Moral Capitalism: The Foundation
Sven Gelbhaar
26.03.2019
Capitalism, in its current state, neglects to find intrinsic value (to the
individual). We used to believe in this concept when money was backed by
precious metals, which were thought to have innate, intrinsic value. The common
saying concerning valuation is that something is worth as much as someone will
pay for it. This is a good rule of thumb, granted, but it leaves out the
all-important “why.”
Value is a property of actions and (as usually thought) of objects. What
value something has, and how this is deduced, is unknown to economists of the
day. Tragic that, but we can save them from their ignorance.
To determine how to value something is dependent on a system of valuation,
obviously. The default system is, of course, Hedonism. We are all born
Hedonists. We like warmth, milk, and so on, and despise the opposite.
Using this basic (behavioral/moralistic) system, (other) moral systems are
programmed into our psyches. Moral systems such as Divine Command Theory do
not easily lend themselves to the valuation of gas, or food, however, so we
will use the underlying hedonistic method, with an allowance of a customized
rendition of Utilitarianism because it is generally acceptable and, yes, has a
lot of utility. But all irony aside, let us continue on.
But before we get too far off the ground, let us determine what needs the user
has. Maslow is popular when it comes to this field. He stipulated that people
have a hierarchy of needs in the form of (from foundational to extravagant):
Physiological, Safety, Love/Belonging, Esteem, and finally Self-Actualization.
He wrote that once the foundational need(s) is/are met, the category above it
come into play. Therefore a starving person will want to acquire food and
shelter before establishing themselves as a patron of the arts, or so it goes
for most (normal) people. Actually Maslow complicated this a little more —
and rightly so — with the concept of deficiency needs, but that is beyond the
scope of this article.
Maslow might be a great arbiter of Hedonism and Utility, but no article on
Hedonism is complete without at least a tip of the hat to the Felicific
Calculus of Jeremy Bentham’s fame. Needs being fulfilled result in pleasure,
and needs being unmet leads to pain and privation. The formula goes,
approximately:
Hedons = Intensity of Pleasure + Duration (of the same) + Certainty that this
pleasure will come about + How soon said pleasure will come about + the
probability that action will be followed by more of the same + probability that
it will not be followed by actions of the opposite persuasion + how many people
will be affected.
Hedons = Intensity + Duration + Certainty + Propinquity + Fecundity + Purity +
Extent
Now, I am in no way trying to convince people what they should (want) to buy.
That’s a whole other topic. I am merely trying to find the objective, innate
value of things on a per-individual basis. Clearly we’re looking at needs,
versus wants. Therefore if the person is starving, food might be ranked as a
higher innate value to the person.
Using Malsow’s Hierarchy we can thus determine how much something, in terms
of Hedons, is worth. Further epi-formulae (such as normalized pricing, to name
one) will be added soon.
29.5.2019:
We can now determine the price that the individual should be willing to pay and
an aggregate thereof could be formulated per locale per good/service. What
needs are not being met? Food has more intrinsic value than, say, a computer
when the individual is starving. Now, I’m not saying that the price of
computers should decrease, but from an objective standpoint that computer has
less value than food when the individual is hungry. The “blind, guiding hand of
the market” will catch wise to this and the price of food will increase, 9 times
out of 10. The artificial valuation of currency might not reflect this, but on
a fundamental level this will be observed. The profits to be reaped from
selling life-sustaining food will naturally increase, both in quality (price per
unit) and quantity. This is obvious when given a little thought, but I haven’t
been able to find an Economist who explores this concept.
How does this directly affect me? Good question, my dear reader. Let’s say you
have a business that produces various goods; say guns and food. Now let’s
stipulate that you’re going to do business in a so-called “3rd World Country”.
How does one determine the price of the food and guns? If food is ubiquitous,
then naturally your customers already have that need met and you’ll be lucky to
turn a profit. One should instead market the guns and valuate them as having
higher value currency-wise, because after all their utility/hedons are higher
than something the customer-base already has too much of.
Finally, let us suppose that you’ve come up with a completely new product.
You’ll now have a set of novel problems; one of these being how much to charge
for the ‘widget’ (or whatever you want to call this revolutionary product). If
we want to be fair about it, we would need to gauge what need it will satiate
and how flooded the market is which addresses this need. The clever
entrepreneur will market the product as meeting the lowest-possible level of
need in the Hierarchy. People are more inclined to forgo ‘Self-Actualization’
in lieu of a biological necessity (for instance), because “People are more
concerned with loss compared to something they can gain.” This is something
that Madison Avenue has yet to figure out.
As to the consumer: determine what level of need the product you are considering
buying meets. Always value things higher up on the list as being less valuable
than the fundamentals, because on the objective level they are in fact less
valuable. Food — for example — has more intrinsic value than the latest and
greatest gadget that does nothing for your basic needs.