culture drives how any particular system operates. After all, it’s people who are actors inside them. Capitalism would not be so terrible if the worst sorts were kept out of positions of leadership, be it political or business. When they are instead encouraged because they seem to bring bigger short term gains, then in the long run the lack of wisdom erodes society.

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Not necessarily a direct answer to your question but I consider noteworthy the concept of value of statistical life (VSL) / value of life:

This measure is used in cost-benefit analysis involving avoidable deaths or injuries. For example, in Australia, the value of life is estimated at A$4.9 million (A$4.2m in 2014 dollars).

https://www.pmc.gov.au/sites/default/files/publications/Value_of_Statistical_Life_guidance_note.pdf

As per the paper above, the yearly measure of value of statistical life (A$182k in 2014 dollars) can be used for determining a value to disabilities following non-lethal injuries:

(…)The Australian Institute of Health and Welfare has published disability weights for most diseases and injuries that can be used to adjust the VSLY (Mathers et al 1999, pp. 186-202). As an example, an amputated foot has a disability weight of 0.3, which equates to 30% of a VSLY or $54,600 per year (0.3*$182 000) when measured in 2014 dollars.(…)

VSL was used recently to justify the economic costs of Covid-19 lockdowns, as explored in this article:

And this article provides a US perspective on the topic:

https://www.bloomberg.com/graphics/2017-value-of-life/

This paper is mentioned in the article above:

http://strata.org/pdf/2017/vsl-full-report.pdf

vsl-full-report.pdf (2.3 MB)

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:slight_smile: I think I may have done the best “work” of this life when there was no sense of working at all. Helping an anxious or scared person to relax, to connect with the present, to get out of some obvious not-healthy conditioning – it wasn’t often “the job” but tangential to many types of work. It didn-t even come from efficiency or work flow or team management or teaching/mentoring/training/supervising responsibilities.

Putting it in terms of labor-time doesn-t seem really possible, because while one can work for that, for those for whom such interaction is habitual it isn’t really “work” and it’s difficult to quantify. Whether compensated or not, they cannot not act in these ways. (Edit: in fact, I have seen such behaviors actually result in negative social or work consequences, on the grounds they waste time or is contrary to competitive cultures.) And I think that might indicate a basic difficulty people commonly have with the idea of labor-time as a system of exchange.

By the way - thank you for sharing your knowledge on this, for those of us less familiar. You explain things rather well, it seems to me.

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That’s nice of you!

I understand it is hard for us to attribute labor-time value to things like this only having as basis for estimating that what we understand labor and value to be in the system we are born and raised in.

But that’s where our task begin if we ever want to go beyond and above the obstacles and limitations of the system we find ourselves in but we’re not ever consulted if we want to be part of.

From what you describe, I am sure we could come up with many different estimates of value of what you did out of kindness, generosity and compassion.

Not for the sake of repaying you but for the sake of giving others an inspiring reference point for the value of these principles.

From a perspective you may have avoided a tragedy. And, as per the above, any action that avoids an injury or death delivers value to everyone else.

If you were not compensated for that it is not because there was no value in it but most likely because it did not contribute in anyway to the dominating logic and system for creation and accumulation of value!

In a society in which the process of creating value is not just part of a greater scheme to accumulate it, the services and products delivered are to be transacted under very differente paradigms. And thinking how different those will be is exactly what the socialist calculation problem is all about.

It is a pity we have not as a species tried solving this problem harder or at least in more conducive circumstances (under no militaristic influences and an imminent risk of a third world war fought with nuclear weapons).

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I am trained as a political scientist, not an economist. However, in the courses I teach there are occasions when a discussion of basic economic principles is relevant to the discussion. One of the very first things I tell students is that, despite the fact that the Nobel Prize Committee annually awards a Nobel Prize for Economics, economists are notorious for disagreeing with each other. This is true in other academic disciplines as well. I often joke with students that disagreement among scholars is what keeps people like me employed in academia :laughing:

One of the other things I tell students when a discussion of economics is relevant to some subject in my politics courses is that the variables affecting economic outcomes are so numerous and so subject to variation that no single theory of economics can possibly explain, much less predict, all possible outcomes. This is one of the reasons the planned economies of the Soviet bloc were an abject failure. The weather is fickle. It’s impossible to know how many size 41 shoes are necessary to produce at any given time. There are time lags between mandates that a certain number of tractors be produced and the re-tooling necessary to manufacture parts higher up on the supply chain. No computer has yet been devised to calculate all the factors necessary to supply an economy with all the goods and services that are demanded.

