Economics

[ad]I have followed the discussion on the Federal Reserve lately, not only how it is meddling with the currency and thereby trying to push the market in one direction or another. My interest has been mainly in the arguments for and against “the Fed,” i.e. reasons it exists and results of its existence (and meddling).

The proponents of a central bank claim there is a general need for a centralized power to create stability in the market and counteract the boom and bust cycles that we’re experiencing. The proponents of a market freed from a central bank claim the exact opposite: that the Fed through its meddling with the currency and interest rates create the boom and bust cycles. So how are we to find out which of these parties has got this right and which is utterly confused?

One way is to think about it for a minute or two. It isn’t too hard to realize what underlying philosophies make people take these two positions. In the former case, the market itself is unstable and needs to be corrected. So it is saying that there is some kind of friction or instability in the market that it cannot sort out itself, and therefore we need political instruments to take care of it. Sounds like a reasonable conclusion given that the premises are correct.

So let’s have a look at the premises. Why does the market fluctuate in big wave-like motions up and down, in which everybody frantically collectively buy everything or sell everything? Marx claimed it was the underlying contradiction in capitalism that caused these booms and busts. Because of oppression and the ongoing class conflict between the propertied and unpropertied (proletarian) classes there is tension, and the exploitation of labor workers makes capitalists literally go “wild,” which in turn makes the market unstable. (This is a very simplified version of Marxian business cycle theory, of course.)

What these booms and busts really mean is that people tend to act “like one” and therefore when someone starts buying everybody starts buying – and when someone starts selling everybody starts selling. This might seem intuitive, but since we know everybody in the market is trying to make a profit this simply cannot be the case. There are panics, of course, when the market is already going up or down very rapidly. When you realize something strange is going on and that you are about to lose all your money, you might panic. But that still doesn’t explain why the market goes down before people panic.

Let’s think about it, when the market is going up at a modest rate, why in the world would a lot of people suddenly sell all they have and leave the market? If the market is going up we would of course have some people selling to realize their profits, but there is no reason to not invest more or stay in the market with some investments when it is going up. It simply doesn’t make sense for everybody to collectively sell everything they have and put the money in a bank account instead of taking advantage of the economic growth.

The same thing is true for the opposite situation. In a market with falling indexes there is no reason for everybody to collectively and suddenly start buying and thereby change the direction of how the market develops. If people really did collectively make a decision – wouldn’t we know of it? Wouldn’t we have a huge information problem to solve first? And if everybody follows a leader, wouldn’t we know who that leader is? Wouldn’t we be able to identify him or her? (After all, we are parts of the market.)

No one working in the financial markets will tell you they are but sheep following a leader or that they are acting collectively on some kind of invisible command. They might tell you that they could panic in certain situations and at that time act like sheep or follow someone’s lead. But then we’re back at the same problem again: the panic doesn’t arise out of thin air, it is caused by something – and it is usually caused by drastic change in the markets. Now, if everybody is acting on drastic change – where the hell does the change come from? “The market,” after all, is but an abstraction of all the people and transactions out there – drastic change cannot happen in the market before people act [on it], because such a change is the result of their actions.

This cause of the problem is what Marx tried to explain with the “inherent contradiction” in capitalism, even though I don’t think he did a very good job (at least not if this theory is applied to the concept of the market in general). However, most people working in the financial markets have adopted this Marxian view of what they are doing. This is evident from how they view the Federal Reserve: most financial analysts claim, and they do so sincerely, that the Fed is necessary to counteract the booms and busts. So they seem to believe that they aren’t able to trade with each other using reason and acting upon it – they can only act collectively and irrationally, and therefore they are doomed to create these booms and busts.

I doubt anyone working in and with the markets would choose to tell you they are all brainless drones acting collectively without ever thinking of what they are doing. On the contrary, many of them spend most of their time analyzing facts trying to make as fact-based and rational decisions as possible.

Now, even if Marx was wrong – this is surely a contradiction. These people claim there is a need for a centralized power counteracting the effects of their collective and irrational actions in the market place whereas they also claim to invest based on as thorough rational analysis as is possible given the ever existing constraints in supply of time and money. We can only conclude these people are wrong in one of these claims: either they are just trying to cover up their “sheepness” through faking analysis, or they are not normally acting like sheep.

