The initial discussion of certain economic concepts in To See a World in a 3D Array and an Economy in a Function might not have received the attention they deserve. My criticisms of some existing measures focus on the fact that they are not scientific — that is, models based on them cannot predict, which is a crucial point. Let's delve further into topics like value generation, pricing, and profit within our economic system — capitalism.

Capitalism stands out due to its ability to bring people together for production, and it has two critical features that set it apart from earlier systems.

Firstly, in a capitalist setup, most individuals working do not possess control over the tools and resources used to produce goods. These resources are referred to as the means of production. Instead, they work for wages provided by their employers. On the other hand, those who own the means of production are known as capitalists.

Secondly, unlike in previous societies, the goods and services produced in capitalism are not primarily used by the producers themselves. Instead, they are sold on the market. This shift means that the focus is now on producing for the market rather than producing what is necessary for consumption. This approach gives rise to products known as commodities, and all the components that contribute to their creation are considered capital.

Furthermore, within capitalist markets, there's competition among rival capitalists. While they share the common goal of retaining control over the means of production and extracting wealth from workers, they are also in competition among themselves to gain the largest share of profits and market influence. This rivalry has significant implications for the system's evolution over time, including aspects such as the pursuit of market share and the attention economy.

In our previous discussion, I also mentioned that while the interplay of supply and demand can influence a commodity's price, it lacks the predictability required for an effective model. Another challenge is understanding the factors around which prices fluctuate. This is where the labour theory of value comes in. This theory, initially formulated by influential classical economists and subsequently refined and expanded upon by critics and theorists of political economy, offers an alternative perspective.

To delve into the labour theory of value, it's essential to distinguish between the two distinct types of value inherent in an item.

Firstly, use-value pertains to a commodity's utility — what purpose it serves. For instance, a loaf of bread is useful for consumption, a chair for sitting, and a gun for various functions including potential harm. Use-value materialises only when an item is used or consumed. However, directly comparing the usefulness of different items proves challenging; this is where the other type of value comes into play.

The second type of value is exchange-value, representing the quantity of one commodity that can be exchanged for a given quantity of another. For instance, the exchange of corn and iron involves a third unit of measurement, currency, which serves as a facilitator of exchange in society.

But how do we go about making meaningful comparisons between such diverse items? Keep in mind that our goal is a scientific approach to understanding the world. Consequently, relying on the notion that something is worth whatever someone is willing to pay for it isn't sufficient. Ambiguous concepts won't allow us to comprehensively gauge the complexities of the world and its economies.

Instead of relying on uncertain measures, we can focus on something that applies universally to all commodities: the labour invested in their production. In my article, where I attempt to translate real-world economics into game-like terms, I referred to this concept as "Worker Effort." However, it has a formal name: socially necessary labor time. This term signifies the specific duration of labour required to create an item.

Throughout my professional journey, I've assumed various roles: front-end developer, back-end developer, database designer, system analyst, content manager, salesperson, and more. However, I've never crafted a chair that didn't come from an IKEA package. So, if I were to construct a chair that took me three days, it doesn't automatically imply that my chair is worth more.

The concept of socially necessary labour time pertains to the societal average. It represents the amount of time typically expended under standard conditions, with an average level of skill and intensity. This principle aims to account for variations and arrive at a standardized measure that can be applied across society.

Given our world's division into nation-states, we can analyse them individually to make comparisons and observe how various factors, such as technology, significantly impact the potential output of each worker.

For instance, let's contrast the agricultural industries of India and the United States. In 2008, India had 261.63 million farmworkers operating on 1.8 million square kilometres, while the United States had 2.67 million farmworkers managing 4.14 million square kilometres of land. Notably, the US possesses twice the agricultural land of India, yet it manages to cultivate it with a workforce 98 times smaller. Naturally, this scenario entails numerous other variables to consider. Nonetheless, it's evident that additional factors contribute to the increase in productivity and the reduction of labour requirements within the US.

But can we justly compare the productivity of individuals in India to those in the US? We can do so to a certain extent, primarily to recognise what strategies another country might adopt to enhance their capacity to produce enough for their populace's needs. This recognition aids in establishing their self-sufficiency without heavy reliance on external sources. However, exploring the fairness and implications of such comparisons requires a more in-depth discussion, one that is best reserved for another time.

Regardless of the approach taken, it remains imperative to account for labour beyond just the human component in our calculations. Last time, we explored the following scenario:

In a service such as changing the tyres on a car, the time it takes for the employee to change the tyres will be the Worker Effort. In this example, we're looking at the Business that did the tyre changing using tyres bought from another Business, and not the Business that made the tyre. For each Business, we only consider the Worker Effort of its employees and not the goods or services it has purchased from other Businesses.

Therefore, in constructing a car, the Business sources tyres from another company by purchasing them. Then the Worker Effort that went into creating those tyres does not count for this Business. However, the car will most likely be assembled by other machines that were assembled and are both run and maintained by Workers. Because running them usually requires interaction, often to feed materials to the machines as part of the manufacturing process itself, this counts as Worker Effort. Meanwhile, the latter is covered by Operating Costs.

This illustration highlights the distinction between living labour (embodied in Worker Effort) and dead labour (captured by Material and Operating Costs). As demonstrated, living labour signifies the immediate contribution of workers to the commodity's production. In contrast, dead labour encompasses elements obtained, refined, or created external to the specific production stage under examination.

Throughout history, mass production has significantly enhanced the accessibility of goods, services, and information. The impact is evident in instances like the printing press, which made books and pamphlets attainable to the general public, and the computer plus internet combination, enabling instantaneous global communication.

As automation advances, there's an optimistic outlook on increased production. A surge in supply tends to meet demand more swiftly, leading to potential price reductions. Nonetheless, there's also apprehension regarding the displacement of human labour by automation, potentially leading to job loss. On the flip side, the introduction of technology often creates new jobs linked to its maintenance. All these elements are interconnected and offer insights into the genuine origin of profit.

My intention is to delve into the root of profit and its computation through detailed examples. We'll extend this examination in an upcoming post. For now, let's conclude with a recap of the terms we've explored thus far:

• Commodity: An item or service produced for sale in the market.
• Capital: Resources used to achieve profit, with money becoming capital when invested for profit generation.
• Use-value: The specific utility of a commodity, like consuming bread to satisfy hunger.
• Exchange-value: The ratio at which commodities exchange, determined by their contained value. For instance, corn, iron, and currency.
• Socially necessary labour time: The time needed to produce something using average skills, intensity, techniques, and technology in society.
• Living labour: The workforce employed by capitalists.
• Dead labour: Purchased inputs for production, such as machinery and raw materials.