Transactions
As a propaedeutic to this section, I would advise rereading Section 7 of the fourth part. Briefly, a value is some aspect of an object that allows you to pursue a goal that you have freely chosen; and one object is more valuable than another insofar as the goal it leads to is more important than the other. A necessity is some aspect of a thing without which a person is dehumanized because it forces him to lack an essential act; and one object is more necessary than another insofar as the lack of its corresponding essential act is more dehumanizing than the other.
Let us first consider the simple transaction of a swap of one object for another.
Here, there are four values or necessities involved. Each person sees the value of what he is giving up and the value of what he is receiving in exchange. For instance, if I swap my apple for your orange, what is the situation? Let us say that I don't like apples, and so my apple's value for me is nil; but the value of the orange is three pears (because I do like pears a little, and if I had any I would give three pears to get your orange; but I wouldn't give four). You also, as it happens, like pears, and you would give up two pears to get my apple (so its value for you in relation to pears is two pears), while you would only give up one pear to get an orange (so its value in pears is one pear).
I am using pears just so that both of us can compare apples and oranges, of course. The first point to note, however, is connected with this: As I said in Chapters 2 and 3 of Section 7 of the fourth part 4.7.2 4.7.3, there is no real value for either the apple, the orange, or the pear; the value of each depends purely and simply on to what extent each object contributes toward goals we have freely set for ourselves.
Now then, when we make the swap, I gain what is for me the equivalent of three pears and give up nothing, because the apple had no value to me at all; and you gain the equivalent of one pear, because you got something that you'd give two pears for and gave up something that you'd give one pear for.
Does this make the swap uneven? No. There is no such thing, really, as an "even swap," because neither person would swap one thing for another if he didn't want the other thing more than the one he was giving up; hence for each of us, the swap is uneven to our advantage.
That is, we both gain by it. It isn't that one gains and one loses; this would only happen if the apple and the orange were somehow possessed of a real value, but the two were not equal. If things have a "true" value, then either the swap is even, in which case it won't take place, or it isn't, in which case one person loses, and so the swap won't take place. Either that, or one of the two is ignorant about the real value of what he is swapping. But there's no such thing as the real value of anything.
There's the children's story of the foolish boy who was taking his mother's cow to market, and on the way exchanged it for a pig, and exchanged the pig for something else and so on and so on, until all he finally had, as I recall, was a lump of butter. The moral was supposed to be that he was stupid and didn't realize the true value of what he had; yet he became happier at each exchange, because he had got rid of something that was burdensome and replaced it with something he wanted more. He was a fool only on the supposition that there was a market that he could have taken the cow to and located someone who was willing to pay him enough money for it that he could buy all of the other things he wanted. Absent the market, what was the problem?
It's really hard to get out of our heads that the market price expresses the "true" value of something; but as I said in the Six Great Myths, this is as much a fairy tale as the tale of the boy going to market. The relative value(1) of something is solely how important the goal it leads to is, and that is subjective, and has no objective basis at all.
The market just adds the complication that someone else might give you something that you find still more valuable in exchange for what you are giving up; and so if you want to maximize the unevenness of the swap, you will shop around and see if you can find someone who has what you want more and values it less than the object you are willing to give to him. But this doesn't make the value itself objective at all, nor does it make the swap anything but uneven in each party's favor.(2)
But it does tell us something interesting about swapping. Since there is no objective value to anything, then you can shop around until you find someone who is willing to give up something you value much more for what you have to offer him. You might find someone who would give you a whole dozen apples for your orange, and instead of getting one apple, you get twelve--and each of you still gains, because your swapping partner has now got something that's worth more to him than twelve apples, and you have something that's worth more to you than an orange.
Conclusion 10: If necessities are not involved, there is nothing morally wrong for each party in a transaction to try to gain as much for himself as possible, looking to what he thinks is the upper limit of the value the other party sets on the object he is exchanging.
You cannot cheat someone when values are all that is involved. I mentioned in Chapter 2 of Section 7 of the fourth part 4.7.2 that the Europeans were not cheating the Indians in buying Manhattan Island for some beads, because in fact the Indians valued the beads more than that piece of land (because they had the whole rest of the continent to roam around in, and they didn't really own it anyway). Undoubtedly, they thought that they were cheating the settlers, and acting more or less like the man who sells the Brooklyn Bridge to the immigrant. The only way you can cheat in a transaction between people involving values is to swap something that isn't what it appears to be (like a radio that doesn't work, for instance).
