Let me begin with a quote:
Imagine that there is one trading body possessing only corn, and another possessing only beef.
It is certain that, under these circumstances, a portion of the corn may be given in exchange for a portion of the beef with a considerable increase of utility.
How are we to determine at what point the exchange will cease to be beneficial? This question must involve both the ratio of exchange and the degrees of utility.
Suppose, for a moment, that the ratio of exchange is approximately that of ten pounds of corn for one pound of beef:
then if, to the trading body which possesses corn, ten pounds of corn are less useful than one pound of beef, that body will desire to carry the exchange further.
Should the other body possessing beef find one pound less useful than ten pounds of corn, this body will also be desirous to continue the exchange.
Exchange will thus go on until each party has obtained all the benefit that is possible, and loss of utility would result if more were exchanged.
Both parties, then, rest in satisfaction and equilibrium, and the degrees of utility have come to their level, as it were. - END QUOTE-
This quote contains a number of the core concepts of Jevons' theory of political economy.
Let me enumerate a few: trading body, exchange, ratio of exchange, utility, degree of utility.
The quote mentions 'degrees of utility' – but Jevons' key concept is the 'final degree of utility.' Let me explain what that means.
“Final degree of utility”, that’s Jevons’ term for the usefulness of the very last pound of beef or corn exchanged. It’s the key to his whole system.
…
So Jevons turns value away from labor cost and toward subjective usefulness at the margin. That’s the revolution. Next time, we’ll see exactly how that works – and why it mattered so much.
A concept not mentioned in the quote is the term "market". The central point of a market is the public exchange, mart or auction rooms, where the traders agree to meet and transact business.
But Jevons needed one more thing: the market where exchange happens. He had a surprisingly modern view of that too.
Like Jevons says: "The traders may be spread over a whole town, or region of country, and yet make a market, if they are,
by means of fairs, meetings, published price lists, the post office, or otherwise, in close communication with each other."
How he connects market, exchange ratios, and utility was truly innovative.
We really need another lecture to explain the meaning and relations of all these terms, but it is clear that we see here the emergence of modern economic thinking.
Main Sources:
MacMillan The Encyclopedia of Philosophy, 2nd edition
of Economic Thought (2012)
TABLE OF CONTENTS -----------------------------------------------------------------
1 - 100 Philosophers 9 May 2009 Start of
2 - 25+ Women Philosophers 10 May 2009 this blog
3 - 25 Adventures in Thinking 10 May 2009
4 - Modern Theories of Ethics 29 Oct 2009
5 - The Ideal State 24 Febr 2010 / 234
6 - The Mystery of the Brain 3 Sept 2010 / 266
7 - The Utopia of the Free Market 16 Febr 2012 / 383
8. - The Aftermath of Neo-liberalism 5 Sept 2012 / 413
9. - The Art Not to Be an Egoist 6 Nov 2012 / 426
10 - Non-Western Philosophy 29 May 2013 / 477
11 - Why Science is Right 2 Sept 2014 / 534
12 - A Philosopher looks at Atheism 1 Jan 2015 / 557
13 - EVIL, a philosophical investigation 17 Apr 2015 / 580
14 - Existentialism and Free Will 2 Sept 2015 / 586
15 - Spinoza 2 Sept 2016 / 615
16 - The Meaning of Life 13 Febr 2017 / 637
17 - In Search of my Self 6 Sept 2017 / 670
18 - The 20th Century Revisited 3 Apr 2018 / 706
19 - The Pessimist 11 Jan 2020 / 819
20 - The Optimist 9 Febr 2020 / 824
21 - Awakening from a Neoliberal Dream 8 Oct 2020 / 872
22 - A World Full of Patterns 1 Apr 2021 / 912
23 - The Concept of Freedom 8 Jan 2022 / 965
24 - Materialism 7 Sept 2022 / 1011
25 - Historical Materialism 5 Oct 2023 / 1088
26 - The Bonobo and the Atheist 9 Jan 2024 / 1102
27 - Artificial Intelligence 9 Feb 2024 / 1108
28 - Why Am I Here 6 Sept 2024 / 1139
The Discussion
[13:16] Max Chatnoir: Thank you
[13:16] Max Chatnoir: Herman
[13:16] .: Beertje :. (beertje.beaumont): Thank you Herman
[13:16] Max Chatnoir: Sorry, missed the comma.
[13:16] Max Chatnoir: comma
[13:17] herman Bergson: What we'll see next time is how Jevons defines value.
[13:17] Max Chatnoir: I understand the relative value assigned to beef and corn here, but that doesn't entirely represent their utility.
[13:18] Max Chatnoir: corn and beef are not nutritionally equivalent.
[13:18] herman Bergson: The utility is in the amount of the exchange....
[13:19] Max Chatnoir: Maybe to the seller, but to the ultimate consumer?
[13:19] Particle Physicist Bejiita (bejiita.imako): true Max
[13:19] herman Bergson: if you need 10 pounds of beef and you exchange 11 or more, then those extra ones have reached their final degree of utility.
[13:20] herman Bergson: The nutritional value is not important here...what important here is the need of the trader
[13:20] Max Chatnoir: Ay, that's the rub!
[13:21] herman Bergson: What to do with corn when you are not a baker but a butcher?
[13:21] herman Bergson: so the increase of utility is in the exchange
[13:21] Particle Physicist Bejiita (bejiita.imako): aaah
[13:22] herman Bergson: This also relates to deciding on a fair price of a product
[13:23] herman Bergson: The product as such has no value; it gets its value from its utility for someone
[13:24] .: Beertje :. (beertje.beaumont): who decides what a fair price is?
