Yeah, I’ve heard demolition of LTV does wonders. Also the division of labor. Jeffrey Tucker’s link doesn’t work, so I believe I found the only other place it is posted on the net. And will reproduce here so it doesn’t die [or could he put it up on Mises.org somewhere]. So apologies for the long post. Also class analysis is what I believe got Hans Hoppe - who used to be a Marxist too. [Though I could be wrong on that is what persuaded him]. Anyway, he wrote on Marxist & Austrian Class analysis… rulers vs ruled and it starts off with the Marxists are correct etc.. (so it will get under the Marxists radar a bit..) Fundamentally though, it depends on whether the person is intellectually honest or not. You’re here because you are.
Cooperation: How a Free Market Benefits Everyone
by Jeffrey Tucker
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12/31/09
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The following will explain the most important idea in the history of social analysis. The notion (actually, it’s a description of reality that is all around us but rarely noticed) has been around for many centuries. It was first discovered by late-medieval monks working in Spain. It was given scientific precision in the classical period. It is the basis of advances in social theory in the 20th century.
In fact, it is an essential part of the case for freedom. It was the basis of the belief of our ancestors that they could throw off tyrannical rule and still not have society descend into poverty and chaos. The failure to comprehend this idea is at the very root of the pervasive bias against liberty and free enterprise in our times, on the left and the right.
I speak of the division of labor, also known as the law of comparative advantage or the law of comparative cost, and also known as the law of association. Call it what you will, it is probably the single greatest contribution that economics has made to human understanding.
This law – a law like gravity, not a law like the speed limit – is a description of why people cooperate and the ubiquity of the conditions that lead to this cooperation. If you can take a few minutes to learn it, you will understand how it is that society functions and grows wealthy even without a visible hand directing its path. You will also see how the criticism that the market economy leads to the strong dominating the weak is actually a sham.
This law shows how it is that people can gain, materially and in every other way, by working together rather than working in isolation. They don’t just gain the sense of satisfaction that comes with participation in solidarity with one’s fellow man; they can actually gain in the real stuff of life, the goods and services that are available to us all.
What’s more, they gain more than the sum of their parts. Through cooperation and exchange, we can produce more than if we work in isolation. This applies in the simplest economic settings as well as the most complex ones.
It helps to lay this out more rigorously so that you can observe the magic of the marketplace at work. (I owe the following exposition to Ludwig von Mises in Human Action, Murray Rothbard in “Freedom, Inequality . . .” and, especially, Manuel Ayau’s Not a Zero-Sum Game.)
Let’s say you and I can both make bagels and pies. But there’s a problem: You make both with incredible efficiency. In fact, you do a better job at making bagels and pies than anyone who has ever lived. You are the world-class, all-time champion.
Meanwhile, I’m not so hot at either. My bagels taste as good as yours, but they seem to take me an age to make. My pies are the same way. I struggle and struggle, but try as I might, I just can’t seem to crank them out the way that you can.
What is likely to happen under these conditions? The intuitive answer, which you will hear in just about every sociology class in the country, is that you will make all bagels and pies. No one else will. You will lord it over the rest of us, and have massive market power. If anyone wants either, he or she must come to you and you alone. You are privileged, favored, rich, powerful, and the rest of us can only sit in awe and beg from you.
But in fact, that’s not what happens at all. Let’s back up a bit and see why.
Let’s say you and I have never met, and we are both making bagels and pies. Here is what happens in a 24-hour period: You make 12 bagels in 12 hours, and 6 pies in the remaining 12 hours. I, on the other hand, only manage to make 6 bagels in the first 12 hours, and a mere 2 pies in the remaining 12 hours.
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You
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You
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Me
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Me
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Hours
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12
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12
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12
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12
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Production
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12 bagels
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6 pies
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6 bagels
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2 pies
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Production in Isolation
If we both work at this pace, the total production is 18 bagels and 8 pies.
In each case, the cost of what you decide to do is the thing you give up. So for you the cost of each pie is 2 bagels, and, likewise, the cost of each bagel is 1/2 of a pie. For me, the opportunity cost of making a pie is 3 bagels, and the cost of making a bagel is 1/3 of a pie.
Just looking at this, you might observe that you have your act together, whereas I’m pretty shabby. What chance in life do I have?
Well, my hope is bound up with the reality that your time and resources are scarce and you want ever more of each. So you began to think about exchange. Even though I’m not very good at either pies or bagles, you can still see that you can make more of one thing or the other by encouraging our cooperation, thereby freeing up your time to do what you do best.
If you specialize in making pies, you still need some bagels. So you plan to exchange pies for bagels from me. With this thought in mind, you increase pie production and reduce bagel production. I, on the other hand, stop pie production completely and devote myself to bagel production in hopes of fobbing them off on you.
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You
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You
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Me
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Me
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Hours
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8
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16
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24
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0
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Production
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8 bagels
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8 pies
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12 bagels
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0 pies
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Production with Cooperation
So you now spend a mere 8 hours on bagel-making, in which time you produce 8 bagels; in the remaining 16 hours of your day, you are able to bake 8 pies. Meanwhile, I can now devote all of my time to bagel-making, and I turn out 12 bagels in 24 hours.
Let’s total up the production. Before cooperation: 18 bagels and 8 pies. After cooperation: 20 bagels and 8 pies.
But it’s the only place that has this content online and I don’t want to copy and paste it because it would be huge: