There are a number of points made or implied in separate chapters that belong together now that they have been individually developed. 

The foremost issue is the alignment of the amount and placement of money (in systems trading primarily with money) with where it is needed to do the most good, both morally and economically -- economically from the standpoint of allowing the system to work well in terms of as much as possible "automatically" increasing participation in order to increase both productivity (including, where reasonable, creating greater leisure) and fairness of contribution and distribution, and in order to increase as much and as fairly as possible and reasonable the ratio of benefits to burdens. Because money is an artificial construct meant to facilitate trade, by concentrating labor (in a more or less voluntary manner, rather than by coercion  such as slavery or a draft, etc.) and dispersing the profits accrued from that concentrated labor, it should not be something that impedes trade merely because rules have been set up without a safety mechanism to allow adjustment for when the rules lead to either morally or economically unfortunate and unanticipated states of affairs. 

But there are a number of difficulties in knowing how much money is a reasonable amount to have available, let alone having mechanisms, such as loans, investments, tax redistribution, charity, etc. to have money go to the right places both ethically and to work productively. As I write this, for example, OPEC has lowered production in order, so far successfully, to raise the unit price of crude oil. By doing this they are making oil more expensive without changing what oil does or how it is used. It is not that oil is suddenly more physically valuable because it has been found to have healing powers or some other new use. The countries of OPEC are able, to some extent to determine the price of oil because they are acting as a monopoly in regard to pricing a desirable commodity. Providers of necessities and other highly desirable products and labor can do the same thing by any concerted effort, whether collaborative or not. The price one can get for any product or service is dependent on what people are willing to pay, and that amount is often arbitrary and always subject to change, often arbitrary change. When oil prices first increase as they have done, without a commensurate rise of other prices in the economy, people have to spend a higher proportion of their earnings on oil than they did before the price increase, or they have to enlarge their income by raising prices or by selling more in order not to have a larger proportion of their income go toward the purchase of petroleum products and petroleum-utilizing services. If somehow the economy is able to compensate or absorb the increase in oil prices, that price might be able to be kept even if more oil is supplied, as long as people are able and willing to pay that price. It is not necessarily true that oil prices will decline just because more oil is produced - as long as people are able and willing to buy it at that price, even if that means they have to cut back on purchasing other things. 

If this happens -- more oil's being produced at a higher price-- it affects trade and the economy, but not in the way it seems to. It is not that the overall economy is deprived of money, because all that is happening is that money is going to OPEC countries instead of to where it had been going. OPEC sellers then have more money to spend than they did. If they buy the things citizens of oil importing countries bought, from the same people, what will happen is that oil sellers will have some of the things that oil buyers previously had but may have no more. This will cause a redistribution of products and labor but not a change in the overall amount of products and labor. 

But suppose that OPEC sellers do not buy what others have bought before; suppose they employ people in their own country who otherwise were not employed or not fully employed. Now, people in oil-importing countries will be hit by a double problem: they are paying more of what they make, for oil, and they are not making as much money because they are not selling as many things (assuming, for the moment) that they cannot find new customers and cannot successfully raise their prices. 

At this point, "trade" or business in the OPEC countries will be on the increase, while it will be on the decrease in oil-importing countries. Yet, it seems to me that this is what I call an artificial (though very serious) problem for the oil-importing citizens and a later than necessary boon for the OPEC countries. 

If there were people to be employed in the OPEC countries before the change in crude oil prices and the influx of money, there should have been some way of putting them to work and involving them in the economy then. And if people in the oil-importing countries still want the goods and services of others who are now underemployed, there should be a way for that to work out. If there were more money in both economies, or if money were redistributed in a more optimal way - the OPEC sellers prior to the price hike, and the oil consumers after it - both would function the way they do in "better" times. 

There is a reason for not just adding money to these economies, however, but I do not think the reason, by itself, is a good one. 

The reason is to avoid inflation, but I do not believe inflation is necessarily triggered by adding money to an economy that is not at full capacity; and not even necessarily by adding money to some economic systems that are at full capacity, because it depends, I believe, in which ways they are at full capacity. 

Price inflation of a particular product or kind of labor occurs when the price for that labor or product goes up simply because it can -- simply because the price being charged will not diminish profits below a ceiling with which the seller is comfortable.  If a seller knows that people will buy his product whether it sells for $5 or $10, he can sell it at whichever price he feels most comfortable.  (Contrary to popular opinion, that will not be the higher price for every particular seller.  Many sellers are happy to sell their work for a price they feel does not take advantage of anyone, even if they could sell it for more.  But for purposes of this example, let us assume that if a seller can get more for his product or services, he will then charge more.) 

