"Suppose there's a bus with exactly ten people inside it. Twelve people get out of the bus. How many people do you have to put back in the bus so nobody's in it?
-- translated punchline of a joke from the German online platform Quora
I still laugh at this punchline. Maybe it's because when I first read it, I couldn't understand it at all, or I couldn't believe what I was reading. I had to Google translate it to believe it, and that made the absurdity of it all the more ridiculous. For context: the punchline is the last ditch attempt of a grade school teacher trying to explain negative numbers. "Suppose you subtract 3 from 2, what does that add up to?" -- add up to leaves the students puzzled, as is "Take 2 away from 1, what's the sum?" -- sum? -- so the punchline above is intended as a "concrete" example using real-world objects to make the abstract idea easier to realize. And there it stands in all its glory.
It still makes me laugh.
Math is not real in the way the real world is real. It's an axiomatic system, a sometimes useful fiction. But it's used a lot to describe economies, and economies are as real a thing as can be, with real impacts on real people. And math is used not just by economists. Ordinary people measure their own wealth with numbers for income, taxes, rent, mortgages.
Still, in some deep way, people can't be numbered negatively, and values either, and yet maybe the great beauty of economics is that it can give a number for a value, called a price. That's what hooked me on economics. A price is mere number, a thing of utter abstraction, yet it reflects a human value, an emotion and desire, even a threshold of sacrifice and a relation to everything else you might want, and not just an emotion and desire but a quantification of a thing so human nothing can be more so.
Words are like this too. They express meanings. We all take them for granted, but they are truly magical, traversing the physical and intellectual and abstract and even spiritual worlds. Their physical properties belong to a structure -- semiology -- unlike any other science of cause-effect, material and formal causes (explained in what dogs are not saying). For a semanticist, it's endlessly intriguing -- ideas or meanings, whatever they are, constrained into physical sound sequences.
And the same magic occurs with price. It's structure belongs not to the thing, but to the entire structure of supply, demand, production, labor and property which engages government as well. That's so complex and interrelated that it's in the most literal sense, incomprehensible, like magic -- an emergent property born of the unaccountable complexity of many laws, many bodies, many dynamics and pressures. As mentioned in the post on fungible and non fungible fictions, religions pale against the magic of price traversing numbers with values in world of social complexity.
But a lot of these numbers fail to express anything. GDP, income, even wealth are typically used to measure economies and participants. Like the German joke, they apply where they shouldn't.
What is real wealth? Your smartphone. indoor plumbing, hot water, electricity, your fridge and your electric lights, having more shoes than you can wear. Not to be too Stephen Pinkerish, real wealth is all the stuff you want and buy. It can't be measured by income. Elon Musk's real wealth can't be measured in billions of dollars. It can be measured by the number of his children, how seriously other people take his stupid ideas, how engaged he is in his projects, and how much power he wields. That's real wealth. The billions are a bit like one word in a book. It plays a role, but it's not to be mistaken for the book itself. Similarly GDP. It's an abstract sum of a lotta lotta lotta real economic activity. Unlike a price, it doesn't reflect any human desire or real wealth. It masks the human element. It's really a measure of growth. Useful for investors and for comparing other macro sums like aggregate national land value relative to GDP or military spending relative to GDP or tax revenues relative to GDP.
A friend worries that AI will create unimaginable wealth for its owners and immiserate the rest of us. But without consumers, no wealth. The deal with wealth creation is, the consumer expresses a desire, capital rushes to supply it for a price (this is just how Smith describes it as I recall), the consumer gets what it wants -- real wealth -- and the capitalist gets unimaginable financial wealth. The only real wealth that comes from such extremes of financial wealth, aside from a tenth private airplane of minimal marginal value, is the power over government and other influences. That's real. But wholesale immiseration of the consumer seems like the end of wealth. The consumer has got to be able to buy, and more the merrier for the ownership class.
Unless the techlords crowd out any competition. In a monopoly of technofeudalism, enshitification ensues. The questions are: how far can the techlords abuse the consumer; can they satisfy a large enough comfortable class to maintain stability in the social order, while ever marginalizing the downscale? We already live in a bifurcated economy -- one for the haves and another that struggles by. When will the tech lords become so enrichificated that they no longer have to extort yet more riches from the consumer? In a cut-throat market too competitive to see the long view, never.
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