Notes on Economics

"He who pays the price calls the tune" goes the old saying. Yet for the person to pay the price to call the tune, they themselves must have sung a tune for someone else who then paid them. So everyone in a good economy thus sings other peoples tunes! This is the essence also of a good society.

Economic theory thus points to the truth that we can't sing our own tune. This is a plus for economics.

However this simple truth is under threat in Western economies because of ownership. An owner not calls the tune but they also get paid the money too (by return on their investment). So in property owning economies the saying ought to be "He who owns the piano calls the tune and gets the wage."

Now an owner like this goes out of business because they aren't playing the tune the customer wants, at least in theory. In reality the owner finds the marginal cost of playing each tune and selects those tunes that give maximum audience response for minimum skill and time of the pianist. The capitalist might also do marketing, or introduce complex pricing to confuse customers like (2 tunes for the price of 1, knowing that they are more likely to buy a drink after the first tune). Blanket advertising on media channels might be expensive but if it raises sales of particular tunes is profitable. So the audience ends up with a limited selection and reduced expectations that all benefits the owner.

Now I realise writing this that really what difference is there between a customer asking the pianist to play a tune and the owner of the piano asking him to play a tune! I guess the only difference is that the customer/pianist relationship is between someone who wants some music and someone who is skilled in producing it. One might say it is an authentic relationship. The customer dealing with the manager/capitalist/owner who then deals with the pianist is experiencing a relationship with someone who is not actually interested in the product but in the mechanics of producing it. There is no reason that this should be an inauthentic relationship (owners and pianists can both be bad people), but it is not the same type of relationship as that of the first example.

Conclusion:

1) In a free market the good principle that each person plays another persons tune is true. However when people become too powerful then they start to decide what tune other people hear and then economics breaks down.

2) The relationship between a customer and the service provider is not the same as the customer-capitalist-provider relationship and should be recognised in systems of property. It seems on this analysis that this is my central issue with Capitalism that it places authority in the hands of the owner and so doesn't respect the skills of the provider which are at root what drive a societies ability to meet its needs. As Veblen argued capitalism actually works to stifle the creativity of the working classes in order to maintain wealth in the ruling classes.

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It seems to me that Capitalism is primarily a ponzi scheme. Prices are inflated and then we borrow increasing amounts from the future to maintain the rising prices. Everyone feels wealthy and so we are encouraged to borrow more which inflates prices more. The house of cards builds higher and higher with everyone expecting to find an even more extravagant fool in the market to buy off them. Eventually the system becomes so unstable that a tiny blip and it all collapses leaving the biggest fools high and dry with relatively worthless assets. The market over corrects and it all starts again. What wealth is really created in such a system apart from simply redistribution of what exists from the stupid to the smart? How in other words can anyone support such a system?