CCXX – Defining And Refining

My previous two articles introduced an off-the-cuff idea and expanded upon it, that the true measure of an economy has less to do with money and more to do with resource transformation. I introduced a lot of terms so I want to take a moment to pin down what I mean by these terms so that I can remain consistent as I continue to think about this idea. Next, I would like to state as simply as possible the model I’m thinking of and see if it’s logic still holds up.

First, let’s talk about terms.

MONEY – A highly (perfectly) liquid instrument for transferring value.
RESOURCE – An illiquid instrument for storing value over time
NATURAL RESOURCE – A resource which is produced and distributed according to nature.
RAW MATERIAL – A natural resource which serves as the object of the transformation process.
VALUE – The desirability of a thing to some party (an individual, organization, society).
POTENTIAL VALUE – The possible future value of a thing after it has been transformed
ACTUAL VALUE – The value of a thing that can be realized in exchange or storage.
FACE VALUE – The stated measure of value of a thing.
WORTH – The perceived value of a thing.
TRANSFORMATION – The conversion of Raw Materials into Products through the application of Work
WORK – The specific means of transformation
MANUFACTURING – The species of work where labor is applied to resources to transform raw materials into products
SERVICES – The species of work where labor is applied to problems to transform those problems into solutions.
PRODUCT – A Raw Material which has been transformed into something useful and/or desirable.
TRANSFER – The one-way movement of Money, Resources, or Value from an owner to a buyer, or from one place to another place.
STORE – The ability for a thing to retain value over time.
EXCHANGE – The sum of two transfers, one from owner to buyer, the other from buyer to owner.
LIQUIDITY – Measures the ease that stored value can be transferred.

---

Lets look at some examples. A friend of mine worked as an engineer in a metals mine. His company would extract the raw materials, transform them into some product, and exchange the product for money. His company was able to exchange the product for money because the product was valuable to the counterparty.

The United States has a strategic oil reserve. This oil was in part taken from raw materials extracted domestically, and transformed into usable product-forms of oil. The strategic reserve has several varieties of these oil products just in case–it is far better to store the actual oil than their cash equivalent because the oil stores value longer than cash does.

In the colonial period, the Belgian Congo was known for it’s plentiful natural resource of Rubber. Congans would do the work of extracting the raw material and transforming it into some product. Belgians would then transfer that product to other parts of the world, where it would be exchanged for money.

---

Lets make a simplistic example. You and three friends have 10 blocks of wood. I have a knife which I can use for whittling. I agree to pay you $1 for one block of wood. I whittle it into a gnome, and I sell the gnome for $2. The end result of this series of transaction is that you and your three friends have one fewer block of wood, you are up by one dollar, and I am up by one dollar. Everyone exchanged goods for an agreed upon price, so economics is working as designed.

However: If our frame of reference is just you and your three friends, your collection of ten blocks has been depleted by one, and income inequality between you has grown by one. In real world examples, what tends to happen is those with money in developing countries leave and go to developed countries. So lets say the same thing happens here. Now there are only your three friends, 9 blocks of wood, and me with my whittling knife.

Any skills that you originally had, left. Any income you earned, you took with you out of your group of friends, and the resource has been transformed and so cannot be returned.

I am suggesting that a better way of going about things would be for me to sell you my whittling knife, and teach you how to carve gnomes. One of your friends sells you the block for $1. You carve it into a gnome. You sell it to another friend for $2. The resource and the product stay in the group, and the economic activity remains as well. The full life cycle is preserved. After the fact, the friend with the gnome could sell it internationally–at that point, the resource has left but the economic gains relating to it have already been preserved.

So the principle appears to be that the first exchange of transformed resources must be within the host country. After that the end product can go anywhere, but the economic benefit of extracting, transforming, and exchanging a resource and product remains in the same place.

---

I don’t have a good segue for this next bit, it’s the result of an earlier draft the substance of which I didn’t want to keep except for this one point:

Lets take a moment to talk about services. Service is the species of work wherein not resources but problems are transformed from problems to solutions. The solutions to problems are valuable, so Solutions are a species of actual value, while Problems are a species of potential value. This is why Entrepreneurship can generate value from creative problem solving.

More to come on this whole topic!

AMDG

X – Dictionary for an Internet Philosopher

These are paraphrased definitions based on my limited understanding of the subject matter. I will update this with new words I encounter that I forget or have trouble with.

