Day 175: The Economic Problem and Equal Money Capitalism

The Problem

The fundamental question which economics is built upon, is how to deal with limited means in conjunction with unlimited wants. It takes on the starting point that we live in a world of scarcity, of of finite resources – but that we also live in a world where humans have unlimited wants and needs, and thus inevitably not all wants and needs will be satisfied.

This is where the Pricing system within Economics comes from, where the price is determined through the interaction of supply and demand. Prices on products and services, are in the end an ‘elimination’ tool. Because we have only so many resources, and not everyone will be able to get them to satisfy their wants and needs – the pricing system works as a distribution system. If a loaf of bread is sold at $1 each – then this implies that everyone who has $1 and is willing to spend that one dollar on bread can do so. This also means that anyone who doesn’t have $1 dollar to spend on bread but wants and NEEDS bread to be able to survive = won’t be able to get bread.

So it seems that the distribution problem of ‘who gets what’ is solved – but this a more than ineffective solution, and is really unacceptable. 

Firstly, the problem starts already in the formulation of ‘the economic problem’. The problem lies in not making a distinction between wants and needs. It’s one thing to say that wants are unlimited and another to say that needs are unlimited. Sure, we can all make up unlimited wants, like wanting a cruise ship, a place, a few villas and a unicorn – but needs are not unlimited and can be clearly defined, such as say food, security, clothing, housing, medical care, participation, leisure, education, etc.

The second problem arises when we look at our current distribution system within the way things are priced. Everything is price based, so even if things are scarce and finite – if you have the money, you can still get your hands on ‘scarce resources’ even though others can’t. This implies that some can exploit the amount of money they have available to use as many resources as they like, while less and less is available for others, and where others may not even have the financial means to acquire what is left.  Our pricing system is then in fact, a system of blatant discrimination. We are no longer looking at how we can support ourselves living life on this Earth – but playing a game of ruthless and unfair competition causing some to live in abundance while others live on the brink of death.

The Solution

The solution is a simple one, we require to re-evaluate the ‘economic problem’ as we have accepted and allowed ourselves to define it. A distinction needs to be made between needs and wants, where needs come prior to wants at all times, as part of being a Basic Human Right.

Instead of having a distribution system based on discrimination, we require a distribution system of inclusion, and this inclusion is that of Life – where the Real Capital that has actual Real Value is recognized as Life.  This is how the Equal Money Capitalistic System will operate.  It’s a biocentric system, and this is reflected within the pricing of Goods and Services. Pricing will reflect the value that has been added through individuals’ contribution as labour. Within this, each participant, each contributor – will receive an Equal Profit-Share of the sale of the product/service.

From Day 163: Equal Money Capitalism - Redefining Profit:

WHAT IS PROFIT-SHARE?
Currently profit is the money a company makes after they have covered their costs, including paying out wages. In an EMC - profit comprises of all the added value that is placed on resources - which is your labour. Therefore - within the price, the percentage share must be included of each one that was part of the creation of the product in such a way that each one ends up with an equal share of the company's profits, so - there will be no need for wages - as the profit becomes your wage.

EQUALIZING WAGES – COOPERATION AMONG CORPORATIONS
If a company at any time makes more money than they need to provide each one with their equal share of the profit as well as covering their costs - those monies will go into a fund that is responsible for assisting companies that are not making sufficient to cover their costs and provide each one with their fair share. That way a balancing effect takes place so that all companies are not only cooperatives in how they cooperate internally - but all cooperate with each other as well.

Equal Money Capitalism will ensure a Dignified Life for everyone, as everyone will be in a position to acquire resources to support themselves to Live their Life, where needs are taken care of while still allowing for wants to be explored.

The Reward

Within Equal Money Capitalism, one will be birthed into a world where one’s life is secure. Currently, the main point of focus that pre-occupies people’s lives is that of money, which turns Life to being a strife, becoming about survival. When you have a child in Equal Money Capitalism, you do not have to worry about your child’s future and how you’re going to fund it with while trying to make ends meet. Your life and your child’s – your entire family’s Life = is guaranteed.

It is in essence a Life where Fear as being part of everyday Life is removed, and where one can truly live and explore – to really find out what it means to live here on Earth in an enjoyable, yet responsible way.

