Primer in Economics by Metaphor:
This is how economics evolved. This is a metaphor.
Bill is a cave dweller back in primitive days. He lives in a cave. He lives in a community among other cave dwellers. Some hunt, some gather, some cook, but not Bill. Bill crawls in the dirt, using his hands to make holes in the dirt. He drops seeds into the holes. When he is finished planting, he goes out to gather. He is not good at hunting so he only gathers. The seeds grow. Bill and his friends share. All, barely, subsist.
However, Bill has a neighbour, Tom. Tom is a hunter. He works hard. Hunting is dangerous. Some of his friends have been killed hunting. Still, he does it.
Now, Bill and Tom have a neighbour Jack. Jack thinks. He thinks what Tom does is dangerous and only marginally profitable. He thinks what Bill does is not the most effective way of doing what he does. Jack comes up with an idea.
Jack takes a stick; he walks across the field poking holes in the ground. Then using a hollow reed, he drops a seed through the reed into the hole. He plants many seeds.
When Jack is through, he gathers. Because he has more time to gather than Bill does, Jack gathers more food than Bill does. Jack has more food to share, so he trades food with Tom who hunts. This causes Bill a problem. He does not have enough food to buy meat from Tom, so he eats less.
Jack’s farm prospers. He not only gathers and trades he now reaps and trades. He trades food with Bill for labour. Bill now works on Jack’s farm in exchange for food.
Jack now has twice as much food so he stops gathering. He cultivates more land. He grows more food. Now he can trade more food for more labour. The gatherers find Jack’s steady supply of food to be a better alternative to gathering.
Tom, seeing how the investment system works, and with meat scarce and vegetables in plentiful supply, he charges Jack more for the meat. Jack pays happily. In addition, with the lessons he’s learned, Tom teaches others how to hunt, where to hunt, and supplies them with the tools to hunt. They pay for their lessons with some of their meat. He pays them for hunting with some of the vegetables.
Tom’s hunters increase the quantity of meat. Jack’s farmers increase the quantity of vegetables.
However, there is another problem. It takes time to make tools to farm the land, weapons to hunt for meat, and it takes time to make clothes from the skins.
Enter, James. James also thinks. He sees an opportunity. He agrees to supply the hunters and the farmers with tools and weapons and clothes.
He gets together with some of the less successful hunters and gatherers and promises to pay them in meat and vegetables in exchange for their labours making tools and weapons and clothes. They don’t have to hunt. They don’t have to gather, and they can eat. That works for them.
James begins his business. Soon, more people are making tools, weapons, and clothes. More people are farming. More people are hunting. However, things are a bit dull despite the prosperity. Enter the arts. (It will be centuries until things become dull because of the prosperity.)
Tom, Jack, and James can afford to take time to pursue the arts. However, they are not very good at it. Enter, Dave.
Dave tells stories. He is paid with food.
Susan can paint. Susan is paid with food.
Peter, Paul, and Mary can sing. They are paid with food.
Mark and Lorraine get an idea. They seek out people who can tell stories. They arrange for storytelling. They charge people to come to listen to the stories and pay the storytellers with a part of the profits.
Susan, who can paint, teaches promising students to paint and helps them sell their paintings taking a commission on the sales.
Things are moving along reasonably well with the exception of dragging around sacks full of food and dead carcases. Moreover, there is quibbling. They agree to seek a solution from the elders. There, they listen to the elders suggest the formation of a council.
With time on their hands, and the evidence of intelligence, Jack, Tom, and Dave become leaders appointed by the elders. For whom everyone has respect.
Together they create a medium of exchange. Then, they issue an RFP and subsequently someone creates a food storage system. The people start schools where the experienced hunters and farmers can teach hunting and farming. Singing, storytelling and painting are also taught. However, there will always be troublemakers. At first, they are handled by a few of the leaders. Then the leaders appoint a shire reeve who calls a posse comitatus to handle problems when they arise.
Some people are smarter than others are. However, they are not creative; but they are inventive. They invent ways to make tools using metals. Some invent more expansive tools and machinery. They learn to grind wheat and make bread. Others figure out how to harness the water to turn gristmills. Others are natural born salesmen. They go out to sell the products of the industrious people of the community.
The community grows. Soon, other communities follow suit. People take what they have learned, their stock-in-trade, to other communities to help them plan their communities.
Some communities with more of something to sell sell it to those communities with more of something else to sell in exchange. Foreign trade is born. Treaties are signed. Thus, civilisation arises from the very dirt that Bill used to crawl in digging holes with his hands to plant seeds.
This is the entry to understanding economics.
Regards,
Slim Fairview
PS. I am not Paul Harvey. Still, I am open to becoming a paid blogger, columnist, or commentator.
In the meantime, if anyone finds the monographs on my blog to be especially helpful, please do not hesitate to send me on of those tricked out laptops and few dollars tucked into the envelope with the thank you note.
Sincerely
Slim
Copyright (c) 2011 Slim Fairview
View the graph to the left. Do you see how slowly the spending is rising?
View the graph below it. Do you see how quickly the spending is rising?