---

AGENCY – A supernatural power of autonomous decision making. (Source: Article LXIX)

ANGEL – A supernatural being of pure agency and conscience. (Source: Article LXIX)

AUTHORITY – A Moral capacity to oblige a subject to choose this thing rather than that. (Source: Zippy)

CONSCIENCE – A supernatural power of emotional and moral awareness. (Source: Article LXIX)

COOPERATION – In Sin, it is the means by which a person other than the individual committing the sin can share culpability for that sin. Cooperation can be Formal (A person is participating in the sin) or Mediate (a person is indirectly participating). (Source: Article XXI, Related to: Necessity, Proximity, Negative Cooperation)

CULPABILITY – The degree of responsibility a person bears for sin.

DISTRIBUTISM – Economic Model based on Catholic Social Teaching which argues that Economic resources ought to be distributed as widely as possible for maximum social benefit. (Source: Article XCIV, Related to: Subsidiarity)

ENFORCEMENT – Power associated with authority, specifically to punish those who disobey authority and extract restitution from them. (Source: Zippy)

ESCHATOLOGY – regarding ‘the last things’; particularly death and final judgement.

FIDELITY – The duty to validly and licitly exercise authority.

GNOSTICISM – [pending]

INTELLECT – The Reasoning faculties included within Agency, informed by conscience and sensory perception.

LEGITIMACY – Authority which has been validly and licitly transferred from a higher authority.

LIBERALISM – The political philosophy that liberty, or freedom, is the ideal state of Man, and Government may not infringe upon it.

LICITY – A deed which one has the authority to perform.

MATERIAL – [pending]

MEMETICS – Study of how ideas compete and ultimately become ‘common knowledge’

MIMESIS – Shares a root with ‘imitate’, regarding how people mimic each other to learn; particularly with regard to social change.

MODERNISM – A worldview in which Truth is defined as bringing thought into line with life. (Related to: Postmodernism, Traditionalism)

NATURE – [pending]

NECESSITY – The degree to which a person, mediately cooperating in sin, is essential to the conduct and completion of that sin. A person mediately cooperating can be either Necessary (the sin would not have happened without their cooperation) or Non-Necessary (their cooperation had no effect on whether the sin happened). (Source: Article XXI, Related to: Proximity, Cooperation, Negative Cooperation)

NEGATIVE COOPERATION – In sin, it is the means by which a person with sufficient position, authority, or circumstance, by intentionally failing to use such to prevent sin, can share culpability for that sin. (Source: Article XXI, Related to: Necessity, Proximity, Cooperation)

NOMINALISM – A philosophy that seems to argue that things that aren’t tangible aren’t real. Also seems to rely heavily on what words are used to describe things; certain words seem to be ‘nominally’ accepted while others aren’t. You could almost say ‘Perception Defines Reality’ (Related to: Realism)

ONTOLOGY – The philosophical study of what a thing is. Best explained by example: If two men call themselves a king, but one has a throne and subjects and rules a large geographical area, he is ontologically different from a man who calls himself a King but lives in a hut in the woods. Both men regard themselves as a King; one is a king while the other considers himself a king.

POSITIVISM – The philosophy that knowledge is derived from natural phenomena. It reminds me of nominalism, in that it rejects the abstract in favor of what appears to me to be a ‘scientific rigor’ applied to philosophy. Zippy describes positivism as requiring a Theory of Everything, and if a given thing can’t be explained by that theory, or is not relevant to that theory, it is irrelevant and can be discarded.

POSTMODERNISM – A worldview in which Truth is defined as bringing thought into line with passions. (Related to: Modernism, Traditionalism)

PROXIMITY – The degree to which a person, mediately cooperating in sin, is close to the conduct of that sin. They can be either Proximate (closely associated with and involved with the conduct of the sin) or Remote (some steps removed from the sin, with reasonable cause for their remote cooperation). (Source: Article XXI, Related to: Necessity, Cooperation, Negative Cooperation)

POWER – The Material Capacity to make this thing happen rather than that. (Source: Zippy)

REALISM – A philosophy that holds that things exist in reality independent of what we think of it. You could almost say ‘Perception is derived from Reality’.

SUBSIDIARITY – The idea that problems should be solved at the smallest practicable level.

SUPERNATURE – [pending]

TRADITIONALISM – A worldview in which Truth is defined as bringing the mind into conformity with reality. (Related to: Modernism, Postmodernism)

TYRANNY – Tyranny is an exercise of authority which is contrary to natural law, and the attempted or actual enforcement of that authority. (Source: Article LXXIV )

VALIDITY – A deed which follows the form prescribed by legitimate authority. (Related to: Legitimacy)

WILL – The acting faculties included within Agency, informed by instinct and passion. (Source: Pending)

---

Last updated 11/01/2019