In a post presenting my book titled. “Foundations of personalist economics” which I posted on my site here, I gave one of the trivial examples of the effects of the approach to economic issues represented by economists of the so-called mainstream economics and side currents. It’s an example that speaks of a schizophrenic attitude towards other market participants depending on whether one happens to be a buyer or seller of something to others, such as services. This case is neither the only one nor even a particularly important effect of the classical approach. Nevertheless, here I would like to add an addition to this entry.
This is necessary because someone might reasonably ask why I seem to think it is a mistake to take as an axiom in the mainstream the thesis of the contradiction of interests of large social groups, if every buyer of anything in the market wants to buy it the cheapest, and every seller – to sell it the most expensive? Isn’t this precisely the contradiction of interests? Is it not then logical to transfer to large groups of people what is right and true in relation to individuals? After all, I myself admitted in this post immediately below that it is absolutely rational for every person to strive to satisfy a need with as little effort as possible. In view of this, am I myself not showing signs of a certain schizophrenia?
Yes, indeed I admitted this, but – contrary to appearances – my case does not qualify for a psychiatrist. And that’s because every person who acts in the market whether in the role of seller or in the role of buyer makes a transaction of exchanging what he has for what he receives in return.The buyer of a commodity is a person who has a transaction of exchanging what he has for what he receives in return. The buyer of a commodity (good or service) gives away money in exchange for what he buys, and the seller gives away his commodity in exchange for the money he receives. The seller’s direct aim is to receive the money, and the cost – the goods sold (more precisely, the cost of its manufacture or acquisition from the manufacturer).
The term “immediate aim” is used here intentionally, since neither the purchaser’s acquisition of the goods nor the seller’s receipt of payment is their ultimate aim. The ultimate aim for both the buyer of the good and its seller is to use what each of them has received from the contractor to satisfy some human need of theirs, thus improving their quality of life in the process (more on this in the book).
As an aside: the thesis of mainstream economics that the aim of an entrepreneur is to make money is one that I believe to be false. This, among other things, is one of the many reasons why this book was written, I will return to this on various occasions.
Returning to the main thread, Well, this basic manifestation of the rationality of human action, which is the pursuit of any aim with as little effort and resources as possible, is the most important reason why – as soon as the appropriate conditions for this occurred – exchange emerged as a second way of satisfying those needs for which some material goods are necessary. The first, which is always possible, and in some circumstances is the only one at all, is the acquisition (creation) of goods by the so-called own efforts, i.e. personally, or possibly jointly with other people.
When one does something on one’s own, everyone tries to put only as much effort into acquiring a given good as is necessary. Thus, he acts according to the principle of rationality. And when the possibility of acquiring this good through exchange arises, she uses this method only if she finds that, thanks to this, the amount of effort required to acquire this good through exchange is, in her opinion, less than in the case of acquiring this good independently (on her own). Exactly the same approach is taken by the other party
And since there is an act of exchange (it doesn’t matter whether immediately or after a long negotiation of its terms, i.e. the price), it means that both parties have decided that what they received is worth what they gave in return.
The issue of conflicting interests of the parties to such a transaction is only to set the terms of exchange (price) at a level that satisfies both parties. When an agreement is reached, this contradiction objectively ceases to exist, disappears.
So it is schizophrenic not to aim at the minimum cost, but only to accuse the other party to the transaction of wrongly doing exactly the same thing as me, which only in my case is absolutely right and obvious.
So much for now. Further explanations will follow.