Tuesday, December 29, 2009

Defining Production

I was challenged by a friend today to define PRODUCTION versus NON-PRODUCTION. It is an interesting question to answer concisely. There are intertwined value systems which must be touched on in order to reasonably define the concept.

First, we must recognize that Production necessarily involves subjective valuation of output. However, any attempt to define Production in terms of value would require innumerable variables and conditions presented with regard a specific individual. Even then, the individual would need to guess the value he would assign.

Therefore, we have no basis to define or classify Production versus Non-production in terms of value, since value is conditional and subjective. We will, however, touch on the concept of gain versus loss to round out the categories.

Production results from employing your resources to satisfy the needs or wants of yourself or others.

Non-production results from employing someone else’s resources to satisfy the needs or wants of yourself or others.

Note: For additional insight, please review the articles about costless money and wealth transfer.


For example, if a person uses their time to operate an employer’s machine to achieve a certain output, this is productive on the part of both owners. The employee owns his time and the employer owns the machine.

If this activity results in gain, then capital increases. If this activity results in loss, then capital is diminished.

If the owner of capital can afford to continue the activity, and chooses to do so even while generating losses, then production is still occurring and the activity is subjectively worth the cost to the owner of capital.

This subjective value judgment may never change, even if the owner depletes all capital and is forced to cease the activity.

On the other hand, the owner of capital may cease the activity by choice before losing all his capital.

Thus, Production may result in gain or loss, but if loss, the loss will be limited by the capital of the owner.


Non-production is the act of consuming resources to which the consumer has no right.

In order to own a resource, it must be received as a gift, be homesteaded, or be produced.

The only other method of acquiring property is theft.

Therefore, if property one claims ownership to came into one’s possession by theft, fraud, coercion or force, then to the extent that one’s production is dependent on that property, one is a Non-producer.

Suppose 30% of my output (or my receipts which can be exchanged for real property), owes its existence to property which was NOT homesteaded, received as a gift or produced. In that case, I am 30% Non-producer and 100% thief, since being a thief is not a graduated attribute.

Thus, Non-production may result in gain or loss, but if loss, the loss will NOT be limited by the current capital of the owner. The Non-producer will use the system to gain access to additional real property through legalized plunder.

Legalized Plunder

Following are fraudulent methods of wealth transfer which turn Producers into Non-producers of varying degrees.

Costless Money

Here is my view of costless money:

“Costless money production is the founding and enabling tool of stealth oppression, which is a cancer that eventually gives birth to open tyranny. Our ignorance of basic economic principles leaves us viewing effects as causes, while the causes always remain hidden from our mind's eye. We fund our own destruction while blaming each other for the pain caused by an ever present, yet unseen enemy.”

Costless money causes a wealth transfer, which is theft. In addition to the government itself, early users of large quantities of costless new money are prime offenders.

When inflating with costless money, the purpose of inflation is to use NEW MONEY to purchase REAL ASSETS at OLD PRICES, thereby causing a wealth transfer from the people who get the new money last, toward the people who get the new money first.

The poor and people on fixed incomes suffer most. They pay for the wealth transfer to Non-producers through loss of purchasing power.


When taxes are collected from one group and given to another, we take from Producers and give to Non-producers.

Whenever someone gets something he didn’t work for, someone else worked for something he didn’t get.


We are taught regulation protects us from big business. This is a fallacy.

In fact, regulation creates barriers to competition and barriers to entry in the marketplace. Prices are higher than they would otherwise be and quality is lower. This causes a wealth transfer through coercion and through the waste of the consumer’s capital by forcing the consumer to overpay for sub-standard products.


Litigation is a bludgeon used by government and established business to suppress competition. In addition to creating barriers similar to regulation, frivolous litigation wastes resources which could have been used more efficiently, which then increases costs to consumers.


I will discuss this in greater detail another time. There are interesting implications that flow from these categories of Production versus Non-production.

Our liberty and prosperity depend on our understanding private property, honest exchange, production and non-production.

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