The Ultimate Goal of Production

Actions are undertaken to get results, by whatever word they may be called (goals, ends, aims, objectives, etc.).  And strictly speaking, the goal of any action always involves the relief from uneasiness (whether we are seeking to react to a problem or pursue something that would make us contented is incidental - we are less happy than we would like to be).

Actions are also limited by the means to act - the resources and capabilities that are available to be employed in pursuit of any goal.  The world is filled with "things" that serve no purpose until they are needed, but are maintained in case a need for them should arise.   In economic terms, it is the potential of a thing to serve as the means to accomplish a goal that causes it to have value.

However, there is no objective standard of value.   To suggest that a thing has a value is to suppose the value of the end to which it serves as a means.  The value is not the same for all, but is determined by each person's subjective assessment, which is based more on belief than upon fact.  The value of a transaction is the coincidence of the subjective assessments of buyer and seller, and there is no external means of declaring an arbitrary price to be fair to all.

It is unfortunate that it has become customary in economics to refer to physical things as "goods" as the "good" that they do pertains to service to a need in which they are merely the means.   That is, improvement of the conditions of human welfare is a good, thing such as food and clothing are the means by which that end is achieved.

There is also the chain of production by which a good delivers the outcome.   We recognize that a consumer good succeeds or doing so (a coat provides warmth to the consumer) but often overlook that the chain of production (raising sheep, shearing wool, spinning thread, weaving cloth, cutting a coat) are all incremental steps by which a means is fashioned to be serviceable to its ultimate end.

And so it follows that the ultimate end determines the value of the means: how much a coat is worth depends on the value of warmth to the consumer.  The cost of providing a coat is apportioned among the various producers of material along the way, each according to the part they play in the production of the consumer good, and the total amount shared among the cooperating parties cannot be greater than the ultimate value to the consumer.  Although it must be considered that while it is possible for one firm to take a loss to improve the profit of others, this is not sustainable practice.

An economic good is not necessarily embodied in a tangible thing, as the goals of the consumer may be met by services provided by others - it is merely in the arrangement of labor and materials that makes it seem otherwise.  Whether a customer purchases a ready-made coat from a tailor or merely pays the tailor to sew cloth the customer provides to him, the goal is the same.