Many different conceptions of value are employed in different contexts, and more than one conception is employed in economics. But the notion of value that is most fundamental to economics is that of usefulness.

Usefulness isn't some attribute independent of context, nor does anything have the same usefulness to one person as it does to another. When context changes, value changes. When a thing that had value is moved, it does not carry its value with it; rather, it takes-on a new value associated with its new context. When a thing that had value moves from being the property of one person to being the property of another, its old value is not delivered to the new person; rather, it takes-on a new value associated with its new ownership.

Prices represent a somewhat different sort of value. Prices are quasi-quantified prioritizations, under which things may be exchanged. But, however prices are formed, they work only to the extent that they promote any exchanges that are useful to those potentially making the exchanges, and discourage any that are not. Ostensible prices that do not do so will be ignored in markets, and bring-about economic failure in other systems of allocation. Market values — prices established by markets — are those that conform to the priorities of the parties who choose to exchange. Market values, though different from usefulness, must be informed by usefulness, and thus must thus reflect the contexts of the things priced.

Monetary prices are quantities of money but not measures of market value.* Prices are first-and-foremost rankings, and treating them as quantifications has limited heuristic value; a thing may be rationally priced at $1000 without its being 1000 times as useful as something rationally priced at $1. And, though the first thing may be rationally priced at $1000 in some context, if the context is changed radically, the thing may cease to have any usefulness, so that its price should be 0. Because of contextual issues, one cannot even say that if the price of one commodity is n that of another then it will always be possible to buy n times as much of the latter as of the former with the same quantity of money.*

A great deal of the wealth in to-day's world is in the form of financial claims that have no meaning what-so-ever outside of the context of a market. If the market is eliminated, then these claims would have no usefulness and hence a rational price of 0. If the markets in which these claims might be used were somehow preserved, but the claims were seized and redistributed, then their new contexts would correspond to greatly diminished usefulness, and their rational prices would then be much smaller.

The great fallacy of popular notions that poor and middle-income people might be significantly enriched by a large-scale seizure and implicit or explicit redistribution of wealth from billionaires or from the 1% or whatever is the notion that the present prices of the seized wealth reflect an intrinsic economic property of the things seized, which property will be delivered with the things as they are transferred. Instead, the old value will evaporate, and the new value will often be 0.

This point is true even in cases in which the assets seized are not financial instruments. Imagine a community given a Lamborghini Diablo. It had more value than a Honda Fit to the millionaire who owned it; but, for the community, the Honda Fit could be more useful than a Lamborghini Diablo. The respective prices prior to redistribution were plainly poor reflections of what would be the values in the new context.

Wealth is destroyed not only when things of value are seized from the very wealthy and given to those less wealthy, but when there is any sort of large-scale redistribution; including that from the lower- and middle-income groups to the very wealthy. But further indiscriminate redistribution, as by income group, will not restore the wealth lost to past redistribution, and even in hypothetical cases in which only actual perpetrators are penalized and actual victims are compensated, there may be further loss of wealth as such.

So, no. There isn't enough money for the dreams of the Occupation movement nor for the promises made by candidates such as Bernie Sanders, because money doesn't work that way. And there isn't enough wealth, because wealth doesn't work that way. The accountings that claim otherwise are crack-pot.

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*These two sentences were added and tweaked on 2020:02/02-03.

There has been and is a lot of confusion over the English word entrepreneur. Now, I say English word advisedly, because, though entrepreneur was derived from a French word spelled exactly the same way, a word is not merely a sequence of symbols, but such a sequence in association with a concept or set of concepts, and the English word entrepreneur doesn't have quite the same meaning as the French word.

The French word means contractor or, more generally, one who undertakes.

We didn't need a new word for contractor; it would be contemptible affectation of one sort or of another to introduce a longer French word for such purpose. In fact, there was some attempt to engage in that sort of affectation in the 19th Century, first in the entertainment industry.

But the sequence entrepreneur was reïntroduced to English in the mid-20th Century with the intention of identifying a narrower concept that meritted a word of its own. That concept was of a person who attempts to create a market where one does not exist — offering a new sort of product, or offering a sort of product to those who have not been purchasers of such things.