The proponents of a market free from the Fed and its meddling with the currency and interest rates claim there are no natural boom and bust cycles in the market. People do panic when the market suddenly and drastically changes, but these sudden and drastic changes are in turn caused by over- and underinvestment triggered by attempts to artificially make capital cheaper and more expensive through meddling with currency and interest rates. What they are saying (and my use of the word “meddling” should give me a way as one of them) is that the boom and bust cycles were originally caused by the central bank trying to politically increase (politicians hardly ever want to decrease) growth through artificial measures.

They lowered interest rates (the price of capital) to spur investment or printed more money in order to “invest” in wars or welfare systems and other benefits to get re-elected. What would such a shock to the market system result in? The obvious answer is that when the price of capital suddenly and somewhat drastically goes down a lot of business people act on this incentive – they get their hands to this money and make investments they otherwise wouldn’t make. Why wouldn’t they make these investments otherwise? Because they make the investments they can afford, and they choose the ones they believe are most profitable – when the price of capital is artificially lowered they can suddenly afford the more risky and less “safe” investments and do so in order to maximize profits.

You can’t really blame people acting in their own interest and acting as they have always act. The reason they make these extra risky investments is because someone lowered interest rates to a level the market itself doesn’t consider reasonable.

The extra investments cause a boom, of course, since investments increase dramatically. And the extra investments, since they are riskier, tend to be bad investments much more often than the investments that were made with capital at market price. It is also important to realize that this “stimulation” of the market usually is a one-time thing – the state does not have any reason to always keep interest rates low (which is very costly – for everybody), they only do this as a way to win the election.

So what happens when the investments start failing (and a lot of them will)? The market is pushed downward at a rate not possible were it not for the artificially cheap investment capital that a lot of people took advantage of. After having spent all money available on investments people tend to underinvest – they have already invested as much as they dare (even considering the cheaper capital). So they start to cut back, especially when they realize some of the extra investments were in fact not very good. So we have a recoil to the artificial boom – a bust.

How does the state, through the Fed, react to these cycles? Just like they react right now: “oh my god, there is a lot of bad investments out there, a recession is coming – we need to lower interest rates to get the market going again.” Well, this might work a couple of times – but it creates but another boom before another bust, and each time the Fed needs to use more drastic measures (i.e., lower the interest rate more or print even more money) to really change things.

Anybody see an evil circle? Anybody see who’s the culprit? Yep, the Fed.

So we have these two positions, and they both are available in a number of different versions, that either the Fed helps a market that cannot take care of itself or it causes the problems it claims to fix.

One can only ask: how come anyone survived before the Fed was founded in 1913? The history books should be brimful with depressions much worse than the one starting in 1929. After all, in 1929 we had the Fed to save us.

[ad]I have been following the discussions on the economy lately, especially the discussions on the larger TV networks such as CNN. What is striking about the commentary and “analysis” is the total lack of understanding (or should I say ignorance?) for what is going on. Most analysts and experts seem to blame recession for the weakening dollar and inflation in prices, as were it some kind of natural market flaw.

We’re told recession is something that “just happens” in the market; something that we cannot get around and that we cannot really understand. They don’t say the wave-like ups and downs in the market are results of what Marx called inherent conflicts in capitalism, but they sure seem to mean exactly that. The experts don’t know why, but the market seems to go up and down in periods – in general boom and bust cycles.

As gold hits and passes $1,000 per ounce, and oil reaches beyond $110 per barrel, we are destined to see a weakening dollar as a result of the overall recession. The fact that the Fed is frequently pushing out more dollars in the international market system, sometimes as loans and sometimes as alms, to cover the massive costs for the ongoing war in Iraq and Afghanistan, is something that isn’t mentioned at all.

Where does all this money come from? If the Fed decides to offer another loan to the market or hand out treasury bonds, where is the reserve of value from which this money is taken? The sad truth is that there is none, which means any such action by the Fed is adding more of the fiat currency to the market without any kind of value backing.

But judging from the “experts” on TV, I guess the number of dollars “out there” has no effect on the value of the currency. Prices of any goods that have heavily increased supply go down – that is something any economist knows for sure. But this reasoning seems to not affect money. After all, money is money and has nothing to do with other things people trade with?

