Economics IV

 

Everybody Needs Somebody To Love

Everybody needs somebody to love
I'm not afraid to be by myself but I just need somebody to love
All the time

In economics, maybe you need two somebodies.

Economics is a three-party game. There is a buyer, a seller and the goods being exchanged.

It is a mistake to think that you will always be a seller. At some point, every seller will have to be a buyer. (Sometimes you’re the windshield, sometimes you’re the bug.)  If a seller has acquired all of the goods, (or the currency, if that is being used as a medium for the transaction in lieu of some of the goods), has eliminated all of the other sellers, and there are also no buyers, then those goods will have no value. They only have a value if there is a buyer.

Economics thus should not be viewed as a game of domination, where the seller tries to accumulate all of the goods at the expense of the buyer. Eventually the seller may “win,” accumulate all of the goods, eliminate his competing sellers, and all buyers, but in doing so he will have "lost".

If the seller does not try to dominate each buyer, then there will be more buyers and the goods that are accumulated will have a value. It makes no difference whether the accumulation is of goods or the currency that can be exchanged for goods. If there are no other buyers or sellers, then that accumulation is worthless.

There is a reason for the infamous triangle trade. At a minimum it takes three buyers and three sellers to have a set of successful economic transactions. Thus there have to be three participants, parties, for those three transactions. In Transaction One, Party One is the seller, and Party Two is the buyer. In Transaction Two, Party Two is the seller and Party Three is the buyer. In Transaction Three, Party Three is the seller and we have come full circle and Party One is the buyer. If there are only two Parties, and Party Two does not want to buy what Party One is selling, then there is no economic transaction. If there is only one Party, then there is no one with whom to trade, and thus there can be no economic transaction.