My apologies, but I don’t understand your question. Could you perhaps rephrase?
I realize that the question was not directed at me, but since I have opined on the topic of economics raised in several recent threads started by Ajahn Sujato I would offer a brief thought here.
As I have noted in other posts, the problem confronting modern economics is one of assumptions regarding preferences. Most economists begin with the simplifying assumption that humans engage in rational cost-benefit calculations. That’s all fine and well, but no two humans make the same cost-benefit calculations. If they did, there would not be the unbelievable number of choices available in the commercial marketplace. If you shop for, say, flat screen televisions, there are literally thousands of models from which to choose. Which one best maximizes benefits is specific to each consumer.
If everyone had the same preferences and calculated costs and benefits in the same way, presumably eventually the number of choices available would thin out to only those that maximize benefits and minimize costs. You would think eventually people would say, “Why are there five hundred breakfast cereals in the supermarket? Everyone knows that the best choice for nutrition, price, and taste is Super Fruity Crunchy Rice Crackling Pops.” The fact is, people value things in different ways. That’s why you could have identical twins at birth, one of whom gives away all physical possessions and becomes a monastic, and the other becomes…an economist! (You would think economists would know that. 
)
The point is, as long as people value things in different ways there is no perfect way to allocate resources unless you could somehow build a supercomputer that took into account the preferences of eight billion human beings and allocated resources so that everyone got exactly what they wanted. Even then, would people accept that level of surveillance of their preferences so that the supercomputer knows at all times what they want? Unlikely.
I am trying to get to the point of where does the income that is spent in a market by individuals come from first place?
As someone fond of Marxian economics I believe the more important economic questions come much earlier than the usual distractions of commodity fetishism.
Hence my question on where does the money people are supposed to use in markets towards a magically super efficient allocation of resources come from in the first place.
More technically, what is in your view the ultimate source of initial endowments of the agents who find in markets the most efficient mix of goods and services needed for their lives? Isn’t it labor?
And I think this is where ajahn sujato is trying to understand when he raises the issue of the inherent value of human life and how that not necessarily that is currently reflected in the way individuals are given access to the resources needed to have a decent life first place.
To the extent that this is true, it frames economists as the exact mirror-image of advertisers, who assume that human spending is based on irrational impulses.
Just to come back to the topic, I’m not interested in satisfying everyone’s desires, but their needs. Everyone needs four walls and rood over their head. What paintings they hang on their wall, I couldn’t care less, so long as it doesn’t cause any harm. If we have developed the most powerful system for material production ever known, yet we cannot give everyone a decent place to stay, we’re doing something wrong.
So it’s not about perfect allocation of resources. It’s about good enough for the basics. And that’s a lot simpler.
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Unfortunately that would be considered utopian and unfair by most mainstream economists!
I just makes me so sad, to think our expectations have fallen so low.
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Even in their needs there is variability of human behavior. Humans are primates, evolutionarily related to other primates such as monkeys and apes. Just as no two primates have the same needs, the same is true for humans. An elderly gorilla has different needs from a newborn gorilla. Gorillas don’t have a “market” per se for goods and services as humans do, but they still follow a rudimentary system of supply and demand inasmuch as changes in supply (environmental conditions) and demand (the number, age, gender, physical condition, dietary needs, etc.) of gorillas in any given troop varies as well.
The intersection of supply and demand is where the quantity and “price” of any given item (food, materials for building shelters, tools, grooming, care-giving, etc.) is determined. I put “price” in quotation marks because obviously one is not talking about a commodified system of exchange. Rather, “price” here would be used metaphorically to refer to the energy and resources put into the system in order to obtain some quantity of a good or “service” (such as grooming). Mind you, this is not a defense of capitalism and market economics. It is meant merely to answer the question regarding the origin of human needs and the methods by which related primates allocate resources.
I am sort of reminded of the quote attributed to Winston Churchill (confirmed by Churchill biographers) that goes as follows: “Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…” The market may be the worst form of resource allocation, but it is better than all the others that have been tried to date.
But back to my thoughts about human needs, one of the reasons why alternate forms of allocating resources tend to be less effective than the market is that they fail to consider the variation in human needs, just as no two gorillas need the same thing. They also tend to rely on coercion to operate.
I am reminded of a student I had several years ago. He was a committed Marxist who insisted that humans were akin to insects. That is, despite all appearances to the contrary (humans resemble other primates such as monkeys and apes more than they do insects), this particular student was convinced that humans are predisposed to engage in hive behavior. I remember a class one day when the student asserted that the best political and economic system humans could strive for was The Borg from the Star Trek sci-fi series. For those unfamiliar with Star Trek, The Borg was a collective of human-machines which obliterated each member’s individuality in favor of “the collective.” For my Marxist student, The Borg was what humans should strive for. I remember the reactions of the other students in the class who could not contain their dismay that this student had completely lost the point of the Star Trek writers which was that The Borg was the ultimate expression of the nightmare of enforced collectivism.
