Thread: The Problem with Free Trade Capitalism

Just take the US. We produce nothing, we import more than we export, and people spend more than they make. Which is why half the population is in debt, and why our country is in debt. The reason the dollar is still worth something is because everyone is so willing to loan us money, and the reason for that is we are floating their economy. They have the labor but that doesn't do anything for them unless we buy their stuff, so they loan us the money and we buy it.

So basicly, they give us money to buy their products, so they can make profit. It doesn't take a genius to figure out theres a flaw there. In the long run there are no winners and losers, everyone is a loser. You can have all the money in the world, but if theres nothing to buy with it, its still worthless.

It seems the way most people want to fix the problem is to plug their ears and go "lalala". I guess it could work, if you figure you will be dead before everything comes crashing down. Which if your older might be a valid point. However its not a very good strategy for the rest of us.

The problem is that McDonalds used to give free sauce for fries. Now you have to pay like 25 eurocent. THAT"s the problem right there >: (

wut?

As long as there are rich, egocentric leaders and a public who can't think for themselves, I don't see how this will ever be solved...

What do you propose, Leo?

The Problem With Leo's Post

In a closed Economic System, there is no money left over for Profit. You see, in modern Consumer Capitalism the only money distributed out for purchases is that money paid out to labor. Well, we know that the first principle of Capitalism is to pay Labor less than it is worth. [/b]

First problem, labor's worth is determined by the market, there is no concrete value of labor that someone can pay less than.

This is where Profits are supposed to arise, from the margin of difference between what Labor is paid and what is charged for Labor’s Value Added Products.[/b]

Only if you group in natural resources, capital resources, and labor all under the word "labor". Profits arise from the difference in expenditures(including labor) and revenues.

But if Labor is one’s only Market, then there is no conceivable avenue from which Profit can arise, as Labor can not pay out more for Product than it was paid to produce that same Product in the first place. That is in a pure closed system. There are ways to play within and around that System – one can expect labor to go into debt to supply an artificial Profit against the future, but such is not to be a lasting solution. So, what eventually happens, within a closed economic system, is that for every Company that makes enough Profit to pay for Usury and Capitalist Luxury, one other Company must collapse into loss and ruin. It is a Win Lose System. History shows that thus far every Civilization had fallen because Civilization cannot sustain upon 1% Winners and 99% Losers, which, as the Rich get Richer and the Poor get Poorer, approximates the final disastrous equations in the Distribution of Wealth.
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I think the solution has something to do with inflation, workers go into debt to buy things then slowly work out of debt as other workers start working and start going into devt to buy things. So I think the profit is dependent on a growing supply of labor and capital(and in some venues naturall resources). The debt is simply a vehicle used to confer the price of the profit onto the next generation of workers who will be more productive due to their increased numbers and greater efficiency(caused by increases in capital goods). This means ever increasing production and ever increasing standards of living. I doubt it necessarily makes the rich richer and poor poorer, that's all dependent on individual investment actions. In the mean time undeveloped nations buy up the debt as they will be the ones producing enough to satisfy profit and usury.

But what happens as we approach the Reality of becoming a One World Economy. We will find ourselves again compressed within the constraints of a Profitless Closed Economic System in which one company’s or region’s success must inevitably be the ruination of some other. [/b]

The undeveloped nations are huge chunks of undeveloped labor resources, before we face a problem of keeping up growth and profit they will have to be equally industrialized. Even then we will have technology to look to to improve productivity.

We are already seeing the effects of this as some Regions of the World, China and India, are growing at 8 or 10%, while the former Capitalist Mainstays are now struggling to quiet the riots resultant from 10 to 20% Unemployment as the Capitalist Losers contract their capacity to pay off the unexpected Winners. [/b]

Those regions are growing because they're starting to use more and more capital goods, they're industrializing. The industrialized countries that are having problems are having problems due to state intervention, the U.S. and much of Western Europe is still growing economically. It's not a win/loss scenario. In the worst case scenario you could simply inflate the money supply to reduce the real value of debt(and consequently of any monetary holdings people have).

