The Second Law of Value

The First Law of Value introduced Exchangeable Value which is seen as Nominal Price to the Buyer.

The Second Law of Value introduces Real Price which is the Exchangeable Value to the Seller.

It states: “Exchangeable Value goes from areas with high value to areas with low value in order to spread and remove the lack in society.”

We simplify this to: value is created to remove the lack in society.

This also mirrors the First Law of Thermodynamics, known as the law of conservation of energy. It states that energy cannot be created nor destroyed but merely changes forms.

Value is created to remove the lack in society

F = (V↑ - V↓) / E

• F: Flow or Force (such as the force of capital)
• V↑: high value perception
• V↓: low value perception
• E: effort (toil and trouble) – this is the Invisible Hand Function

Economic activity or flow is highest when there is a difference between value-perceptions, and Effort is minimal. We call this difference as “primary arbitrage”.

Economic flow is lowest when there is no difference between value-perceptions, and Effort is high. Effort is naturally lowest if it matches the dharma or purpose of the entity making the effort.

What is Real Value?

Real value is the exchangeable value from the perspective of the producer or seller.

It represents the effort, trouble, hardship, and sentimentalism that is put into the product or service by its owner or seller.

In Economics, this is called cost.

Value Creation from Nothing to Something

The 2nd Law directly addresses the 1st Law which is about everything having relational exchangeable value to a mind.

The mind assigns this value because it has needs and desires that can be addressed by that thing.

• A valuable thing addresses a huge desire
• A low-value thing addresses a small desire
• A worthless thing addresses no desire

The 2nd Law then creates that valueable thing from a non-valuable thing to address that desire.

This can be done by:

• making that value yourself. In this case, the value is self-produced. This leads to the 3rd Law
• getting that value from others. In this case, the value is transported or relayed. This leads to the 4th Law

This leads to a flow of value from the 1st to the 4th Law and back to the 1st.

Supereconomics studies and implements the mechanisms and policies to make this this flow sustainable while spreading value to all.

Without a society, only the 1st and 2nd Laws are needed.

For example, if you are a hungry caveman, then you pick up fruits and berries to address your hunger.

• The hunger is your effective demand of the 1st Law
• The labor of getting fruits is your real effort of the 2nd Law
• You then eat the fruit, as a good for consumption, to address your own demand

In this case, there is no need for a market price (4th Law) or a systemic way for production and trade (3rd Law) such as employing a 3rd party to check if the fruits are safe to eat.

This leads to personal economics or budgeting, instead of the full science of Supereconomics.

The Resulting Concepts from the Second Law

The resulting concepts from the Second Law of Value are:

• The invisible hand of dharma
• The Force of Capital
• Real Prices
• Economic Development
• Primary arbitrage
• Wholesale
• The Philosopher class or cycle

The main concept in the 2nd Law is the real effort in producing goods and services. This is formalized as the Effort Theory of Value which focuses on the Real Price.