If the price of labor or product of one specific item or industry increases because something has become more popular rather than because there is more money in the economy, then there will not be general inflation or price rises because the money to pay for the price hikes will come out of cutbacks in other areas, whether cutbacks in saving, investment, or purchases of other things. 

Moreover, if the money that is added to an economy gets soaked up in purchasing this higher priced labor or product, other prices may not rise because there will then not necessarily be excess money in the hands of those who would purchase the things with those prices.  It will depend on what the seller of the successfully price-inflated product does with his additional profits.  If he buys the services of people who are currently doing other things that will not be missed when they are no longer done, it will not exert price pressures on other sectors of the economy.  In any modern economy, many people are underemployed in a sense seldom used -- they are working at something that is neither interesting to them nor particularly necessary or useful to others, but which others are willing to purchase if it is available.  It will not be missed if not available.  It is a successful trade item/labor but not one which is in any way necessary.  So an economy can be at full capacity in terms of what it is now producing, but not be at full capacity in terms of production of necessities or even conveniences or more "important" luxuries. 

If, however, money added to an economy is used simply to "chase" or demand the same products and labor supply, those prices will likely increase without capacities necessarily rising.  For example, suppose that money or employment were to increase in a given society, and that everyone wanted to purchase (more) bread with their new earnings. There are any number of possible outcomes: (1) bread might decrease in price because the unit costs of larger production might decrease, (2) bread might increase in price because there is more demand for it -- whether or not production also increases to meet the demand, (3) bread might stay the same price.  What happens with the excess money available in society will not necessarily increase the price of bread or affect its price in one particular way even if it affects the quantity of bread produced and sold. 

Moreover, if fashions or consumers change so that instead of buying bread, some previously less popular product is purchased with the additional earnings -- say, rice or pasta -- then the price and quantity of bread produced may be unaffected, but efforts that went into producing other things that are less desirable and less desired than rice or pasta will now go into mass producing rice and pasta.  Increases in money in an economy may cause all kinds of shifts in the work people do, without necessarily causing inflation. 

Of course, inflation may result, and the inflation, instead of just soaking up all the new money proprotionally equally, essentially not affecting anyone, may cause harm to some people because there are mechanisms in society that distribute money disproportionately.  E.g., long term contracts may not have inflation indices built into them so that lenders may get back money worth less than they lent, fixed incomes become worth less, etc.  But also, it may be the case that some businesses will not have sufficient demand to be able to raise prices as other businesses raise their prices in ways that soak up a disproportionate amount of the new money available.  For example, when the price of energy increases dramatically, necessary food or medical items and services can pass along cost increases because people will still need to eat and will still pay what they can for medical insurance and services.  However, to do that, they may cut back on auto purchases or on dining out or entertainment.  Some restaurants or movie theaters then may be forced out of business because inflationary pressures are not evenly exerted and are not, in that way merely a proportionally equal across the board rise in prices of everything. 

But it is not necessarily only necessities whose prices might increase with inflation of oil.  It might be the price of luxuries, since there may be an increase of the number of wealthy people at the expense of an even greater increase in the number of people who become poorer.  If the oil producers will buy luxury cars for higher prices, those cars can increase in price, and who will be hurt are the people who can not buy or sell intermediate price cars if they are unable to make up the money they are paying for energy such as oil. 

It seems to me this is one possible explanation of the so-called "stagflation" (combined  inflation with rising unemployment, a combination that seemed to astonish economists) that occurred after the oil price increases of the 1970's.  Those workers whose labor was perceived as less necessary than others became unemployed (or suffered decreased business profitability) as people tightened their budgets when energy and other perceived more necessary labor and products became more expensive.  This then essentially caused there to be relatively more money available in an economic system in which fewer and fewer people were participating.  So those who had money and were still participating in trade ended up having to pay more for the same products and labor than they did before.  This potentially leads to more belt-tightening and more unemployment until external causes or a change in attitude about spending and hiring can bring a reversal and start expanding the economic system -- in terms of the number of participants sharing viably in trade. 