It is Ironic that the Northern and Western Powers demanded that the East and the South play a game they were first reluctant to join, but which the East and the South are now apparently most likely to Win in the end. As Capitalism is now designed, the Winning Crown goes to those who can supply the cheapest Labor and Production. We can see where Labor is Cheapest and hardest working, whether willingly or by governmental duress, but in either case the value retains, and it is in the East. Of course now there is even some entirely Labor-less Production, by robotics and automation, which are bound to be the ultimate Capitalist Winners; however, remembering that without any labor at all, there will be no purchasing power at all to buy any such products. So it is that Automated Production must depend entirely upon Export Trade. [/b]

The East and South are going to get richer, but at nobody's expense. They will simply get richer faster than the west, playing catch-up. Of course much of the third world(Africa namely) will simply get left behind due to dismal government policy over there. Where production is automated workers get payed quite a bit and produce more, but more importantly in the West is where the capitalist owners will be, and most westerners will be capitalists to some extent.

As Automation and Robotics eventually replace most or all of Labor, then Distribution of Wealth will have to transfer from Exchange of Labor for Value Added Production, to some mechanism of Exchange or Reward for Social Compliance. As Labor becomes less and less necessary, then People will have to be paid to comply with the Laws and the other Social Programs and other Stated Goals. Of course, the Capitalists still see it as their ultimate end to corner all the wealth of the World into their own few hands – to be the Winners while making all the rest of the World the Losers. Such is a childishly selfish desire, but we have the ruins of 21 former Civilizations to show just how stubborn such childish Aristocrats can be. The Roman Empire for awhile was wise enough to implement its “Bread and Circuses” program, as Slave Labor replaced Free Labor almost completely, the Unemployed Freemen of the Roman Empire were paid off to simply keep the civil peace. Rome finally fell when the Senatorial Class eventually bulked at giving away ‘something for nothing’ and found out much too late that they had all along been paying a reasonable price for Peace and Order. [/b]

As the Industrial cycle goes into its advanced stages there will be highly educated and highly paid laborers, a huge class of capitalists, and probably a class of people who didn't get in on the whole industrial cycle. Their only hope will be becoming capitalists by saving from low wage service jobs or becoming more educated so that they can get paid more and then become capitalists.

Your analysis of Rome simply isn't true. The end came because they couldn't sustain the constant conquests necessary to keep their situation going and had to increase taxes in the provinces. Rome needed a steady supply of slaves and spoils to keep its economy running. It also needed new lands to give to volunteer soldiers, as conquests slowed it had to pay mercenaries from taxes. Enforcing taxation forced Roman soldiers away from the frontiers and eventually the barbarians were able to enter and tear the Empire apart. It was true that much of the tax money went to support the urban poor, and that Rome's necessity to feed them was the expense that brought its downfall. These poor were created by consolidation of smaller farms, famines, and towards the end taxation.

It is also believed that Rome fell because of their drinking pots containing a high percentage of lead, they did not know that lead in the body was bad for you. High rate of abnormal births, death rates increased etc.

I am no expert in economics nor do I claim to know much about the system but I do have a small amount of knowledge based on both insight and documented research. About the whole capitalism aspect of the post, I understand what you are saying about importing more than exporting etc. It is very important to note that China is noted as a communist state and this is simply not true. China is emerging as a capitalist super power with private industrialization. And the fact that we produce less than we import is the simple fact of socialist practices mixed with a capitalist market, more labor rights means more expensive production of goods. What you are saying Leo is right, but your placing of the problem on the capitalist system itself seems wrong fitted. There is also a problem with restricted trade markets with communism and socialism. There are problems in all areas. I don’t really expect capitalism to be the do all save all. I don’t expect a communist market to be productive either. Either way, your argument is well written good job. As for belisarius you sure are giving him a run for his money [pun intended], good points made and taken on both sides.

Originally posted by Belisarius


First problem, labor's worth is determined by the market, there is no concrete value of labor that someone can pay less than.

Actually not. All sorts of modifying factors can be brought into play. Look at how Doctors and Lawyers use licensing to increase their own value.

And, yes, you do have a point, that there is a Minimal Wage under which nobody can work, and that is the BARE SUBSISTENCE WAGE. Ever since Adam Smith, the Capitalist have sought for this absolute wage bottom. It is that wage at which any further decrease would make the laborer too sick and hungry to show up for his 18 hour shift.