The falling dollar has in only seven months cost me more than 10% of the value of my annual salary as a Graduate Research Assistant at the University of Missouri measured in my “home currency” Swedish Kronas (see August 15 vs. March 14). This is not because the Krona is unbelievably strong; on the contrary, the Krona is – like any other fiat currency – inflated, but it is so at a much lower rate than the American dollar.

How much has the dollar fallen? (Or, in more correct language: how much poorer have Americans become “thanks” to their politicians?) Let’s have a look at the exchange rate five years ago, on March 14, 2003, about the time when the war began. The dollar has fallen almost 29 % since then as compared to that small, insignificant country‘s fiat currency.

Theoretically, this should mean American products are a helluvalot cheaper now than five years ago, which should be good for exports and for countries importing American goods. So the problem of the dollar shouldn’t be anybody else’s problem.

Even considering that the dollar is a “world currency” (whatever that means), and that a lot of companies and corporations have signed contracts in dollars, shouldn’t affect e.g. European countries too much. At least not in the long term – such losses are nothing but temporary and should therefore be covered by temporary measures or productivity increases.

The reason the world is so closely following what is happening with the dollar exchange rate (but no one is of course asking why this is happening) is that the international system of trade is 100 % political. It is managed by political organizations that enforce political rule; it is traded through political channels with political favors and with politically controlled currencies; and the corporations acting in the system are almost without exception heavily subsidized by “its” country’s political government.

This is the reason politicians around the world are now aiming to collectively save the dollar (link in Swedish). The natural thing to do in a time of crises would of course be to take whatever measures to strengthen one’s own nest, to make sure the “home market” is strong enough to survive a dollar crisis. Which can only be done through massive deregulation and depoliticization of the market (broadly defined). This is, of course, not in the interest of politicians and political power – even though it is definitely in the interest of people and firms everywhere.

Instead of taking advantage of the situation, politicians around the world get together to do what they do best: make things even worse. The dollar is to be saved only so that status quo is unaffected by the problems caused by political meddling with the economy – and this can only be achieved through intervention in support of the dollar.

What we are about to see is therefore a collective effort by politicians worldwide to make their central banks spend enormous amounts of tax payers’ money to buy paper dollars so that the supply in the market is limited (or decreased), which will make the dollar regain some of the illusion of value. This may seem like another one of politicians’ stupid ideas to try to do something about something they are utterly ignorant about.

But let me assure you it is worse than that.

The reason the dollar is crashing is because there is a war going on in Iraq and Afghanistan (and there might soon be another one in Iran). Wars are costly and they certainly cannot be financed through regular taxation – the Iraq war will cost as much as the U.S. federal income tax for two full years according to Nobel prize-winning economist Joseph Stiglitz. It is obvious that such costs cannot fit in the budget; it is also impossible to “temporarily” raise taxes to cover for such costs.

In other words, costs have to be covered in other ways than direct taxation. When a thief cannot steal enough to cover his costs, what does he do? He starts another lucrative business: counterfeiting. The Fed is literally pumping billions of dollars into the market to cover the costs of the war, which causes the dollar to fall. And then politicians all over the world take tax payers’ hard earned money to “rescue” the dollar from collapse.

So when people work hard in Europe and Japan to make a living, their politicians are taking their money and literally sending them to Washington D.C. to be spent on killing more people in Iraq.

What a wonderful world.

Update: The Financial Times is now writing on how non-American central banks will bail out the United States financial problems. They don’t mention what it means, of course, but they report on what is about to happen.

[ad]A cornerstone of government economic policy is to “fight” inflation and make sure we do not have too much of this problem, to make sure we minimize the costs of inflation. This is in a sense why we are taught there is a need for the Federal Reserve: they manage the currency and interest rates in such a way that inflation is kept at a minimum. This is an important task, and that is why the news media so frequently reports on inflation and talks of “inflationary” policies, etc.

But why is inflation a problem? According to the common definition used in the media, in politics, as well as in economics, inflation is an “increase in the price level of goods and services.” It is therefore pretty obvious why inflation is bad for most of us: with higher prices we get less for our hard earned dollars. Indeed, the latter is sometimes made part of the definition: “prices for consumer goods rise, eroding purchasing power” (emph. added).

So we, i.e., all of us, would definitely have an interest in keeping inflation “as low as possible,” or – even better – at zero (if possible). In other words, we should be grateful that we have government and the Federal Reserve to protect us and the economy from inflation, which would make us a lot poorer were it allowed to increase.

