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Dear Peter,

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Perhaps I should also comment on your idea that: "Voluntary transactions are mutually beneficial, otherwise they wouldn’t take place".

The rationale behind that idea is that if a transaction does not make those involved better off, they can always choose not to engage in it in the first place.

Implicit to the idea is the value judgment that individuals are the best judges of their own welfare. It also assumes that both parties have the same judgment as to the value of the object of the transaction and that a more advantageous value could not be obtained by either party through an alternative transaction with a different party. It further assumes that both parties are perfectly free to trade or not and that there is no compelling reason for either of them to enter into the proposed transaction without examing possible alternatives.

To illustrate these caveats let me offer the following examples:

Are the individuals the best judges of their own welfare?

Example: somebody who bought the retirement house of his dreams that was subsequently destroyed during the Queensland floods and resulted in his death by drowning.

Same judgment by both parties of the value of the object of the transaction:

Example: somebody who sells a painting inherited from a deceased relative for a few dollars to an art dealer who later reveals it is a masterpiece worth millions.

A compelling reason to enter into the transaction without examining possible alternatives:

Example: Somebody who sells his deceased mother's jewellery, of inestmable sentimental value, in order to pay the three months rent he owes the landlord.

I offer these few examples as instances where so-called "mutually beneficial transactions" may prove to be illusory either partially or totally to either one or perhaps even both of the contracting parties.

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Effect of 2 quakes on New Zealand economy ...

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The International Monetary Fund (IMF) has just published its report on the effects on the New Zealand economy of the earthquakes in September 2010 and February 2011.

The IMF findings confirm the negative resilience of the New Zealand economy compared to the resilience of the economy of Japan to major catastrophic events.

Here is the link to the IMF report:

http://www.imf.org/external/pubs/ft/scr/2011/cr11102.pdf

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Banjo
If you buy a carton of milk for a dollar, it means you value the milk more than the dollar, and the shopkeeper values the dollar more than the milk. That’s it.

It does not require the assumption that the parties value the objects equally or the same. On the contrary, it means they *both* value them *unequally*. If they both valued them equally or the same as what they already had, then they would not obtain any advantage from swapping them, and the exchange would not take place. The very fact of a voluntary exchange self-evidently proves that they both value them unequally.

The value of an object is not *in* the object itself, it’s not *in* gold or milk or computers. It comes from the subjective human act of evaluation, of placing a value on things. People value things because they expect they can be used to satisfy a particular subjective want. These *subjective* wants cannot be inter-subjectively compared as between people, or even intra-subjectively compared. We cannot meaningfully compare your desire for a drink of milk, with your desire for a swim in the sea, with someone else’s desire for a ruby ring. Nor can we necessarily compare one person’s desire for a drink of water with another’s desire for the same, because their thirst levels, or situations, or other values, are always different.

Thus it is not necessary, not true, not helpful, nor even particularly meaningful to say that voluntary exchanges must involve equal or similar valuations of the objects being exchanged.

Also, we can talk of values in the abstract, but it’s deeds not words that really count. The values don’t have an existence independent of the human action that manifests them: a particular human prefers one particular thing (milk) to another particular thing (a dollar) at a particular time and space, that is all.

We are only capable of knowing what someone’s values are by their actions, and their actions *always* consist of preferring one thing to another.

(Thus values are *ordinal* (1st, 2nd, 3rd), not cardinal (1, 2, 3). They cannot be weighed, measured, quantified, or aggregated, and all pretensions to do so are false. We can’t get a kilogram of values. They can only be objectified through preference.)

It is true that our actions, after the event, don’t always produce the satisfactions we thought they would produce beforehand. I might think a swim will be wonderfully fantastic; and yet it turns out to be only okay.

But that doesn’t mean there is any unfairness operating whether or not I exchange one condition for another by acting alone, or by exchanging with another consenting party for example an art dealer. (Fraud is already illegal and no-one is contending otherwise.)

It’s true that disappointed expectations are an inevitable fact of reality. But that certainly does not justify concluding that a violent interventionist would be a better judge of one’s welfare than oneself. He also faces exactly the same problem of judging ex post utility for himself, a further problem of knowledge in deciding for someone else, and a further conflict of interest in applying his judgment to his coerced subject. His judgment can only be more problematic, not less.

(And if people are incompetent to decide for themselves, it is impossible to see how the same people could be competent to choose, through the ballot box, what other people should decide for them; nor why the *competent* people in the population should be subjected to the rule of the incompetent.)

Therefore in remarking that voluntary transactions must be mutually beneficial otherwise they wouldn’t take place, there is no need to assume that
- both parties value the object of the transaction the same
- either party could not obtain a more advantageous value elsewhere
- the parties are perfectly free to trade or not *(what’s “perfectly free” mean?)
- a more advantageous value could not be obtained by either party through an alternative transaction with a different party
- there is no compelling reason for either of them to enter into the proposed transaction without examining possible alternatives.

It is important to understand that without the unequal valuations that people place on the same thing, human society would not exist, because no-one could obtain a benefit from associating with other people.

Poirot
I haven't "assumed" anything…”

You must be assuming that historical sources are capable of self-evidently proving your point, otherwise why are you citing them without any reason?

But they don’t prove it for the reasons I have shown. You haven’t explained how you know that the Factory Acts did not cause *more* death and hardship than they relieved? And the rise on population was a strange coincidence? Yes?

You don’t seem to understand the issues or arguments you are facing.

Capitalism means the *private* ownership of the means of production. The pollution of so-called public goods such as streets, courts, lanes, and streams evidences *government failure* not market failure.

Similarly, flogging, fettering and torturing are against the law. They infringe the principal of self-ownership, and therefore of the private ownership of the means of production. They are no more an indictment of capitalism than is the existence of robbery or fraud which are also illegal, and rightly so. They definitely do justify forceful intervention by government, or anyone else for that matter, to prevent them. But it is the *central justification* of government to be necessary to prevent such abuses. They show a *government failure*, not a market failure.

Thus anything you don’t like, you just reflexively lay to the blame of capitalism, regardless whether it’s caused by government, or violates private property rights, or caused by something other than capitalism. A completely prejudiced and circular approach, actively ignoring and evading disproof.

Please answer me this: If, following your line of reasoning, in order to improve the conditions of the working class, the legislature in 1842 had passed a law mandating the minimum wage be 50 pounds per day in contemporary money, do you think the resulting condition of the working class would have been better, or worse?