New Economics: some more basic things

Having done a fairly comprehensive analysis of the way things are, taking apart clunky metaphysics, there is still no obvious way forward. I'm in no hurry to change the world. If there is one problem with "activism" its the desire to tinker with things without knowing what the impact will be. Dramatic changes to economics and the status quo are going to be dangerous. So time for some real basics first.

The commonest view of life is that we need to do things in order to live. This becomes the idea of "making a living." We look at birds foraging, or making nests, and mice creating store houses for the winter and we see the kind of activity that people are involved in.

All would be good in an infinite world like the US. After the colonists killed off the Indians there was enough land for all (the colonists and more). The system used there was similar to the Mediaeval system where about 120 acres (1 hide) was given to each family. That was considered enough to sustainably feed a family on.

The ability of people to gain access to a means of living is the logical requirement of an economy, although societies (as analysed already) aren't really based on this. But if we were to design an economy from the bottom up and from scratch this is where we would begin. It is a completely hypothetical postulate though. In reality people gain income from lots of means, and pay off people in lots of way too. For example as discussed you can have kelptoparatisism where people subsist by stealing from others, opportunistically as criminals, or systematically through protection rackets, rents and taxes. But then this cannot necessarily be classified as theft as it may be willingly done, in the case of a tenant farmer feeling safer after paying off his knight, and it depends upon how you classify ownership. Capitalists claiming dividends is a theft from the workers, who despite  generating the income, do not own any of the company and so are not due any of the profits. It is a complex and fluid soup of connections, and the idea that someone has the direct ability to "make a living" is a myth. If nothing else the plough that they use has been stolen without compensation from the genius who first invented it and put it into the public domain. If an eternal patent had been set up on the plough most of the human race would have starved, and one family would own everything.

But more or less sustenance must make its way from producers to consumers. Free market is a good system from ensuring this happens.

Problems with this is that it does presuppose ownership of produce by producers. And in Capitalism producers for the most part don't own anything, but capitalists do, and give a salary in compensation. Profits are protected for the rich, while the employed subsist on market force based salaries. But this then entails that consumers must produce themselves so as to have something to exchange in the market place. Market activity is thus actually limited by supply and demand. There may be a very high demand for something and even ample raw materials, but without funds to pay for production, the industry will stagnate. Capitalism then greases the wheels of industry frozen by exchange with the wealth of the rich but at a cost. So the cost first introduced by exchange is alleviated by exchange providing income for the wealth at every step. The system of giving does not suffer from this. Much frowned upon but Command economies have the upper hand here.

This also means that producers are always needing to make and push produce in order to raise funds to buy things. As industries become more efficient, markets must grow. This is perhaps the biggest cause of the drift away from the San people. The need for exchange, where someone may make stickers for cars in order to get money to feed their child, leads to economies where really unnecessary activity gets exchanged for essential activity. In San society your relationship with nature the producer is optimal. You just take what you need. [todo: I need to find video clip of amazonian indian talking about his relationship with the jungle. Is is quite different from workers in industrialised countries having to make money to pay for everything.]

Producing is not the only way to make money. There is theft as mentioned. Criminal but also legal in the form of taxes, rents and dividends. I posted recently the enormous cost of just the dividends and interest payments in the UK. The rich here are more demanding for free hand outs than all the poor combined! The take home message is that long ago the connection between production and consumption has been broken in the West. 40% of GDP is the system of free handouts to various people (both public and private mechanisms). The idea you need make a living is most definitely a romantic myth.

One key feature of modern economies is machines. A quick energy calculation showed that 99.98% of all the energy in the British economy goes to powering machines. Humans, perhaps because they are more efficient, only use 0.02% of the economic energy. Imagine the vast productivity of this system compared with pre-industrial systems where animals provided the labour for heavy work, but humans were the main machines. The productivity of post-industrial systems is inconceivable, and yet there is not surplus. If the insect apocalypse is one wake up call that economics is not working, the other is that we are not swamped in surplus. Or to be precise most of us are not swamped in surplus. There is a very small group of ultra-elite who are swamped in unimaginable surplus. But for the majority of the planet life remains hard and precarious. Why is this when there is already food to feed the planet?

I considered the case where land was infinite. But like many commodities it is limited. Once it is all owned then society is split into owners and non-owners. This is the origins of the class system, and property. That is well handled in previous posts. The result is parasitism by the owners on the non-owners. This is Capitalism's genesis, and the origin of inequality. Free markets don't work when there are limited resources, because like in the game Monopoly the markets becomes controlled and non-free. And that means that Adam Smith's economics doesn't apply.

So next up is a more detailed analysis of Capitalism and how it has led to growing inequality, starvation across history and is leading to the destruction of life on the planet.

The official data says that the world is growing wealthier. But this I suspect is inspite of capitalism rather than because of it. It remains to be analysed.

todo: supply/demand. benefits land tax vs others + dividends. giving (uncoupling supply/demand). Also offshore havens hiding the true vast inequality of Capitalism.