It is a well known fact that prices tend to increase. Ask anyone and they know for sure that prices will go up, which makes it better to buy whatever you need now, if you have the funds necessary, rather than wait for later. Especially if you are not sure how much your salary will increase (if at all). In other words, those of us who do have funds could very well become richer through spending than holding on to their money.

So there seems to be a bias in the economy to increase differences in wealth. Those who already have enough funds don’t have to wait for higher prices, and thus get more for their dollars than those of us who don’t have that much money. In other words: if you are rich, you will get richer; if you are poor, you will stay poor.

This is the problem with the capitalist economic system, if you ask any Marxist economist or theorist. The economic system does not only distribute wealth unevenly, it also augments the differences; this is the very basis for exploitation – the rich industrialists are given the opportunity by both the state and the economy to make more money, to get even wealthier, while the poor labor workers’ salaries are literally swallowed by inflation.

And it is conventional wisdom that prices do indeed always go up. Prices of groceries and clothing go up; prices for energy go up; prices for houses as well as rented apartments go up; prices of cars, transportation, and travel go up; prices for health care and education go up. Up, up, up. They don’t ever go down, at least not in the long run. Or do they?

Let’s have a look at an example of a free market, without regulation, and what would happen to prices. Imagine there is a market for goods and that it is at equilibrium (or close to it), so that demand is approximately the same as supply. In other words, prices are set at such a level that there isn’t a great shortage (demand higher than supply) or surplus (supply higher than demand). In other words, the market “works.”

In this market, if relative demand suddenly goes up the prices will follow (upwards). This would also be true if relative supply goes up, which would lead to prices going down to adjust for the increased number of goods in the market that would not be sold if the price was not lowered. Prices may be different in different areas, but the market as a whole (at any level) is somewhat stable in that it “tries” to approach equilibrium. There will thus not be a long time period of constant surplus or shortage; such inefficiencies will be corrected through price changes.

But let us make something clear: such price changes are not the same as constanly increasing (or decreasing) prices. We haven’t gotten that far in the example yet. So far, all we know is that prices fluctuate naturally in a market.

What happens over time? One thing that is for sure is that producers have a great incentive to be efficient, or more importantly: to increase efficiency. Increased efficiency means the products can be offered in the market to a lower price than competitors are able to match, which means increased market share and thus (hopefully) increased profits. Such increased efficiency, which is caused by constant market competition (from existent competitors or probable future such), is largely the same as economic growth.

There should thus be a tendency in the market for these products towards lower prices. Of course, if prices for energy, capital goods, and labor go up, prices might not go down as much. But as long as there are markets for energy and capital goods the prices in these markets would tend to go down as well.

If we assume salaries are kept at a constant level, the purchasing power of each dollar earned would increase. This should mean any consumer with income or funds at hand would be better off waiting for lower prices rather than to purchase the goods immediately. In other words, there is a fundamental market incentive for saving rather than spending, which in turn should put extra pressure on producers and sellers of goods and services to “make” consumers purchase as soon as possible (and therefore also increased competition).

At this point (or sooner), the Marxist would definitely ask about the market for labor – wouldn’t it too tend towards lower prices and thus lower salaries? Well, so far we have only discussed the supply side, companies supply the market with goods and services. These companies are however not suppliers of labor – they are consumers of labor, and therefore companies employing labor workers would bid prices up rather than down. The supply side competes and thereby push salaries down; in this case, labor workers themselves would, through competing for the best employment available, push salaries down. Would labor workers compete to such degree that they would not only accept, but compete for, exploitation level salaries?

In a free market, which is the fundamental assumption in this example, there are no regulations restricting the market in such a way that labor workers are forced to accept employment. Companies compete for labor workers not only with other companies, but also with the possibility of labor workers starting their own businesses (individually or together), making use of their competencies and reaping the full profits. It is very unlikely that a freed market would tend towards a situation where a whole class (if such a thing at all exists in a market) would choose slave labor or exploitative employment.

If this is indeed true, you might ask why not the market for capital goods work the same way – companies are consumers of capital goods. This is true, and I have so far only discussed the supply side of this; there is also a demand side for capital goods competing for consumption in such a way that prices are bid up.

