Then what was the purpose of all that internal communist propaganda concerning the common good ?

This is also such a crazy statement that comes back very often: one should pay its employees a lot of money, so that they can pay a lot of money for your products

The secret is that you don't want MONEY from your consumers, you want to get *goods and services* from others.  Money is just an intermediate thing.  You produce, because you want to get production from others, not money.  If you can get the production from your labourers for less, then by all means, that's what you should do.  

Imagine: I have material costs of 100.-, I pay 100.- wages, and I have then produced 100 products which I sell for 3.- each, so I make 100.- benefit.

What advantage would I have, by paying 160.- wages, and sell now 20 products more (namely, the 20 products that my employees can buy with their extra salary) ?  Because now, in fact, I have a cost also of 120.

In the end, I will now sell 120 products at 3 each, have a material cost of 120, and pay 160 wages.  My benefit is now 360 - 160 - 120 = 80.

I LOWERED my profit from 100 earlier on to only 80, by paying my workers more so that they come and consume my products and by selling more.

There is nothing to be won by increasing wages for people to consume more.  Because you have to pay the other production factors too (in our case, the "material costs")

I never said that social systems can't work.  The confusion comes maybe because I said that most social engineering is based upon that misunderstanding.  Social engineering.  Wanting to transform the social relationships of humans, like communism or the like.  Wanting people to want other things than their own interest.

I call a monopoly, if it is freely established, and not a privilege of law, simply a way of doing business.  Certainly not corruption.
The only exploitation of labor is when there is slavery, that is, people are forced with the threat of violence, to work.  Any other free agreement to sell labor against something else is business.

If you starve to death, and I propose you a contract where you get one bowl of rice per week if you work 16 hours a day for me, then that's a business proposal.  You're probably better off with it, than without it.  Up to you to decide.  That's business.

Monetary influences on legislation is exactly corruption, because legislation is "supposed to be for the general interest" and clearly people with the privilege to make legislation and supposed to act that way, take personal advantage to adapt legislation to their "customers".
In other words, they're supposed to write law in the general interest, and that's why they got their privilege to write the law, and in fact they are setting up a commercial activity of selling their privilege to their customers who pay for it.  

I consider warlords in Africa as "states".  To me the state is the violence monopolist.  The one with the biggest gun.  If that happens to be a guy on a jeep with a big machine gun, then that guy is now locally "the state".  No matter what they think at the United Nations.  The one pointing a gun at you and telling you what to do, is the state.

So you want to have a tyrant ruling over us to protect us from tyrrany? You realize how nonsense that is?

If people are sheeps they do whatever they want with them. Otherwise a free society will also have rules, its not the wild west, it just that it doesnt have rulers.

I differentiate between corruption and scam.  Corruption, for me, is claiming to work for the general good, while working for your personal advantage against the general good ; or, having received privileges for the general good, and using them for your personal advantage against the general good.  A public function gives power and public means to somebody who is supposed to use that power and those public means in the general interest.  If he uses it against the general interest, and for his personal advantage, then that is corruption for me.

I don't see how you can be corrupt in a free market where nobody received any privileges, any public means, and nobody is supposed to do anything else but to serve his own personal interest.

A scam is simply, and on purpose, not honouring a contract (because you put terms in it which you knew you couldn't or wouldn't honour). 

Selling you some pills that make you 20 years younger, is a scam, because you have no idea how to make such a pill, and no intention to give me one.  You give me something else, and so you don't honour your part of the contract.

I think I explained that in detail before.  
In a "repeated vote" system, you base the others' behavior on their strategy in the "previous" round (that's all you know) and you optimize the outcome for yourself by picking your own optimal strategy GIVEN the strategy of the others. 

If the strategies taken by everybody in the previous game is a Nash equilibrium, then everybody will take the SAME strategy again in the next round.  So everybody's strategy will remain stable throughout successive rounds.

Producers produce what they think (and try to find out) what consumers want to consume. 
The incentive to produce what consumers would desire is so large, that there's a continuous battle for the attention of consumers.  No central planning, who couldn't care less about the consumer's desires, can cope with the incentive of producers wanting to satisfy consumers in a new market.


The problem with voting is that it doesn't cost you much.  You might vote that you want the moon, and eat it too.
The "put your money where your mouth is" is a much more secure way of voting.


The main problem I see with central planning is that it will always be corrupt, and claim to work for the general good, while serving the interests of the central planners, or their cousins.

I'm not talking about free market, I'm talking about your logical error.

I say: "no social system can be stable if it is not a Nash equilibrium".

You answer: "there's no guarantee that you reach a Nash equilibrium, so let's go for a non-Nash equilibrium solution".

There's a logical error here, which I tried to point out with my colorful parachute example.

The logical error is this:

The statement "if a social system is stable, it needs to be a Nash equilibrium"
is not contradicted by a statement like "one might not reach a Nash equilibrium, or there may be many"
But that certainly doesn't imply: if it is NOT a Nash equilibrium, it might be stable.  Indeed, that last statement is forbidden by the theorem that has not been disproved.

It is not because a parachute might not work, that you can save your ass by jumping out of a plane without one.  It is not because a Nash equilibrium might not be reached, that you can find stable social systems which aren't Nash equilibrium.

Your understanding is terrible. Watch an educational video.

https://www.youtube.com/watch?v=94BtOtGVqLw

oh comeon the actors in the economy are not people, they are corporations who cares about thier freedom if such a thing exists?
besides freedom of choice is an illusion

There can be several Nash equilibria.  But there is at least one.  (Nash' theorem).