But we find that that all that is required to push up the Price of Labor is to simply legistlate in restrictions that would automatically make Labor rarer and scarcer. The Overtime Wage is a good example. Any limits imposed on maximum hours worked would force up the price of labor.

The trick is to get every economy on board. Right now, as it is, every economy is competing in order to arrive as closely to the BARE SUBSISTENCE WAGE as it can without fomenting a disasterous Social Revolution.

But there would be problems with a Universal Fair Wage. The other night CNN ran a story which concluded that if the Chinese were to become as Per Capita Prosperous as those in the West, then the West would be deprived -- forced into sharing the World's resources equally, the West would be sorely disappointed. This would indicate that the sentiment in the West is for the New Manufacturers of the World to retain their Subsistence Wage Structure forever... fairness being so inflationary.

Originally posted by ZNOFZ
It is also believed that Rome fell because of their drinking pots containing a high percentage of lead, they did not know that lead in the body was bad for you. High rate of abnormal births, death rates increased etc.

I am no expert in economics nor do I claim to know much about the system but I do have a small amount of knowledge based on both insight and documented research. About the whole capitalism aspect of the post, I understand what you are saying about importing more than exporting etc. It is very important to note that China is noted as a communist state and this is simply not true. China is emerging as a capitalist super power with private industrialization. And the fact that we produce less than we import is the simple fact of socialist practices mixed with a capitalist market, more labor rights means more expensive production of goods. What you are saying Leo is right, but your placing of the problem on the capitalist system itself seems wrong fitted. There is also a problem with restricted trade markets with communism and socialism. There are problems in all areas. I don’t really expect capitalism to be the do all save all. I don’t expect a communist market to be productive either. Either way, your argument is well written good job. As for belisarius you sure are giving him a run for his money [pun intended], good points made and taken on both sides.

Well, the biggest problem with Capitalism is that it is THOUGHTLESS. It never thinks much ahead of the quarterly reports. Stock prices rise as America exports its manufacturing base -- thoughtlessness. Adam Smith with his Invisible Hand of Self Interest succinctly describes the problem -- a hand with no mind. The Banks have stepped in to control one factor, inflation, but then they allow for an endlessly steep curve of unemployment.

Now, as unresponsive as Communist and Socialist Economies can be in making quarterly changes to their corporate strategies, their view to long term planning is admirable. We hear how China is now Capitalist, but it is Capitalist only because that was where all those 5 Year Plans pointed it. Russia's industrial growth from 1917 to 1938 was nothing short of miraculous. While the West was in the midst of its Capitalist Great Depression, Socialist Russia was advancing as a Super Power.

so when we look to the future, individual share holders who are considering only momentary fluctuations in the values of discreet companies -- the Mind of Capitalism -- will hardly be of much help. Adam Smiths Invisible Hand of Momentary Self Interest is Blind to Broader Trends and Civilized Directions. Eventually we must submit ourselves to detailed Economic Planning.

We can see that it worked for the Chinese.

Russia's industrial growth from 1917 to 1938 was nothing short of miraculous[/b]

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I dont expect to agree on everything but I do know a good amount about history, and this statment is true I will give you that! I would love to counter things but I just dont know enough about econ, I am taking some courses in it next year maybe though?!

There was this wonderfull show on the china on discovery HD about china in general. I highly recomend it to any one he can get lucky enough to catch it. They talk about the reforming that is going on in china.

Originally posted by ZNOFZ

Russia's industrial growth from 1917 to 1938 was nothing short of miraculous

.

I dont expect to agree on everything but I do know a good amount about history, and this statment is true I will give you that! I would love to counter things but I just dont know enough about econ, I am taking some courses in it next year maybe though?!

There was this wonderfull show on the china on discovery HD about china in general. I highly recomend it to any one he can get lucky enough to catch it. They talk about the reforming that is going on in china.[/b]

China has historically had an odd Blessing and a Curse when it has come to Advancing Civilization and then with fostering its collapse. China has a tradition of orderliness and protection of property rights which makes their Interregnum Dark Ages extremely short by all other historic standards -- they go from utter Chaos to Universal Order in sometimes less than a hundred years. And China typically swings up to becoming the Primary and Richest Power in the World, in often only a 150 years from its lowest ebbs.

