The Third Law of Value

The Third Law of Value states: There must be a balance in the creation and spread of Exchangeable Value in an economy.

This mirrors the Zeroth Law of Thermodynamics that has the concept of thermal equilibrium. This concept does not exist in Economics because profit maximization prevents it. This is why modern economic systems have recurring crashes from the violation of this natural law of value.

In contrast, supereconomic systems are crash-resistant because policymakers know that there exists a natural price and so the system is designed to stay near it.

P = Vl1 + Vl2 + Vl4

• P: Consolidated Price
• Vl1: Nominal Price (Exchangeable Value from Law 1)
• Vl2: Real Price (Exchangeable Value from Law 2)
• Vl4: Market Price (Exchangeable Value from Law 4)

Vl3,t = Vli,t / P

• Vl3: Natural Price over time (Exchangeable Value from Law 3)
• Vli,t: Nominal, Real, and Market Price over time

For example, the table below shows the economy growing by 1 unit each year. But it exposes an imbalance favoring market price at year 3. Thus, even if the consolidated price shows growth, the third law exposes market price as being unnatural – it overfeeds the merchant class and starves the working class.

Year | Total Value of Economy | Nominal | Real | Market 1 | 10 | 3 | 4 | 3 2 | 11 | 3 | 4 | 4 3 | 12 | 2 | 3 | 7

Natural Price: The Balance Between the Three Classes

The Natural Price is the average price that the producer or seller can actually sell his goods or services with ordinary profits for a given period of time. Ordinary profits is the minimum level of profits that the seller will accept yet continue his trade indefinitely. This is subjective (comes as a range) and so it is different from “break-even” which is objective and exact.

The natural price is achieved when the three Laws are balanced.

• The First Law represents the demanders or consumers
• The Second Law represents the suppliers or producers
• The Fourth Law represents the middle men, finance, commerce.
• The Third Law comes before the Fourth Law because the merchants, middlemen, and finance are the most frequent causes of corruption of an economy.

For example:

• the Roman Empire was notorious for debasing its coins
• the colonial governments gained great profits from selling native products without giving back to the colonies
• corporate owners gain by raising shareholder value without giving a corresponding increase in wages
• the globalization of food transfers power from the farmer to the trader, which accordingly has caused food inflation globally

Merchants and master manufacturers employ the largest capitals.. Their thoughts revolve around the interest of their own business, than around the interest of society. The proposal of any new commercial law which comes from them should always be listened to with great precaution. This order generally has an interest to deceive and even oppress the public. They have done so on many occasions.

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Adam Smith The Wealth of Nations, Book 1, Chapter 11

The Usufruct Circular Economy as Alternative to Linear Economy

The profit maximization doctrine causes environmental destruction as it urges humans to make money without feeling for the consequences on the environment.

The country of Bhutan threw away this doctrine. As a result it has 70% forest cover and absorbs more carbon than it emits, preventing the main cause of global warming. But governments do not adopt the Bhutan model because it greatly hampers the pursuit of material utility and modern conveniences.

As a compromise to reduce the damage to the environment, many academics, institutions, and government agencies have embraced the circular economy concept instead. It aims to share, lease, reuse, repair, refurbish and recycle existing materials and products to reduce environmental impact.

We upgrade this into a usufruct circular economy from the Latin “usus et fructus” which means use and enjoyment of fruits. Usufruct is a legal right given to a person or party to temporarily use and derive benefit from someone else’s property.

The great landlords wanted to raise their rents above what their lands could afford. The tenants could agree to this on the condition that they should possess the land until they can recover their cost in improving it, with a profit. The landlord’s expensive vanity made him willing to accept this condition. Hence the origin of long leases.

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Adam Smith The Wealth of Nations, Book 3, Chapter 4

All real property will be leasehold, whether agricultural, commercial, residential, or industrial. This will make the ownership of land dependent on certain conditions such as taking care of it, making it productive yet environmentally sustainable, and using it in line with state policy.

An analogy is the Earth as a ship, and each plot of land is cabin space or crew compartment. The passengers are free to upgrade or change their cabins depending on their changing needs upon approval from the captain. This allows all cabin space to be utilized efficiently while allowing each passenger to live properly.

This paradigm will make more sense after humans discover the technology to defy gravity, which is a focus of Material Superphysics. This will allow easier and cheaper space travel. By then, the human attachment to land will be drastically reduced. Conflicts for land will not make sense when the colonization of so many planets becomes possible.

For now, this idea is most useful for right-of-way issues and ancestral do main wherein private or tribal ownership of land goes against the projects of the state that is meant for the majority benefit. The imposition of conditions means that this is a non-liberal policy. Since those policies are voted on, then it is still democratic, but non-liberal. This is consistent with the regulated democracy that Socrates was advocating in The Republic.

Wealth and Poverty are two causes of the deterioration of the arts. When a potter becomes rich he will grow more and more indolent and careless and become a worse potter. But, on the other hand, if he has no money he cannot work well. Here, then, is a discovery of new evils of wealth and poverty, against which the guardians will have to watch, or they will creep unobserved.

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Socrates The Republic, Book 4

A liberal country can still implement leasehold without imposing any conditions, making no effective changes to private property ownership. Rather, the change is only on changing the mentality from owning to leasing.

The Usufruct Economy applies to goods and services as after-sales support and responsibility. The manufacturers and service providers would pay into a state or NGO-run usufruct system (US).

• For consumer goods, the US will be tasked to collect the packaging and give them back to the manufacturer or recycler.
• For food, it will collect food waste for redistribution or composting.
• For services such as health insurance, the US could monitor the health of the policyholders and remind them of their risk factors. The US would base its decision to pay for treatments on medical data, and points-patterns instead of financial costs. This refers to the person’s life interest rate in Chapter 3 wherein an absolutely lazy person can be denied treatment both in Economics and Supereconomics.

“Herodicus was a sickly trainer. He would have had better health had he been employed and was not idle. In well-ordered states, everyone has an occupation. Not having an occupation causes people to be indolent and sick. This sickness then has to be cured by medicine.”

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Socrates The Republic, Book 3

Taxation in Kind and the Fourth Branch of Government

The system of grain-based valuation mentioned in the First Law will allow people to contribute their goods and services directly to maintain the Usufruct System (US), in addition to their monetary contributions. If the US is run by the government, then such contributions can be thought of as tax payments.

Allowing people to pay in kind to their society will greatly increase revenue for governance purposes. A well-run US will make government shutdowns and budget deficits obsolete.

To ensure that the US runs smoothly, Supereconomics proposes a fourth branch of government as the Resources Branch for both money and moneyless concerns. This will be tasked to implement and maintain the US in the national level. Currently, this takes the form of the Exchequer or Audit Commission and the Budget or Finance Ministry.

In the complete system:

• The Legislative branch defines the budget
• The Executive branch implements the budget
• The Resources branch assigns the actual resources and monitors the use of the budget by the Executive

During the pandemic, many governments did not know where to find suppliers for specific personal protective equipment. The Resources branch solves this. It can also veto the budget if it knows that there are no resources for certain projects. If the state were a family, then the Executive and Legislative are the father, while the Resources and Judicial are the mother.

The Resources Branch will also include semi-state owned corporations that operate in essential industries like public utilities, oil refining, metals processing, healthcare, transportation (including outer space), and grain distribution. These corporations provide the base of a modern economy and operate as not-for-profit, with their running costs defrayed by taxation, their capital managed by a sovereign wealth fund.

“The sovereign’s third and last duty is building and maintaining advantageous public works and institutions for society.”

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Adam Smith The Wealth of Nations, Book 5, Chapter 1

Violations of the 3rd Law

The violations of the 3rd Law lead either to Underregulation or Overregulation which come from ignoring natural prices. Underregulation is common in liberal and neoliberal laissez-faire philosophies, while Overregulation is common in monarchical and Marxist philosophies. Examples are:

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