The Purpose of an Economy

[expat_panama]

...Definition of an Economy... ...human activities concerned with the production, distribution, and consumption of goods and services...

Poeple like to say that the difference between human and non-human animals is that humans make things and animals tend not to. It seems to me that humans by their very nature are beings that produce, distribute, and consume goods and services. Asking what's the purpose of these basic human activities is like asking what's the purpose of the human race.

I'm guessing that Douglas really wasn't concerned with the purpose of humankind, but was actually more interested in identifying priorities of economic policy. I'm also guessing that somehow these priorities favored people working in the labor markets over people in other markets such as capital, commodity, consumer, etc. The reason I'm guessing is because Douglas and his followers don't seem to have been clear enough in their thinking to actually say what they meant.

 

[georgephillip]

...Definition of an Economy... ...human activities concerned with the production, distribution, and consumption of goods and services...

Poeple like to say that the difference between human and non-human animals is that humans make things and animals tend not to. It seems to me that humans by their very nature are beings that produce, distribute, and consume goods and services. Asking what's the purpose of these basic human activities is like asking what's the purpose of the human race.

I'm guessing that Douglas really wasn't concerned with the purpose of humankind, but was actually more interested in identifying priorities of economic policy. I'm also guessing that somehow these priorities favored people working in the labor markets over people in other markets such as capital, commodity, consumer, etc. The reason I'm guessing is because Douglas and his followers don't seem to have been clear enough in their thinking to actually say what they meant.

Douglas seems clear about his philosophy when he argues the interest of man is self-development and above all systems whether theological, political, or economic. I'm guessing like Marx and Lincoln, Douglas believed labor was prior to and superior to capital and deserving of higher regard. He believed systems were made for men and not men for systems, which would probably be heresy to many capitalists.

 

[oldfart]

...spell out just what it is that we know and what we are asking. Unless of course we're not trying to figure anything out in which case we're already fine...

You don't see any ...

Still not seeing any balances and system boundaries yet that could describe an econ model. Maybe if there are any lurkers here with talents in econ ed they can help ease us though the communication impasse.

OK, I'll take a stab at it. There were a lot of economic theories going around at this time (1900--1935) as alternatives to classical economics, most with a leftist leaning, and most pretty muddled. All were critical of the Ricardian world where everything would return to equilibrium and all would be right with the world. This is the kind of thinking that makes historians of economic thought appreciate Keynes' writing.

The best way to sort his out is to jettison all of the accounting jargon and look at this scheme from the viewpoint of growth theory. Of course the Classical model of three factors of production (land, labor, and capital) was incomplete and to the Major's credit, identifying what we now would call intellectual capital and parts of social overhead capital (like a commercial justice system) is a major insight. What he missed was technology, a foreign trade sector, a government sector, and a viable theory of physical capital. That's missing a lot.

He was obsessed with where the "missing" purchasing power went. It went for the creation of physical capital, both public and private, for research and technology, for education and human capital, and to support and maintain the social institutions he identified as the major engine of growth. Curiously he thought the benefits of this accumulated store of knowledge should be distributed to the public rather than plowed back into development. All of these things constitute demand: building roads, schools, conducting research, enforcing patent, trademark, and contract law, educating the next generation of workers and so forth.

 

[expat_panama]

Douglas believed labor was prior to and superior to capital and deserving of higher regard. He believed systems were made for men and not men for systems, which would probably be heresy to many capitalists.

We need to stop right here and understand that Lincoln first person to warn about misinformation on the internet.

Seriously, one of the few things we're able to figure out about Douglas' ramble is how he pushed this goofy old labor-good/capital-bad nonsense. We run into this idea that labor is better than capital a lot from the goofy laborists, although I've never run into anyone in real life that ever suggested that capital was superior to labor. There are no capitalists; the very word was invented by the early Marxists as a straw-man ploy to sling mod at free people who just wanted to be left alone. Marxist knew better than to call himself a laborist favoring labor --he called himself a socialist who favored society and opposed the evil lovers of money. The extreme left sure knows how to lie.

