The Venus Project: mistakes that advocates make

So there's been an exchange between Stefan Molyneux and Peter Joseph on YouTube lately, and I've been commenting on both videos and communicating with advocates of the Venus Project. In this video, I'll try to correct some of the most important misconceptions held by the Venus Project advocates who I've communicated with online.

So the first one: there is and always will be scarcity, at least as long as there are human desires that remain unfulfilled. Scarcity refers to the situation in which there are too few resources compared to human desires. This leads to a situation in which choices must be made about how to deploy the resources that exist because not all human desires can be satisfied. Currently, there is scarcity, and no matter what technological advances are made, as long as people have unfulfilled desires, scarcity will continue to exist. The science of economics deals with the question of how to allocate scarce resources, and so while there are insufficient resources to satisfy all human desires, economics will be relevant.

The second point: what gets called needs are just wants that are felt particularly strongly. The Venus Project advocates seem to depend heavily on setting up an artificial distinction between needs and wants. In fact, what gets called needs are not qualitatively different from wants. What are typically called needs are really just wants that are widely held and tend to be felt very strongly. The Venus Project advocates regularly talk about needs as if they were qualitatively distinct from wants, and this is an artificial distinction that hinders clear thinking about the issue and leads to other cognitive errors.

Three: money is not evil. So, to begin with, what is money? Money is a commodity that is so widely in demand that eventually it comes to be used as a medium of exchange. Money allows more trade to happen, so as long as scarcity exists— and we have no reason to suppose it will disappear anytime soon— money is useful. Why is this? It's because voluntary trade is a non-zero-sum game. Generally speaking, both partners in a trade benefit. Money allows indirect exchange, which allows more trades to happen. The Venus Project advocates, so far at least, have ignored this beneficial quality of money.

Next thing: money allows prices, which allow profit and loss accounting in the long run. On a free market, the price system directs resources to be used in a way that most closely aligns to the aggregate values of society. How does this happen? When a firm makes a profit, it means that they were able to sell a good at less than it cost to create that good. In other words, they're able to sell a good for less than the cost of the inputs they used to create it. Or, to put it yet another way, profits mean that a firm took resources that society, on aggregate, considered to be of a certain value in terms of meeting human wishes and did something with those resources that resulted in an output that society considered to be of a greater value in terms of meeting human wishes. In this way, profit-making firms create value. Firms that make losses, on the other hand, have wasted resources by transforming them into goods that people value lower than the inputs needed to make those goods.

Number four: the assumption that long-term technological unemployment exists is unwarranted. While there are human desires that remain unfulfilled, there are potential jobs that can be done by people. It's true that automation can displace human labor from a particular kind of job, and that's known as churn. But as long as the people selling labor want to find work, and as long as there are human desires that remain unsatisfied, then human labor, in the long term, can be redeployed towards the satisfaction of increasingly marginal human desires.

Okay, number five: reaching and maintaining a post-scarcity situation depends on overcoming the economic calculation problem. Creation and maintenance of abundance is subject to the economic calculation problem first formulated by Mises. Without prices, there can be no profit and loss accounting, and I explained what that was earlier. Without profit and loss accounting, we cannot know whether a given use of resources is optimal. In other words, we have no way of knowing whether a given use of resources is creating or destroying value.

Six: surveys do not solve the economic calculation problem. The Venus Project advocates seem to believe that it would be possible to achieve optimum allocation of resources based on surveys. They envisage a global survey to establish an inventory of available resources and, as far as I understand it, another survey to establish somehow needs and wants— what they call needs and wants, or more accurately, value scales. I'm going to take issue with the second idea. How could a survey capture a person's value scale? I didn't hear any concrete answers to this from Venus Project advocates, so I'll try to answer for them and talk through the problems of my proposals at least.

So the first thing that comes to mind is perhaps a survey could take the form of a giant list of thousands of goods and services that the answerer would need to somehow arrange in order of descending personal importance. I think this brings us to the next point: surveys cannot feasibly take the dynamic, context-dependent nature of value scales into account. If such a survey of thousands of goods and services could be feasibly conducted, it would at best show the value scale of a person at a particular moment, which would be in the moment or moments that the survey was completed. But value scales are in constant flux. People value a good more or less highly relative to other goods depending on the details of the situation they find themselves in.

So, people value certain goods more highly when the weather is warm. People value goods less highly if their health is suffering. People value certain goods more highly if they acquire a new hobby or if they hear details of new research. People value certain goods less highly if previous experience of that good was disappointing, etc. A person's value scale is not static. So a survey, if it were even conducted every month, would be a very crude way of assessing value scales, far inferior to the price system, which, via profit and loss accounting, constantly conveys information about the changing value scales of consumers.

The next point: surveys cannot feasibly take marginal utility into account. The survey approach also seems to ignore the lesson of marginal utility. Establishing a ranked list indicating how important people rate particular goods has very limited use because we value each additional unit of a homogeneous good less than the previous units. This is because the first units will be used to satisfy our most pressing desires, and subsequent units will be used to satisfy increasingly less pressing desires. To give an example, it's of very little use to learn that I value a pair of shoes more than an orange, for instance, because I value each additional pair of shoes less than the previous pair. In other words, if I already possess three pairs of shoes, I may well value an orange more than an additional pair of shoes.

So far, I've had no suggestion of how a survey method could account for the complexity that marginal utility entails. So, to close with a question for those who believe that surveys could be used to overcome the economic calculation problem: a decision needs to be made about whether a ton of steel should be used in location A to build a more efficient agricultural machine or in location B to extend transport infrastructure. I'd like a Venus Project advocate to explain to me how a survey could be usefully used to help decide this question. If it makes use of a computer program, that's fine, but I want to know exactly what happens with the data from this survey, and I want to know how this survey could be used in a way that's at least as rational with regard to satisfying human desires as the result of a free market with profit-maximizing firms that make use of the information embedded in prices.

Thanks.