Your patience has been rewarded. Here we are again exploring the fundamentals of economic systems - and no better place to do it than the source of the Renaissance and modern ways of thought: Venezia, Firenze and, Pisa. Hopefully I won't get the same treatment as Galileo.
This article delves further into the concepts of work and wealth - the foundations of the First Law of economic gravity. Just to whet your appetite I will also give some clues to the derivation of the second law.
I will not go back over old ground too much and so before we start you might want to re-read the first article in this series, "Xcheque's three laws of economic gravity - Definitions and the First Law" Dr Jon Hauser, Xcheque.com, 13 December 2009. There you will find the definition and description of the first law , the importance of work and wealth and their mysterious units, the tanstaafl and the solaris . You will also find this information in the iconography of the text.
On first reading you may have the impression that wealth (as defined) is created from the noble pursuits of toiling in the fields; the building of houses, roads and bridges; gathering the harvest of the sea; making wondrous and practical mechanical devices; and other labours of farmers, builders, stone masons, fishermen, craftsmen and artisans. That however is too simplistic. It may have been true in the genesis of civilisation but more complex forms of work have developed in the past 1000 years or three.
Where would we be without the work of Pythagoras and other Greek philosophers? For a start the Greek and Roman ruins would be mere dust and stone, tumbled into chaos at the first sign of rumblings from the earth. Many of their buildings, bridges, viaducts, and aqueducts stand still - a testament to the combined skill of mathematicians, engineers, architects and craftsmen.
Roads and bridges are a wonderful example of the work and wealth of societies and civilisations. They connect people together more efficiently than mud tracks and river ferries. This reduces the time taken for work to be done and for the creation and transfer of wealth. It is unlikely that the original builders of Roman roads had any concept of the incredible span of time and return on investment from their endeavours. It does seem however that they had just a little more foresight than our current companies, cities, states, countries, and empires.
I suspect that some may think that Archimedes' contemplation of things that float in a bath was something other than work - but they would be wrong - who would dare build a ship weighing thousands of tonnes, capable of traversing the earth, unless they had some confidence in the fundamental principles of buoyancy. It is not exactly an accident that the waterline is roughly in the right position before a boat is put to water, give or take an appropriate amount of ballast. This design is work of the mind. It contributes to the whole and the product is a most valuable and efficient means of moving work and wealth even further across the planet. Likewise, navigation is work of the mind and many more ships would be wrecked or lost on an open sea without this important and fundamental knowledge or, in the modern parlance, intellectual property.
The Egyptians too had some concept of these principles of mathematics and engineering. Somebody please correct me if I am doing the builders a disservice, but it seems to me that a child can also stack blocks on top of each other. It is however true that the simplicity of design has underpinned the durability and perhaps this shows more foresight than I credit. Putting such debates aside, to me the wonder of the Pyramids is the scale, ingenuity and determination in the building. It is this last point that brings me to another important link in the chain of work and wealth, that of leadership.
A general concept of leadership is the harnessing of people and resources to achieve an outcome that is beyond the capability of a single person. We do not act instinctively like ants or bees and so it takes leadership to bring together, and hold together, a mass of people to achieve a larger outcome. The process of organisation of people must therefore be a form of work and a contributor to wealth. A ship needs sailors, and a navigator, and a captain. Some of these functions are more physically demanding than others but all represent work.
There are many iconic examples of the work of leadership, intellectual ingenuity, and hard labour translating into wealth. I mentioned before the roads, bridges, and towns of the Roman Empire. Wealth that lasted for hundreds of years as part of that civilisation and those that followed. New technology in boat building and advances in navigation made the world an open playing field for European nations. This brought rich new materials and ideas back from the new world, gave Europeans somewhere to go, and work, and helped fuel the development of modern western civilisations. Led by Japan, China, India and other Asian nations are now following this lead and are building their own versions of a modern civilization.
Other less tangible but clearly beneficial forms of work includes the activity of our medical experts and practitioners. They keep most of us alive for longer, enabling us to get on with whatever it is we do. In an economic sense death and disability is quite wasteful, especially when we lose a person with a rare skill or knowledge before they have had a chance to pass this on to others.
The first law states that economic wealth is the product of useful work and that the two are fundamentally and inextricably linked. Our society and civilisation is sustained by farms and factories, trucks and ships to transport the products we need, roads and bridges and harbours, market places for exchange, and homes for us to go to and shelter in comfort at the end of our days or nights of work. None of this happens by random acts of nature and nature itself often acts to undo much of the work and wealth. But, the busy bee hive of humanity keeps putting it back together again - it's what we are wont to do.
The full list of useful work and true economic wealth is a very interesting question. I will leave this for dinner table and café discussion but pose some riddles for you all to ponder: Where in this vast array of human endeavour and economic work do lawyers sit? What economic wealth was created with the Pyramids? Does a ship that sails the harbour with rich fops aboard sipping cocktails represent economic wealth? What is so important about the moon that we need to go there - more than once?
For those now wondering what the hell all this has to do with the dairy industry you can be satisfied in the knowledge that work and wealth associated with efficient and reliable food production is a core requirement in the growth and sustainability of all civilisations. We all must eat and if the process of producing and distributing food is cheap and easy then that leaves us with lots of time to do whatever else it is that we feel compelled to do.
And cows are a wonderful economic engine! Well at least for those of us that are not of a vegan persuasion. The protein, fat, carbohydrate, and other nutrients in milk are almost a complete diet - not quite as good as our mother's but that alternative is not exactly a practical ongoing option. The cow continues to convert grass and grain into milk 10 months a year. The cow then gives birth to a calf (ideally) and that calf in turn goes on to become a cow, or the sire of a cow, or meat on our table. This system is a very effective and sustainable means of producing lots of protein and fat (which is highly nutritious but very difficult to produce) from fibre and other carbohydrates (which is very easy to produce but not so nutritious).
Like roads and bridges the modern dairy industry is part of the wealth of nations, and if it wasn't, Japan wouldn't spend so much of their economic wealth to keep it intact and China and other developing nations wouldn't be working so hard to build a dairy industry. It's not just about ice creams on a hot day and sipping cappuccinos in the piazza.
For those that get up at 5am to milk cows, or work in factories day and night, or pick up and deliver the milk, or dream of a new dairy process, or lead a large dairy company, there is and should be great satisfaction in this - albeit that holding on to the wealth created is a tricky thing with bankers, and shareholders, and entrepreneurs, and retailers, and all manner of knaves and opportunists riding on the back of the cow.
But I won't start on the issues of ownership and wealth transfer. This treatise is about the foundation stones of economics, not the many and various characters and concepts that dance in the halls created.
In my next article I will present Xcheque's Second Law of economic gravity. This law helps us to understand how and why there is ongoing change to the nature of work and economic wealth and, in part, why wealth moves from person to person and place to place. It is the second law that takes us from subsistence as hunter gatherers and propels us forward into a brave new world.