Related articles

• Human Sweatshops will END in Equal Money Capitalism - Day 275
• Day 163: Equal Money Capitalism - Redefining Profit
• Day 171: Life-Force and Expression in Equal Money Capitalism
• Day 166: Corporate Social Responsibility in Equal Money Capitalism
• Day 173: Supply, Demand, Business and Scarcity in Equal Money Capitalism
• Equal Money: We want the Best Life for YOU. Do You?

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Day 163: Equal Money Capitalism - Redefining Profit

Note: The EMC is an entirely new project that was started 2 days ago. We’re at the moment in the phase where we are brainstorming by answering questions. It’s a messy process – but an effective one to get all the relevant points addressed. So – also note that points will evolve and change as we go as we are not setting things in stone, but on a journey towards designing the EMC. The principles upon which EMC is based are laid out in the previous blog-post. From those principles, we work our way towards what life in EMC would practically be like and how the system will function from an economic perspective.

OVERTIME / FREE TIME

The point will be to optimize FREE TIME

Overtime - working past your regular hours. There will be no need for overtime, it will be unnecessary, because it is not your labour that holds the value - it is your life and all life is valued equally. Overtime would only come into play when for instance a natural disaster occurs and those assisting are required to lend a helping hand for longer than usual because the situation demands so in that case, one doesn't get paid for overtime - because it is a point of compassion and understanding - and to show that one is more than a self-interested human. Overtime now only exists so people can make more money - so they can buy more stuff - in EMC - you will have enough money to buy what you actually need. All economic slavery jobs where people are forced to do it to survive will end if people do not have to do it

Will we have more free time in an EMC - definitely - as we employ all the labour of each person - it will take less time to get the same job done. Every person will still work the same amount of time - this must be agreed on by all. For those whose jobs simply doesn't take up that much time or if a person's job is replaced by that of a machine - the Compassion Department of the Company will take care of you. This Department of the company creates jobs that will benefit society as a whole.

HOLIDAYS

There will be holidays, probably more than now - because with all the unemployed people that currently exist that are integrated into the labour force, each one will require to put in less time in the production process, it would be cool for everyone to have like 2 months off a year so that you can go and travel and stuff.

While you're on holiday, you will still receive your profit share of the products that you helped produce, because your added value helped to create the product.

 HOLIDAYS AND CHILDREN

 For those who have children - holiday time will be when your children are off school, for those who don't have children - it will be during the school time.

WHAT IS PROFIT-SHARE?

Currently profit is the money a company makes after they have covered their costs, including paying out wages. In an EMC - profit comprises of all the added value that is placed on resources - which is your labour. Therefore - within the price, the percentage share must be included of each one that was part of the creation of the product in such a way that each one ends up with an equal share of the company's profits, so - there will be no need for wages - as the profit becomes your wage.

EQUALIZING WAGES – COOPERATION AMONG CORPORATIONS

If a company at any time makes more money than they need to provide each one with their equal share of the profit as well as covering their costs - those monies will go into a fund that is responsible for assisting companies that are not making sufficient to cover their costs and provide each one with their fair share. That way a balancing effect takes place so that all companies are not only cooperatives in how they cooperate internally - but all cooperate with each other as well.

Related articles

• Day 259: Give Happiness, Get Happiness
• Day 162: EQUAL MONEY CAPITALISM - The Way Forward

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Day 67: The Functions of Money

Money as a Medium of Exchange

In a barter economy, one can only trade goods for other goods. If you want/require something like for instances clothes, and you only have wheat yourself which you cultivate, you need to find someone who can supply you with clothes and at the same time demands wheat.
For a trade to take place, a double coincidence of wants needs to be in place. Trading goods for goods can be limiting as one might have to first trade wheat with someone who has carrots, trade the carrots with someone else for spinach, and then go back to the person with the clothes because spinach is something he/she's willing to trade for clothes.

This type of inefficiency led people in even early primitive communities to come up with some form of money (for instance obsidian) to facilitate the exchange of goods. The advantage of a monetary economy is that the requirement of the double coincidence of wants falls away. As long as the wheat farmer can find someone who wants to buy his wheat, he can buy clothes with the money received for the wheat.
Money then serves as an intermediary to facilitate the process of exchange, making it more efficient.