As long as there are people whose services or products are perceived to be unnecessary, their contribution and distribution -- their participation -- in the economy will be at risk and they will probably be the first to suffer in a wave, or anticipated wave, of price rises rippling through an economy.  And these days there generally are great numbers of such people, since if you look through the Yellow Pages or walk through most malls or commercial areas, you will see a great many products and services  attempted to be sold that you and most of your friends could easily do without.  And as with the auto industry question in the first chapter, any economy that does not have a way to distribute money or trade to people whose work is (temporarily or permanently) not necessary, and which does not have a way to distribute leisure to those whose work is necessary -- by employing the unemployed to share the labor that is still needed; that is by re-distributing the perceived and purchased necessary labor -- will suffer economic disruptions that cause personal and social difficulties even though there might be plenty to go around for everyone if there were a mechanism available that could re-distribute labor and leisure in a reasonable, acceptable or desirable, and fair way. 

In line with this, but from a different perspective, some price inflation will result from their being greater participation in the economy and more goods and services available.  In 1950, middle class families had one car, if that, one television if any, no dishwasher, no central air conditioning, one phonograph player and one or perhaps two radios, etc.  Children might have a few toys, but hardly equaling the quantity of decent quality relatively inexpensive or expensive toys available today.   Families in 1950 did not need to make as much money or trade with as many people because there weren't as many things to buy or to feel one needed.  Today, in order to have the things that are all fashionable or desired, families must make more money.  Some of that comes from adding a second income, but part of it comes from charging more for the work one does, if one is able to do that successfully. 

Social, political economic policies seem to have as their ideal purpose encouraging either or both greater productivity and greater participation. The idea is to have more people producing more and then being able to fairly share the burdens and the benefits of their combined efforts and labors. This will happen ideally to decrease each individual's share of the burdens while increasing each individual's share of the benefits, or at least to increase each individual's share of the proportion of benefits to burdens. The issue of how to treat people who do not participate arises as a social issue and as an economic issue as well.  The free market works well socially and economically when there is sufficient employment to go around and when no one is left out or is underemployed in any sense of the word, so that all desired goods and services are provided by everyone for each other voluntarily.  Unfortunately that does not always happen. 

For example, if Abel had decided to leave the family and start life by himself a thousand miles away, there would have been no reason for Cain to have to try to look out for him or keep up with his whereabouts in case God inquired.  In that time, it would have been almost impossible or would have required Cain to pick up and go with him, leaving his farm and crops. 

In my "Introduction to Ethics" I argue for a principle that includes a criterion for fairness in situations involving looking out for others.  This principle involves only those sorts of cases; it is not a complete principle of obligations in general, and it only forms part of a complete principle of ethical obligation in general: 
 

This principle applies to balancing fairness to oneself and to others in the aggregate, not just in individual cases, so that even if a particular case may seem to fall under it, it will not actually fall under it if it starts to make your total burden, with other people you have helped, be too costly to you.  For example, one day I happened to pass three stranded motorists.  I changed a tire for the first, took the second to a service station, but passsed by the third because I was starting to run late for what I needed to do, and there were plenty of other people around who could help.  It was not that the third person deserved my help any less than the first or second on an individual basis, but trying to help all three would have been burdensome that particular day. 

On this principle, Cain would not have had to keep track of Abel if Abel made that very difficult.  But the principle says that we are our brothers' keeper in those cases where it is not particularly burdensome to watch out for him/her and it does potential good.  Moreover, this principle certainly does not override our obligation not to transgress against the rights of others, such as the right not to be killed for the reason Abel was.  In the story of the good Samaritan, all that was required was that a hurt person lying in one's path not be ignored. It required some first aid and some compassion that was neither that costly nor that time-consuming.  Many people are quite willing to help others they feel innocent or otherwise deserving.  If one way to do that would be to help those who want to have economic opportunities become part of the economic system, then collectively there should be institutions set up that help that happen, and that do it fairly and effectively. 

If this principle is correct, then no economic system obligates participants to help those it cannot help without great cost to themselves, particularly if such help would do the potential beneficiary relatively little good, but it does obligate its participants to try to help those who might greatly benefit with little cost or burden.   Furthermore, it does not override anyone's obligation not to harm others if such harm violates their rights -- rights as explained in the "Introduction to Ethics." 

