Economics 4, The problem with capitalism

Let’s say the capitalist system is global, and it can be viewed in the whole.

Its engine is profit: Paul and Angela’s tool company has to make profit to pay back the 1 from the 10 they borrowed (Economics 2). To do this, they have to sell their tools for more than it costs to make them.

To whom are they selling? Since in the whole, producers and the consumers belong to the same body/system (i.e. humanity, the market-workforce), producers are selling to consumers, who are themselves producers, and consumers…

So, how to make profit? Let’s say the company lowers costs. Some may temporarily and locally get ahead in this fashion. But in the whole the value of costs equalise: 1 cow = 2 sheep, or 2.019876 = 1.09688 doctor’s hour = 3 teacher’s hours, or 2.75132….

The basic problem in the whole is that people are being paid as producers 10 euros, and as consumers (as the market) are having to pay 11 euros. In the whole we (humanity, the market-workforce) pay ourselves 10 for a product, only to have to buy the product for 11.

The only way to achieve this is that the extra 1 euro be lent. But where does this ‘lent’ extra 1 euro come from? It comes from the profit, which profit in turn is solely financed by this very act of lending!

In capitalism, all economic crises are debt crises. Can we hold our nerve as debt expands infinitely, and distribution becomes ever more uneven?

 

 

 

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