[13:24] herman Bergson: When you buy a product that you actually don't need at all, it is in fact worthless
[13:24] herman Bergson: negotiations among traders
[13:26] herman Bergson: Take water. It is abundantly present everywhere. You can't exchange it for whatever.... unless you are in a desert. Then its utility increases enormously.
[13:26] Particle Physicist Bejiita (bejiita.imako): true
[13:26] herman Bergson: It is really fascinating to dig into this economic reasoning...
[13:28] herman Bergson: We are still en route to explore capitalism...and here you encounter the first reasoning....
[13:28] herman Bergson: And the shift away from ethics and towards mathematics...which is regarded to be value-free
[13:28] Max Chatnoir: Yes, if there is one cup of water and two people who want it, then they will probably offer more than the market value to be sure they get it.
[13:29] herman Bergson: Well...depends...these two persons are a market
[13:29] Max Chatnoir: and i think that takes us back to ethics.
[13:30] herman Bergson: I agree, but not all economists do :-)
[13:30] Particle Physicist Bejiita (bejiita.imako): hm
[13:30] herman Bergson: Michael Sandel does and Piketty, but not Friedman for instance
[13:32] herman Bergson: These were the first steps in modern economic thought.....
[13:32] herman Bergson: I think we should get ready for the lecture of coming Thursday...
[13:33] herman Bergson: For now you may relax or come up with that final remark or question :-)
[13:34] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:34] Particle Physicist Bejiita (bejiita.imako): oki
[13:34] Particle Physicist Bejiita (bejiita.imako): well a bit to think of but interesting again
[13:34] Particle Physicist Bejiita (bejiita.imako): interesting
[13:34] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:34] herman Bergson: Well, then, thank you again for your attention and on to the next lecture...
[13:34] herman Bergson: Class dismissed....
[13:35] .: Beertje :. (beertje.beaumont): thank you, Herman:)
[13:35] Päivi (nicolesteel): thank you herman
[13:35] Max Chatnoir: What's next, I wonder?
[13:36] herman Bergson: An explanation of the core concepts of Jevons' economic theory
[13:36] herman Bergson: I only have introduced them today, but it takes more time to show the relations and meanings of his ideas
[13:37] Particle Physicist Bejiita (bejiita.imako): oki
[13:37] herman Bergson: One thing may be clear already perhaps....
[13:38] Particle Physicist Bejiita (bejiita.imako): ok
[13:39] herman Bergson: the economic value of a product is not constituted by the amount of labor and energy that is put into its production, but it is determined by the utility of the product
[13:39] Particle Physicist Bejiita (bejiita.imako): ah yes, true
[13:39] herman Bergson: And that is an interesting thought, because there are produced a lot of useless products in this world.
[13:39] Max Chatnoir: Is this demand-side economics, then?
[13:39] .: Beertje :. (beertje.beaumont): does this count for art too?
[13:40] herman Bergson: oops two questions... no, this does not apply to art, I'd say
[13:41] Particle Physicist Bejiita (bejiita.imako): what about AI art?
[13:41] Particle Physicist Bejiita (bejiita.imako): no effort put in, only a prompt
[13:42] herman Bergson: demand-side economics....to understand that we still have a way to go because a lot of demand is artificially created by advertisement, to begin with
[13:42] Particle Physicist Bejiita (bejiita.imako): yes
[13:42] Particle Physicist Bejiita (bejiita.imako): true
[13:42] .: Beertje :. (beertje.beaumont): creating of a need, we never were aware of
[13:43] herman Bergson: Yes :-)
[13:43] Particle Physicist Bejiita (bejiita.imako): yes
[13:43] Particle Physicist Bejiita (bejiita.imako): true
[13:43] Particle Physicist Bejiita (bejiita.imako): a good example this Labubu crap
[13:43] herman Bergson: I recently saw a commercial for a bed cushion.....
[13:43] Particle Physicist Bejiita (bejiita.imako): horrible looking dolls
[13:44] Particle Physicist Bejiita (bejiita.imako): sold for 100s of dollars because hype
[13:44] Particle Physicist Bejiita (bejiita.imako): TikTok, influencers, etc
[13:44] herman Bergson: I was told that it would eliminate my neck pain by its special shape....
[13:44] .: Beertje :. (beertje.beaumont): the cushion with a hole in the middle?
[13:44] herman Bergson: But I don't have any neck pain using my own cushion in my bed...what on earth is neck pain?
[13:45] herman Bergson: Yes that silly square one
[13:45] .: Beertje :. (beertje.beaumont): lol
[13:46] herman Bergson: so...demand-side economy....we really have to look into that, Max, and what it means
[13:46] herman Bergson: But we aren't yet there
[13:46] Max Chatnoir: Fascinating!
[13:47] Particle Physicist Bejiita (bejiita.imako): aaah
[13:47] herman Bergson: Yes, I definitely agree, Max
[13:47] herman Bergson: That is why I am doing this here :-))
[13:48] herman Bergson: But step by step things become clearer and I see how we have grown into capitalism....
[13:49] herman Bergson: Remember my lecture about young people that think something is wrong with capitalism?
[13:49] herman Bergson: We are going to find out in what sense this is the case
[13:49] Max Chatnoir: It's in the blog?
[13:50] herman Bergson: not yet...it is Lecture 1258...I'll post it tomorrow...
[13:51] Max Chatnoir: OK!
[13:52] herman Bergson: Posting is a tedious job....I check the discussion on spelling,, not my favorite activity :-)
[13:52] .: Beertje :. (beertje.beaumont): ツ
[13:52] herman Bergson: But I also don't want it to look like a typonese mess :-)
[13:53] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:53] Max Chatnoir: See you all soon.
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