Nature of Competition: The Peril of Reverse Causation

 

In economics, obtaining a unit of utility is called: a gain, a pleasure or a benefit. A gain is sometimes metaphorically called “having a cake.” On the flipside, losing a unit of utility is called: a loss, a pain or a cost. A cost is often called a price, but we hereinafter reserve the latter for the meaning of “market price” in the currency unit.

             Two millennia and a half ago, Confucius would have said, “There are yin (-) and yang (+). Thou shalt not con-fuse them but fuse them right.” 

Enemies and foes. As the conventional wisdom has it, “We cannot have the cake and eat it, too.” Another: “No pain, no gain.” Still another: There is No Such Thing as a Free Lunch (Milton Friedman). The other: “People Face Trade-off” (Gregory Mankiw).

             Let us take on the metaphor. The cake when eaten renders a special kind of utility, or a benefit. The cake renders another kind of utility or is beneficial to have; after all, the cake is a good possibly to preferably hoard. Apparently, “eating” (+) and “having” (+) are enemies and foes inasmuch they never join forces. They, much like the present and the future, never spend time together, either. So naïve but eating is for a utility now (+) and having is for another later (+). (J.S. Mill says slightly different, to which we come later.) 

Families and friends. No doubt we lose (-) the cake if we eat it (+). Losing a thing pleasant to have (-) is also called costly (-) by the very definition. In other words, a benefit (+) always and everywhere keeps company with a cost (-): the benefit of eating and a cost of losing are families and friends. The two are no more separable than the head and the tail of a coin are.

             When we offer our human power (-) for the sake of working (-) for the purpose of earning income (+), we do not only physically miss (-) but also mentally miss (-) all the leisure time (+) which we may expend together with families and friends (+). For better or for worse, the income (+) and missing the leisure (-) keep company with each other. Where is the “Trade-off between Work and Leisure” as in textbooks? The only feasible answer: We work for fun, that is, for “the purpose of working pleasure” (+).   

Macroeconomic causation. Alas, that’s macroeconomics by conception and subsequent birth. “You guys, work, and work, still work, and yet work for the growth of GDP.” “Go for it, single-mindedly and you’ll get unbounded utilities.” A collateral benefit: Like eating a piece of cake, you can “End This Depression Now.”  

             ??? You’re right: “The income” (+) and “leisure time” (+) are in Trade-off.” On the sidewalk, “eating the cake” and “losing the cake” are together. On the flipside, having the cake and missing the pleasure of eating keep company. “Thou shalt not change partners again.” 

The means to an end. We define the end which is “never constant but it only changes,” to borrow from Heraclitus. Beneficial or costly, the means is defined by the whole situation including our whim. The economic key point: We lose (-) something utile or otherwise useful (-) in return for the marginally but never infinitesimally better (+) we momentarily have in mind (+); we trade out the means (-) in return for an end (+) of the moment. In economics jargon, the means is just “marginally” less beneficial than the end.

             We keep exchanging the useful (-) for a utility (+) while our time in Here lapses. The benefit of life comes at the cost of losing time. C’est la vie! Don’t even think about the antithesis until......

             In all cases, nevertheless, thou shalt not interchange the end and means for the sake of convenience. Convenience is nice to have (+) at Cambridge, but innocent readers elsewhere might suffer (-). Their benefit comes at the cost of some of us? C’mon, there in economics is no such thing as the kind of trade.

             We might always and everywhere get the causality chain correct. The worst of all is of course a reverse causation. We never want a utility for the purpose of a cost. 

            Suppose: People prefer to “demand” the useless money, more or less, be-cause of (-) the interest rate (e.g. Gregory Mankiw)? Well, you’re barking up the wrong tree. Nay, you’re barking down, up at the treetop, glistening or otherwise: the interest is the cause for (+) “liquidity preference” (Lord Keynes in The General Theory, p.163).

             We would better not turn the edge of convenience in reverse. Do when out of Cambridge not as macroeconomists do. And, “the only purpose of production is consumption.” In exactly the same vein, the AS “is of no use to us until” the AD. Please, do not end the depression for the sake of convenience, Sir. Ne le finis pas!

End This Depression Now!