Economics 101, a Novel, Preamble -- Value Added by Exchange

When I was a teenager taking the LDS Seminary classes in the early morning before my high school classes, I read a passage in the Book of Mormon that caused me a bit of discomfort:

And it came to pass that the Lamanites did also go whithersoever they would, whether it were among the Lamanites or among the Nephites; and thus they did have free intercourse one with another, to buy and to sell, and to get gain, according to their desire. (Heleman 6: 8.)

In other places where you have scriptures talking about getting gain, there is a negative sense, such as in James 4: 13, where we are warned that our plans can disappear in a puff of smoke. Here, in Helaman 6, there really isn't such a sense. Rather, the implied meaning is about how wonderful a time it was, when erstwhile enemies were hanging out together and cooperating and even getting gain together.

 There was a question I thought was going begging:

Why should just buying and selling produce gain?

My primary economic experience at that point was that of a paid worker. And I was busy trying to figure out a way society could tie wages to hours worked, in the hopes that the inequities of a free market could be addressed by something like that. And here was a question that took me completely out of my fussing with that conundrum --

Why should simple exchange produce added value in the system?

I was aware of the idea that some people operate under, that whatever the market will bear is by principle a fair price. I had reservations, but I could (almost) accept it.

The problem I thought I saw was the question of how whatever value got added to the system by simple exchange could actually justify profit. And if no value at all were added to the system, getting profit by simple exchange would, I thought, be on principle no better than chain letters and pyramid investment schemes -- the profit just driving inflation, becoming a lien on future production.

I figured out, somewhere along the line, that connecting producers with markets actually does produce value:

Say I have a plot of ground and I can raise enough rice to feed myself and my family and have some left over. If I know the extra rice is just going to go to waste, I'm likely to quit producing extra once I know how much I need for the year ahead, and once I have some idea how much I need to plan on for emergencies.

On the other hand, if I have a place to sell it (or otherwise see that it goes to people who need it), I am more somewhat more likely to work longer hours to produce extra.

So the existence of the market adds value by giving the producers a reason to keep working when they might be doing something else. That could justify making some profit by simple exchange.

And now there's another question I see going begging:

What if the other thing I could have been doing instead -- that something else -- ultimately would have been of greater value?

Hmm.

Table of Contents

First : the Framing Story

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This is a slightly edited version of a post in my blog on freedom, which is where the first draft of this novel took form. The original post can be found here: https://free-is-not-free.blogspot.com/2015/12/economics-101-value-added-by-selling.html.