It has been my contention that some kinds of economic activities unjustly exclude or penalize those outside a system while benefitting those within it.  Such actions are then wrong unless there is some overriding factor that can justify the harm that is done or the rights that are abrograted -- and satisfying the greed or indulging the self-interest alone on the part of those within the system will not generally suffice.  Failure to help others become part of the system in a reasonable way (not in a harmful, unfair, extorted, permanently disadvantaged or wasteful way) or to benefit from it, where the overall cost is not relatively great to those already in the system, is then also wrong.  As people become easier to help or to incorporate within a good system in a fair and reasonable way, so that they can help themselves, the obligation of those already in the system to help them arises or increases.  It seems to me that Marx had the right goal in mind, even if the wrong mechanism -- in those implementations where freedom and decentralization are left out to the point of being detrimental -- when he wanted an economic system that would have as many contributors and beneficiaries as possible such that each contributed according to his gifts and abilities and each received from the mix in as fair a proportion as possible according to everyone's needs being met first where possible and reasonable to do that.  As I wrote at the beginning, the point of economic activity should be to lessen burdens and increase benefits by dividing labor in fair and effective ways and sharing the results, and that, theoretically at least, the more participants there are, the greater the benefits and fewer the burdens there should be for everyone. 

For an economic system or community to meet these obligations, there might need to be a mechanism in addition to relying on the employment needs of individual existing businesses.  Economic development groups of one sort or another might be necessary.  Or there might need to be organizations that can plan and execute sweeping changes that everyone might agree would be good, but that cannot be enacted piecemeal by any individuals or companies.  The example I gave previously was the recognized need for polluting companies to curb their pollution by installing expensive equipment to filter their waste or to convert it to something safe.  But no company could risk doing that on their own and trying to recoup the costs by increasing their prices, if their competitors did not.  So companies acted in concert to ask the government to require them all to make the changes at essentially the same time.  Likewise, institutions may need to use seed money to incubate businesses or to do research that may pay off in the aggragate but not pay off for particular individuals. 

Sometimes whole systems get out of alignment with all the participants' (and non-participants') best interests but there is no model within the system to be able to change it.  For example, it might turn out that some sort of half-day school, half-day apprenticeship program might be more profitable for almost everyone in a community than is requiring longer and longer academic educations before people can be employed.  Colleges might be better served as places where people can attend who want to be there than as places people have to go in order to get any sort of decent employment. Companies might be better off training their own employees instead of relying on schools to do that, and recouping the costs by paying less to apprentices than they would have to in taxes to operate ineffective schools.  Schools might have more motivated students and would not have to serve as many social/parenting functions.  Students could begin making money sooner and not have to begin their careers with huge education debts.  Yet without some sort of coordination outside of any specific college, school, business, etc. this would be an almost impossible change to bring about, even if people wanted to try it or thought it was feasible. 

In a free society, institutions tend to take on a life of their own and a direction of their own, as do then whole industries.  Symbiotic relationships then may develop which everyone can see are not the best way to operate, but which cannot be changed because there is no desirable mechanism to effect change.  There might, for example, be rampant unemployment and unmet needs, but there might not be a way of employing people to meet those needs without start-up capital that a bank or an investor might find too risky to bankroll. 

This does not mean that government or some other institution needs to force a solution on those who do not voluntarily accept it.  It means simply that institutions need to be developed that can elicit and develop support for change and then coordinate it so that transitions are as smooth and beneficial as possible.  It means that the legitimate fears, needs, and interests of those within the system who are getting along just fine without such change can be successfully accommodated. 

None of this is generally easy to do, of course, but any social or economic model that does not take into account either the importance of freedom (in the sense of voluntary, self-motivated actions) or the importance of coordinated efforts in an interdependent technological society, will always have problems caused on the one hand by coercion and bureaucratic inflexibility or on the other hand by lack of planning and lack of coordination and cohesiveness.  That is not only true within a corporation; it is true within a country or within the world, insofar as the world is becoming more and more interdependent. 

And none of this is as important for new, small, isolated economic systems or business enterprises as it is for established, large, interdependent societies with people who are not given opportunities they deserve to have to make the most contribution they can, and where there not being given an opportunity to be a part of the system actually causes them to be harmed.  In a community where business and economics are just starting or where the cooperative division of labor and trade among some members has no real effect on the lives of others, it is not particularly important to help better the lives of those not participating.  But in a society where  economic decisions effect the well-being of even those who are not part of the system, there are obligations to help or safeguard those innocent or deserving people who would be harmed or permanently disadvantaged or left out. 

First of all, stock prices do not necessarily reflect a company's profitability or even its potential profitability. Amazon.com stock had an astronomical price when the company had never made any profit and was losing hundreds of thousands of dollars a year.  There was some reason to believe the stock price was so high, that it was "overvalued" in the sense that the company could not possibly ever generate sufficient profit to justify that price. Then the year the company started to show a decent profit, its stock price fell precipitously.  Perhaps once it operated at a reasonable profit, people saw it was not likely to generate a much greater profit, and the stock prices perhaps dropped to some extent accordingly.  Perhaps they dropped too far, just as they had risen too far in the first place.  To a certain extent, stock speculation, particularly when increasingly more people enter the market as investors, and do so without sufficient information, is tantamount simply to gambling. 

