A New Principle?

I’m no economist. I don’t have formal training. What I know about economics is from studying with groups and on my own (going through CORE-ECON for instance, which I highly recommend), but also from experiences in the classroom. Teaching is kind of like setting up and managing a tiny society and grades are a kind of money/commoditization of educational work.

I have an idea I want to work out a little more in this vein. It has to do with a formula at the center of capitalism and trying to come up with an alternative based on a teaching experience I had.

Me me me

So far as I understand it, the thumping heart of capitalist economics is a concept that Yanis Varoufakis calls the equimarginal principle. The idea has a bunch of different names depending the textbook you read. I want to give it a more funny and down-to-earth name, and the best I’ve got so far is the me me me formula.

The idea is that every one makes decisions based on what has utility for them, what’s beneficial given the resources available. It says that the reason you do anything is because, if you spent one more second not doing it, it wouldn’t be worth it. Value is therefore at the margins when it comes to the me me me formula: the cost of not doing a thing. You get a certain amount of benefit from not doing a thing. As soon as you benefit from doing it, you do it. As soon as doing it doesn’t benefit you, you stop.

By ‘margin’ economists don’t mean like marginalized peoples, in the sense of excluded or oppressed. Rather, they mean the margins of the accountant’s book: the last column where you see the differences when calculating gains and losses. It’s not a center-periphery concept. It’s a rational calculation concept. By saying value is at the margins, the me me me formula is saying that value is a calculation of gain and loss.

I’ve used this example before, but I finally understood this idea when I thought about my old roommate and how he made tacos. He liked to take corn tortillas and hold them over the open flame on the oven. When I started doing this, I realized that if I held the tortilla over the flame for too long it gets burnt. And it happens quickly. So there’s a point at which holding it for one moment too long means the taco is ruined. When heating up taco shells the benefit to me is at the margins, when I calculate the cost of not removing the tortilla from the open flame.

This is economics remember, so we’re talking about decisions that make a material difference like working, spending, saving, etc. Economists use the formula for individuals, businesses, and whole countries. I’m calling this the ‘me me me’ formula because it’s extremely individualistic and defines value in terms of personal value. But this doesn’t just mean individual people, it means individual entities that exist in group contexts. A big firm makes decisions based on what’s marginally valuable. A country makes decisions makes on what’s marginally valuable. But also individual people when buying stuff, selling stuff, going to school, etc.

The thing is, individualism isn’t a liability for the formula. Capitalists see it as a strength. One of capitalism’s big lies is that everyone collectively benefits in society insofar as individual entities can pursue their self-interest according to the me me me formula. The best way of distributing resources is if everyone can make their own decisions about what benefits them. Thus the ideology of free markets, competition, and individual choice (which sounds like neoliberalism, and it is, but, as someone recently tweeted about, this idea is really as old as neoclassical economics). Economics treats this idea like it’s a natural truth that humans barter, truck, and exchange. The me me me formula, to them, is what it means to be rational.

Ever since I learned about these ideas, I wondered if there were other formulas out there that could supplant the me me me formula. I’ve also been wondering if I maybe figured one out when I was a high school teacher.

Stay with the group

When I was teaching high school and studying classroom discussion, I came upon a formula for assigning number grades during discussion that felt consistent with my socialist values. The formula put every discussion participant in relation to each other and calculated grades based on their distance from the average number of turns taken. If someone took a lot of turns, they’d get points off. If they didn’t take any turns, they’d get points off. People who took the exact average number of turns got 100%.

Could this be the basis for a more cooperative, socialist formula beyond the me me me formula? Trying to think of a name for this idea, I think ‘stay with the group’ is pretty good. The stay with the group formula means that individuals make decisions to do what benefits them, but benefit in this case means doing a thing that’s neither more nor less than the average of what everyone else is doing. Being rational means calculating your distance from the average and trying to get close to that. Value is in the variance rather than the margin. The vision of society here is that everyone benefits when everyone tries to hit that sweet spot to do neither more nor less than everyone else.

Again, I’m not an economist and I don’t have proper training. I’m not sure if someone’s thought of this before or if there are implications of the formula that I’m not thinking of. I’ve applied this formula more systematically to school funding to make a cooperation index for regions of districts in the United States. It works pretty well. But how far could we take this formula? Could it be an alternative anthropology?

It’s probably a hair-brained, delusional thing. I think a lot of people try to do economics by themselves and it doesn’t come to much. I haven’t found many economists to talk about it with, but when I have talked with them about it they usually say “hmm, maybe something’s there.”


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