Topic: Pegasus Island: Thought experiments on the nature of money and economies. (Read 2318 times)

Universities have their own coming storm to deal with ... the rising tuition costs aren't sustainable.

Forsooth, despite its present relevance, the university lecture will have been forsaken within but one generation.  

It's funny, you can think of Google (in place of currency) and information (in place of trading goods) for islands that want to stay informed of other islands. I also see this as a problem with modern information: Google acts as an intermediary but starts diverting more and more searches to its own properties, to make themselves $$, or else they can include you in their results if you pay them $$ (Adwords). In that way Google becomes a reification of the natural curiousity we have to search one another for information. In a generation we might all be almost completely dependent on Google instead of the historical oral tradition of passing down vital cultural information.

/ end tangent

The scenario you described is not low demand, there are still demand for those sparkling wines

In reality, it is very likely that Alice is producing sparkling Californian wines and Bob is producing is sparkling Canadian wines and Keiko is producing sparking Hokkaido wines and they all compete on the international wine market and there will be a price war to drop their price even below the production cost. And there is a race to drop the production cost and shipping cost further by using robots and drone delivery, and fire more workers, just because the winner could sell a bit more wine and get some fiat money

Worse than that, since both Alice and Bob and Keiko could get loan from their bank, the ability to defeat their competitors will depends on how long they could sustain the operation at a loss (the loss is coverd by a long term loan). After 5 years of price war, eventually Alice and Bob are out of business because the Japanese central bank gave Keiko 1 billion dollar loan, helping her to occupy 90% of the international wine market, so that future human would mostly drink wine from Japan  

 
  
I won't deny that bitcoin has a massive network effect going on right now, but let's consider other historical examples where massive network effects have been disrupted by superior/different ideologies or technologies.  
  
Consider the Myspace disruption by Facebook.  Social media was just starting out and right as Myspace began to take off, here comes Facebook with a competing but fundamentaly superior product that totally destroyed MySpace.  
  
Consider how the US Dollar came out of nowhere to become the reserve currency for the world (despite our little country only being a few hundred years old).  
  
Consider how the Super Nintendo owned the video game market in the 1990's but the Playstation came along and obliterated that lead (and then lost it to the Wii).  
  
Consider how the Muslim religion spread with fervor a thousand years ago, despite Christianity already having hundreds of years of a "network effect".  
  
Consider the fact that you are now reading and participating in a thread by the famous americanpegasus, despite the fact that no one had ever heard of me a few years ago.  

I am not a realist: I do not hold "profit" to have an objective existence. "Profit's" existence, for any particular person, is specifically that which it has come to occupy for them. (I will proceed in accordance with this belief.) Profit is a degree whereto one's perception of value - as it is manifest as a response to an exchange - deviates from that of another. Moreover, it is one such degree that is held to be to correspond to one's having secured itself against some calamity.

Proof only exists in purely axiomatic systems (e.g., mathematics). Empirical systems have but evidence, since observation must be assumed to be veridical (should one aim to avoid solipsism). Therefore, you have not proven  anything (that genuinely corresponds to the observable universe). Furthermore, your hypothetical is so far abstracted from reality that its meaningful connections to reality, if any, are not at all apparent (which, according to your criticism of my use of language, is entirely the fault of yourself).

Regardless, I have shown that - at least, within the context of your hypotheticals - reality has to be framed around money (perhaps, via a plutocratic hyperreality) for it to be anything but an instrument of augmenting the abuse of scarcity to one's (perhaps, a plutocrat's) advantage.

This sounds great and im holding XMR since ages ago, but I still think there's no way Monero will ever surpass BTC. BTC's network effect it's too strong at this point, and the powers that be will love a public, non-anonymous-by-default blockchain. Unfortunately, i think Monero may become the #1 coin used in darkweb or something, but not mainstream.

Even in a modern society, imagine Alice produces californian sparkling wine, and sells them for $10/bottle to Bob. Bob buys 100 bottles, pays a $10 dollar shipping fee and sells them for $12 dollars/bottle in Japan. Then 100 people buys Bob's wine.

Alice made money, Bob made money, and the 100 people made money because otherwise they would have to pay $20 dollars to get that bottle of sparkling wine shipped to them. So in effect, they each saved 8 dollars.

True, trading profit both party, as long as there is division of work and unfulfilled demand

In modern society, very often majority of the demand is fulfilled, each producer are dumping excessive goods in an attempt to get most liquid assets (usually money) from the other, then it does not benefit anyone

Profit is an accounting term after the arrival of money, and it is based on an assumption that money have constant value, which is not true, it is not necessary to support economy activities. Economy is driven by demand, and its root is desire

Of course, if you use time as a unit of value, then your statement is almost true. Exchange happens because each participants could save more time from it. But not everyone is profit-seeking and I guess majority of people are not

lol, just give up. It has nothing to do with the "scotsman fallacy". What it is, is proof by contradiction. I've shown cases where your argument is invalid, and therefore it is invalid. Again, it has nothing to do with the argument to begin with even if what you said is internationally logically consistent.

You haven't given a clear, concise and UNDERSTANDABLE statement/description of what it is you are trying to argue. "About money" is not an argument.