Moreover, a common mistake made by economists (economists would characterize this mistake as a “simplifying assumption”) is to assume that all humans engage in rational cost-benefit calculations designed to maximize benefits and minimize costs with stable preferences. Human beings do not have stable preferences, and what qualifies as costs and benefits is subjective. No two humans value the same thing in the same way. You can put a signed guitar by Eric Clapton on e-bay and price it at $1 million USD. Someone who has never heard of Eric Clapton will think that price is ridiculous; an avid Eric Clapton fan will think it is a bargain.

My point is, and going back to disagreement among economists, there is an old saying among economists that there is no such thing as a one-armed economist since, when explaining something, economists always say, “On the one hand (this), but on the other hand (that).” Or, as the Scottish writer, essayist, and historian Thomas Carlyle described it, Economics is the “dismal science” (credit Google).

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This conversation is so huge that I hardly know where to begin, but I think it is an incredibly conversation to have, especially for Buddhists. There are two critical problems with the systems suggested here:

1.) Any political or economic system that includes the expropriation of property is a straightforward violation of the precept of not taking that which is not given. This would be as true in a democracy as a dictatorship.

2.) The idea that “we value everything against the dollar” is wildly off the mark. Even if you only include things that we accept as market exchanges, this doesn’t come close to describing the situation. The whole point of the marginal revolution in economics is that a.) the very of every single thing in this world is different for every person and b.) that value changes constantly. How much is a glass of water worth? Well, maybe the answer is different for someone living in the desert and someone next to a lake. And it changes yet again if you’ve already recently had a drink of water. Nowhere is this more true than the valuation of labor.

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I am thinking of the social implications of implementing such an economic system. The current economic system keeps people busy by pursuing wealth either for necessities or for luxuries. What would keep people busy when wealth is redefined to account for the ambiguity of a “decent human life” and when wealth inequality is capped by a logarithmic scale?

In the current economic system, we often encounter the notion “time is money”. How would leisure be defined under the proposed system? To assume that people would abandon the pursuit of money to engage in wholesome activities seem to be built on an optimistic view of human nature. At least the current economic system seem to produce predictable behavior and at the same time allow for individuals to pursue value through other means, such as becoming a monk.

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I have found transactional relationships and transactional social schema ultimately unsatisfying. Human relationships are not, as I understand them, analogous to chemistry in which

A catalyst is a substance that increases the rate of a chemical reaction by lowering the activation energy without being used up in the reaction. After the reaction occurs, a catalyst returns to its original state and so catalysts can be used over and over again… neither a reactant nor a product…
https://courses.lumenlearning.com/cheminter/chapter/catalysts/

Desire and self views seem intrinsicly insatiable. Anicca, dukkha, anattā. But all consideration of “fairness” has seemed to me to depend upon concepts of desire and self views.

However, this is quite an interesting conversation.

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TBH, I’m blown away by the informed and compassionate responses to this thread.

Thanks so much Gabriel for letting me know something of the diversity of approaches for valuing labor. This is stepping in the right direction, but I still feel, though, that if we define worth by labor, however defined, we still miss the fundamental point: human life (or all life really) is the ultimate arbiter of moral value.

Kerala seems to support this. The Government is to all appearances genuine and works well, and the current Health Minister is a rock star!

I guess the problem is that any radical change creates opportunities for bad faith actors.

Ahhh!

Indeed. It’s a topic for another thread, but i am more and more coming to think that one of our basic mistakes is to assume that “science” is a universal method applicable to any field of human endeavor. In physics, chemistry, and engineering it’s been successful to an incredible degree, but in other fields, not so much; economics and psychology being two obvious example.

Well, tax is not theft, so there’s that. But sure, I am not thinking so much how to get from here to there.

Does there come a time, I wonder, when the harm done by extreme accumulation of wealth overwhelms our obligation to precepts?

Perhaps it would be better to say that “the capitalist system tries to value everything by the dollar”. By “dollar” I mean any currency, of course. Obviously dollar values differ according to time, person, and context, but the financial system still moves towards having one universal system.

Reading Suttas and meditating?

And I think there is a deep truth there. It is why those who know only transactional relationships are always so unsatisfied, so relentless in their need to consume more.

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Ajahn, You are more right than you know to reject labor as the measure of value. Not only is it morally reprehensible, but economists have rejected the labor theory of value since the 1860s. Economic value is radically subjective and only markets are able to accommodate that radical subjectivity.

There will never be a time when extreme accumulations of wealth overwhelms our obligations to the precepts. The time of the Buddha had fantastic disparities in wealth, and the poor in that time in place were far more desperate than the poor in developed countries today. That in no way made it acceptable to expropriate wealth by any means then, nor does it now.

