Ellis Wyatt: Discourse--Contradictory Assertion?

Karl Nord's picture
Submitted by Karl Nord on Wed, 2009-07-22 00:02

A conversation between Ellis Wyatt and Dagny Taggert about production:

"I'm producing everything I need, I'm working to improve my methods, and every hour I save is an hour added to my life. It used to take me five hours to fill that tank. It now takes three. The two I saved are mine––as pricelessly mine as if I moved my grave two further hours away for every five I've got. It's two hours released from one task, to be invested in another––two more hours in which to work, to grow, to move forward. That's the savings account I'm hoarding. Is there any sort of safety vault that could protect this account in the outside world?"[Ellis Wyatt]

"But what space do you have for moving forward? Where's your market?"[Dagny Taggert]

He chuckled. "Market? I now work for use, not for profit––my use, not the looters' profit. Only those who add to my life, not those who devour it, are my market. Only those who produce, not those who consume, can ever be anybody's market. I deal with the life-givers, not the cannibals. If my oil takes less effort to produce, I ask less of the men to whom I trade it for the things I need. I add an extra span of time to their lives with every gallon of my oil that they burn. And since they're men like me, they keep inventing faster ways to make the things they make––so every one of them grants me an added minute, hour or day with the bread I buy from them, with the clothes, the lumber, the metal"––he glanced at Galt––"an added year with every month of electricity I purchase. that's our market and that's how it works for us––but that was not the way it worked in the outer world. Down what drain they poured out there, our days, our lives and our energy? Into what bottomless, futureless sewer of the unpaid-for? Here, we trade achievements, not failures––values, not needs. We're free of one another, yet we all grow together. Wealth, Dagny? What greater wealth is there than to own your life and to spend it on growing? Every living thing must grow. It can't stand still. It must grow or perish."[Ellis Wyatt]

Questions about things I didn't understand: What is meant by my use? What is the looters' profit? What is adding to a life?

Discourse:

Successful Min/Max is: Producing More, or Producing Faster, i.e., spending more time on a given task or improving the efficiency of the work done upon that task.

Ellis Wyatt: Min/Max = Less effort > Lower market price.

Result: 1. Ellis gets an initial time profit, and sets the price of the product lower. 2. Ellis holds a smaller amount of goods exchanged as was held previously, because he is offering it for less; Ellis has less income available per unit sold. 3. Ellis is making less money. 4. Improved production = Less available capital. 5. Is there any incentive for Ellis Wyatt to set the price lower?

Mainstream Economic Practice: Min/Max = Less effort > Parallel market price unless competition initiates a price war.

Result: 1. One gets a time profit, and the price of the product holds still. 2.One holds the same amount of goods exchanged as was held previously.

Contradictory Assertion: In this case, Ellis Wyatt, Ayn Rand, holds that you shouldn't be paid more for increased production in this case. Elsewhere, Atlas Shurgged, Ayn Rand, asserts that one should benifite from increased production.

>>Can somone help me with this?


( categories: )

What good is improved production?

Ptgymatic's picture

Your numbered analyses make assumptions, such as that Ellis would pass on exactly the lower cost his improved production created, that are arbitrary. It might work that way, or it could work differently, as I described before. There's no point in creating arbitrary scenarios.

If I read between the lines, you might be arguing that IF Ellis passed all the benefits along to his customers, including the savings represented by time, he would be acting altruistically. Is that right?

Mindy

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Karl Nord's picture

Obvious to whom? I answered, to me. Your points were not self-evident to me at the time I wrote the original post or else I probably wouldn't have written it; they could not have been obvious. Thus, the phrase "Some obvious points" implied an expecation to knowledge greater than what I possessed and would be out of order.

In the case that "the obvious" was in regard to your thinking process, my responses ["No one is born omnipotent. By what standard of observation is it obvious to you? By what process? How can I understand your points as obvious? And why is that standard of obviousness valuable? ] do not apply.

I followed the former rather than the latter, and in the case you fall your remark entitled the latter I am at fault. A fun question: what should I expect from another person in an online forum? (Keeping in mind that I made that decision on a SOL level and not a conceptual one.) Excuse me, this is my first post in this forum and I have not developed a generalized set of forum-specific expectations.

"I hope my points don't require your "acquiescence," as to being obvious, but explain themselves. If not, let me know." I certainly will, likewise with me.

Smiling

What is "normal, healthy demand?"

"How do you conclude that Rand holds that men should not profit from an improvement?"

Thats not what I said.

"In this case, Ellis Wyatt, Ayn Rand, holds that you shouldn't be paid more for increased production."

Each man gains his own personal benifite, e.g., Ellis Wyatt has more oil for his own use.

