Long Pipeline to Effectual Value

The sequence of events between the time of production and the moment of health-generating consumption is extremely important to a society’s well-being. It is therefore summarized in the following figure.

Output losses and satiation
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There are four major leaks in the creation of effectual value: output losses during transportation from the production facility, at outlets such as stores, and in the hands of consumers; and satiation during consumption. Satiation is increased, and effectual value thus reduced, by maldistribution.

The result of the production process is initial potential value, which represents the highest level of potential health before the various leakages begin.

During transportation from the point of production to the point of distribution, various output losses can occur: disappearance at sea, destruction during road accidents, spoilage while outputs are stored, etc.

ENL's treatment of output losses and maldistribution shows how the health potential of outputs can be negated before consumption.

The potential value of the outputs that make it to stores and other outlets is called delivered potential value.

Once the outputs have reached their points of distribution, we have left the realm of production and entered the realm of consumption.1 Any further reductions in achieved health are now assigned to effectual value, not potential value.

Stores can discard outputs or allow perishables to rot. These output losses will decrease effectual value. The outputs that survive will be distributed to consumers, in whose hands output loss can occur through spoilage, discarding, destruction, etc.

The outputs that are left and remain in good shape will then be consumed, and effectual value will result based on the consumer’s degree of satiation, which depends on physiological factors and maldistribution.

One might picture a pipeline running from produced outputs to health. The pipeline has four major leaks: transportation to stores, the stores themselves, consumers, and satiation. A rational economy will plug these leaks to the best of its ability, thus maximizing the benefits ultimately derived from its production efforts.

This maximization entails both physical tasks, such as taking extreme care during transportation and storage, and a key social task: minimizing maldistribution and thus the satiation that inexorably erodes effectual value.

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