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Knight_of_BAAWA
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 Posted: Wed Jul 18, 2007 7:49 pm Post subject: |
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Specialization is part of what leads to wealth because, clearly, a person can produce more of what s/he is good at than trying to be all-around. This means that more wants can be satisfied in less time, assuming that what is produced is what is wanted.
http://www.mises.org/rothbard/mes/chap2a.asp#3._Exchange_andthe_Division
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monty
Joined: 02 Dec 2002
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| Posted: Wed Jul 18, 2007 11:01 pm Post subject: |
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| Philosophos wrote: | | Inherent to many people's explanations of wealth seems to be the concept of specialization. To the people who've answered thusfar: do you think that specialization is part of what leads to wealth? |
Yes, but not necessarily directly. The recognition that specialization has above average value and the proper leverage, use, sale, and marketing of that specialization does.
For example, I happen to be an owner in two specialized computer consulting companies - both are smallish - 15-20 employees. All of the consultants (23 or so people total) have very specialized technical skills. But that doesn't do us any good unless we can sell those skills to buyers; furthermore we must keep improviing and honing those skills as the market evolves. |
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cheapsuprise
disgraced, in exile.
Joined: 25 Apr 2004
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| Posted: Thu Jul 19, 2007 1:51 am Post subject: |
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| Philosophos wrote: | | Inherent to many people's explanations of wealth seems to be the concept of specialization. To the people who've answered thusfar: do you think that specialization is part of what leads to wealth? |
I bet that it was THE part. I say was because I think the relationship is easier to see when you look at the transitions. It's the same today, it's just obfuscated. Also, understand that I'm pulling this out of my ass. I'm making a semi-educated pull, but I can't give any guarantee as to the contents of my fist...
With my example of the guy who develops a more efficient method of collecting grain by cultivating it, he is able to do LESS general work by trading surplus grain for other things he needs. Not enough fire wood?
"Well Joe over there is awesome at collecting wood. I'll just give him some extra grain for his extra wood, then I can spend more time on what I'm good at, GRAIN, OR buy some of that sparkly hard stuff from that WIZARD who moved in next door. If I give some of that sparkly hard stuff to my wife, she might stop bitching at me about all the cracked pottery... That pottery is perfectly good, I don't care how cracked it is, I'm not giving any more grain to Mr. Clay this year unless he agrees to give me a better deal... It's a rip off!... I've heard that there are better pots to be found on the other side of the river, but I don't feel like making the trip right now. I don't have time. I've got to get back to my grain if I'm going to be able to afford that sparkly stuff."
I'm not suggesting it's GOOD that people only know how to do one thing. Most people know how to do many things well enough, and that's always been more or less true. However, a person can only be REALY good at a thing if they can spend time on practice, study, and trial and error. I'm guessing that this is why technological advance has been such a slow boil. It multiplies though. The more specialised knowledge is passed down from generation to generation, the faster it develops as there is more proven knowledge on hand from the get go, and so more purchasing power for a person who specialises as they can trade for more, for there individual effort, and have to cover fewer of there own basses because there are more specialists offering those other services at high efficiency. There is also cross over which drives seemingly separate disciplines towards higher efficiency.
You will probably roll your eyes, but I have a booze angle on this. (what can I do? I'm a specialist)
I've heard tale, that Luise Pasture got started on the path to micro biology -- not because he wanted to save babies from rabid dogs -- but because he was looking for a way to stabilise wine and beer. Even if this is not exactly true, he wasn't a brewer or a vintner, but his work (dedication to a specialization) eventually lead to a new level of knowledge which allowed Brewers and Vintners to suffer less LOSS to contamination, IOW increased efficiency.
For thousands of years beer was sower, and often wine was to. Less often with wine as it is more acidic, and more conducive to spontaneous fermentation from wild yeast as it is a fruit which symbiotically benefits from air born yeast, but *vinegaring* was still a problem. (and led to a pragmatic specialization, being the production of vinegar)
Why did people start to prefer un-sower beer in particular? Beer used to be a house hold activity, like bread.
Monks started producing beer for there own consumption, and because they did it on a larger scale, with a dedicated staff, they could select for better methods through trial and error. IE: The beer from that cask tastes like ass, (because it's infested with lactobacillus) but the beer from this one is great. Lets chuck that cask and keep this one. They eventually started selling there surplus beer, and so peoples tastes changed over time. The monks beer is always better, and it "costs less" as we don't have to make it our selves, we can do other things now.
Public Houses picked up on, or caught up with the monks methods.
Public Houses gave way to dedicated Breweries.
At the same time, the resulting expansion in demand for malted barley increased to the point where dedicated maltsters were viable. This eventually lead to consistent and well modified grain, that could yield more starch --> more fermentable sugars --> Value add on grain by maltsters + less grain per batch --> lower costs, but profit for both maltsters and brewers --> higher production for the same cost --> more drunks --> more sales --> more capital for expansion... etc.
If any one wants to argue that this pattern has lead to the dominance of shitty corporate mega-swill beer, and so demonstrates some kind of fundamental flaw in the free-market ideal, or the concept of specialization as the origin of wealth, I can pick up the story at that point. It will lead us full circle though, and I'd rather do that tomorrow.
Beer is more advanced, more available, and of better quality today, than at any other time in human history. Perhaps 90% of it is shit, but the 10% percent that isn't is supported by those who know the difference. This is an improvement over recent history, and this was driven by consumers. In short, don't judge a system by a particular point in it's cycle.
Remember the Monks. When they started making unusual beer, "normal beer" tasted like sower milk.
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CET
The Spiritual Atheist
Joined: 02 Apr 2003
Posts: 12844
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Location: SoCal, USA
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| Posted: Thu Jul 19, 2007 5:44 pm Post subject: |
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| Philosophos wrote: | | Inherent to many people's explanations of wealth seems to be the concept of specialization. To the people who've answered thusfar: do you think that specialization is part of what leads to wealth? |
Part of it. Leveraging the time and talents of specialists leads to wealth.
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CET 
The Spiritual Atheist
"Much of the suffering in the world comes from the delusion that we are separate from one another." - Gautama Buddha
"Those who dance are considered insane by those who can't hear the music." - George Carlin |
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CET
The Spiritual Atheist
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Location: SoCal, USA
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| Posted: Thu Jul 19, 2007 5:49 pm Post subject: |
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| cheapsuprise wrote: | | Philosophos wrote: | | Inherent to many people's explanations of wealth seems to be the concept of specialization. To the people who've answered thusfar: do you think that specialization is part of what leads to wealth? |
I bet that it was THE part. I say was because I think the relationship is easier to see when you look at the transitions. It's the same today, it's just obfuscated. Also, understand that I'm pulling this out of my ass. I'm making a semi-educated pull, but I can't give any guarantee as to the contents of my fist...
With my example of the guy who develops a more efficient method of collecting grain by cultivating it, he is able to do LESS general work by trading surplus grain for other things he needs. Not enough fire wood?
"Well Joe over there is awesome at collecting wood. I'll just give him some extra grain for his extra wood, then I can spend more time on what I'm good at, GRAIN, OR buy some of that sparkly hard stuff from that WIZARD who moved in next door. If I give some of that sparkly hard stuff to my wife, she might stop bitching at me about all the cracked pottery... That pottery is perfectly good, I don't care how cracked it is, I'm not giving any more grain to Mr. Clay this year unless he agrees to give me a better deal... It's a rip off!... I've heard that there are better pots to be found on the other side of the river, but I don't feel like making the trip right now. I don't have time. I've got to get back to my grain if I'm going to be able to afford that sparkly stuff."
I'm not suggesting it's GOOD that people only know how to do one thing. Most people know how to do many things well enough, and that's always been more or less true. However, a person can only be REALY good at a thing if they can spend time on practice, study, and trial and error. I'm guessing that this is why technological advance has been such a slow boil. It multiplies though. The more specialised knowledge is passed down from generation to generation, the faster it develops as there is more proven knowledge on hand from the get go, and so more purchasing power for a person who specialises as they can trade for more, for there individual effort, and have to cover fewer of there own basses because there are more specialists offering those other services at high efficiency. There is also cross over which drives seemingly separate disciplines towards higher efficiency.
You will probably roll your eyes, but I have a booze angle on this. (what can I do? I'm a specialist)
I've heard tale, that Luise Pasture got started on the path to micro biology -- not because he wanted to save babies from rabid dogs -- but because he was looking for a way to stabilise wine and beer. Even if this is not exactly true, he wasn't a brewer or a vintner, but his work (dedication to a specialization) eventually lead to a new level of knowledge which allowed Brewers and Vintners to suffer less LOSS to contamination, IOW increased efficiency.
For thousands of years beer was sower, and often wine was to. Less often with wine as it is more acidic, and more conducive to spontaneous fermentation from wild yeast as it is a fruit which symbiotically benefits from air born yeast, but *vinegaring* was still a problem. (and led to a pragmatic specialization, being the production of vinegar)
Why did people start to prefer un-sower beer in particular? Beer used to be a house hold activity, like bread.
Monks started producing beer for there own consumption, and because they did it on a larger scale, with a dedicated staff, they could select for better methods through trial and error. IE: The beer from that cask tastes like ass, (because it's infested with lactobacillus) but the beer from this one is great. Lets chuck that cask and keep this one. They eventually started selling there surplus beer, and so peoples tastes changed over time. The monks beer is always better, and it "costs less" as we don't have to make it our selves, we can do other things now.
Public Houses picked up on, or caught up with the monks methods.