I very much appreciate your grappling with these difficult issues. I think we are entering a time in which economic issues will once again be front of mind as millions of people in the US and other developed countries find their standard of living tumbling. There will be tremendous pressure to violate the second precept, both at the level of the person and the state. I hope we are all wise enough to avoid the temptation, but I doubt it.

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Can you elaborate on how markets represent the only way to accommodate that radical subjectivity?

I don’t understand how the issue of externalities, for example, is satisfactorily addressed by markets.
A market-based approach towards that problem ends up requiring the establishment of multiple markets which not necessarily talk to each other at the required speed and synchronicity and don’t do much towards a necessarily satisfactory outcome overall.

An example for that is how the establishment of markets for emissions (like carbon) or renewable energy certificates did not end up solving problems in theory they should: the amounts of emissions effectively avoided are negligible to make a true difference, and renewable energy certificates ended up creating wrong incentives and not the most efficient allocation of resources towards cleaner alternative sources of energy.

But the existence of the markets themselves are usually pointed by those not willing to do more towards the underlying problem as basis for not doing more, usually under the promise that all it needs is a bit more time and a bit more faith in markets as an effective solution for the real-world issues at stake.

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First, why is price radically subjective? Consider the “value” or “price” of a soybean. What is the “correct” price for a soybean? Should it be based on the labor that went into producing it? The “value” of the underlying resources? Both of those would produce tautologies. After all, that would require knowing the correct pricing of labor or materials in the first place.

The price of something is what someone is willing to pay for it. That means that the value of a soybean for someone that doesn’t like soybeans is much lower than someone that does. It is higher for someone that is hungry than for someone that just ate. It is higher for someone where soybeans are rare than plentiful. It varies from person to person from place to place from time to time but the millisecond. If you gave a team of economists the world’s largest supercomputer they could not, even in principle, calculate the value of a soybean even one millisecond in the future. We know this for a fact because commodities traders hire economists and mathematicians by the fistfuls and still are not able to correctly predict prices with precision. The price of a soybean is affected by whether rain was accurately predicted in Saigon 3 months in advance. It is impacted by a tofu companies’ marketing campaign. It is literally affected by everything else in the world simultaneously.

There is no central planning authority that could come close to adequately determining the price. This is one item out of millions. The idea that a market, or multiple markets, “lacks speed and synchronicity” is exactly backward. Market prices can change billions of times a second. It is precisely central planners that lack speed or information to adjust.

Only the free interaction of people is able to determine prices through the mechanism of the market. Any 3rd party that interferes with the free exchange of goods and services damages that subtle price mechanism and is very close to the definition of an externality. Externalities are only satisfactorily addressed by the market.

The classic example in every economics textbook of an externality is bees pollinating a farmer’s field. It goes like this: the bees are providing a service by pollinating the field that is not adequately compensated because the value is not captured by the market. Nonsense! First, the opposite could be said as well. The bees are snacking down on all that lovely pollen without paying either. It is mutually beneficial. And besides, there is a rollicking market for pollination. Today I drove past an apple orchard that had a truckload of beehives that they had paid to visit the orchard to pollinate the trees. The beekeeper is paid by the orchard (and the bees are paid in pollen).

The same is true of air pollution. As countries first claw their way out of grinding poverty, they pollute more to be able to enjoy some of the features of a developed country like heating, light, and transportation. At first can only afford dirtier sources of energy. As countries grow rich, they increasingly value clean air and environment. This is why the US has had a decrease in air pollution (including CO2) on a per capita basis since 1975. The primary externality in relatively free markets are governments. Without government intervention, we would all have much, much less CO2 pollution, at least in the US.

I thank you very much for indulging my thoughts in this important conversation. I know it is in some ways tangential to Dhamma, but it is critically important in most people’s lives.

By the way, I see by your profile that you are Portuguese. My family and I were supposed to be in Portugal for the first time this week, but we had to cancel our plans because of the virus. Too bad!

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And what determines what one is able to pay for in the first place? :thinking:

I think the issue with the thought avenue you seem to come from is that it is based on an hidden assumption that determining the price is so crucial and that planning can only be done by individuals and not by machines.

In the case of USSR, we know that a key reason for the failure of their central planning based production system was that generals and powerful individuals stopped the use of computers for a more effective central planning and allocation of production.

A central planning approach is very scary for capitalism as it uses money solely as a agreed neutral unit of measure for transactions of services and goods to take place and as such reduces dramatically the room for money to be used as financial capital. Without room for money to become financial capital the speed and scale at which value appropriation and accumulation by private parties can take place is reduced dramatically.

And it was exactly because of that fear for efficient central planning that, for example, in Chile Allende’s Project Cybersyn was boycotted and as much of it destroyed as a result of CIA-backed military coup on September 11, 1973.

