Friday, September 27, 2013

Beginnings of a Comprehensive Economic Theory: Struggle as Fundamental

In my last post on building an economic theory, I came to the conclusion that the interactions of people are fundamental to the economy, not individuals themselves. However, are all interactions economic? Of course not. Economics, as a whole, tends to deal with a specific set of actions by people: First, production of goods and services. Second, hiring of workers. Third, the selling of these goods and services. Fourth, the purchase of goods and services. Fifth, the competition between different businesses.

These five actions boil down to three interactions. First, the interaction between the worker and the boss. Second, the interaction between the producer and the consumer. Third, the interaction between competing businesses. These all share one common characteristic: They are a struggle. In the first, the worker struggles for higher pay and less work while the boss struggles for lower pay and more production. In the second, the producer struggles to get more consumers to by more of their product for a higher price while the consumer struggles to buy what he/she will actually want for a lower price. In the third, both businesses struggle for more customers buying more of their stuff. Thus, it wouldn't be inaccurate to say that economics is the study of the struggles in production and distribution.

These three struggles are what are fundamental to the economy and, thus, must be fundamental to any analysis of the economy. All three of them have resources funnelled into them, be it through strikes, union dues, hiring pinkertons, creating anti-union propaganda, marketing to customers, shopping around, or negative ad campaigns. All of them take up time, labor, and resources that could be put into other things, thus all three of the struggles are inefficiencies.

The expression of the struggles can be found in three places: wages, prices, and relative prices among competitors. They show who is "winning" each of the struggles and by how much.

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