Money from this perspective is anything that is generally accepted as payment for goods or services or that is accepted in settlement of debt.

What makes money "special" is that it is accepted as payment because people believe that it will be accepted as payment by other people. In England in the 12th century for instance, they came up with 'tally sticks' as a medium of exchange, which was basically a piece /stick of wood with notches in it. The use and exchange of money is thus completely dependent on its acceptance and belief of people as it being 'money' and it being 'valid'/'valuable' -- and so is completely based upon agreement.

Money does not have to be 'backed up' by anything such as gold or silver -- as again gold and silver are simply materials which we've decided to give value -- but that doesn't make them valuable in fact. Backing up money with 'gold' or 'silver' is then simply 'backing up money with another form of money' and does not make the money more 'real' / 'valuable' / 'better'.

Money as a Unit of Account

A unit of account is an agreed measure for expressing the prices of goods and services. In a money economy the prices of goods and services are expressed in monetary terms and so money also functions as a unit of account. The accounting function of money is secondary to that of the function as a medium of exchange.

Also note that money can lose its usefulness as a unit of account when going through a period of inflation, as when prices increase but your income/savings stay the same = you get less for the same amount of money.

Money as a Store of Value

Money also functions as a store of value. The most common form of holding wealth is money, as it is something which you can easily exchange for something else at any point in time.

There are other forms of storing value, such as property, stocks, shares etc. Of all the different forms of stores of value, money is the most 'liquid' one (since its easily exchangeable).

Holding / storing wealth in the form of money over long periods overtime also has very definitive disadvantages. Overtime, inflation progresses and your money will slowly but surely lose some of its value overtime (and will diminish a lot in periods of hyperinflation). In short, during inflation your money does not retain its value.
 n the long run, one is better off storing one's wealth in the form of property, Art, precious metals, etc. As prices increases, the prices of your Art pieces will also increase, and so will retain its value better than money in its simple form.

Money's function as a store of value also implies that it can be used as a standard of deferred payment. This practically means that money also works as the measure of value for future payments.

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Day 58: Elasticity - How Far Can we Stretch our Customers? - Part 1

In previous blog-posts the concepts of supply and demand were discussed and it was explained how economists use supply and demand curves to predict how the quantity demanded and supplied of goods will change when their prices change. However, so far we've only been able to predict in which direction the quantity demanded for a good or services will change if the price of the good/service changes, or in which direction the quantity supplied will change if the price of the good/service changes (will it go up or will it go down). But to make more accurate predictions, economists require to know by how much the quantity demanded/supplied will change by a certain change in price. In order to do this, a new concept must be introduced, namely: Elasticity.

Elasticity basically measures responsiveness. It is possible that if a price goes down slightly, that the quantity demanded will barely change - in this case we speak of a low level of responsiveness. But it is also possible that if a price goes down slightly, that the quantity demanded will significantly increase - in this case we speak of a high level of responsiveness.

So - with elasticity we're looking at a relation between an action and a reaction - where, the change in price is the action and the change in the quantity demanded/supplied is the reaction.

To calculate elasticity, (take a breath, it's going to be a little technical now - don't worry, it'll soon be over) we divide the percentage change in the reaction by the percentage change in the action. Because two percentages are divided by each other - we end up with simply a number (not a percentage) and this number is referred to as the 'elasticity coefficient'.

Let's make this more tangible by discussing the Price Elasticity of Demand.

The Price Elasticity of Demand

With the price elasticity of demand, the change in price is the action and the change in quantity demanded is the reaction. We know from previous discussions that if the price of a good goes up, the quantity demanded will generally go down (when something becomes more expensive, less people are willing and able to pay the higher price). And - when the price of a good goes down, the quantity demanded generally goes up (when something becomes cheaper, more people are willing and able to pay the lower price). The price elasticity of demand will thus help us assess by how much the quantity demanded of a good goes up or down in response to a change in price.

To calculate the price elasticity of demand, we divide the percentage change in quantity demanded (the reaction) by the percentage change in price (the action). Let's say - the price of petrol goes up by 10%. In response, the quantity demanded of petrol will go down as less people will be willing and able to pay the higher price. But, since many people are currently dependent on petrol to for instance drive to work, it will for many make sense to just pay the higher price, rather than looking for alternative ways to go to work that might take up more time or that are simply not available. Therefore, let's say that the quantity demanded will only go down with only 1%.