But the Declines and Collapses are equally hurried and pronounced. What happens is that Private Wealth turns against the Public Interest and the Social and Political Infrastructures are strangled, resulting in vulnerability to outside invasion and internal social rebellion.

What China needs to work on is an institutionalized mechanism for assuring that the Public Interest will always have the deciding leverage over the power of Private Wealth.

Already some huge Economic Entities in China, particulary the Army Divisions that set up independent economic Corporations, are showing almost a complete independence from the Government -- disregarding regulations and not paying taxes. We can see in these independent entities the first wedges that will split prosperity into Decline and Collapse.


Now, about studying economics. It would be better to study History and get a broader view. Modern Ecomomics is like a Religion which has its own Orthodoxies, and especially heresies. There are the Party Lines and the bounds not be crossed. It would be nice to suppose that there is still Intellectual Freedom in the West, but we can also assume that with all the politics in the last 50 years has largely prevented any dissenting mind from achieving Tenure in what used to be a Free domain. So, in any economics department in any university in the West, I'm not sure how useful any of it would be. It will all still carry the Masonic and Protestant stamp of approval. Or show me any course bearing the name Planned Socialist Economies 101.

You bring up a good point about having no money left over.
This is not to imply there are not profits. This is just the way the market accounts for its own success. It can get very complicated. But what about production costs, material and research?
Owning my own small business there are perks to making [on paper] as little as you can.
A very appropriate theme at this time are gas companies.
Everyone is in an uproar about the large corporations having million dollar gains. What most people do not realize is that these corporations buy credit (Iam not sure what it is actually called..sorry) Like stock.
They establish a price and give $20.00 per barrel and they are guaranteed that for a certain duration. Much like a fixed loan.
When oil prices go sky high, they are still buying oil ,some of which they may have discovered and set the price, some of which is established by world economy and or domestic relations.
So in a sense the many issues you bring up do dig a bigger grave. Companies and corps. are a direct result of their owners. More More More! So they win big and the labor force will pay, at some point.
To the contrary, we can see what happens to countries that do not establish free trade. Nations that do not have the resources to maintain themselves are dependent on other nations. They haven't a choice. Unless you are like South Korea and your dictator is a figure head of one big self loathing corporation.
Then you get free trade only as a bargaining tool.
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Why do you think these rogue nations want to create nuclear power? Get real. The same nations that have enough oil of their own to sustain their power needs for ever claim they seek nuclear fusion for energy. NO. It is bargaining chips they want.
Just like South Korea. All that can be done now is put sanctions on them.
I know Leo you probably feel different and I would be interested in your thoughts on the latter.
We could also split the topic I kind of strayed

Posted: Sun Apr 23, 2006 12:44 am Post subject:

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Belisarius wrote:


First problem, labor's worth is determined by the market, there is no concrete value of labor that someone can pay less than.




Actually not. All sorts of modifying factors can be brought into play. Look at how Doctors and Lawyers use licensing to increase their own value.
[/b]

I'm not sure exactly what you meant by that. Did you mean that doctors and lawyers get licences in order to get paid more? They're just taking measures to make themselves more valuable to labor consumers.

But we find that that all that is required to push up the Price of Labor is to simply legistlate in restrictions that would automatically make Labor rarer and scarcer. The Overtime Wage is a good example. Any limits imposed on maximum hours worked would force up the price of labor. [/b]

Automatically raising wages causes a labor surplus(unemployment) because employers who would normally employ people at lower wages no longer can afford to and must fire them or not hire them. It's very basic economics that setting prices artificially high causes surpluses and setting them artificially low causes shortages.

The trick is to get every economy on board. Right now, as it is, every economy is competing in order to arrive as closely to the BARE SUBSISTENCE WAGE as it can without fomenting a disasterous Social Revolution.[/b]

Every employer would love their employees to work for less, even nothing if possible, but there's one thing that stand's in thier way: The employees wouldn't be willing to work for those wages, but they would be willing to work for the employer's competitors for higher wages. The only way for employers to lower wages is through threat of violence or collaboration. In today's economy that would require tens of millions of people to all be conspiring together, and each of those individuals would have much to gain by betraying their fellow capitalists. Your analysis of the situation is completely ridiculous.