Second, in some cases money losses in the stock market are like any money losses in gambling: money is not lost to the system; it only changes hands, and for every dollar lost by some people, there is a dollar gained by others. The amount of money available is not lost or changed.  Often, for example, you will hear that bonds or gold gained in the market "as investors pulled their money out of the stock market" and invested in bonds or precious metals.  Or you will hear someone say, "I was lucky; I got rid of my stock at just the right time.  I bought it at 20 and sold it at 100 and the day after I sold it, it went down to 35, and is still heading down."  The money lost by the person who bought the stock at 100 was gained by the person who sold it at 100.  Suppose you have a baseball card that you got with a pack of bubble gum and that someday someone offers you $100 for it.  If you sell it then you essentially made $100, and they essentially "lost" $100 but they have the baseball card.  If they do not ever sell it, their $100 is gone for good, but it has not disappeared; you have it, or someone you bought goods or services from has it, or someone they bought from, etc., has it.  If the person who bought the card from you goes to sell it and nobody will offer them more than a dollar for the card, then in some sense they have lost $100 because they wasted it buying something they didn't want, something that though it had value at least equivalent to $100 to them once, has lost that value, and they cannot recoup it.  But the global economy did not lose $100.  It is still circulating somewhere. 

Now if one buys a baseball card or some corporate stock in order to resell it at a profit, then one will lose a serious amount of money if the price of the stock or card plunges right after one has bought it.  But the person who sold the card to you, if he had only bought it at a low price in order to resell it for a profit, made a substantial gain on his investment.  If you do not sell the card and the price plunges, you have not "lost" anything other than that you might have not had to pay as much for it if you had waited to purchase it.  But all the speculative gains and losses of "I wish I had bought/sold something yesterday" or "I wish I had waited until today to buy/sell it" are not reall gains or losses; they are only what you could have made or lost.  It is like watching a roulette wheel land on number 23 and saying you lost millions of dollars because you didn't bet the farm on 23 before the spin.  If you did not bet at all, you did not lose anything.  You didn't win what you could have won, but you also did not lose what you might have lost.  When one does not sell stocks that are overvalued, or that decline to prices that are seriously undervalued, unless one sells the stock after it has gone way down, one has not lost money, but has only lost what one could have made had one sold the stock beforehand, just as one always loses money by not betting on whatever actually ends up winning.  In that sense, everyone loses money all the time because they don't bet on all the winning things they might have.  But we don't see headlines "Billions lost at casinos by people not betting."  Nor do we see headlines that say billions of dollars lost to the economy by gamblers who did bet and lose.  The Las Vegas chamber of commerce probably even brags about how much money is gained by their local economy from gambling losses.  That is what casinos thrive by, the gambling losses of patrons. 

Buying stock in a company is tantamount to working for a company by essentially giving them your labor -- except that what you give them is what you have traded your previous labor for -- money -- so that they can trade the money in for labor or products that they need to operate -- that they need to participate in the trading system, the economy.  You are investing in them because you think they will reward your investment (the fruit of your past labor) with a good return on your money, so that your original labor will now be worth even more to you.  Investing money in a company is essentially like working for them and living off your previous savings because you expect to get back more than you spend.  When one invests in a company in order to make additional money, one picks a company one expects or hopes to be profitable.  The more profitable you expect the company to be, the more you are willing to pay for its stock or the more you might be willing to work for it based on a percent of future earnings rather than for a somewhat higher salary now.  When you are wrong about their profitability, you will have labored for nothing as a worker on a deferred salary plan; and when you are wrong about their profitability, you will lose money that is the fruit of your previous labor, so the part of the labor you did that earned that money will have been wasted or in vain in terms of your benefit, but not in terms of  whom the work you did benefitted.  On the other hand when the company spent your money, or your labor, on things which did not help it profit, whoever received that money benefitted from his/her work, but your company for whom s/he did the work, did not.  When money is lost it is labor that is wasted or lost.  If you lose money, you get nothing for it; essentially getting nothing for the labor that brought you that money in the first place. 