Reality is that virtually all human activity involves both labor and capital. Animals dig in the ground with their paws and humans dig with tools. Digging is labor and tools are capital. We have to have both.

 

[editec]

Douglas seems pretty clear on how his system required democratic control of credit, ed.

Yeah that does NOT surprise me, George.

I was merely trying to answer the question.


The steady erosion of the working class' wealth has mostly not been done through taxation or theft, its been done through inflation.

When the aggregate REAL WEALTH of the nation is based on the aggregate MONEY in supply, then those who can CHANGE that supply AT WILL, basically have completely control over the economy and the means to steadily gain greater and greater ownership of all that is worth owning.

Its been 100 years, and as we can see the plan has worked beautifully for the MASTERS OF CAPITAL.

The rest of us, and I do not care how bloody rich you are, are DUPES to this cabal of INTERNATIONAL thieves.

 

[georgephillip]

Douglas seems pretty clear on how his system required democratic control of credit, ed.

Yeah that does NOT surprise me, George.

I was merely trying to answer the question.


The steady erosion of the working class' wealth has mostly not been done through taxation or theft, its been done through inflation.

When the aggregate REAL WEALTH of the nation is based on the aggregate MONEY in supply, then those who can CHANGE that supply AT WILL, basically have completely control over the economy and the means to steadily gain greater and greater ownership of all that is worth owning.

Its been 100 years, and as we can see the plan has worked beautifully for the MASTERS OF CAPITAL.

The rest of us, and I do not care how bloody rich you are, are DUPES to this cabal of INTERNATIONAL thieves.

And the thieves care not who writes the laws since theY control the SCARCITY of money?

"Douglas also claimed the problem of production, or scarcity, had long been solved.

"The new problem was one of distribution.

"However; so long as orthodox economics makes scarcity a value, banks will continue to believe that they are creating value for the money they produce by making it scarce.[19]

"Douglas criticized the banking system on two counts: for being a form of government which has been centralizing its power for centuries, and for claiming ownership of the money they create.

"The former Douglas identified as being anti-social in policy.[20]

"The latter he claimed was equivalent to claiming ownership of the nation.[21]

"According to Douglas, money is merely an abstract representation of the real credit of the community, which is the ability of the community to deliver goods and services, when and where they are required."

Social credit - Wikipedia, the free encyclopedia

 

[The Rabbi]

Communism is gay.

 

[georgephillip]

Communism is gay.

Who said money plays the largest part in determining the course of history?
Hint: it wasn't Milton Friedman.

Chris Hedges: Overthrow the Speculators - Chris Hedges - Truthdig

 

[eagle1462010]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

 

[eagle1462010]

An Economy can happen without currency. Before currency was ever made, if you had food you could trade it for other food, for wood, for clothes, for someone building you a house, for a horse, for a cow..........................

Simple Barter in local areas..............Currency was created to attach a value to said products. The more demand for a product the more currency needed to purchase said products. A system of Equitable wealth trading..........Yet currency was to be backed by something of value. Something Rare, aka the Gold Standard or Silver...........Thus Coins were commonly accepted as currency and thus sought after..................

Paper currency with no REAL STANDARD leads to manipulation of its production and value...........And those making the paper can manipulate the currency. Thus ending Equitable Currency or Economies, leading to FIAT economies that no longer rely on the basis of EQUITABLE TRADE.......or CURRENCY..............

DOUGLAS should be rejected and has been rejected over time. And this is correct.

 

[georgephillip]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

Marx got the solution to capitalism all wrong, IMHO.
He saw its fatal flaws as clearly as anyone who ever wrote about it.
You're certainly entitled to reject him and his purpose; however, do you think he was correct when he says "money plays the largest part in determining the course of history?"

 

[eagle1462010]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

Marx got the solution to capitalism all wrong, IMHO.
He saw its fatal flaws as clearly as anyone who ever wrote about it.
You're certainly entitled to reject him and his purpose; however, do you think he was correct when he says "money plays the largest part in determining the course of history?"

