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Saturday, 15 April 2017

The importance of QUONS

In my book NO CONFIDENCE: The Brexit Vote and Economics I stress the importance of differentiating between assets of four kinds. Assets are material and immaterial things that people seek to acquire and to retain, which in common parlance are assumed to have 'value' to them.

I point to four significantly different categories of assets:
KEYNS: immaterial things like the ownership of land. Many such things are represented on deeds or certificates, but these are just tokens. Substantively, they are all legally enforceable 'rights'.

MARCOMS are material commodities that are brought to market and offered for sale in competition with similar produce from other providers. Free competition between providers ensures that they must provide their wares at a price that covers their costs in getting the product to market; but no provider is able to demand that the customers give them any 'excess profit'. because the customers will simply use suppliers who do not  charge that excess, and the 'profiteer' will not be able to sell his/her stock.

QUONS are material goods, and services, where the seller can charge more than the material cost of providing the visible components of the produce because it is sold with the cachet of a brand name which the customer recognises as a guarantee of quality. Products and services that are provided with the protection of a patent are also quons: the law prevents other suppliers using the intellectual property that is the exclusive property of the patentee. Copyright is similarly protected.

JEVS are material objects that are priced exclusively on the basis of what a buyer will pay for them on the day they are offered. The scarcest jevs, such as famous works of art, are offered for sale by public auction.

In a free market economy, marcoms are sold in direct competition with those from other suppliers and competition can drive prices down towards the cost of production. Quons are sold with the implicit intellectual property incorporated, and open competition between suppliers is therefore prevented.

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