But there would be problems with a Universal Fair Wage. The other night CNN ran a story which concluded that if the Chinese were to become as Per Capita Prosperous as those in the West, then the West would be deprived -- forced into sharing the World's resources equally, the West would be sorely disappointed. This would indicate that the sentiment in the West is for the New Manufacturers of the World to retain their Subsistence Wage Structure forever... fairness being so inflationary.[/b]

Prosperity means control of scarce resources so naturally if China were more prosperous it would have more control of scarce resources. Free markets reward those who use scarce resources to fullfill people's wants with more scarce resources. There's no way to create more scarce resources, but we can use them effectively. The best way to do that is to entrust those resources to the free market. Of course Western consumers don't want competition, but Western governments simply don't have the power to do anything about it. Any move western governments make to try to keep the Chinese from competing ultimately hurts their people economically.

Originally posted by Howetzer
..... we can see what happens to countries that do not establish free trade.

Well, what happens these days is that such nations are singled out for sanctions and punishments. The horrible results of not participating in Free Trade are largely artificial, created, and imposed by vindictive force of will. But historically, it used to be the Norm for countries to protect their essential industries and markets. Yes, no country can supply itself internally to meet every one of its needs, but then again, each country can maintain some few exports in order to have enough of a Foreign Exchange to buy those necessary external goods. If one looks throughout the World at the Economies of the Advanced Nations one will see a mileau in which EVERY SINGLE ONE of those Advanced Economies had incubated, developed and grown during a period when Protectionism was allowed and exercised. Nowadays, the developing Nations are told that they do not need to Protect -- that Foreign Investment will do the equivalent service for them. But what happens there. The Citizens of these Developing Nations can't become the leaders of their own Industries but can only hire on as nothing more, effectively, then labor and government liasons and consultants, while foreigners run the show. The Protected Industries of long ago were far better at assuring a National Character in the product of each nation. Not like today where the same Toyotas are made in 7 countries. Blah.

Then we need to look at the broadscale disingenuousness of much of the Free Trade talk. Look at America -- prides itself on being the Number One Proponent for Free Trade, but when China, that peggs its currency exactly in line with the American Dollar, can sell at such greater efficiencies, America wants to effectively impose a Currency Tarriff by demanding that China artificially overvaluates its currency. By pegging its own value to the Dollar, China had left it entirely up to America do anything it wanted to the Value of Money. What is fairer then a sustainable parity, especially when one trading partner leaves it entirely up to the other partner to set the scale. But America, falling behind, wants to be able to adjust its own currency down, while demanding that its trading partner goes up. Well, that is just simple Protectionism. Though I might agree with it, but still, we can no longer abide by the delusion that we are any longer in a regime of pure Free Trade.

Everyone is for Free Trade while they are winning the game. But when one is made the Loser of World Competion, and the Game never ends, and every day more value and wealth is stripped and carted away to foreign powers, THEN, suddenly currencies are manipulated and obscure laws are invoked claiming 'unfair' trade practices -- selling cheaply.

There is a great deal of hypocracy in it all. Nations should go back to quite admitting that they will trade only where it is for their own advantage, and that they do not owe it to any other nation to lose in a competition where it is easily discernable that losing would be easily foreseeable.

America should insist that if China values American Markets, then China should pay American access Taxes. Why say that they can take it all for Free. Where we are told there can be no "free lunch" why suppose that the Capitalists can have a "free trade".

For militarist nations to insist upon Free Trade in order to pillage the value and the wealth out of victim nations, well, it would seem that we have a new reprehensible incarnation of Colonial Imperialism. But it only shows how utterly stupid Europe and America are, that while they thought they could pillage China with their Free Trade, the Chinese were able to maneuver for their own advantage. How? Well, China, for its formative period was able to protect its industries until they could compete at advantage. The Japanese used the same strategy -- to concede in principle to all the demands of Free Trade, while dragging their feet and protecting their markets in tacit and undeclared Protectionism until they could jump in and beat the West at its own game.

