Parable of the fishing tribe

Consider a fishing tribe, who fortuitously find themselves living on the banks of a virgin river.

They are living by spear fishing.  The adults in the group catch enough fish every day to feed themselves and their dependents.  There being no refrigerators, in a day, they catch as much fish as the combined stomachs of the tribe can accomodate in a day.  They have thus two sources of income (that which gives utility) viz. fish and leisure.  The economy is in steady state, with the rate of extraction of fish equal to the rate at which it is consumed.  Growth of population happens over a time scale much larger than the time unit we have chosen (say, a month).

Now we introduce technical change.  Say one guy has an idea (from a dream perhaps) of building a fishing net from the vines of the trees surrounding the tribal settlement.

Now he will have to devote some time while he constructs the fishing net, and will have to be supported while he does so.  This can happen in many ways.

First, he can devote some of his leisure hours to constructing the net, while he still catches his quota of fish for a day.

Second, if all waking hours of the work force are taken up in spear fishing to feed the entire tribe, our net maker can fast for a week while he constructs the net.  This is called “abstinence” by Nassau Senior and other classical economists.

Third, he can be fed by the others in the tribe, while he is constructing the net.  Let us take two cases here:  One, the productivity data is such that all waking hours of the work force are taken up just to produce what the tribe needs to continue its existence and reproduce over time.  Since one guy is dropping out of the workforce, the others will have to make some sacrifice (abstinence) to provide for him while he constructs the net.  Two, there is an increase in production possible if the-work-force-reduced-by-one, works for slightly longer waking hours.  This is a temporary increase in the length of the working day to produce the surplus needed to support our net maker.  Some leisure of the tribe is traded for more fish produced per head of the work force.

Anyhow, however the extra fish are produced, the net maker is allowed to continue with his task of making the net.

He works for a week, at the end of which there is a net.  This is a roundabout means of production.  Time and energy have gone into creating “produced means of production”.  “Produced means of production” in Economics, are also called “Capital”.  Production has become more “capitalistic”.

The tribe discovers that fishing with the net produces more fish per head of the work force.  They can either work less waking hours to remain at the same level of total utility as before when they were spear fishing (and thus enjoy more leisure).  Alternatively, the net maker can say “It was my idea to make the net, and I fasted for it, so all the extra production is mine”.  He gets more fish than he can eat in a day, but it is wasted.

The matter of disposal of the surplus is a tricky one, and will have to wait till another post.

This one was about getting at the meaning of capital.

Advertisements

10 Responses to “Parable of the fishing tribe”

  1. Amit Says:

    just to add clarity on roundabout means of production:

    “Roundaboutness” means postponing production of consumption goods by using labor and raw materials first to produce capital goods, which are then used along with labor and raw materials to pro duce more consumer goods than could have been produced in the first place with labor and raw materials alone.

    Also on abstinence:

    By “abstinence” [is meant] refraining from current consumption in order to accumulate capital, or “intermediate” goods.

    http://www.economictheories.org/2008/12/nassau-senior-capital-and-interest.html

  2. Amit Says:

    So far what I understand in this scenario is that such innovations result in an increase in leisure and the possible valuation of invention as a desirable characteristic among individuals among social groups.

    Though one can also easily imagine resistance and betrayal of an earlier way of life.

    The net maker could be given more projects or burnt at the stake for the introduction of an accursed object that is later considered part of the “natural economy”.

  3. sxray Says:

    @Amit

    Thanks for pulling out the definitions of roundaboutness and abstinence. It will be here for reference, and as a check against wild misinterpretations of the words.

    The point about capital is that it is “dead labour” embodied in the capital goods. This labour has already been paid for (here in terms of fish supplied to the net maker. The rest of his inputs are free or found objects of nature). This dead labour embodied can increase the product for all. But under Capitalism it does not. That is the paradox of capital.