The entrepreneur is not merely a small business person, nor an active business person, nor an independent contractor, nor some combination of the three. The entrepreneur is an economic explorer, seeking to cultivate new territory — typically with pecuniary profit in mind, but sometimes just for the satisfaction of having brought a market into existence.

Whatever the motivation, it is in the rôle of attempting to create markets that the entrepreneur is the great hero and the entrepreneuse the great heroine of the market economy. And some unconscious sense of that heroism has passed through our society, causing business people aren't such explorers to want to label themselves entrepreneur. The word has become diluted in general use, and many people are using it as if, well, it meant no more than the French word from which it were derived. Economists with a fair understanding of the market process shake their heads in dismay. We need a word for those heroes.

The self-styled SD Planning Committee, formed to fight cuts to state funding of education, health care, and social services, has posted flyers that declare

We face not a financial crisis, but a crisis of priorities,

I don't know why they end that with a comma, as it's followed by a sentence in which it cannot participate. In any case, it's a somewhat puffed-up way of saying that

Interesting concept, there, that there could be plenty of money in a budget, but that the money is not being well spent. They just might try applying that same concept to just those portions of the budget that are allocated to education, to health care, and to social services. Perhaps, even after cuts, there would be plenty of money, if only it were spent well. And perhaps even if funding to these programmes were increased to the greatest possible levels, it would be spent badly.

Okay, so there's no perhaps to it; that's just how it would be.

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On the other hand, I have to grimace when I hear or read of linking teacher pay to performance.

I understand the desire to pay teachers based upon the quality of their teaching. And, outside of the teachers' unions, almost everyone understands that it's not a good thing to link teacher pay primarily (let alone directly) to years of service. But I'm pretty sure that real-world attempts to link teacher pay to ostensible measures of performance are going to increase

• disincentives for teachers to accept jobs working with less able students,
• incentives for teachers to teach to the tests by which student achievement is purportedly measured,
• student time tied-up in taking those d_mn'd tests, which themselves teach nothing to students beyond test-taking skills.

A profoundly different model of education is needed to get something that will work.

A part of that model would be to use markets to price teaching, recognizing (amongst other things) that different teaching contexts correspond to different markets.

Unfortunately, another part of that model is for parents to accept a significantly greater degree of responsibility for ensuring that their children are properly educated. The vast majority of parents seem willing to pass the buck to state-funded schools, regardless of their performance. It isn't sufficient to say Hey, I sent my kid to school! The school dropped the ball, not me!

I recently read someone defending socialism on the ground that socialism has the same root as does society. Well, I don't object to society. And I venture to guess that she doesn't object to fathers, yet I go further to guess that she does object to what's called patriarchy. One mustn't over-reach with etymology, with dear old dad, nor with society.

I've previous explained the economic calculation problem of socialism: Rational allocation of resources requires trade-off signals that reflect as much relevant information as practicable. Most of the relevant information is highly decentralized, and some of it (such as the expectations and preferences of participants) is intrinsically so. A market brings that information into play by way of prices (trade-off signals) developed by the give-and-take of would-be consumers and of would-be sellers. Socialists haven't developed an alternative; they correct the market only at the cost of over-all misallocations with their own costs in human welfare.

This point is as true in the delivery of health care as anywhere else. Almost everyone agrees that American health-care delivery is in appalling shape, but there are those who ignore that the problems have grown as state interventions have increased. Commentators frequently note that costs have exploded in the last fourteen years, but then most of these commentators are silent on the fact that the period followed upon the last round of reforms. Of course, the period before those reforms wasn't itself some sort of golden age; the reforms were effected because many things were seen to be worse than once they were, and getting worse still. But, again, due attention was not paid to the rôle of prior state intervention in effecting that worsening. This routine of blaming what remains of a market for the mounting problems of an increasingly state-controlled system began well before I was born.

Many people, even defenders of socialized medicine for the United States, admit that the socialized systems elsewhere have some dramatic flaws. The belief of the defenders is that the United States can develop a better system, perhaps in part by learning from the problems of other states. But the deep problem is, again, that of trade-off signals. And one of the seldom-recognized implications of that is that greater state control here has led and will lead to a worsening of systems elsewhere. A state-controlled system can somewhat compensate for its own inability to formulate rational trade-off signals by being guided (directly or indirectly) by prices generated elsewhere. (This solution is imperfect because the prices of one region cannot be expected to be ideal for another; and, if they were, using them fully would generate exactly the same out-comes as would be effected by a free market, rendering the socialism absurd.) Implicitly, production and distribution of health care in the industrialized nations with more socialized medicine has been significantly guided by the choices made in the United States. To the extent that our prices as well continue to become the guesses of bureaucrats rather that the outcomes of interaction between free consumers and free producers, socialized medicine everywhere will be shooting in an ever-growing darkness.