Collectivism only has an appeal if all humans have the exact same needs. Absent that fact, humans are more like their primate counterparts who find ways of distributing goods and services despite differing needs. It’s not perfect, but it works reasonably well, flaws and all.
But that’s the point: it really isn’t. We’d all be better off growing our own food and living a subsistence lifestyle than facing the horrors that unfettered capitalism has in store for us. The whole “capitalism kind of works” argument only has a plausibility if you leave out climate change, and other attendant environmental crises.
And while for most of us on this thread, starvation and deprivation is in the future, the future is unevenly distributed, so for millions of people it is the reality right now.
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Unfortunately I think this isn’t true. I’m not an expert and welcome an informed rebuttal but the last statistics I saw, there’s simply too many people now to feed everyone without industrialized agriculture. It’s like the first agricultural revolution: quality of life went down significantly after wheat domesticated us, but once the population boomed there was no going back.
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Moderator peeking in here… 
With a quick 
to our glorious leader, Bhante Sujato
Could someone please mention some more dhamma…
Hard to ask people to comply with guidelines, without a good example being set 
Remember there are group PMs available for people wanting to discuss stuff in detail
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It comes from the good and useful things we do for each other. The only ways to have income in a free market are from 1.) gifts/charity or 2.) providing goods or services that are of value to the community. In a free exchange, both parties of the exchange benefit. The other day I bought a table from a neighbor. He wanted the $5 more than the table, and I wanted the table more than the $5. We were both better off for the deal. The ambitious must provide ever more for the community.
In a centrally planned economy, one can only accumulate wealth by the exercise of political privilege, so the ambitious enter politics.
The good and useful things we do for each other indeed, and mostly in the form of labour, current or historical. Don’t you agree?
What you describe could only have occurred because of initial endowments.
You only had the money needed to trade what you traded because either you worked to be in possession of that initial endowment or you inherited value generated by previous work necessary to result in that initial endowment. And the same applies for the other party of the transaction you described.
Mind however, that in current market-based approach, given the commodity fetishism and the high penetration of financial capital, only a small portion of actual transactions occurring across existing and new markets for goods and services take place solely for the simple and immediate meeting of individuals needs.
This is for a significant portion of what becomes the individual prices for services and goods transacted through the economy is serving a bigger purposed of perpetuating an very unequal allocation of individual endowments.
When I pay a plumber to fix my units` pipes, in his price for his time is included a material portion of money he may need to pay for a dwelling he probably acquired at 2-3 times the replacement cost (the value of the bricks, cement, and labor needed to build it) added of course by a non-negligible interest payable to a bank.
And this is why I am trying to investigate with you what is the ultimate source, origin, basis of the very starting point you and anyone find themselves when transacting anything in these markets you so much believe being efficient at solving the world’s problems…
Well, I see you are quite stuck at rejecting central planning. Worry not, we can discard that at that stage. The idea here is to help ajahn @sujato with his thinking.
And in the words he has so far written from his thinking he seems perplexed with the fact that in this theoretically perfectly efficient market-based solution for things we have been living in, some people find themselves with initial endowments so unequally small that they cannot even afford to have have access to the basics as summarized in the traditional Buddhist framework of four requisites.
So the question is are markets efficient to determine, distribute or allocate the inital endowments the players in the markets are to find themselves with in the first place?
If you think so, we could explore than a market-based solution for the license to live or be born.
A possible model for that is a system in which potential parents would have to acquire or be allocated an amount of initial endowments sufficiently large for that new agent they will bringing in this world to efficiently transact in all existing markets to meet his/her individual needs in terms of the four requisites and beyond.
This is somehow aligned with some countries’ policies towards maximum amount of children and/or grant schemes for first child, etc. And we can even have a democratic socialist solution that uses markets under similar format, which I very much enjoy thinking about!
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The way I understand it, in a centrally planned socialist economy, any required ex-ante accumulation of capital should only be required due to international trade with other non-socialist economies (e.g. like USSR had to accumulate gold or pursue surplus grain production to offset the imports for the things it was not in place to produce).
Also, any accumulation of capital is done by the state on the behalf of all the individuals it represents, each one have an equally infinitesimal share of that capital.
It is noteworthy that the organisational models which resulted in political privileges historically in non-capitalist systems were in fact determined externally and mostly resultant from the militaristic bias inherited as the world went through two major world wars in the last 100 years.
It is also noteworthy that these organisational models are in principle exactly the same models followed currently in the market-based capitalist system.
The organisational models which created a powerful Stalin in the Soviet Union, a Chairman Mao in China, or a Kim Jun-un in North Korea are in principle the same which results nowadays in CEOs and CFOs earning hundred or thousand times what one of their organisations’ average employee earns.
And this disparity and inequality has very serious implications in terms of determining the initial endowments parties transact from in the markets you so strongly believe can solve for everything.
