Maybe a better example would be a country getting leveled in a war. All of the money is still there, but now everyone is poor and has no net worth. How does that work?
It seems kind of like losing that amount of money, even though we didn’t?
In: 3475
We can consider the sandwich as part of the upkeep cost of your human body.
If you do not eat, you’ll die, and be unable to work.
Your capacity to work is valuable, and so the sandwich helps maintain your value, the same way that putting fuel in a car can can provide value, despite the fuel being destroyed.
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I have no doubt that your are valuable even when not working, but that is more subjective (or at least *differently* subjective) than what you were asking about ‘net worth’ and so on.
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For our war example, it is possible to lose *value* without losing *money*.
Imagine, for instance, that half of the factories were bombed, and so we have half as many things being made by those factories.
The value is in the goods the factories make (and hence, there is value in the factories for their capacity to make goods).
Bombing the factories did make society poorer (assuming we did benefit from what those factories produced).
We might have just as much money as before though. Maybe the price of those factory goods goes up, so in ‘nominal’ terms we might spend just as much on factory goods, but because the price is ‘inflated’ by the war having destroyed halfthe factories, we are getting less value in ‘real’ terms.
>What’s it called if I buy something like a sandwich, then consume it, and the net worth of society has now shrunk by 1 sandwich?
That’s called an economy.
>Versus buying something that keeps its value.
that’s called an investment.
Money become sandwich, sandwich becomes energy, energy becomes productivity, productivity becomes money, money become sandwich.
There is no such thing as creation or destruction, only transformation.
You purchased a sandwich, so the value contained in the sandwich is still circulating in society in the form of money. It didn’t go away, it just got transmuted. And if you are a worker, consuming the sandwich is a form of productive consumption, because it gives you the energy to produce commodities that contain a greater total amount of value than that sandwich (to ELI5 that last bit, the calories in 1 sandwich could give you the energy to make another 50 sandwiches, which could then each be sold for the same price as the original sandwich – your labor is what creates value). Of course, you could also consume the sandwich unproductively, by using the energy to play video games or something. Still, that wouldn’t change the fact that the value in the sandwich is still out there, circulating as money, and other people are also out there creating more value by making more sandwiches, etc. New value is always entering circulation.
The question about a city being leveled in war is a different issue. See, value (how much money you can exchange a commodity for) is inextricably bound up with *use-value*, an object’s ability to be useful to someone for something. Use-value is based on the physical characteristics of the object. A building is has use-value while it’s standing, because people can live and/or work in it, or use it to store things. Once it’s been bombed to rubble, it has no use-value, and so the value originally contained in it is gone. It can’t be sold for the price of a building, because it can’t do building things. To further illustrate, you bought the sandwich in the first example because it has the use-value to you of nourishing your body. But say that as the guy from the sandwich shop was just about to wrap it up for you, a cockroach fell from the ceiling into your sandwich. Now, it no longer has the use-value of being nutritious, because there’s a potential disease vector in it, and the sandwich guy has to throw it out. The value that’s in it is gone, wasted, because the use-value is gone.
The first problem your 5-year-old world view has is putting a fixed value on things.
Say you buy a sandwich for a dollar.
What is the sandwiches worth?
It is _not_ one dollar – otherwise, if the next guy offered you a dollar for your sandwich, you would sell it to him, because one dollar is one dollar(‘s worth of sandwich), right?
Wrong.
You bought that sandwich, because you valued the sandwich higher than the one dollar.
And the vendor valued the dollar higher than the sandwich, so he sold it to you.
So, What’s the sandwich’s value?
Different people value it differently.
The trade (sandwich for dollar) was a net gain in value for both parties (both gained something they valued higher than what they had before), so, a net gain for society.
You ate the sandwich, which was good for you, giving you energy and joy. Nothing was lost here.
I’m seeing a lot of economists not explaining like your 5.
If you eat a sandwich you haven’t reduced the value of the economy by one sandwich. You’ve invested that sandwich in energy that you can use to be productive or not.
The idea that a war damaged country has all the value still present is the basis of the most misleading thing about what the general public accepts as true. It’s often boiled down to a pie analogy and a war damaged country as your saying is still the same size slice of the pie.
Here’s why that’s wrong. It assumes there’s only one pie. Let’s discover why you already knew there was more than one pie. You assumed the value of the sandwich was lost because you ate it. That’s only true if you invested that energy that in no way benefited you. It was your investment and you do what you like with it. Obviously there’s another sandwich out there.
If you’re saying there’s only finite resources on this planet and that is the pie. Then it doesn’t matter who uses what or when and no one is poor because we are all ingredients in the pie.
Making more pie, how? Pies take ingredients and different pies take different ingredients. It’s up to you to find what has value.
A war damaged country has more potential than a fully functional city. The money is there you have to start making pies. In a fully functional city the pie is getting made at regular and predictable rate and the investment in the pie is low risk. People like low risk, and low effort. This is why the pie seems small. Low risk means low rewards which means low opportunity for more investment. You’ve got an inability to gather ingredients for a new pie.
I would recommend watching the Futurama episode Futurestock. It is a story highlighting the value differences between holding onto stock shares versus a sandwich-heavy portfolio.
TL;DR: [https://www.youtube.com/watch?v=FnGOmYEuXRo](https://www.youtube.com/watch?v=FnGOmYEuXRo) … [https://www.youtube.com/watch?v=EHUtHITYb94](https://www.youtube.com/watch?v=EHUtHITYb94) … https://www.youtube.com/watch?v=kId0WiD69JM
Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose.
Ah but you’re forgetting. The sandwich is actually gone, it’s just been turned into fuel for you body. Which I would argue is more valuable to society then the sandwich was
This is a Marxist way of looking at it but I feel it gets at the common sense intuition the OP is looking for:
When you purchase the sandwich it exits the realm of exchange and enters the realm of consumption, so in one sense it doesn’t matter economically what you do with it because the money has been paid and has entered the economy.
However you also have an economic value, your labour power, which you sell on the open market in exchange for wages. Just as the sandwich can’t exist without bread, which must be factored into its price, your labour power can’t exist without your body, which must be continually replenished with food.
So in a more holistic sense, the value of the sandwich isn’t destroyed when it’s consumed but rather metabolized by your body, nourishing you so you can go to work the next day
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