  4. Amit Says:

    If the fish are now termed as capital goods, then the net maker’s labor has resulted in a surplus. How is it you say that his dead labour has bot resulted in the “increase of product for all”.
    Could you please explain?

    Also if living under capitalism, I take the time to develop a web application that allows marketing personnell to collaborate beyond locked-in excel sheets, does that not increase productivity and better reporting for the company?

    So where is the paradox?

  5. sxray Says:

    @Amit

    I have not been perfectly clear in my exposition. I thank you for the feedback. Let me try and explain myself.

    The fish that were advanced to the net maker: They were current consumption goods diverted to other uses. The compression of current consumption necessary, is what the economist calls saving (forced or voluntary). The net maker who ate the fish while he worked was indulging in an act of investment. The fishing net that was produced as a result, was fixed capital. So the sequence is roughly: Savings (abstinence) -> wage fund (working capital) -> Investment (capital combined with living labour) -> Machine (fixed capital).

    There is a problem with using ahistorical models without reference to the “relations of production” that I just now realize. Maybe I can clear up the assumptions in a later post.

    As to the second point in your comment, the operative words here are “for all”. The gains in productivity may be appropriated by a small subset of people. I know I haven’t justified this fully here, but bear with me. This here is pabulum for another post.

  6. sxray Says:

    @Amit

    You say you are working on an invention. You will need to be supported while you work on it. Will you start up your own company and raise money to support yourself until the product goes to market and pays for itself? If you do, you are now a capitalist. The labour you employ will be wage labour.

    The profits from your enterprise will be more, the less you pay your labour. The gains in productivity will be appropriated by you, as profits.

    The model for atomistic capitalism was developed by Adam Smith, writing in 1776 (or thereabouts). Those were the conditions prevailing then.

    Modern capitalism is a mixture of monopoly capital and state capital. This has grown as a logical outcome of atomistic capitalism.

    • Amit Says:

      Ok, I actually tried this a few months back by proposing to a friend that he join me in a relationship of equal profit. Joint partnership working with entrepreneurial drive that would help us approach a better quality of clientele than we are serving.

      In this case, 16 hours of labour would be required over 3 days a week but the commisions and profits would more than suffice and leave time free for the rest of the week for learning, leisure and research.

      Things did not work out exactly between us but I really thought I would end up with significant gains in productivity by combining our skills together and get rid of all superfluity regarding wage labour.

      So doesn’t it make sense to own one’s own labour and share profits? The risk being the cost paid.

    • Amit Says:

      On monopoly and state capital:

      I don’t think I understand how “modern capitalism is a mixture of monopoly capital and state capital”. Wasn’t the historical moment for monopoly and state capital the 17th century when the London merchants and Aristocrats enlisted the favors of the state and royalty to grant the east india company monopoly over over spice trade?

      So basically monopoly capital worked by buying up stocks and holding back sales. That way your competition doesn’t get to sell and you can maintain large stocks of silks, sugar, Swedish copper and whatnot in large warehouses and you can use scarcity as a tactic to force up prices.

      Of course you can also destroy foreign competitors (Dutch and Portuguese) by suddenly flooding the market with European market goods.

      So does modern (contemporary) free market capitalism work by this logic? Government subsidies would seem a weak defense against free speculation of commodities. Hardly monopolistic practice. The pivot of exploitation has changed.

      Would you care to comment?

  7. sxray Says:

    @Amit

    Yea you are right. I just hadn’t thought of it that way. But what we were taught was that industrial organization in seventeenth and eighteenth century in the anglo-saxon west, was a matter of a large number of small capitals competing with one another. Would need data on this to resolve the question. (How many enterprises? How many of them mom-n-pop shops? What size capital?). Haven’t so far seen such data. If you can dig it up it would be great. I will also be on the lookout.

    Yes, the British East India Company was to my knowledge granted an exclusive charter for trade with the Indies. Yes, the Dutch and the Portugese also had their concerns.

    But now the state is democratically constituted. Then there was monarchy. Does this change the nature of considerations at all?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: