> have value, and that value is preserved through scarcity
Adam Smith, Benjamin Franklin, Thomad Malthus, David Ricardo, Jean-Baptiste Say, Thomas Malthus, John Stuart Mill etc. and all the early economists did not believe value was preserved through scarcity.
People tried to change this idea in the 19th century, but in the early 1950s the idea that value was preserved through scarcity was only held widely in the USA, and perhaps in some quarters in Western Europe.
Nowadays things are contradictory. Contradictory in the sense that the establishment speaks about government and free market in a certain way, then flips to the total opposite idea and demands banks be bailed out by taxpayers, then flips back to what they were originally saying once that is done.
The establishment economists say value is through scarcity. Then they demand that mp3's, movies etc. not be "pirated" because "artists deserve the fruit of their labors" and the value they imputed to these mp3's, movies etc. But how can that be if value is derived through scarcity? If things are write once, read many, then there is no unfairness going on if no one buys movies and songs and "pirates" them.
The mainstream economists say value is derived through scarcity, but then, when things can be reproduced digitially with no more scarcity, they try to impose the old legal system on things - the legal system which always more-or-less acknowledged that value came from labor time, whether or not the idealogues acknowledged things as such.
This is also why Bitcoins are as worthless as tulips were in 1637 Holland ( http://en.wikipedia.org/wiki/Tulip_mania ), or bum real estate projects in 2008, or Pets.com and Webvan stock in 2000 etc. The Mt. Gox collapse and such is just the heralding of the inevitable collapse of the worth of Bitcoins.
In science, facts, such as say the inevitable collapse as Bitcoin, or the contradiction of where mp3's derive their value, and so forth, change established theory. But as who gets a bigger piece of the big pie is not a scientific endeavor, it's a struggle with lots of propaganda and such. If scientists predicted something, and then the evidence showed them wrong, they would change their theories. The inevitable collapse of Bitcoin will not change its slick huckster's propaganda one iota. They'll just sucker you into buying into their next MLM scheme. How long until it happens? However long Dutch tulip bulbs, or the housing bubble, or the dot-com bubble went on should be a clue. As Keynes said, markets can remain irrational longer than you can remain solvent. But those who want to understand how the world really works, will look at the inevitable crash of Bitcoin, meaning when they are worth not $630 or so each, but 63 cents each, or less - those who want to understand how the world works will see when that happens and will reconsider whether value comes from scarcity or not. Most won't. The ones who hype it today will have other reasons for why that collapse, which today they say will never happen, will have had happened. The propaganda will go on. But those who want to understand the world can take that time to reconsider things. Even though the discourse will be dominated even then by the phonies and hucksters who were just proven to be frauds. That day will come in the next few years, as it is impossible for Bitcoins to retain value due to "scarcity".
I would be inclined to agree; that value is _not_ entirely caused by scarcity. (Though I will point out that if a resource is scarce, people might put more value on it and try to acquire more now because they're afraid they might not be able to get it later.)
However, for a currency, scarcity is critical! Let's say it was easy (and cheap) for people to print their own dollars. You then want to buy an apple. How much is an apple these days, about $1? That doesn't make sense, the apple store can easily print $1 worth of money and keep the apple. What about for $100? Same thing: it's still one bill. What about $1000000? Maybe. Depends how much harder it is to acquire that amount of paper and ink than the apple. At this point, congratulations, your currency is basically paper and ink. Buying anything remotely expensive (like groceries) involves hauling around tons of paper and ink.
Currency is a commodity, just like any other commodity. Why have certain commodities, such as gold, often become currencies over the past millennia? Because certain commodities like gold are durable, divisible, portable, uniform etc. and thus make good currencies. The US dollar was just a note exchangable for equivalent gold at the Federal Reserve until 1971.
States have tried to issue currencies without backing for thousands of years. Have any of those currencies lasted long? The answer is no. There's nothing about the US dollar which makes me think it will be any different than such schemes hatched in Ancient Mesopotamia or Greece. In fact the worth of three dollars today is about equivalent to one 1980 dollar. The dollar will not retain its value over time, while an ounce of gold from 4000 years ago has a somewhat equivalent value to an ounce of gold today. Inevitably there will be a crisis of confidence, and the dollar, euro, yen etc. will either become worthless, or will be backed by gold, or silver or the like. It's not as if governments today have some magic which makes their dollars and euros valuable in a way that governments 2000 years ago could not.
I can pay taxes with dollars, I can go to USPS and buy stuff, I can go to an Army PX and buy stuff - but this only goes so far. The day will come, maybe decades from now, maybe a century or two from now, when a crisis of confidence happens and the dollar either becomes worthless or backed by gold from Fort Knox.
If the dollar has a real underlying value - WHY does the government still stockpile gold in Fort Knox?