But it is important to understand that a new type of capital good (like a machine), used by an entrepreneur seeking new and more efficient ways of producing some good, is expensive at first – but as soon as the market realizes that there are profits to be earned from adopting the same type of capital goods in production, the market grows and the market therefore generates incentives for increasing efficiency in producing the capital good itself.

(The same is true in the labor market, where unique knowledge in a new market is highly rewarded, whereas relative salaries may go down as this knowledge becomes a common characteristic sought for in the market.)

What we have in such a market is therefore deflation rather than inflation, at least if we assume there is no secret meddling with the currency itself. If the currency used in the market place is stable, actors in the market will see the value of each dollar measured in goods and services go up. In other words: prices go down.

If the market works in such a way that a stable currency is effectively deflated, then the cause of inflation in our contemporary markets must be something other than the market itself. As we have already established, prices do tend to go up and the value of one’s salary, measured in the amount of goods and services it can purchase, is constantly abated.

To understand the inflation from which we suffer, we need first ask: 1. why do prices go up rather than down? and 2. is the currency stable?

The first question can be answered rather easily without having to study the market or the details of it. In our example we assumed a free market without regulation, whereas the real market today is extensively regulated by [at least] three levels of government. The market mechanisms are restricted (if at all allowed) and therefore the market does not function as a market. In other words, the regulated market may not deliver the positive effects expected.

The second question can as easily be answered. No contemporary currencies are stable, partly because they are not fixed in value (through for instance an exchange value set in commodities) and partly because the money supply is constantly increased. In other words: the value of money is based thoroughly on expectations that it will be accepted by sellers of goods and services in the future and that it will retain some or all of its value; and the volume of currency notes (bills and coins) is increased relative to the market estimate of number of products and services already available, which causes a pressure on prices upward. The supply of money without backing in “real” value is in other words increased, while the market has not created a corresponding increase in available goods and services.

Inflation according to the mainstream definition is therefore a product of government-imposed restrictions on how the market functions, while government at the same time is supplying a currency without a real value base that is constantly suffering from an [artificial] increase in supply. The reason inflation is such a problem is thus that the market is not allowed to generate wealth through economic growth to the degree (or even fraction of) it would if left unregulated, and that government is constantly devaluing the currency the market uses. No wonder inflation is a problem – we are getting poorer from not reaping the full profits of our investments (in terms of money, labor, effort, and ideas) while being stripped of the value we have at hand (as currency).

And then government comes to the rescue claiming to fight inflation?

[ad]The radical left generally plays with the thought of a society completely devoid of money and market. According to their reasoning, money is the root of all evil. This is the complete opposite to the view of objectivist philosopher and writer Ayn Rand (read or listen to an excerpt from her magnum opus), but still a view shared by, it seems, a majority of people around the world. Perhaps this is the reason Ayn Rand’s views are considered so radical, even though they are rather “mainstream” among economists.

However, I would say the radical left isn’t as far out as many claim it is. Some of the arguments and aims of this rather communist movement are definitely both ignorant and stupid as well as “evil.” But that does not make the radical left very different from most ideological movements: there are bad ideas (sometimes called dogma) prevalent and even dominant in most traditions of thought.

But the existence of such dogma should not make us throw out the baby with the bath water. No one is infallible or perfect, and thus we should be magnanimous and patient enough to assess the ideas for what they are. We shouldn’t disregard from all mail simply because the carrier in some respects is despicable, so to speak.

Actually, I claim we could learn from the radical left in how we understand and appreciate money. What I am saying here is that it really is the root of evil. But before you panic and appalled vow to never visit this blog again, allow me to explain what I mean and in what sense money is indeed evil.

The left despises wealth as they see it as the fruits of exploitation. Part of this is their insistence to believe in the labor theory of value, a value theory that, to say the least, has some shortcomings. Since wealth is expressed in money and money in turn means power it is a symbol of oppression. As such a symbol it is literally hated by many on the far left.

The power of money is evident since large amounts of money brings the power to e.g. build or shut down factories (thereby creating and destroying jobs), boss people who lack money around, as well as corrupt the minds of those desperately wanting this kind of power. Money, it would seem, is both an instrument and symbol of power, and as such it is reasonable to assume things would be for the better without it.

I tend to agree with this view, but strictly in the light of contemporary corporatist (or fascist, if you will) state society. Money doesn’t have to be evil and it certainly isn’t inherently so, but it definitely is as things are today. The reason for this? The state.

