Civilisational Wealth, Economics, Economy 2.0, Thinking Money

Economics for a civilised world – Part 4

Steve Kelsey

The Price Transformer

The price transformer determines how much of the imaginary wealth equates to the concrete value of real wealth. Price is established during a complex process which involves the following elements

  • The real wealth element, intelligence applied to base matter- conventionally defined as the manufacturing cost.
  • Plus the ‘market’ elements
  • The size of the market-  how many people need the product?
  • The perceived need- is the product an essential medicine or a toy?
  • The Supplier premium- is the supply rationed?
  • The Marketing premium- the price premium delivered by various psychological manipulations?
  • The Competitive premium, how dominant is the company manufacturing the real wealth element?
  • The state of the economy.
  • All of the market factors play a dominant part in setting the price to be paid for the wealth ‘on sale’.  They have no direct connection with the real wealth element of the price and some, e.g. the Marketing premium, are purely psychological. 

Today Brand and Marketing often play a controlling role in setting the price to be paid and can be responsible for the significant premiums that can be charged over the real wealth element.

In conventional economics, price is given great significance, defining the value of a product to the consumer. However, price is entirely subjective and breaks any objective link between real wealth and the market. We have seen this systematic mutation of reality before.

“In the end the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality was tacitly denied by their philosophy”

George Orwel 1984

Summary:

  • The Price Transformer establishes the link between real wealth and Imaginary Wealth, money
  • The Transformer function is complex and dominated by subjective factors
  • Price varied widely and can change over time, therefore there is no objectively measurable relationship between Real Wealth and Imaginary Wealth.