(12 - 15) The Economics Island

Notes on Robinson Crusoe, Chapters 12 through 15:

The Economics Island: Microeconomics, Keynes and Marx.

Usually economists use Robinson’s example to illustrate Microeconomics concepts, and that’s pretty useful, after all Microeconomics tries to understand the human being mindset without considering social / institutional feedback effects over the individual.

That’s probably a very poor definition, but I hope it helps you understand why Robinson is such a lovely character to us economists (so glad I can finally say that!).

The Economics Island, though, makes one wonder about other economists, and how well would their theories fit into this story. Particularly, I wonder, would Marx’s “Commodity Fetishism” or Keynes’ “Liquidity Preference” be related to the book? Maybe I’m way out of line here, but I believe both authors explain quite well this passage:

“ The last thing I found was a secret drawer in the cabin. In that drawer there was some money (…) I smiled to myself when I say this money. ‘O useless stuff!’ I cried. ‘What are you good for now? You are not worth picking up. This little old knife is worth much more. I have no manner of use for you. Lie there, where you are, and go to the bottom’. I was about to leave the cabin when I looked around again. The bright pieces were so pretty that I could not bear to leave them.”

Isn’t this passion for money, even in a situation where it can’t be used, somewhat surprising?

It makes me think about the intrinsic value of money, or how people valuate money independently of the goods that it can buy. Keynes explains why people leave bequest to their children using the intrinsic value of money argument, for instance, and, the very same concept suits pretty well the passage above.

Perhaps Marx’s “Commodity Fetishism” shall be evoked. I would definitely do that if I could.

I suppose this concept is also related to the passage above, but, I’m not sure that I can prove my point, so, let’s just keep that as a hypothesis for now…