Now suppose you buy stock that goes up in value.  What you have as long as you keep that stock and its price stays high, is the possibility of trading something of value for something else of value, either money or other goods and services that people might want.  You don't actually have anything of value itself.  You have to sell the stock or trade it somehow in order to get money or something else you want -- something tangible or interesting in a worthwhile way to you -- some good or service.  This is true whether you are an investor or whether you are the company with stock you can sell to get more money or goods or services. 

The price of stock simply reflects what people are willing to pay for that, and that willingness may be based on past and current earnings, likely earnings, speculative earnings, or wildly speculative earnings.  It may even be based on some sort of sentimental or "collector's" value.   I bought a token amount of Boston Celtics stock when it went public because my wife was a Celtics fan at the time and she loved telling people that she owned the Boston Celtics or that Larry Bird worked for her.  I gave her the stock as a birthday present.  I did not expect it to be profitable stock and it has not disappointed me in that regard; it so far never was worth much, money-wise, but it has been of great personal value to my wife.  In this regard it is the same as some collector's purchasing a baseball card or some other souvenir for more than any intrinsic or material value it might have, except that since we bought the stock from the Celtics organization, the money went toward the furtherance, in a very token amount, of professional basketball, rather than toward some other enterprise. In some cases, stock prices depend on both potential earnings and sentimental or collector value because the ultimate selling price, and thus the potential profitability, of some services or products is based on how desirable the products or services are to consumers.  If tulips or a new brand of designer jeans can be sold for far more than other flowers or than other jeans, simply because they are more fashionable, then stock prices in those enterprises will reflect earnings potential, but only so long as the products are that desirable to consumers. 

The price of a stock may become inflated if there is more money coming into the market than the market (or certain popular stocks) can ever pay back a decent return.  In those cases, the purchasers of stocks at inflated prices are not getting value for their money, and the people who sell the stock are getting more money than the value of what they are selling.  Buying stock at high prices, expecting commensurately huge dividends,  may increase consumer confidence and spending in various ways, and it may facilitate more trade and thus expand the economy by employing more workers and increasing production, but if that expansion of the economy in general does not somehow lead to increased profits for the companies whose stock prices are high, at some point stock owners are likely to become disenchanted and try to sell or get rid of their stock.  They may have to take a loss to do that.  Those losses may then negatively impact on trade in the economy as the people who took the losses will have less money to spend or less money they may be willing to spend. 

But all the trading of money for stock or stock for money does nothing to change the wealth of the economy unless or until it is translated somehow into increased or decreased trade, and distribution, of labor, leisure, production, or more or fewer Goods and Services.  What changes by the trading of stock is which things in the economy will likely be purchased, because a person who sells stock may buy totally differerent goods and services from (some of) the proceeds of that sale than someone who buys the stock might otherwise have purchased with that money.  But the bottom line with regard to economic improvement is not any increasing  monetary value of the stock market, but increasing the amounts of Goods and Services available (including leisure) to more and more people in a fair way.  When purchasing stock helps that happen, it benefits the economy, but the simple price of a stock, and the mere trading of stock, while potentially reflecting how much good it does the economy, does not necessarily reflect that, because it does not necessarily translate into the distribution of employment and production, let alone the distribution of Goods and Services.  One has to look at not just the bottom line, but what any bottom line means for what will or can be done.  When the price of Amazon.com's stock fell sharply, that may have decreased their ability to raise more money by selling stock, but if they did not need any more money to do what they do, and if they would not have spent the money that they potentially lost, there was no real harm done to their business.  And whatever harm was done to the people who paid too much for the stock was compensated for from a systematic standpoint by the amount of good it did for the people who sold it for more than it was worth. 

The computer industry seems to me to be a good example. In the 1990's many people, businesses, and families decided they needed computers, and then newer model computers as more services were made available for computer users which the older models could not utilize.  As of the time this is written, in 2001, however, although home or small business computers are still improving in speed and gadgetry, the improvements are of only marginal interest or importance to consumers, and computer sales have slowed to the occasional replacement computer or perhaps, in some families, extra computers for each child to do their school work, and to communicate with friends.  The rush to the Internet has also abated, as most people who can afford it, and who have an interest in it, already have it.  So it is not surprising that new Internet companies and tech stocks in general are currently having a difficult time, particularly in those cases where stock prices were overly inflated and where the expectations of huge dividends were overly optimistic.  I believe it will take some new desirable or fashionable application that currrent hardware and infrastructure cannot feasibly provide, to boost sales again into boom times.  Something perhaps like the merging of satellite/cable tv and computers so that there will be the same access to movies and television programming that there currently is to still photographs, simple animations, short, choppy, tiny, video clips, and information in written form. 