Fiat Currency does play a major role, but not when it was done as originally designed..........Equatable trading and not USUPERY..................

In his own writing he gave out tickets for purchase instead........What's the difference.............

 

[georgephillip]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

Marx got the solution to capitalism all wrong, IMHO.
He saw its fatal flaws as clearly as anyone who ever wrote about it.
You're certainly entitled to reject him and his purpose; however, do you think he was correct when he says "money plays the largest part in determining the course of history?"

Fiat Currency does play a major role, but not when it was done as originally designed..........Equatable trading and not USUPERY..................

In his own writing he gave out tickets for purchase instead........What's the difference.............

Did you mean...?

"Usury (/ˈjuːʒəri/[1][2]) is the practice of making unethical or immoral monetary loans. Depending on the local laws or social mores, a loan may be considered usurious because of excessive or abusive interest rates.

"According to some dictionaries, simply charging any interest at all can be considered usury.[3][4][5] Other terms used for usurers include loan shark and 'Shylock', which is sometimes used with an antisemitic connotation[citation needed].

"The term may be used in a moral sense — condemning taking advantage of others' misfortunes — or in a legal sense where interest rates may be regulated by law.

"Historically, some cultures (e.g., Christianity in much of Medieval Europe, and Islam in many parts of the world today) have regarded charging any interest for loans as sinful."

Usury - Wikipedia, the free encyclopedia

Social Credit was founded by another variety of socialist who asked which of the following three possibilities best expresses the purpose of an economy

Social credit - Wikipedia, the free encyclopedia


"1. The first of these is that it is a disguised Government, of which the primary, though admittedly not the only, object is to impose upon the world a system of thought and action.

2. The second alternative has a certain similarity to the first, but is simpler. It assumes that the primary objective of the industrial system is the provision of employment.

3. And the third, which is essentially simpler still, in fact, so simple that it appears entirely unintelligible to the majority, is that the object of the industrial system is merely to provide goods and services.[12]"

Maybe the difference between what Marx and CH Douglas envisioned is revealed by their different interpretation of economic democracy; for Marx, the term implied worker control of industry while Social Credit defines the term as democratic control of credit.

Which sounds like an endorsement of public instead of private creation of money.

 

[eagle1462010]

Yes I meant Usury.

I've posted my feelings on this many times on various threads.

 

[Quantum Windbag]

...sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week: consumers did not have enough income to buy back what they had made... ...Douglas proposed to eliminate this gap between total prices and total incomes by augmenting consumers' purchasing power through a National Dividend and a Compensated Price Mechanism....

What makes this a confused muddle is the lack of clarity as to which payments are positive (incomes) and which are negative (payouts). It sounds like Douglas considers profit as something that's 'bad'. I mean, let's say I set up a company to make a really neat product where I pay workers $1,000/month to make stuff I can sell for $2,000/month. What Douglas seems to want is that I got to always pay my hired help more in wages then I can get in product sales.

If that's what he's saying then for me that qualifies as what I'd call an "obvious glaring error". If that's not what he's saying then I'm still waiting for a better explanation. You can understand why none of us are willing to spend all day guessing.

I hope you understand why I believe most of you will have better guesses on this subject than I have. I didn't mean to imply I understood Douglas's reasoning; I was hoping for some help from those more educated than I am about these concepts.

It's my interpretation that Douglas isn't asking you to pay your workers more than your total revenues. He is pointing out how "the weekly total costs of goods produced was greater than the sums paid out to individuals for wages, salaries, and dividends (and) this seemed to contradict the theory put forth by classic Ricardian economics, that all costs are distributed simultaneously as purchasing power."

Social credit - Wikipedia, the free encyclopedia

Except it doesn't contradict anything, it assumes that there is no profit in making goods, and that, unless both sides of the equation are built on the lack of profit, that something is wrong with the equation.

 

[georgephillip]

What makes this a confused muddle is the lack of clarity as to which payments are positive (incomes) and which are negative (payouts). It sounds like Douglas considers profit as something that's 'bad'. I mean, let's say I set up a company to make a really neat product where I pay workers $1,000/month to make stuff I can sell for $2,000/month. What Douglas seems to want is that I got to always pay my hired help more in wages then I can get in product sales.