So, having in mind the idea of helping ajahn @sujato with this thinking, I suggest some attention to be paid to the topic of organisational model and how we could maybe look at the overall decentralized model for organizing the Bhikkhu and Bhikkhuni Sanghas could be a useful reference for a better future.
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Bhante, I appreciate your thoughts on this issue, and you may well be right.
As for inequality, perhaps it is a question of definition. While the rich are better off today than in the past, the poor in developed countries (and most developing countries) are also vastly better off in material terms than the middle class or even the rich in the not-too-distant past.
It is not true that ancient India did not suffer from famine and hunger in the past. As I’m sure you know, the Asokan conquest of Kalinga talk about the human toll of war but that even more died form famine. Jain mythology records a huge famine in 301BCE. Of course, records are thin on the ground, so perhaps India escaped the lot of the vast majority of people before the 20th century. That said, it may well be the case that this was not true for the region where the Buddha lived. I don’t know.
You mention slavery, of course slavery is the ultimate in poverty and inequality. It is a fantastic achievement of the last 150 years or so that slavery has been mostly wiped out worldwide, with the lion’s share of the credit going to the British Empire. Until the 19th century, slavery was a given throughout the world.
Can you explain why you would consider farming an externality?
It is possible that there will be a global catastrophe from climate, plague, or economic collapse, but the last century has been a record of millions being saved from the fate of the vast majority of human beings throughout recorded history: grinding poverty. In India itself extreme poverty has fallen from 50% to 15% in the last 30 years, largely the result of tentative steps toward freer markets. In East Asia it has been even more dramatic falling from 60% to less than 5%, again mostly from China moving toward freer markets. Members of my wife’s family starved to death in China in the 1960s. Now as they have increasingly embraced private property, everyone down the poorest villager is vastly more secure than under socialism. Starvation is unthinkable.
Hunger is falling dramatically all over the world, and the share of income spending on food continues to plummet. Child labor is in decline. People in developing countries have more leasure time. Global life expectancy continues to climb. As recently as 1925 Asian live expectancy was less than 30. Child mortality has fallen by more than half just since 1990. Violent crime is down nearly everywhere in the world. All of these things are due to embracing private property, markets, and modern technology like energy, transportation, and medicine. If we do face a global catastrophe sometime in the future, and there is scanty evidence for it, we are better prepared to handle it than at any time in human history.
This is not to say that there aren’t serious problems brewing. The artificially lowered interest rates of the last 20 years have left the US financial system dangerously over-leveraged. I will be very surprised indeed if we escape a very deep and long recession.
Labor and capital. Labor is the work we do today. Consumption is what we spend today. Capital is what we save to invest in the future.
Capital is savings. When a person or firm or society builds capital, they are putting off current consumption for greater future consumption. This can be done in international trade or domestically. While it is true investment can be done either by the state or by free individuals, long history and experience has shown that the state is generally very bad at it indeed.
Nothing could be more different than Stalin, Mao, or Kim than a business in a free market. The dictators built their power and wealth through the exercise of violence. Sam Walton built his wealth by providing low cost food and clothing to poor and working class Americans. If Walmart doesn’t provide good quality food at a low price, you go shop at another store. If Mao does not provide, you starve. Markets are not perfect, and there is no such thing as Utopia. They are just a far better tool for allocating resources than the state. Free people choosing for themselves will make better decisions. Markets are the decentralized model par excellence. Nothing else comes close.
If we want a better future, we should stop making the tragic mistake of every tyrant that they can make decisions better for people than they can make for themselves.
I disagree with your equation of capital and savings and we know that historically it does not hold true.
But if I understood your ideological bias from this conversation I understand that there is no point in discussing it further.
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Yes, I allow for the possibility of markets being a good enough decentralized model for the economic problem of intertemporal allocation of resources.
The question I really wanted to explore with you is how can we sort out the issues that arise when not everyone comes to these markets with a reasonably equivalent initial endowment, and therefore simply find themselves excluded altogether from the market-based solution to the real problem of meeting their needs in terms of four basic requisites, or even beyond in terms of the four types of nutriment the Buddha talked about in SN12.63:
- solid food ,
- contact (lodging, clothing, medicine, cooling, heating etc),
- mental intention (education, inspiration, etc), and
- consciousness (meditation and sources of entertainment in the form of sights, sounds, tastes, etc).
Is it the case that EBTs would support simply stating: “it is their bad luck, their bad kamma, there is nothing we can do” ?
I am optimistic that discussing this will help ajahn sujato in his thinking.
Seriously, there are only 5 of you engaging in the economics threads 2 and 3. Perfect number to thrash out the details in a group - without having to restrain content due to ‘setting a good example’… 
@sujato Perhaps we can leave economics 1 as is. And I can turn 2 and 3 into PM’s that all who have participated in are invited to. Or some permutation of the above. So that you guys can write volumes and volumes about it No restraint at all needed …
Just trying to come up with a neat solution that is win:win:win 
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