Even assuming that morality can somehow ignore such practical problems, the morality of the claims for socialized medicine strikes me as utterly bogus. Many people declare health care to be a fundamental right, but that's plainly incoherent as one could exercise any fundamental right without the presence and assistance of other people. There have been very few attempts to build ground-up cases for a moral entitlement to health care — identifying some actual fundamental right from which a right to health care is derived in a social context — and every one with which I'm familiar has been exploded on logical grounds. Mostly people just confuse the appealing proposition that it would be a very fine thing if no one was denied health care for simple lack of resources with there being a right to health care. There are a great many hypotheticals that would be very fine things. I know people such that it would be a very fine thing if they had the companionship of someone of the desired sex, and such that they would like that even more than access to medical care; I hardly think that we should force someone else to provide that companionship though.

Some very fine things become very vile things when delivered by virtue of confiscations, regardless of whether we imagine that the confiscation is effected by society, or recognize that it is by a state or by a gang or by a mob.

Calvin Woodward, at the AP, calls this an overstatement:

Most economists, almost unanimously, recognize that even if philosophically you're wary of government intervening in the economy, when you have the kind of problem you have right now … government is an important element of introducing some additional demand into the economy.

but it goes well beyond mere overstatement. It's an gross lie.

It's bad enough when people use consensus to argue for a proposition that ought instead to be tested by logic applied to brute fact. But this business of using counterfeit consensus is just actively vile.

Any time that the state spends money, there is some cost to the economy.

The state can tax, in which case the cost is obvious. But I put obvious in quotation marks here, because people don't seem to think past the fact that money is taken, without much thinking that the value of money per se is its purchasing power.

The state can print money, issuing new currency to fund its expenditures. The cost here comes because

where M is the total supply of money in an economy system, ν is the average frequency with which a unit of currency changes hands in the system, q is vector of the quantities of goods and services purchased in the system per unit time, and p is the corresponding vector of prices. If M is increased, and there isn't some off-setting increase in the elements of q, or a drop in ν, then elements of p must increase. If prices go up, then the purchasing power of the unit of currency goes down. Ceteris paribus, when the state issues new currency, the value of the holdings of currency that people already had is decreased. (There are some other, potentially far more costly effects than the direct loss of purchasing power, but I don't want this entry to mushroom into some huge treatise.)

In many modern states, printing money is made to look like borrowing, whereïn the ostensible borrowing is from a central bank, a special creature of the state, which prints money and uses this to make the loan to the state.

But the state may also more genuinely borrow money (especially when officials of the central bank think this better than printing more) in the financial markets. In this case, borrowing by the state shifts out the demand curve for loanable funds. Unless the supply curve for loanable funds were perfectly elastic, so that any amount of funds would be made available by lenders at the prevailing price — the rate of interest — that price will go up.

When people lose purchasing power to taxation or to an over-all increase in prices, they reduce purchases of goods and of services, and they save less, so that funds for investment are decreased, and hence investment is decreased. When the price of borrowing is increased, people borrow less for consumer purchases and less for investment. So whenever the state spends, no matter whether it taxes, inflates, or borrows, that spending takes a piece of the economy. Whether there is a net cost turns upon whether the activity funded by state spending is somehow more productive than the private activity that it has crowded-out.

As I have explained, state allocation of resources can be more productive only if private provision is hampered by transactions costs, and the effects of those transactions costs are greater than the combined effects of state transactions costs (red tape and all that) and the loss of economic coördination which results from substituting guess-work for market prices.

Okay, so this gets me to these stimulus bills in the United States legislature. Various numbers are associated with various versions, but the bill that left the House of Representatives was for about 800 billion dollars. And various commentators, both conservatives at institutions such as the Wall Street Journal and social democrats (liberals) at institutions such as NPR, have noted that only about one-eighth of the projects in that bill could be reasonably claimed to be stimulus, with the rest just being pork-barrel projects. Regardless of whether we buy-into the Keynesian hopes for about $100,000,000,000, the loss to the economy associated with about $700,000,000,000 in pork will be vastly greater.

