Unjust Pricing.

Prices are initially set to costs, and untooled idleness is raised to 5%. On day 200, tool-1's price is set to an unjust level, and the idleness of man 1, the maker of tool 1, rises to over 200%, while the idleness of the other 5 members of the trading system falls to about 5% or slightly less (which is why untooled idleness was raised to 5%).

Since the most a man can be is 100% idle, 200% idleness appears absurd. What it actually means is that man 1 can be regarded as 100% idle and in addition has one man working full time for him. Since man 1 is simply directing IOU issuers to perform some sort of work for him, it doesn't matter to them what that work actually is. They may be performing his basic work for him, or assisting in the production of tool 1, or they could be fanning him to keep him cool, or building him a palatial house. If there is no useful, time-productive work for them to do, they can be set to work producing luxuries.

The mean increase in idleness in this system is about 34%, so the unjust price of tool 1 should be 1 + 8 x .34 = 3.72. Since untooled idleness is 5%, actual mean idleness is 39%. That means that basic work takes each man 0.41 of a day. Since man 1 makes one tool costing 1 day every 8 days for each of the 6 members of the system, he needs to doe another 6/8 days (0.75) of work to meet demand for tool 1. So the total amount of necessary labour that he can buy in is 0.41 + 0.75 = 1.16 days/day. Yet he can actually buy about 2.05 days of labour/day. So 2.05 - 1.16 days, or 0.89 days of bought labour can be spent on luxuries. Or handed back to the issuers as being surplus to requirement, which would result in man 1 being 100% idle and the rest having their idleness increased by .89/5 or 18%, to about 23%.

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Author: Chris Davis
Last edited: 5 Sep 1998