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? Versus buying something that keeps its value.

Question

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

Answer 1

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