Again I want to stress I'm talking historically and what must happen in a century or two. I am not claiming the dollar's value will collapse in the next year. But if it is not backed by a real commodity once a real crisis of confidence occurs, then it will inevitably lose its value.
Scarcity has nothing to do with it. The dollar until 1971 backed by the commodity gold, is the historical norm. The past 40-something years is the historic abnormality. Which will inevitably transform back to the old way.
You are just confusing exchange value with use value. From the words of Adam Smith:
The word VALUE, it is to be observed, has two different meanings, and
sometimes expresses the utility of some particular object, and
sometimes the power of purchasing other goods which the possession of
that object conveys.
Something can have use value without being scarce. But in the context of a currency, what matters is exchange value, and does require scarcity to be preserved.
In fact, his quote continues:
The things which have the greatest value in use have frequently little
or no value in exchange; on the contrary, those which have the greatest
value in exchange have frequently little or no value in use.
I am not confusing exchange value with use value. Everything you said is correct, except for the bit about scarcity.
If scarcity is needed for value, then how are write-once read many commodities worth anything? Mp3's, software, electronic books, mpeg's? They have no scarcity whatsoever. Their value is not imputed by scarcity, but as Adam Smith pointed out, by the labor it took to create them.
Almost all of the businesses on this website are about the creation of commodities because they are "scaleable". They are scaleable because they are not scarce, like a car, they are WORM (write once, read many).
If scarcity is needed for value, then how are write-once read many commodities worth anything? Mp3's, software, electronic books, mpeg's? They have no scarcity whatsoever.
They aren't. If you believe they are, I have a collection of MP3 files to sell you. Tell me how much do you think each song is worth, I'll sell you for half of that, and you can make some profit. Deal?
Almost all of the businesses on this website are about the creation of commodities because they are "scaleable". They are scaleable because they are not scarce, like a car, they are WORM (write once, read many).
It's not scarce for them, but it's scarce for the consumer. Why do you think everyone here is building SaaS apps and not Free Software licensed desktop applications?
Not that you can't make money with Free Software - I should know, since my paycheck comes from writing it. But what our costumers pay for isn't the software as it is, which many have already downloaded for free when they come to us.
Adam Smith, Benjamin Franklin, Thomad Malthus, David Ricardo, Jean-Baptiste Say, Thomas Malthus, John Stuart Mill etc. and all the early economists did not believe value was preserved through scarcity.
People tried to change this idea in the 19th century, but in the early 1950s the idea that value was preserved through scarcity was only held widely in the USA, and perhaps in some quarters in Western Europe.
Nowadays things are contradictory. Contradictory in the sense that the establishment speaks about government and free market in a certain way, then flips to the total opposite idea and demands banks be bailed out by taxpayers, then flips back to what they were originally saying once that is done.
The establishment economists say value is through scarcity. Then they demand that mp3's, movies etc. not be "pirated" because "artists deserve the fruit of their labors" and the value they imputed to these mp3's, movies etc. But how can that be if value is derived through scarcity? If things are write once, read many, then there is no unfairness going on if no one buys movies and songs and "pirates" them.
The mainstream economists say value is derived through scarcity, but then, when things can be reproduced digitially with no more scarcity, they try to impose the old legal system on things - the legal system which always more-or-less acknowledged that value came from labor time, whether or not the idealogues acknowledged things as such.
This is also why Bitcoins are as worthless as tulips were in 1637 Holland ( http://en.wikipedia.org/wiki/Tulip_mania ), or bum real estate projects in 2008, or Pets.com and Webvan stock in 2000 etc. The Mt. Gox collapse and such is just the heralding of the inevitable collapse of the worth of Bitcoins.
In science, facts, such as say the inevitable collapse as Bitcoin, or the contradiction of where mp3's derive their value, and so forth, change established theory. But as who gets a bigger piece of the big pie is not a scientific endeavor, it's a struggle with lots of propaganda and such. If scientists predicted something, and then the evidence showed them wrong, they would change their theories. The inevitable collapse of Bitcoin will not change its slick huckster's propaganda one iota. They'll just sucker you into buying into their next MLM scheme. How long until it happens? However long Dutch tulip bulbs, or the housing bubble, or the dot-com bubble went on should be a clue. As Keynes said, markets can remain irrational longer than you can remain solvent. But those who want to understand how the world really works, will look at the inevitable crash of Bitcoin, meaning when they are worth not $630 or so each, but 63 cents each, or less - those who want to understand how the world works will see when that happens and will reconsider whether value comes from scarcity or not. Most won't. The ones who hype it today will have other reasons for why that collapse, which today they say will never happen, will have had happened. The propaganda will go on. But those who want to understand the world can take that time to reconsider things. Even though the discourse will be dominated even then by the phonies and hucksters who were just proven to be frauds. That day will come in the next few years, as it is impossible for Bitcoins to retain value due to "scarcity".