So, now we have re-created the tribal unit along traditional lines and by modern methods. It is potentially large enough to provide for its own needs, the Tribe may start to extricate itself from dependency and its members may start to feel the benefits of having control over their own lives. The disinherited are re-inherited. A life with capital reclaimed, restarts after a 3,000 year break.
So now the Gen sets to work with its own redistributed capital. It applies its own labour to that capital to create wealth and to meet its own needs. It sets up a Corporation to develop an area, issuing bonds as described previously. Soon it will be able to create a surplus that it may trade with others and further increase the quality of its existence, should it choose to do so. If we want a better standard of living we work for it. Or if we’re happy with our quality of life, we don’t do any excess work. Enjoy. Make Art and Music. Even these products of course have economic value if they are sold. We may even make more from a decent tune than a year’s crops.
Beyond this, we have not fought this hard simply to repeat the mistakes of the past and so we should look very carefully in turn at economic relations, education and forms of government amongst other key enquiries. I look first at our economic activity.
There has been introduced into the economic landscape a theory of profit by Adam Smith in his famous book “The Wealth of Nations”. The theory states that profit is inextricably linked to production. The Capitalist Establishment was very eager to hold
up this “argument” as the justification for enriching itself at the expense of others.
But it is no more than a license for greed as has been demonstrated by Henry George who wrote “Progress and Poverty” in 1879 in answer to Smith’s book.
George argues that economic production may be broken down into only three parts – land, capital and labour. Natural resources like trees and oil are part of the land. Capital is everything made by man from these resources. Capital may be further broken down to be either tools or stock. When someone applies labour to capital, they create wealth. But what is the price of the product? What is it’s real value?
The product’s real and actual value is precisely the sum of three things…
1/ LAND – The use of land required in the product’s production and distribution (i.e. natural resources (raw materials), land for the factory, the warehouse, the road and the shop).
2/ CAPITAL – The use of capital expended in the production and distribution of the product, i.e. how much stock is used to produce the product and how much depreciation of tools occurred in its production).
3/ LABOUR – i.e. wages for the time spent in production and distribution.
The simple mathematical equation therefore follows…
WAGE per labourer = Total of WEALTH produced minus CAPITAL used in production minus RENT for land, and this sum divided by the total number of labourers.
Exactly the same equation sets the value of the product produced – it’s value. So re-organising the same equation gives us…
Product Price = Rent + capital used + wages, this sum divided by the number of products produced.
And since price x no. of products = WEALTH produced, this then yields the same equation in another simpler form…
WEALTH = LAND + CAPITAL + LABOUR
Note that when arrogant land-owners tell people that it is only their laziness that holds them back, it is actually access to land and capital that holds them back. Nothing comes from nothing and the landless cannot make wealth out of thin air. That’s why they won’t give you your share of capital to set up your own business, or allow you to be involved in that land redevelopment. In the absence of land or capital, people have to sell their labour to someone else, which is what a “job” is. Labour without capital or land. Work without security or future. They convinced us that a job is what we want.
Back to the economic equation. Taking an example, 100 workers take 8 hours (@ £20/hour) to produce 1000 things. The wage bill is therefore 100 workers x 8 hours each x £20/hour = £16,000.
The rent is £500, the capital used costs £2,000, including losses. The sale price of the item is therefore …
(16,000 + 500 + 2,000) / 1000 = £18-50
i.e. (wages + rent + capital) / no. of products = price
On receiving this precise price for the product, the producer pays first for the land and the raw material that has been extracted from it. Secondly, the producers pay to cover the loss of capital used up in production. The remainder they keep as their wages. There is no profit. They are paid for the work that they have done, no more no less. No work, no pay. Adding anything else to the sale price is theft, i.e. getting the consumer to pay you more than the product is actually worth. Or put another way, the consumer pays the producer for not working. Profit pays the Directors who are generally also the Shareholders, who hold our share of the planet in their own hands.
So we can clearly see where profit fits into the equation. Profit may also arrive in another way – buying something for less than it’s worth as well as selling it for more than it’s worth…
1/ The Director may buy something for less than its worth…Or simply steal it. Mainly practised by Imperialists stealing land and therefore not having to pay the first cost of production – land and raw materials. The other way to do this is to get slaves to produce capital and then the producer keeps the capital and doesn’t pay for the labour. This removes the second and third costs of production. All the sale value may then be returned to the Director as profit.
2/ The Director may sell something for more than it’s worth… by just calculating the actual value and adding on a bit. Or selling it for whatever he can convince the buyer to pay. The buyer therefore pays more for the product than it is actually worth. The buyer acquiesces, allowing the producer to steal the extra value. In the exchange, the buyer loses by giving up more than they receive in return. Buying the goods impoverishes the buyer.
Profit, or more accurately the professed need for it, is a con. It can be removed from the economic equation. And removing profit still guarantees that people who work get paid. The only new aspect of this change is that people who don’t work don’t get to make a living on the backs of other people any more. Profit, as we can clearly see, is theft.