If, on the other hand, one of the objects swapped is a necessity, the situation changes. Suppose I am sick with scurvy, and the only thing that will keep me from dying is an orange. I not only have the apple, but enough beef in my freezer to last for the next four years, and you happen to know that. You tell me that you don't want the apple, but you'll swap your orange for a three years' supply of beef.
What I would do first is refuse and see if I could find an orange somewhere else; but if I couldn't, then I'd come back and try to make you lower your demand. But if you held out, and particularly if you told me that if I didn't hurry up and agree, you'd find another taker for your orange, I would make the swap.
Why? Because you are handing over to me what is for you a value (the orange), and so you can keep it or give it up as you please, and exchange it for anything you want. I, on the other hand may not morally refuse to acquire it if it is possible for me to do so. If I say, "But I was counting on that meat to get me through the next four years," you could easily reply, "What's the next four years to you if you're dead from scurvy by December? You can always get more meat if you're still alive."
You are acting as if I value my cure of scurvy higher than my supply of meat. But I don't. I need the orange to avoid harm and I value the meat to achieve my goals.(3) When necessities are involved, there are no longer four values in the transaction, but only three: the value of the orange to you, the value of the meat to you, and the value of the meat to me. The "value" of the orange to me is infinite, and cannot be compared with any of the other values in the transaction. Hence, if you had wanted all four years' supply of my beef (instead of, in your mercy, leaving me with some), I would also have made the swap, unless the lack of any beef would have been as deadly as the scurvy you had the cure of.
When the exchange involves a necessity, then, the "upper limit" of what the person will give in exchange for it is the point of greater dehumanization. In fact, in any exchange involving a necessity, the one seeking the necessity never gains from the exchange. In the best case, he swaps something of no value to himself at all, and removes the dehumanization--in which case, he is now at zero. He didn't gain from removing the dehumanization, because he is no better off than he has a right to expect to be as human. If, of course, he swaps something of no value to himself and only lessens the dehumanization, he is a net loser afterwards; it is just that he is less of a loser than he would have been without the transaction. Finally, if he swaps something that has a value to him for the necessity, then he loses whatever goal he can't now attain because of the giving up of the value, and gains nothing from the transaction, because at best he has simply removed the dehumanization due to the lack of the necessity.
Beware of the pseudo-mathematical mentality that considers reduction of a loss a gain. As I have stressed so often, calculating greater and lesser dehumanization is an entirely different process from calculating greater and lesser gain toward one's goals. We have a right not to lack necessities, because lacking them pushes us below the ability to act up to our genetic potential, and as humans we have this genetic potential, which is a power to act; and so lack of a necessity contradicts our nature as human; and as human we have a right not to be a living contradiction. So the person who "gains" a necessity gains nothing at all; he simply now has what he has a right to presuppose that he should have.
From the point of view of the one who lacks the necessity, the one who exchanges it for something of value is threatening him with harm if he does not give up the value for the necessity. It is not a question, for him, of how much better off he will be with the necessity, but how much worse off he will be without it; while the person who is exchanging it as a value is looking to see how much better off he will be for having the value he is exchanging this other value for. He can freely give up the value to get the greater value; the one with the necessity must give up any and all values(4) to get the necessity.
Conclusion 11: Exchanges involving necessities are always to the disadvantage of the one who receives the necessity.
How do we solve this dilemma? The noble way to solve it, of course, is simply to give the person the necessity he lacks, not to exchange it for something. In certain cases, this might even be morally obligatory. If the only thing the other person has to exchange for the necessity is a lesser necessity, then forcing him to make the exchange is to dehumanize him.
On the other hand, for the person who doesn't lack the necessity, what he is swapping is a value for him; and so if he gives it up to the person for whom it is a necessity, then he loses. No damage has been done to him, of course, because the object is a value for him, and if he were damaged by giving it up (i.e. dehumanized), it would by definition be a necessity for him. It is just that he can't achieve some goal he has set for himself, and so must at least temporarily give up that goal.
