Collectibles

Harry Pollard

[Reprinted from the Land-Theory online discussion, 11 September, 2003]

When I first noted the parallel between the land market and the general collectible market, I spent some time looking at collectibles. Generally a mint condition is preferable to (say) a scratches, or "dog-earing".

Even in the case of a valuable postage stamp with a printing error - the fact that it is mint increases the value. It's not something that is particularly logical. As you will find if you look at this peculiar aspect of human behavior.

What do you collect?

Two or three decades ago, I was having dinner with David Friedman and a couple of others. David wiped me out on a question of collectible value - which fortunately led me into a study of the collectible market.

At auction, a guy bought an empty Rosalie beer can for $4,000. Before he left the room, he was offered $10,000 for it.

He refused.

I shook my head in bewilderment. "What kind of market is this?" I wondered. This led me to the comparison of collectible market and land market. I found their characteristics were the same.

A couple of years ago, I checked the price of an empty Rosalie beer can. It was $10,250. He should have taken the offer. But, of course, he didn't. He was a collector.

DISTINGUISHING

It's useful to be able to say that the product of Labor's exertion in the hands of the consumer is Wealth.

It's equally useful to be able to say the product of Labor's exertion while it is still in the production process is Capital.

You can also say:

It's useful to be able to say that the product of Labor's exertion in the hands of the consumer is non-Capital Wealth.

It's equally useful to be able to say the product of Labor's exertion while it is still in the production process is Capital-Wealth.

You can also say:

The product of human exertion is Wealth. Wealth in the production process is a sub-set of Wealth called Capital.

However, our science is not a study of consumption. It is a study of production. So, it is a study of Capital rather than Wealth. Our only connection with Wealth comes in the final disposition of the product when it arrives in the hands of Labor, the Capitalist, and the Landholder.

This Wealth may be used to buy groceries, hire a maid, or set up a venture firm. It doesn't matter what people do with the Wealth they acquire. Our interest is in the production of Wealth, not in its consumption.

More importantly, Capital provides another important basic factor in production - time. If "exertion" is the important characteristic of Labor, and "location" the important characteristic of Land, then "time" is the important characteristic of Capital.

As George said:

"The importance in political economy of this principle that all production of wealth requires time as well as labor we shall see later on; but the principle that time is a necessary element in all production we must take into account from the very first."

In the Science of Political Economy the moment human exertion is put to work on Land, the result is Capital and during the time the product is in the production process it remains Capital.

REDUCTION

There is no "reduction" to anything. There is simply Land, Labor, and Capital as the only Factors of production - and their product is Wealth. (I point out those four terms cover everything on earth - for that matter, everything in the universe.