About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Sunday, June 19, 2011

The Answer For Progressive Thinkers

A few days ago I posted a question for progressive thinkers:

A physician and a farmer freely and voluntarily engage in a trade: the physician takes the farmer's tonsils out in exchange for a dozen, fresh chicken eggs.

Which trader is being taken advantage of and, consequently, must be unsatisfied by the trade?
Here is the correct answer: Neither trader has been taken advantage of. Neither trader is unsatisfied.


Because trading is a purposeful action. Human beings trade with a purpose in mind. They seek to profit from their trade, i.e., they expect to be more satisfied after the trade than before.

Doesn't one trader have to lose in order for the other to gain? How can both traders profit from the same trade?

Both traders profit because each values the traded items differently. The doctor values a dozen, fresh chicken eggs more than the labor he expends taking out the farmer's tonsils. The farmer values getting his tonsils removed more than the labor he expends producing a dozen, fresh chicken eggs.

Value is in the eye of the valuer.

Some might object by asserting that a tonsilectomy is obviously of far greater value than a dozen, fresh chicken eggs. But he who makes such an assertion must explain why, if what he says is true, the doctor made the trade. We assume the doctor is of sound mind. We also know that the doctor made the trade freely and voluntarily.

He who believes value is "objective," i.e., contained in the essence of a thing, must explain why the price of water is less than the price of gold. Human life is, after all, impossible to sustain without water. Gold is a bauble. Yet, men generally value x amount of gold more than x amount of water.

He who believes value is "objective" must also explain why it is that each of two men could value the exact same thing differently. For example, assume that a boy hits a home run into the bleachers. The ball is caught by Ted, a disinterested fan. Mike, the boy's father, desires the home run ball as a souvenier. Mike values the baseball more highly than Ted.  

The truth is value is not "objective," i.e., contained in the essence of a thing. Value is "subjective," i.e., assigned to a thing by the mind of each individual.

The crux of the question is the stipulation that both the farmer and the doctor engaged in the trade freely and voluntarily. Because of this stipulation we can deduce that the satisfaction earned by both men as the result of the trade was due to their different assessed valuations of the items traded and the respective profit both perceive and expect to receive.

If, on the other hand, a third party coerced either the farmer or the doctor (or both) to engage in the trade, we can deduce that one or both of the traders will not be satisfied as the result of the trade. For if one or both of the traders truly expected to be satisfied as the result of the trade, one or both of the traders would have made the trade freely and voluntarily, i.e., coercion would be unnecessary.

Furthermore, if the doctor were coerced into making the trade, we might conclude that the trade was made in 2016 and that ObamaCare were in full force. (Just kidding!)

Now for the kicker...

If the goal of society is the mutual satisfaction of all in society, and if it is true that in a free and voluntary trade both parties always profit, i.e., both parties are always satisfied, and if it is also true that in a coerced trade both parties do not necessarily profit, i.e., both parties are not necessarily satisfied, then wouldn't it be preferable if society were organized in such a way that all trades are made freely and voluntarily and that no trades are coerced. Such an organization would result in all who trade being always satisfied, as opposed to being satisfied by some trades and dissatisfied by others.

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