So he loses if he gives up the value and gets no return, even if he doesn't do himself harm. But since people are self-determining, it is legitimate not to have to engage in transactions where you lose. Hence, the person who is exchanging a value (which happens to be a necessity for the other person) has a right to exchange it for something of equal value to him, so that he doesn't lose by the transaction. But if he exchanges it for something of greater value to himself, then he is in effect forcing the other person to subsidize his gain by the other's being less dehumanized than he was--or he is threatening the other with greater dehumanization unless the other person makes him richer.
That is, the one exchanging the necessity for a value that makes him a net gainer is doing in effect the same thing as a robber who threatens you with death unless you hand over your wallet. All that is, when you look at it, is a transaction where a necessity (not being killed) is exchanged for a value (whatever is in the wallet). The only difference is that the person threatened by the robber is not now dehumanized, and becomes dehumanized if he decides not to make the swap, whereas the person lacking the necessity is already dehumanized, or at least is not going to be directly dehumanized by the action of the swapper. I am thinking of exchanging a gallon of water with someone in the desert who isn't thirsty right now but knows he'll die without it tomorrow. The fact that you won't directly kill him by not giving him the water really makes very little difference; the fact is that without it, he'll be dead; and so you're threatening him with death unless he agrees to the exchange on your terms. Thus, if you ask for more than what makes up for your loss, you are robbing him.
I'm sorry about that, but I don't see how you can escape the logic of it. We have been so brainwashed by our capitalist way of thinking about transactions that we believe that any exchange that is "freely entered into" is an exchange where both gain, or they wouldn't make the exchange. Of course, those who hold this don't think that handing over your wallet to a robber is an exchange freely entered into. But why? After all, he says, "Your money or your life," and gives you a choice, and you freely choose to hand over your wallet in exchange for your life--and so by the logic of capitalism, you gain. "But he was threatening to do you harm if you didn't hand it over!" And the person who refuses to exchange the water you need to stay alive isn't threatening to do you arm if you don't hand over your wallet? Ask the one who needs the water. You can actively harm someone by inaction as well as by action.
Don't get me wrong; I have nothing against capitalism as such. What I am saying is that a capitalism that doesn't recognize that necessities are essentially different from values and which treats transactions involving necessities as if they were the same as transactions involving nothing but values is a capitalism gone blind, which only sees threats on the most superficial level, and so treats cases of robbery as if they were benefactions.
Conclusion 12: A person who is exchanging a necessity for a value has a right to recover the value of what he is giving up, but no more than this.
You will say, "Then why would the exchange take place? The person who is exchanging the necessity is not gaining by it, and so there's no motive to induce him to make the transaction." This is true, if the only motive that a person can have is his own gain (or reduction of his own dehumanization).
But there is the fact that we are all human beings, and we have a moral obligation not to connive in the dehumanization of other human beings. This is what is behind Jesus' statement, "I was hungry and you didn't feed me; I was thirsty and you gave me nothing to drink," when he tells the cursed to depart from him. And the people say, "Master, when did we see you hungry and not feed you?" and he answers, "When you refused to do it to the most insignificant of my brothers and sisters, you refused me."
Do you honestly think that if you are in the desert and you own a well and someone comes up to you and asks for water, you should hold out before you give it to him until he offers you something in exchange that will increase your wealth? If you have any human decency in you at all, you will give him the water even if you lose by it, as long as you're not actively doing yourself harm--because you recognize that if you don't, you are in effect killing him.
Here is the first place, then, where good morals turn out to be good economics too. To give the man his water, or to exchange it for something where you just recover your losses is consistent with the economic realities of the situation. It is only if you assume that values are on the same level as necessities that it makes economic sense to gain by relieving someone else's dehumanization.
It isn't that I am "fixing up" economics by attaching ethical restrictions to it; what I am doing is saying that the economics that allows such transactions is inconsistent economics; it is economics that doesn't recognize what the economic reality is, because it is treating robbery as if it were an ordinary transaction, and is treating a threat of greater loss as if it were a promise of gain.
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Notes
1. That is, its value in comparison with something else of value to a given person.
2. But it does show the foolishness of the boy taking the cow to market, because if he liked butter so much more than the cow, there are other people who would give him a great deal of butter for his cow.
3. Always supposing that I have enough other food so that the lack of meat will also make me sick.
4. Again, supposing that the lack of a great many values does not amount to a dehumanizing deprivation that is greater than the deprivation he is getting out of.