If that's what he's saying then for me that qualifies as what I'd call an "obvious glaring error". If that's not what he's saying then I'm still waiting for a better explanation. You can understand why none of us are willing to spend all day guessing.

I hope you understand why I believe most of you will have better guesses on this subject than I have. I didn't mean to imply I understood Douglas's reasoning; I was hoping for some help from those more educated than I am about these concepts.

It's my interpretation that Douglas isn't asking you to pay your workers more than your total revenues. He is pointing out how "the weekly total costs of goods produced was greater than the sums paid out to individuals for wages, salaries, and dividends (and) this seemed to contradict the theory put forth by classic Ricardian economics, that all costs are distributed simultaneously as purchasing power."

Social credit - Wikipedia, the free encyclopedia

Except it doesn't contradict anything, it assumes that there is no profit in making goods, and that, unless both sides of the equation are built on the lack of profit, that something is wrong with the equation.

Are all costs distributed simultaneously as purchasing power?

 

[Quantum Windbag]

I hope you understand why I believe most of you will have better guesses on this subject than I have. I didn't mean to imply I understood Douglas's reasoning; I was hoping for some help from those more educated than I am about these concepts.

It's my interpretation that Douglas isn't asking you to pay your workers more than your total revenues. He is pointing out how "the weekly total costs of goods produced was greater than the sums paid out to individuals for wages, salaries, and dividends (and) this seemed to contradict the theory put forth by classic Ricardian economics, that all costs are distributed simultaneously as purchasing power."

Social credit - Wikipedia, the free encyclopedia

Except it doesn't contradict anything, it assumes that there is no profit in making goods, and that, unless both sides of the equation are built on the lack of profit, that something is wrong with the equation.

Are all costs distributed simultaneously as purchasing power?

Is profit a cost?

 

[bripat9643]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

Marx got the solution to capitalism all wrong, IMHO.
He saw its fatal flaws as clearly as anyone who ever wrote about it.
You're certainly entitled to reject him and his purpose; however, do you think he was correct when he says "money plays the largest part in determining the course of history?"

It makes as much sense to ask what the purpose of an economy is as to ask what the purpose of a Giraffe is.

 

[georgephillip]

Except it doesn't contradict anything, it assumes that there is no profit in making goods, and that, unless both sides of the equation are built on the lack of profit, that something is wrong with the equation.

Are all costs distributed simultaneously as purchasing power?

Is profit a cost?

I had to ask Google

"Is Economic Profit a Cost of Production?
Answer
Economic profit is not a cost of production from a company, but rather it is a product of it. It is a result from production from the company. You can find out more information here: www.amosweb.com."

Is Economic Profit a Cost of Production? - Ask.com

Do you think it's possible an economy would function more "fairly" without profit?

 

[georgephillip]

I simply reject him and his purpose.

Call it Socialism or Communism take your pick.

He has been rejected over time because he basically sets up a plan where production is controlled by the few, gives out tickets to the workers aka currency to buy stuff, and no producer of any product ever makes a profit at all because the Workers receive all of the tickets via percentage of total production.

That's Stalin..........That's Lenin............And thus he's been rejected to these failed policies as he should be.....................

He doesn't believe that barter economies are Justified.............

This has nothing to do with CURRENCY MANIPULATION as we have today. It has nothing to do with Equitable Capitalism, and any attempt to defend his Communism by the current system is to Justify his beliefs with Crony Capitalism.

Marx got the solution to capitalism all wrong, IMHO.
He saw its fatal flaws as clearly as anyone who ever wrote about it.
You're certainly entitled to reject him and his purpose; however, do you think he was correct when he says "money plays the largest part in determining the course of history?"

It makes as much sense to ask what the purpose of an economy is as to ask what the purpose of a Giraffe is.

Does it make sense to you to ask if the purpose of an economy is to provide jobs or provide goods and services?