Initial conditions (and changing conditions !) will determine WHICH equilibrium is reached (hypothetically, in a steady-state situation).  But what is for sure, is that no situation that is NOT a Nash equilibrium, will remain stable.

And you seem to forget that central planning ITSELF is a game, too.  Who is going to be a central planner, and what are you going to do as a potential or actual central planner, IS JUST AS WELL A GAME.  Central planners also optimize their personal gain.

Central banks print it. Most money is actually created by regular banks through loans like you said but most of the money only exists digitally on a computer. If everyone tried to withdraw all their cash the economy would be screwed because there's simply just not enough physical cash by many multiples.

Then I think that you didn't understand the meaning of a Nash equilibrium.  The hypothesis set forward in game theory is that we have non-cooperative individuals who try to optimize their own gain in a rational way each independently, and the question is: what are stable configurations of strategies in such a case.  That is to say: what strategies can be applied, so that no individual has something to gain by NOT adopting it.  Those sets of strategies are then stable against the postulated desire of every individual to rationally improve his situation given his environment.  That's what a Nash equilibrium is.

Any proposed set of strategies that is hence not a Nash equilibrium, means that some individuals would have personal gain if they didn't follow it.  As such it is not stable: there's a serious probability that said individual will NOT adopt the prescribed strategy, or will change from the prescribed strategy to another one when he realises that that is in his personal advantage.

Even Jesus realized the Nash equilibrium


Indeed, the situation: "you can bring a bottle of wine, or a bottle of water, and we will drink the mixture", has a single Nash equilibrium: we all bring water and we drink it !

Although it would maybe have been better that everybody brought wine, and we drank wine, that's the UNSTABLE situation, because indeed, everybody makes the rational decision, that whatever the others bring, if you add a bottle of water instead of adding a bottle of wine, what you will drink in the end will not be very different, and what you will pay (for a bottle of wine, or a bottle of water) will be quite different.  So, whatever the others decide to do, you will be better off bringing water than bringing wine.

Most naive social engineering is based upon not realizing that non-Nash strategies are not stable.  The usual reaction to the discovery of this evident truth is then to be outraged by so much egoism

I'm sorry but YOUR hypothesis was universal empathy.  If you don't have universal empathy, then any non- nash equilibrium will not be stable (that's exactly the idea of a Nash equilibrium: that you do not NEED total cooperation for it to be stable).

A Nash equilibrium is such, that, from the POV of a single individual, there is no incentive to change strategy.  That is, if a single individual changed strategy, and all the others kept their way of doing (the Nash equilibrium), the single individual would lose.  So he won't change strategy.

So in order for a situation to be stable and NOT be a Nash equilibrium, it means that some people would win by changing strategy, but they WON'T because of "empathy".  They would systematically take decisions at their own loss, for the sake of keeping the global solution.  So in order for this situation to remain stable, it would be absolutely necessary that random people suffer from universal empathy.

In other words, in order for your claim to be true (that is, there are stable optimal solutions which are not Nash equilibria), you need to make the hypothesis that random people do suffer from universal empathy.

So no social construction can be stable without being a Nash equilibrium.  However, it will be a Nash equilibrium with a very complex and sophisticated cost function, which will include all of human forms of satisfaction and dissatisfaction, including empathy.  It won't be a "bookkeepers" cost function, with just monetary gain or something.  So it may SEEM that certain situations are stable and nevertheless not a Nash equilibrium, because we don't understand the real cost function.  That's exactly what happened with the real-world prisoners dilemma.  We thought that the cost function was a naive "years of prison", while there's much more that enters it.  In fact, it is essentially unfathomable.  We're back to human action.

I am asking how physical cash specifically enters the economy, not fiat as a whole.

Anyone know?

Yeah  

The point with the mathematical prisoners dilemma is that it is very abstract.  It is as if the ONLY cost/reward is years of prison.  In reality there's a lot more that plays: reputation, revenge, IOU, agreements, ...  Because, if you don't know the other person's decision, you run the risk that the other guy didn't betray you, and that you betrayed him.  If he gets free, or he has friends outside, you might be worse off outside than inside the prison !  So the REAL cost/reward structure in a real prisoners dilemma is much more complicated than in the abstract game.

Empathy is a phenomenon whereby you experience good or bad sensations as a function of what you perceive that SPECIFIC OTHER persons experience.  Empathy is always limited to a small circle of persons (family, friends), and is a phenomenon that can happen or not.

If empathy were universal, no police, no prisons, no laws would be necessary.  After all, each of us would feel much better, knowing that other people would feel better by his actions.  That's obviously not the case.  We would all sit together around the camp fire and sing Youmbala.

If your solution is not a Nash equilibrium, it will simply not be adopted in a non-cooperative game.  So even though it might be Pareto-optimal, it won't work.  As such, the ONLY solutions you should consider, are Nash equilibria, simply because the others are unstable and will not be adopted, or remain adopted.

The prisoners dilemma is indeed the best illustration of that.  The point is that the optimal solution will not be adopted, simply because each individual can improve his situation by changing strategy.  As such, the only Nash equilibrium is not the optimal solution, but it is the only stable solution.

It is the same reason why cartels can't last.

I would say: hoarding can be 2 things: a form of saving, or a form of cornering a market.

This is another argument why "a strategy that is good for an individual" is also a strategy that is good for everybody.  Because otherwise it wouldn't be a Nash equilibrium.