Public Houses gave way to dedicated Breweries.
At the same time, the resulting expansion in demand for malted barley increased to the point where dedicated maltsters were viable. This eventually lead to consistent and well modified grain, that could yield more starch --> more fermentable sugars --> Value add on grain by maltsters + less grain per batch --> lower costs, but profit for both maltsters and brewers --> higher production for the same cost --> more drunks --> more sales --> more capital for expansion... etc.
If any one wants to argue that this pattern has lead to the dominance of shitty corporate mega-swill beer, and so demonstrates some kind of fundamental flaw in the free-market ideal, or the concept of specialization as the origin of wealth, I can pick up the story at that point. It will lead us full circle though, and I'd rather do that tomorrow.
Beer is more advanced, more available, and of better quality today, than at any other time in human history. Perhaps 90% of it is shit, but the 10% percent that isn't is supported by those who know the difference. This is an improvement over recent history, and this was driven by consumers. In short, don't judge a system by a particular point in it's cycle.
Remember the Monks. When they started making unusual beer, "normal beer" tasted like sower milk. |
Mmmmmmm, beeeeeeerrrr
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Namaste,
CET
The Spiritual Atheist
"Much of the suffering in the world comes from the delusion that we are separate from one another." - Gautama Buddha
"Those who dance are considered insane by those who can't hear the music." - George Carlin |
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josephpalazzo
Illusion Master
Joined: 30 Aug 2006
Posts: 8036
Local time: 7:25 AM
Location: D-brane
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| Posted: Thu Jul 19, 2007 6:12 pm Post subject: |
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| What happened to the theory of buying low and sell high? Does it still work? |
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monty
Joined: 02 Dec 2002
Posts: 923
Local time: 6:25 AM
Location: Lakeville MN
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| Posted: Thu Jul 19, 2007 11:01 pm Post subject: |
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| josephpalazzo wrote: | | What happened to the theory of buying low and sell high? Does it still work? |
Of course. The difference in pricing is justified by the risk taken. |
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Philosophos
Do it
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| Posted: Sat Sep 15, 2007 3:23 pm Post subject: |
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A new book is out that tries to answer my original question. Economics + complexity theory = secksi.
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Sal1981
Do you hear me now?
Joined: 23 Mar 2006
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| Posted: Sat Sep 15, 2007 4:48 pm Post subject: |
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| josephpalazzo wrote: | | What happened to the theory of buying low and sell high? Does it still work? |
Merchanting is just about moving resources around (not in the transportation sense) ... at a gain.
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"Why not just make your null hypothesis be that..." - Philosophos |
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Gettin' In Tune
Forum Master
Joined: 03 Aug 2007
Posts: 2545
Local time: 7:25 AM
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| Posted: Sat Sep 15, 2007 6:40 pm Post subject: Re: What Causes Wealth? |
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| Philosophos wrote: | I am curious to hear or be led to resources that describe economic theories relating to the generation of wealth. I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective. How do societies and nations, as a whole, become more prosperous? How do citizens gain an increase in purchasing power?
Any links or explanations from posters would be appreciated. |
I know a little on economic growth theory. Solow introduced a neoclassical growth model in 1956 and it has undergone various refinements. Exogenous Growth Model. It can be criticized. There are also models based on Endogenous Growth Theory
Basic growth boils down to human and capital accumulation combined with sustained technological progress. Some other factors of growth are:
A country's endowed resources
The introduction of new goods and/or new quality of an existing good
The introduction of a new production method
The opening of a new market
The 'conquest' of a new source of supply of raw materials
The new organization of an industry
Innovation
Political-Institutional factors
Last edited by Gettin' In Tune on Sat Sep 15, 2007 7:26 pm; edited 1 time in total |
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Abraxus
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Joined: 06 Jul 2005
Posts: 1914
Local time: 8:25 PM
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| Posted: Sat Sep 15, 2007 7:13 pm Post subject: Re: What Causes Wealth? |
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| Philosophos wrote: | I am curious to hear or be led to resources that describe economic theories relating to the generation of wealth. I'm not interested in personal wealth - I'm more interested in the "wealth of nations," (lol - should I reread Smith?) or wealth from a macroeconomic perspective. How do societies and nations, as a whole, become more prosperous? How do citizens gain an increase in purchasing power?
Any links or explanations from posters would be appreciated. |
Malaysia seems to be using an intriguing method called "wealth transfer". By practicing institutionalized affirmative action for the (majority) Malays, they basically transfer the wealth generated by the (minority) non-Malays to themselves. In time, the non-Malays will probably feel used and want to leave of their own accord. As a consequence, a wealthy society of Malays is left behind to compete healthily amongst themselves in a way that does not compromise their national identity.
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Software Utilities Famous Philosopher Quotes (1:41, Divx 5, 8.8 MB) |
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