Computers and the Internet have been a great boon to many people, but except in certain circumstances, they have not so much provided new services and products to the economy (besides the computer industry itself) as they have shifted the way already established, "old" business is done.  People can go online to get information or purchase things that, to a great extent, they could have got previously by phone or by shopping in a store, or by mail order.   It is faster online in many cases, sometimes more informative, and more convenient and perhaps more efficient for consumers and businesses, but much of it is not new products or services.  It has added jobs in the computer/Internet industry, but perhaps displaced or shifted those jobs from people who offered the services by phone or in stores. 

Where the Internet has added to commerce, besides in the computer/Internet industry itself, is the ability to sell certain kinds of content globally on demand that would be impossible to sell if material had to be printed,  shipped, and stored in sufficient quantities to make unit costs feasible.  For example, I am able to sell and distribute, and in many cases provide for free, various philosophical materials and services on the Internet that I could never afford to have published and shipped in print because the number of people seeking it is too small in any given geographical location. I have sold essays, transmitted over the Internet, to Australia, Singapore, and Iowa, all in the same day.  It would have been financially impossible to have stocked bookstores or libraries with those materials.  No bookstore owner in his right mind would want to stock something highly unlikely to sell in his/her store.  And I am able to help a certain number of students scattered  all over the world understand school material when they write seeking assistance.  I could never afford to advertise or to interact with these students in any way other than something like the Internet. 

With current technology, it seems to me that there is another potential boon for commerce on the Internet, but the software is apparently not widely enough available or sought to make it happen yet.  And business philosophy may not yet be compatible with the idea.  It seems to me that the stage is nearly set for anything that can be transmitted over the Internet to be sold for astoundingly low prices, and thus high volumes, because physical manufacturing, packaging, shipping, and storage would be eliminated, and financial transactions, and automated shipping of the files could all be done online automatically by consumer, in the way that much software sold over the Internet currently is made available. So one could sell information files online, but also music, voice, or other sound recordings, photographs, etc. The idea is that the demand would be so great to purchase, say individual songs, for $1, or two or three songs for $1, that it would make piracy or swapping files freely almost pointless and yet tremendously increase the profits of people who make recordings.  The reason it would make free swapping pointless is that there would be sufficient work and time involved for the purchaser to get a file, that s/he might be disinclined to do even more work just to save a friend one dollar. More music, or other sorts of recordings, would be available to more people, and trade might increase exponentially.  This is, of course, an empirical issue, and some small scale experimentation might need to be done to see whether it would be the boon for commerce and creativity that I think it would be. 

Labor can be concentrated and profits dispersed without money, either by forced or by voluntary concentrations of labor; e.g., slavery, conscription, etc. on the one hand, or by voluntary collections of workers on the other, as in barn-raising, school cleaning, Homes for Habitat, soup kitchens, etc.  The products of concentrated labor, that is, the Goods and Services produced by it (or what those Goods and Services are traded for), may be donated primarily or solely to others (as in Homes for Habitat or in feeding the poor), or they might be divided to some or total extent by those who participate in the labor (as in voluntary musical societies, clubs, churches, various "co-operative" enterprises, etc). 

It has been my contention in this book that money should, and generally does, translate into or reflect something tangible about labor and distribution of the goods and services that labor brings (or can be traded for).  For example, "loan interest" and "dividends" are not just monetary concepts.  In non-monetary terms the concept of interest and dividends for investment are essentially based on the notion that if you allow me to have part of what you have earned, I can use it (or other resources I have that I do not then need to trade for it) to produce enough goods or services that I can not only sustain myself, but have enough left over to return to you more than what you have lent me or invested in me.  Loans and investments are intended to be just two ways of collaborating and sharing labor and the fruits of that labor. The fact they normally involve money is only because money makes the enterprise work more easily than is doing it non-monetary trade.  However, we see samples of it in non-monetary trade when, for example, a neighbor borrows something and returns it along with a gift of something else in return, such as some vegetables s/he has grown or food s/he has made.  (Return to text.) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Currently one of the politically conservative mantras of those who want to cut taxes is the supposedly rhetorical question "Who best can decide how to spend your money -- you or the government?"   But since pooled money can often do far more good than distributed money in many cases, that question alone does not solve the tax or no-tax question.  It is not "who decides" but "what is decided" that is important. 