It was claimed that a stimulus bill was necessary because the economy is tanking. The word depression is being bandied-about. And, yet, a majority in Congress and the President are pushing what will plainly be a massive hit on the economy.

To explain the behavior of these parties, we could offer various hypotheses. Many politicians are simply great fools; some politicians might believe that we are indeed on the cusp of an economic disaster, but be so greedy for the political gains associated with these projects that they just won't allow themselves to think. Other politicians might not believe the talk of economic crisis, but be knaves who participate in it, creäting a smokescreen behind which to seek much the same gains as are the fools. Finally, some of these politicians might both genuinely believe that the economic crisis is quite dire, and recognize that a stimulus like those proposed will be greatly damaging, but expect that the effects of the bill can be blamed on other things, especially upon what remains of the market economy, so that those effects become an excuse for even greater expansion of state power.

With regard to one particular politician, the President, I don't at all think that he's so great a fool as to misunderstand what a stimulus bill that is about 7/8 pork would do. He knows that he's pushing a hit on the economy. I don't know whether he is amongst the knaves who don't really believe that the economic situation is all that dire, or amongst those who want to engineer a greater crisis in order to have a greater excuse to technocratically restructure the economy. But when the President speaks of recovery as taking years rather than months, I worry that he is not merely lowering expectations to reduce future criticism, but revealing more ambitious plans.

Let's say that we might make veeblefetzers, and we have three available processes:

Now, we have two questions:

• How many veeblefetzers should we make?
• Which process should we use to make veeblefetzers?

From our table we can answer part of the second question: If adamantium and vibranium are actually goods (rather than something otherwise harmful), then we just don't want to use process C; compared with process C, process A would save us some adamantium for other uses, and process B would save us some vibranium. So (again on the assumption that adamantium and vibranium are goods), technical considerations tell us not to use process C.

But it gets messier when we attempt to decide between process A and process B; we have to know whether we want adamantium more for other things than we want vibranium. And there's basically the same question in deciding whether to make veeblefetzers. Could the adamantium or the vibranium be put to better use than in making veeblefetzers? (It gets even more complicated if the processes don't simply scale linearly, so that doubling inputs doesn't double outputs, or new veeblefetzers get put to decreasingly important uses as we make increasing quantities, or we start to take adamantium or vibranium away from increasingly important things as we make more veeblefetzers.)

What we want are numbers or number-like things that are assigned to veeblefetzers, adamantium, and vibranium, so that we can compare those numbers or number-like things, and know whether it's better to save adamantium or vibranium, and whether the priority should be to make veeblefetzers or to do something else with the adamantium and vibranium. Those numbers or number-like things are prices. Market prices are prices assigned by a market process, but any prioritization implies a corresponding system of prices, explicit or implicit. Where there aren't any prices (explicit or implicit), there isn't a system of priorities.

If prices weren't and couldn't be set for us by a market process, then how should they be set? One student, when given a hypothetical example like this of veeblefetzers, adamantium, and vibranium, demanded to know why I didn't use familiar, real-world products and inputs. The answer is that we have a sense of how the world does price things such as watches, aluminium, and gold. Further, aluminium was once more precious than gold, and a decent watch was once unattainable. Relative priorities change, and with them prices. I wanted him to consider pricing from scratch.

In attempting to price adamantium and vibranium, part of what would obviously need to be considered would be the other uses to which one might put each. Were one going to price adamantium or vibranium rationally, then one would have to answer the same sorts of questions for those alternate uses as one wanted to answer for the production of veeblefetzers. In other words, one would have to price the alternative products, and the other inputs (besides adamantium and vibranium) in those other processes. That means looking at other products and processes for those inputs, with no direct involvement of veeblefetzers, of adamantium, or of vibranium. To price anything rationally, one would have to price everything rationally.

One might in theory construct tables of processes for other goods and services. In many cases, one could quickly discard some processes for the same reason that we discarded process C. And, were adamantium or vibranium itself something that must be produced, and not something that a consumer would want in and of itself, then perhaps one could replace it in one's calculations as a function of other inputs.