Money is an instrument of oppression simply because it has been monopolized by the state and therefore is no longer a voluntarily accepted market instrument. Wealth as we see it today is hardly ever a result of hard work, ingenuity, and respectable conduct; it is literally never a natural outcome of being at service to the masses. Rather, wealth is the result of not hesitating to use corrupt and utterly immoral measures to become market leader and bar others from offering better and cheaper products: wealth is what you get if you have enough friends in Washington, D.C., and if you manage to play the game of politics masterfully.

Wealth is not a result of masterfully producing products cheaper, faster, and at a higher quality than your competitors. It is a result of producing while using the guns of government to slay or tie the hands of the competition; to legally limit the number of suppliers and producers in the market to perpetuate the privilege of acting as a monopolist (or oligopolist); to maintain a constant flow of cheap labor to exploit; to prevent, block, hinder, and stop any kind of market mechanisms that might arise.

There are of course some exceptions to the rule, but most of them can only come so far. Sooner or later they will need to buy politicians off and call for legal support, if nothing else simply to not let competitors use government against them without a “fight.”

This is the reason we have corporate empires that seem unaffected by time – everything changes, but the corporate empires seem to prevail.

There is however another piece to the puzzle that must not be forgotten. It is definitely not the case that Capital is rotten and makes whatever immoral use of a neutral state they possibly can. The main problem is the system of force in which these corporations and business leaders act: the state.

Money as it is today is not a tool created by Capital in order to exploit labor workers and use the state to protect profits. It is a tool created and used mainly by the state and political power. The reason we see corporations and politics working so tightly together, i.e. in symbiosis, is not an effect of the state desperately trying to stay alive in corporate society. It is quite the opposite.

Controlling money is essential for government: if money is a voluntary, market-based and market-controlled commodity as a means of exchange it sets narrow limits of government influence, authority, and power. In a market with free money government is literally forced to act like any other actor in the market: it would be impossible to constantly mismanage public finances and deceive people as to what degree government controls society. Government would have to tax its subjects the exact amounts it intends to spend, since it would only be possible to borrow so much – and loans would have to be paid back.

Sound, free money would thus effectuate a strictly limited government and a government which would not be able to have a secret agenda. And most of all: such a government would not be able to wage wars unless absolutely necessary. To engage in war the state would have to get the funds like anybody else, i.e., borrow in the free market. Or it could (not like anybody else) tax citizens and make them directly finance murder abroad without being able to deceive them about the intents or real costs.

With a government-controlled money that is not based in real value (such as commodities or precious metals) all such restrictions immediately vaporize. Whenever the state wishes to engage in wars it can simply print more money and thus dilute money supply, which inevitably results in a decrease in the money’s purchasing power and thereby an indirect tax on its users.

Money printing has another effect, knowledge of which is essential to understanding the ingenuity of the money monopoly. The market doesn’t react immediately to the increase in money supply simply because there is no knowledge available on whether and how much money supply has been diluted; there is a “learning curve” to dilution, which means only when the increase in money gets publicly known through the price mechanism (increase in prices to adjust for the increase in the money available) will the full effect of it be seen.

In other words, those who learn about the increase first get to react to it before the market as a whole gains this knowledge. Increasing the money supply, government can thus reward friends and allies while indirectly punish others. With more money printed, government can purchase products from corporations it wishes to support (and even pay excess prices) and these corporations can use that money for profits or spending in a market that does not yet know all money is worth less.

Money, i.e., fiat money, is thus what grants political government its powers and offers a way to constantly let its representatives escape responsibility for their actions. It is thus the root of not only immoral and unmerited wealth – it is the root of all evils government can do (and does) when not being subjected to the laws of the market. It is the root of the system of government that chains us all and makes us slaves to its whims, quirks, and distortions. It is the root of poverty and the class system!

Fiat money and the command money system is what brings State and Capital together in a symbiosis of corruption that enriches those close to power and enslaves those further away. It thus seems money, in the sense of the fiat monetary system, is indeed the root of “all” evil. Such money is the enabler and driver of a corrupt system of power and force that thrives on the subjugation and exploitation of the people.

This kind of money must indeed be abolished, so that free men and women can establish free monies as enablers and drivers of universal prosperity through voluntary exchanges.