But enough of treating all of this serious business as though it is child's play. Enough scheming and trickery. No more Free Trade. What we need to do is plan a World Economy to everybody's advantage.

[quote]

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Automatically raising wages causes a labor surplus(unemployment) because employers who would normally employ people at lower wages no longer can afford to and must fire them or not hire them. *It's very basic economics that setting prices artificially high causes surpluses and setting them artificially low causes shortages.

You forget about Productivity. High wages... low wages... it all does not matter because if Labor is paid its true value -- roughly equivalent to their value added -- then Labor should be able to buy the Value Equivalent of what it itself produces.

High Wage... Low Wage.. Who cares. Labor should be able to purchase value equivalent to it own Productivity.

Problems arise when economies are driven by Export, where the value of Labor is sent out of the Country, making their own purchasing power nullified. their poverty then is largely artificial. You call it Market Value, but this is where markets are manipulated to cheat value.

Again the example of the Child Laborers in Indonesia who create $2000 of wealth each day while being paid only $2. Or the Mexican Auto Worker who makes a car a day but is not paid enough to buy a car if he had ten years. Markets and economies are being manipulated to falsify Values.

But it is not sustainable. High Priced labor in the West is unemployed, while the only workers in the World are being paid 1% of the Value Added of their Labor. Eventually the Profiteers will have so much hoarded all currency to themselves, making so little payout, that there can no longer be possible any further return.

Henry Ford recognized this. His vision created the Consumer Economy, predicated on the fact that Capitalists absolutely need to flow wealth, as payment to Labor and Taxes to Government, into the economies they exploit even just to make purchasing power possible. Markets need to get their money from somewhere, and essentially it must be in the form of Wages.

But we are now forgetting Henry Ford's successful Revolution, and now economists are returning as Fundementalist in their own Religion, to that primitive prophet of profit Adam Smith, and the belief that Capital must beat down labor to subsistence wages.

You forget about Productivity. High wages... low wages... it all does not matter because if Labor is paid its true value -- roughly equivalent to their value added -- then Labor should be able to buy the Value Equivalent of what it itself produces. [/b]

I'm not sure you completely understand the concept of "employment". Employment is an agreement two people where one freely agrees to work for the other party, using the other party's property, and to give up the fruits of their labor to the other party in exchange for a wage.

Labor is not the only factor of production. All the labor in the world would mean nothing if there weren't capital goods(tools) and natural resources. If capitalists didn't allow workers the use of their capital goods and natural resources the workers would be unable to produce anything of value to anyone. Employment is a good deal for workers.

Problems arise when economies are driven by Export, where the value of Labor is sent out of the Country, making their own purchasing power nullified. their poverty then is largely artificial. You call it Market Value, but this is where markets are manipulated to cheat value. [/b]

I'm not exactly sure what you mean by their purchasing power being nullified. If there was no export wages would be driven down because a flood of these products that would otherwise have been exported would cause the price to collapse making employers unable to continue paying employees. In addition it would harm the world economy by eliminating specialization. A nation that is good at agriculture would have to decrease production of agricultural goods because the flood of food would decrease the price to make it difficult for producers to continue production on the same level. The only thing that cutting off international trade does is hurt the economy as a whole. It is true that certain buisnesses may benefit from protectionism, but that value is negated by increased prices or decreased quality for consumers and a decrease in competition.

Again the example of the Child Laborers in Indonesia who create $2000 of wealth each day while being paid only $2. Or the Mexican Auto Worker who makes a car a day but is not paid enough to buy a car if he had ten years. Markets and economies are being manipulated to falsify Values. [/b]

The example in Indonesia is an example of over-abundant labor resources, and very scarce capital resources. If you have 10,000 jobless people, and you only have 100 jobs to offer, you're going to be able to get 100 of them to work for very little. Another example is that in America we use machines to unload our railroad cars and only a few workers, and in Africa they use many workers and maybe a crowbar or two. In America there is an overabundance of capital resources and scarce and expensive labor resources whereas in Africa machinery is scarce, and labor is rather abundant.