But the presumption that one could assemble all that technical information — and it must be assembled (not merely collected, but organized) before boffins and wonks can feed it to their super-computers — is truly heroïc, even if one assumes purely automated production. (More on that assumption in a bit.)

Even then, what would be produced would not be prices, but a system of equations and inequalities expressed in terms of unknowns, corresponding to relative valuations of consumer goods and services. One would need to know, at various levels of consumption, whether each participant would rather have a bit more water or a bit more warmth, a bit more warmth or a bit more clothing, and so forth, before one could compute prices rationally or (equivalently) allocate production and distribution rationally.

And, actually, this matter of human preferences cannot be postponed quite like that, because the assumption of complete automation is counterfactual. Human beings may not be factors of production in the making of veeblefetzers, but they are factors of production in quite a bit else. So, to describe production, not only would one have to know how many whoozits can be produced by a purely automated procedure; one also would have to know exactly how specific, real-world human beings (who are very much a part of real-world production) will respond to specific, real-world incentives.

Markets establish prices by concurrent processing. Knowledge is left dispersed; private data, such as preferences, are expressed in the behaviour of individuals participating in the economy. When the price for a given good or service is below an equilibrium, would-be sellers withdraw or try to negotiate a higher price while would-be buyers pursue the good or service in frustration (showing would-be sellers that they might get a higher price) and perhaps offer a higher price; when the price is above an equilibrium, these rôles are largely reversed. So prices are being pushed towards the equilibrium of the moment. Meanwhile, the prices of each good and services is effecting how much people are attempting to buy or sell of other services.

A general equilibrium would never actually be obtained in a real world, because preferences are always in flux, and resources, including technology, change in ways that cannot be particularly well predicted. Still, a market would be in constant pursuit; the process of correction beginning immediately as new information were introduced. And a notable mathematical result is the Coase Theorem: If property rights were clearly defined and respected, then in the absence of transactions costs a market equilibrium would always be economically efficient.

Socialism — the doctrine or practice that the means of production should be owned by the community per se and administered for the over-all benefit of that community — is now-a-days primarily associated with claims about fairness, but in its heyday, and to some extent still to-day, it entailed a belief that technocratic planning could outperform the market by some combination of speed, accuracy, and the avoidance of transactions costs. In the context of production which is assumed to be dramatically more efficient, it becomes easier to talk about the relationship of workers to work changing, and about different patterns of distribution. But the problem here was and remains that socialists rarely recognize the problems of efficiency beyond technical efficiency. In effect, they presume that the differences between processes A and B must ultimately be no different from those between either and C. One often even finds socialists who deny the relevance of prices to socialist planning, betraying some failure to understand the general concept of price. The great problem for socialism is that it must price but, because pricing involves more than technological efficiency, has no sensible system for pricing in the absence of markets. In the absence of sensible pricing, rather than getting wildly more efficient production, one gets horrific chaos and waste.

In practice, socialisms that attempted to avoid having their own markets largely adopted the prices of the more market-oriented economies that they could observe. They had some sense of the present relative values of aluminium, of gold, and of watches because markets elsewhere had valued them. But those prices are prices appropriate to the context in which those markets prevailed; if markets had prevailed in the imitating community, then they would set different prices corresponding to that context. Further, the technocrats can't give the game away by fully imitating the prices of market economies — that would make their own economies more overtly caricatures of market economies. So pricing in communities without their own markets, while not typically being as awful as it might be, is still markedly worse than that in less socialistic nations.

There have long been some socialists who recognized the need for market prices, and such socialists started to become relatively common in the 1980s. The problem for these attempts to combine markets with socialism is that, to the extent that the resulting system behaves like a market, it behaves nothing like socialism; and, to the extent that it behaves like socialism, it behaves nothing like a real market — it doesn't coördinate private and dispersed knowledge to form prices.

(Neoclassical economics hasn't had a good handle on these issues, because it typically assumes-away the underlying problem of information being private and decentralized.)

That's not to say that markets should be used for all economic allocation. The real world involves transactions costs. Sometimes the transactions cost of markets are sufficiently high, and the transactions costs of alternative institutional relationship — contracts, firms, &c — are sufficiently low that the difference then more than off-sets the lost informational value of market prices. But one should remember that real-world alternative institutions do entail transactions costs, and indeed sometimes these are even higher than those associated with markets.