Economics/Class Relations

Cost, Aggression, and Access to the Land

By William Schnack

Evolution of Consent

In this essay, I intend on demonstrating the complementarity between the cost-principle (as used by mutualists), rent-sharing (as displayed by the Georgists), and the principle of non-aggression (as used by the voluntaryists). I will also demonstrate why geo-mutualism is a better way to distribute land than by balancing its use either by individualizing or collectivizing it, as done in the extremes of capitalism and communism. I hope this essay to demonstrate the efficiency, both ethical and practical, of geo-mutualism, and its relatability to the non-aggression and cost-principles.

 The Cost-principle

In “The Mutualist Cost-principle,” I outline the dynamic of mutualist economics, which follows the maxim, “cost-the-limit-of-price.” According to this view, any price above or below the cost of manufacture is discouraged, including all forms of taxes, interest, profit, and rent. Wages, salaries, and other labor-based incomes, however, are celebrated.

To the mutualist, cost is not only a matter of political-economy, a measure of proper prices, but is also an ethical concern. To impose costs on another person, without their willing agreement according to mutual exchange, is to act violently, extortively, toward them. After all, mutualists define costs as anything disagreeable to one’s body or rightly-earned property, and, therefore, see the inflicting of costs upon another person as agreeable only under the condition of voluntary exchange, where costs are being traded for mutual benefit (like in a sale).

Within the context of voluntary exchange, one takes a cost upon oneself for another’s sake in order to reduce their own overall costs. The reason for this is best understood through principles such as comparative advantage and economies of scale, whereby division of labor and team-efforts can reduce costs in general. Let’s look at it this way, using comparative advantage:

Say two friends are cooperating in the cooking of a meal; we’ll call these friends Emma and Alexander. Say Emma has had nothing but bad experiences in her time in the kitchen cutting vegetables (say she cut the tip of her thumb off), but she loves to bake. Alexander, let’s say, likes to bake as well, but is a superb food handler, and doesn’t mind doing the job at all.  Who should do what job and why?

It should be quite clear that Alexander should be doing the vegetable slicing, and Emma should be making the pie crust; together they will make a delicious pot-pie. Why should each do their specified tasks? Because they are the tasks each hate the least, and which they are best at.

Let’s look at it economically: By taking the job of making the crust, Emma reduces Alexander’s opportunity costs, and frees him to cut more vegetables, the thing he is best at. By cutting the vegetables, Alexander does not only reduce Emma’s opportunity costs, by freeing her to bake more crusts, but he also reduces her direct costs, because Emma hates cutting vegetables (Alexander, we’ll say, is neutral). So, what happens when Emma bakes the crusts and Alexander cuts the vegetables? Costs are reduced for both parties. They are directly reduced for Emma, because she hates cutting vegetables, but there is also a reduction in opportunity costs for both parties, and, due to this comparative advantage, if they specialize according to their preferences and rates of productivity, more can be made.

How their product is divided should reflect the values of each party, and will tend toward a balance of costs, direct and opportunity-based. They can exchange their products loosely by way of exchange, with one of them keeping the final result; they can cooperate in association to produce the pie, and then receive their own portion of the whole to market themselves as independent agents; or they can cooperate in the marketing process as well, and split the final rewards. Their level of association, and method of splitting the income—whether it be by exchange or by dividend— will be determined by their willingness to cooperate, and the value, or lack thereof, for one another’s abilities.

When individuals are left to make their own decisions they are most likely to make decisions they believe will be beneficial (either in the long- or the short-term). The economic position of the completely rational agent, however, must be better defined; behavioral economists have levied many fair shots at this model of economic life. While their understanding of neither the cause, nor solution of the issue, is without flaw, their approach and analysis of the issue, as it stands, is quite valid. Where they fall short, and their view becomes unsound, is when missing the distortion in the market which is caused by money carrying a price (interest).

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