These are only related questions when some particular individual or group is not likely to make good decisions, or when some particular or individual is particularly wise and likely to make the best decisions about what should be done.  An instance of this on the personal level would be to give a teenager a monthly allowance to buy his lunch at school and have some discretionary funds left over -- but then cancelling that allowance, or the lunch part of it, in order to pay the school the lunch money directly, if you have found out that the child has been spending all the allowance money on frivolous things and skipping lunch.  In my community a voluntary fund was allegedly began to collect money for building new schools, but the school administration did not spend it on that and did not actually have a separate fund they promised, and no one outside the administration knew what the money was being spent on, so the contributions were discontinued.  It was disappointing for the contributors, but at least not much money was lost -- certainly not as much as if this had been a tax matter that could not have been remedied as easily. 

Sometimes, however, neither private groups nor the government spends money wisely, so again, it is not who decides how to spend money but on what the money should be spent.  In Birmingham, Alabama, for example, many of the schools are not in good shape but the government was interested in building a domed stadium, while at the same time corporate donors were giving somewhere between 8 and 13 million dollars to finance the refurbishing of an old statue that has served as a landmark and symbol of the past steel industry prominence in the city.  For those interested in improving schools, neither the government nor private business was a good place to turn.  It would have been better for there to be some organ of society that could collect private donations earmarked for specific purposes, such as building schools or hiring teachers, and that would have to use the money for that to the satisfaction of the contributors if they wanted their donations to continue. 

In some cases individuals may want to spend money privately and in some cases they may want to spend it collectively by pooling their resources with others.  It might be best if governments were to have taxes only for what is absolutely necessary, but then also have pay-as-you-go projects and funds that people could support who thought them worthwhile and who wanted government management of the projects.  That way there would be the benefits of individual choice and voluntarily pooled money for coordinated community/regional/national projects, rather than making those two important characteristics be mutually exclusive. 

It is of course, difficult to watch people waste great amounts of money which essentially is a pooled resource that could channel labor into accomplishing a great deal of good.  It is difficult whether one is watching the government or watching wealthy individuals, whether they are wasting it themselves or giving it to others who will waste it.  I would argue that because money, especially a large quantity of money,  represents labor that could be put to use for great benefit, squandering it is wrong.  What constitutes appropriate or inappropriate uses of money is open to discussion, but the consideration needs to be made in good faith.  There will, of course be conflicting values that sometimes come into play -- such as whether passing on large estates to people who do little work is fairer or less fair to those who earned the estate through hard work and who want to bequeath it to profligate children, than is taxing it so that it can be put to use by those who will work.  This is like the question of whether a rich child without talent or a poor child with talent is the more deserving of education or piano lessons.  These are moral issues and social issues that need to be reflectec on and discussed within or beside an economic system, not ones that need to be made automatically or accidentally by a system that replaces good judgment. 

Some people think that awarding grants to individuals or groups, particularly for specific purposes is a good way of solving the who/what issue, and it does help, but still takes the money collected in the first place out of the hands of the citizens or consumerss and awards it to whom the granting body believes will use it best -- which may not be who will use it best.  As I wrote in regard to government, using arts money as seed money for certain kinds of self-perpetuating community-wide art business enterprises might be a far wiser use of the money than simply giving it to artists who know how to write compelling grants for possibly less than compelling one-time projects. 

The Gates foundation gives away one billion dollars a year, some 20 million dollars a week to enterprises they believe worthwhile.  Bill Gates feels he was lucky to have earned his money because he happened to invent and market something at the right time in the right way, and he feels the money should be put to use doing good.  I think he has the right idea about being fortunate and about needing to spend the money to do good. That is an admirable outlook. The question, however, is whether his foundation actually does make the best use of the money, or whether it would be better, and fairer, to let Microsoft customers know how much of their money was being collected for worthy discretionary purposes and let them request how it be spent.  Or would it be better to reduce the prices of Microsoft products by that much in order to let consumers in general have more money to spend as they saw fit -- especially if there were various funds and money-pooling resources available from which they might choose. (Return to text.) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

I say "perceived need" because trade is really about getting what one wants or believes one needs, not necessarily getting what one actually needs.  When people do not believe they need something, they tend not to trade for it.  When a whole society does not know they might benefit from something, they tend not to produce it.  People tend to count themselves as wealthy when they have everything they want, which often has to do with having everything, or more than, one's neighbors have.  "Rich" people in centuries past were quite content with their lives even though they had almost none of what we in today's  world would consider necessities.  (Return to text.)