The version is society is different.

If improved production does not cause a person to increase his/her profit margin, then that person does not gain any financial advantage in introducing his improvement into the market place, except as a gift to his neighbors which might inadvertently benifite him if they share their improvements as well.

I'll restate my initial idea with corrections gained from the conversation.

Discourse:

Successful Min/Max is: Producing More, or Producing Faster, i.e., spending more time on a given task or improving the efficiency of the work done upon that task.

Ellis Wyatt: Min/Max = Less effort exerted > Lower market price.

Result: 1. Ellis gets an initial time profit, and sets the price of the product lower in equivalence with the improvement. 2. Profit stays the same. 3. Ellis is making the same amount of money. 4. Improved production = No trading difference. 5. Is there any incentive for Ellis Wyatt to set the price lower?

Mainstream Economic Practice: Min/Max = Less effort > Parallel market price unless competition initiates a price war.

Result: 1. One gets a time profit, and the price of the product holds still. 2. One gains the amount one improved upon in one's production as a buying and selling profit. 3. One makes more money for an industrial improvement.

Restated: If improved production does not cause a person to increase his/her profit margin, then that person does not gain any financial advantage in introducing his improvement into the market place, except as a gift to his neighbors which might inadvertently benifite him if they share their improvements as well.

OK, not so obvious

Ptgymatic's picture

I did not mean to seem in any way diminishing to you, I just was going to make those couple of points without going into everything involved in your post.

I hope my points don't require your "acquiescence," as to being obvious, but explain themselves. If not, let me know.

Ellis's economic situation should be taken at face value, which does not mention slow markets, etc. Normal, healthy demand is assumed.

About your statement that you confused profit with "amount of capital necessary to produce the product," that is a very complicated comparison. Profit ought to include overhead costs, that is, to automatically add them to the cost to produce the product, but if you get technical, there are operating costs and there are capital investment costs, and the day-to-day costs of raw materials will vary, so I myself would stay away from--I'm not capable of making the detailed analysis for--technical classifications.

My point was that lowering his price doesn't logically entail a change in his profit picture. His profit might have been so large that even lowering his price leaves some profit, which might be as desirable as a higher profit for several reasons. The straight-forward interpretation is that he passess the savings along in the lowered price, which would not lower his profit margin at all. I'm not the person to map out all the business and accounting possibilities, there are very many, even including taxes!

"Adding to one's life" includes any enhancement of the enterprise of living qua man. Brilliant old Franklin said to empty your pocketbook into your head (books, education) and you'd never be poor (rough quote!) If Ellis speeds up production, he has time to invest in other things. Imagine you could do a day's work in two hours. How many salaries could you pull in?

How do you conclude that Rand holds that men should not profit from an improvement?

Mindy

Jeff: (!) Mindy: "Some

Karl Nord's picture

Jeff: (!)

Mindy:

"Some obvious points..."

No one is born omnipotent. By what standard of observation is it obvious to you? By what process? How can I understand your points as obvious? And why is that standard of obviousness valuable?

"He probably sells more, as the lower price would attract new customers..."

By your own acknowledgement: dot dot dot. = We cannot know; the demand for oil might be very high or very low.

"If my oil takes less effort to produce, I ask less of the men to whom I trade it for the things I need."

Less effort = An improved efficiency = More free time in the day. * (Point of argeement)

"It is not warranted to conclude that Ellis has less income per unit sold. It costs him less, and he charges less, but his profit may remain the same, or even be higher. So, he is not making less money, or, he may be making less money, but in significantly less time, so that that time is free to make money in another way."

Thank you, I mistakenly mixed profit with the amount of capital necessary to produce the product, as contributing to how much money is made. He reduces the price in accordance with the cost of processing of the neccessary materials, but this does not have anything to do with the profit margin in this case.*(Correction) Is this correct?

What determines the profit margin within the price of a product?

Use/Profit Reference

Jeff Perren's picture

"I now work for use, not for profit"

Rand is making a sly reference to the Marxist ethical proposition that one should work for use, not for profit. She is taking that false dichotomy - common in her day (and not exactly unknown now) - and, in a clever way, shoving it back in the Marxists' faces.

Some obvious points...

Ptgymatic's picture

When you say that "Ellis holds a smaller amount of goods exchanged as was held previously, because he is offering it for less;" you are mis-stating Ellis. He sells as much, but for less. He probably sells more, as the lower price would attract new customers...

It is not warranted to conclude that Ellis has less income per unit sold. It costs him less, and he charges less, but his profit may remain the same, or even be higher. So, he is not making less money, or, he may be making less money, but in significantly less time, so that that time is free to make money in another way.

Mindy

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