And a word of advice: I hope you don't talk like this in real life. Besides, language is a means of communication. If you can't communicate your message clearly to the intended audience, it isn't the fault of the audience, but your own fault for not being smart enough to communicate effectively.

The amount of time it would have taken for Alice and Bob to acquire anything would be infinite, after already starving and dehydrating to death.

In regards to your point that they may have been able to exchange the goods at a higher price, first of all, let's assume you're right. How does that in any way invalidate my point? Or johnyj's point? (which was the original post that started the debate). It seems that you are, in an effort to sound smart, typing extremely convoluted sentences that has nothing to do with the posts you're arguing against.

But even ignoring the fact that your arguments have nothing to do with the topic, your arguments are flat out illogical. Why do you assume that they could've exchanged the goods at a higher price? If Bob and Alice both needs 4 hours' worth of food and 4 hours' worth of water to survive, neither will be willing to let go of more than 4 hours' worth of each resource no matter what medium of exchange your using, whether that is barter or through fiat, bitcoins, gold, or anything else. They are not going to agree to starve to death.

But they will happily exchange 4 hours' worth of their resource for another essential resource they need, because it will allow them to survive, and they still have enough of the original resource they worked for for themselves. Both Alice and Bob would make such a "fair" transaction, because they would both benefit from it, or die otherwise.

If everyone considered the "opportunity costs" of possibly being able to exchange goods at a higher price, there would never be any trade happening. It's simply neither practical, nor optimal. For example, go to any local corner store, and look at the pricing of their items. Then go to Walmart. Are they the same? Or is it more expensive at the corner store? Clearly people do buy at the corner store; or else it would go out of business. So why doesn't Walmart raise all their prices? They're losing out on opportunity costs!

Of course it's fairly obvious that Walmart would earn a greater profit operating the way they do now. Oh, and don't try to bring in extraneous arguments like "Well, the corner store is closer to the 80 yr old's home, and has locational advantage." Not relevant.

1. "the amount of time it would have taken Alice and Bob to acquire them after having starved and dehydrated respectively" (username18333)

2. " to acquire [food and water]" (username18333)

3.a) Exchanging the goods at a higher price.
3.b) No.
3.c) No.

Money allows all of us to speak a common language of resources and effort, and by focusing on specific sub-areas it lets our entire species become more productive in ways that would be impossible before. 
 
Consider: if we all have to hunt, fish, get water for ourselves... almost none of us will have free time to design new technology and wonders. 
 
But with civilization, and specialization, we are left with more free time to pursue ever loftier goals.... better shelter, tools, entertainment, etc.  Now take this example out to its logical conclusion: 
 
What will be more effective: 100 tribes of ten people each.... with each tribe having its own money? 
 
Or one single united tribe, all speaking (valuing) a common currency allowing the 10,000 person tribe to truly become far more than the sum of the parts. 
 
And lastly, consider our 7 billion strong civilization.  At the present, many amazing discoveries and wonders are impossible to pursue because a lot of our talent is locked up just trying to survive day to day... imagine how incredible it is going to be when we all speak the same 'language' of money.  When the entire world can instantly and easily transact with itself, we are going to see a second Renaissance and industrial revolution.  We are still going to have the same 7 billionish people, but we are going to suddenly feel the productivity of what feels like 40 billion all contributing in ways that were impossible before. 
 
It's going to be an amazing ride.

An extremely convoluted argument is not necessarily a good argument.

"Neither Alice nor Bob forsook that quantity of time"
Which quantity of time? For what? Alice did in fact spend a whole 8 hours gathering drinking water, while Bob did in fact spend a whole 8 hours hunting for food. That time was spent.

What opportunity costs are you talking about? That Alice could have gathered drinking water for 4 hours, proceed to travel for 2 hours to the hunting grounds, and hunt for another 4 hours, to get what she needed?

Or that Bob could've hunted for 4 hours and proceed to travel 2 hours to the river, and spend another 4 hours gathering water in order to get what he needed?

You did not account for opportunity costs: each of those items were "worth" (futureofbitcoin) - to use your phraseology - the amount of time it would have taken Alice and Bob to acquire them after having starved and dehydrated respectively. However, neither Alice nor Bob forsook that quantity of time. So, the assurance of profit deprived each participant of what they "needed" and assured them only of what they already had in (at least, relative) excess.

Money extrapolates such deprivation to international markets.

People just don't want to believe in an idea that there is a solution out there, which thrives on the idea that two people can profit individually without any one of them suffering any loss. Money could be specific but value cannot be specific, 2 people can value same commodity differently because of the intensity of their wants, the more marginal value it has to them.

I don't see how what johny said has anything to do with what you said. Did he say anything about profit?

That said, Imagine Alice works for 8 hours to find and bottle clean water.

Bob spent 8 hours hunting for food.

They exchange 4 hours' worth of water for 4 hours' worth of food. They both profit, because without food, Alice would starve to death, and without water, Bob would die from dehydration.

Value is not necessarily the same for everyone, you can have situations where everyone profit.

Profit mandates one receive more value than it (i.e., that one) produces. Money enables one to delude another as to profit's pre-/absence within an economic "exchange" (johnyj).