P.S.: I am Brazilian and as such a native speaker of Portuguese. :slight_smile:

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I have recently come across a specific chapter of the book furhter below and think it is relevant to this conversation:

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Had they been reading Dune, I wonder?

But jokes aside, this is remarkable, I never knew this. One question that I may ask down the track has to do with technology, and what the future would look like if its use had not been appropriated by capitalism.

Speaking purely historically, I am pretty sure this is not the case. There is no evidence for pervasive and widespread poverty in ancient India. On the contrary, the land is green and fertile, and provided abundantly for all. Famines and poverty were the exception. Obviously there were poor people, but poverty has a very different meaning when practically everyone has water and food and a place to live.

And inequality was not even in the same ballpark. The richest financiers would travel in some luxury goods such as cloth and the like with countries a few hundred kilometers distant. There is simply nothing in the economy that would generate the kind of wealth we see today.

In the Buddha’s day, the externality of farming was the loss of life due to the plough, the incursion of lands into the jungle (which was the topic of some Jatakas), the deprivation of food from those lacking land, or the institution of slavery. Today we face a global catastrophe.

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Yes, it is a very interesting and sad story (at least to me!). This article may be helpful to get an idea of what really went wrong:

As a user of mixed integer optimization simulation engines for modelling energy markets I am aware that too complex problems are indeed unsolvable.

But as it was the case with the renewable energy revolution, to simplify things is indeed a very efficient and possible solution.

With enough momentum and volume in terms of international interest and uptake, the upfront costs of building massive wind and solar farms now stack well below the overall costs of building the typical mixes of immense complex machines to extract, process, store, transport and burn highly flammable materials (coal, gas, oil) to generate energy on a not very reliable manner. For example, any individual thermal power plant is in average at least 5% of time under some sort of planned or unplanned outage in which the totality or a meaningful portion of its potential output is constrained off. At the same time, while individual windmills or rackets of panels may need to be turned off for maintenance or checks, wind and solar farms are usually 100% of the time able to produce electricity at zero or negative marginal cost.

Nevertheless I am very optimistic about what could be achieved if we had the real economic challenges we face as a species formulated in the right manner and under different paradigms.

Another read that may be useful to you bhante @sujato as you develop the utopian model I think you are working on is the book entitled The Economics of Feasible Socialism. I found it in PDF in the web here.

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But this can still be done under the current system. One can argue that if one accumulates enough wealth, they can dedicate more time to studying the dhamma or any other teachings they find conducive to their spiritual and intellectual growth, which can help achieve a decent human life.

Under the current system, its not only money that is defined in absolute terms, but also time itself. Measuring time in minutes, hours and days made the subjective sense of time secondary and helped create predictable behavior such as being in the office at the same time as everyone else.

It seems to me that the conceptual generalizations of conventional reality is meant to produce minimum predictability where people can act as a group. More often than not, it has been successful in providing the minimum requirements for people to seek a decent life.

Also the same system justifies the adaptability of Buddhism. I have read somewhere that certain schools such as pureland Buddhism evolved to address the spiritual needs of poor farmers who do not have enough time to meditate.

The lack of a limit on how rich one can become seems to be integral to the idea of “opportunity cost” which leads many to see the limitations of this kind of pursuing and seek refuge or decency in other activities such as religion or philosophy.

Finally, dividing Buddhist community into lay and monastics seems to rely somehow on the current economic system. The interdependence between “food for the body” with “food for the heart” would lose its meaning if an economic system based on a “decent human life” is introduced. Blurring the line between monasticism and lay life, while might be more utilitarian, it could downplay the significance of renouncing lay life where well-being is often held hostage to material possessions.

All in my opinion :anjal:

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I see! I must have misread your bio.

The importance of determining price in a market system is not hidden in the least. It is the primary function of the market, since prices determine how resources will be allocated. If someone or some business or some country develops a computer system better or more efficient at allocating resources than the market, then nothing at all is stopping them. They will have the choice of making a fantastic fortune or building an earthly Utopia (or both). Cybersyn ran on an IBM 360/50 mainframe which had a CPU bandwidth of about 1MB/sec. My old iPad has 12.8 GB/s, so computing power shouldn’t be a problem.

Central planning isn’t scary because it threatens sources of power. Central planning is scary because it replaces the decisions and choices of millions of individuals with the power of a ruling elite. This is the reason why they have been pushing for ever greater central government control for more than a century.

Still on the topic of price, could you describe what in your understanding determines what one is able to pay for in the first place? :thinking:

I think that by answering that question we may help ajahn sujato building his utopian model, with or without a market