But it is not sustainable. High Priced labor in the West is unemployed, while the only workers in the World are being paid 1% of the Value Added of their Labor. Eventually the Profiteers will have so much hoarded all currency to themselves, making so little payout, that there can no longer be possible any further return. [/b]

High priced labor in the West is only unemployed because of government interference making labor artificially expensive. Unemployment policies in the West also make it much easier to be unemployed, allowing workers to hold out for better jobs or wages. Profiteers spend money or invest it, they don't lock it in their closets. That money goes to purchase other goods which require people to make them and be paid for them. Even when they put their money in the bank, it is lended to other people. The money continues to circulate and the economy continues to function unless the government interrupts it.

Henry Ford recognized this. His vision created the Consumer Economy, predicated on the fact that Capitalists absolutely need to flow wealth, as payment to Labor and Taxes to Government, into the economies they exploit even just to make purchasing power possible. Markets need to get their money from somewhere, and essentially it must be in the form of Wages.

But we are now forgetting Henry Ford's successful Revolution, and now economists are returning as Fundementalist in their own Religion, to that primitive prophet of profit Adam Smith, and the belief that Capital must beat down labor to subsistence wages.[/b]

Henry Ford saw that it is much easier to reap the benefits of economies of scale if you have a large scale of consumers to sell to. It is true too that people must spend and invest their resources to encourage economic growth. That does not mean raising wages above the market value. The reason rich countries are rich and poor countries are poor is that rich countries have more resources, especially capital resources.

Adam Smith was a primitive prophet, he espoused the Labor Theory of Value which Marx used to justify communism. Later economic thinkers understood things much more clearly, it is from them, not Smith or Marx, that I take my theory, but more than that, it's a simple application of reason that leads a person to this understanding of the economy, not emotional judgements or sensationalists theories.

[quote]

High priced labor in the West is only unemployed because of government interference making labor artificially expensive.

.

As long as Capital can cartel and restrict wages and hiring, then any wage the slightest bit higher than for minimum subsistence would be "artificially high".

In an age where robotics and automation can virtually do anything, then we have a situation where there can no longer possibly be anything that might be considered as a "labor shortage".

Indeed, now we have situation where wages are far less than 'subsistence'. Adult children are no longer moving out on their own. Women can no longer be mothers but must get jobs themselves to supplement the meager income of the less than subsistence wages of the Bread Winners.

So, Adam Smith was right, as far as it goes -- there is no reason, in the Market, to pay any worker more than practically nothing.

But, that is exactly why we cannot operate our Economies with this Market Capitalism. A System of Distribution of Wealth is not working unless it actually does distribute some wealth. We have productive capacity shutting down at the same time as unemployment is going up. Then we can look at the consumption of the top 1% of the Wealthiest Individuals -- we have an inflationary consumption of a huge proportion of societies resources going toward a miniscule minority.

And this is while no effort at all goes into maximizing production. All of the competing organizations within Capitalism are just so many multiplications of redundancy. We can see War Time Emergencies and Socialist Five Year Plans and see that 1 or 2% growth rates are ridiculous strangle holds compared to what Planned Production can accomplish. and then Fair Distribution could be just another part of planning.

Look at European Socialized Medicine. It is simply an example of Fair Distribution. Housing and Food could be distributed according to much the same Model.


Oh, I was doing some more thinking about Free Trade and China. The assignment of Currency Value by Banking Committee has taken value outside of any objective measure, and values are being manipulated for convenience. This would be okay, if the values were convenient for everybody. However, America prints cheap money for itself, but when the Chinese have solidly pegged the value of their own currency strictly on the Dollar Standard, then it is surprisingly hypocritical of the Americans to complain.. What the Americans are calling for is that the Chinese be penalized in direct proportion as they have been more efficient and effective then their American Counterparts. The Americans are desiring that the Chinese be handicapped, and that the currencies be adjusted to keep the Chinese from ever pulling ahead in this "Free Trade" competition.

Now, I would agree that it is ultimately a bad thing to allow a runaway lowest denominator competition -- it benefits only the meanest slavedriving economies. Economies with high standards of distribution should and ought to protect against slave states, and if they could not profit from reducing their own standards, then they wouldn't be so insistent about so driving down their own values. But we need to admit that such Wise Regulations and Restrictions are not Free Trade.

We all need to consciously and desively renounce that idiotic doctrine of Free Trade.