The price elasticity of demand for petrol is then calculated as follows: 1% (percentage change in quantity of petrol demanded ) / 10% (percentage change in the price of petrol) = 0.1

Because 0.1 lies between 0 and 1- this result indicates to us that the price elasticity of demand is 'inelastic'. In other words: Even if the price of petrol goes up by quite a large percentage, in comparison, the quantity demanded will not go down by much.

Demand is inelastic when a change in price will cause a smaller change in quantity demanded.

Demand is elastic when a change in price will cause a bigger change in quantity demanded. In case of elastic demand, the elasticity coefficient will be above 1.

Goods with an inelastic price elasticity of demand are often goods that people need, like basic necessities (eg. basic foodstuffs, electricity, water, petrol, etc.), as well as goods that are addictive (eg. tobacco, alcohol, drugs). With basic necessities, a person often simply doesn't have the choice not to pay the higher price. Therefore, if a person knows that the good they are providing/selling is a good with inelastic demand - they can take advantage of the situation by raising the prices as high as possible, because they know people will still pay for it; it's either paying up or endangering one's life. With addictive goods, the same logic is used, because even though prices of these goods are high, the addiction will motivate individuals to keep on purchasing the good, even if they have to sacrifice a lot of money for it.

Goods with an elastic price elasticity of demand are generally luxury goods - meaning: goods that are not necessary for one's survival, such as books, holiday resorts, fast cars, etc. If the price of a luxury goods goes up, many people will be willing to sacrifice having this good in order to have more money available. Or in other words: the price will be a big factor in deciding to acquire luxury goods, whereas with basic necessities - the goods must be purchased de facto and the decision to buy the good is therefore less dependent on the price.

Other points that play a role in determining the price elasticity of demand are:

1. Substitution possibilities
The amount of substitutes available will also play a role int he price elasticity of demand. If there are many substitutes for a product, then instead of paying a higher price, people will simply turn to a cheaper substitute. However, if there are no or only very little substitutes, then people are inclined to keep on buying the same product even if the price rises.

2. The degree of complementarity of the product
The degree of complementarity of a product refers to the tendency of people to use this product together with other products. For instance, you use batteries with appliances - you use salt to spice your food, etc. For goods with a high degree of complementarity (that are often used together with other goods) the price elasticity of demand will tend to be low (inelastic). And the other way around for goods that are used individually.

4. The proportion of income spent on the product
The larger the proportion of income spent on a product, the higher the price elasticity of demand will be (elastic).

One can see that having insight in the price elasticity of demand of the good one is selling gives the seller the opportunity to make the biggest profit possible - and one doesn't have to know much economics to do this, simply considering the points above and assessing what type of product one is selling in relation to these categories will aid a person in milking their customers to give them as much of their money as possible.

We discussed here the price elasticity of demand - the same principle of elasticity can be applied in relation to:

• The income elasticity of demand (how will the demand for a good change with a change in the income of households?)

• The price elasticity of supply (how will supply for a good change with a change in the price of the good?)

• The cross elasticity of demand (how will the demand for a good change if the price of a related good changes? Eg: how will the demand for coffee change if the price for tea changes?)

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Day 51: Resource Distribution - Part 3

I commit myself to expose the true nature of supply and demand -- where a demand is only a demand if a person has the financial means to back up their want/need -- and where again no distinction is being made between want or need -- the system doesn't care whether you're dealing with a want or a need -- if you don't have the money you're not part of the game

I commit myself to expose that our current nature inherently prefers people with money over people with no money and that the system will thus never work for everyone as there is no equality existent currently within the distribution of money all over the world -- it can thus only further widen the inequality gap


I commit myself to expose the dubious nature of economics -- where economics is dubbed the 'science of scarcity' -- while all the while not being interested at all in the responsible management of these 'scarce' resources -- because if you have money, you can get what you want -- no matter how this will impact negatively upon others

I commit myself to expose that economics being fucked up is no secret -- it is right there all laid out in the textbooks, there are no conspiracies who are behind the fucked-up-ness within our world -- the answer has always been right infront of our eyes but we've been too blind to see it/question it -- which only reflects back to us who we really are and what we have accepted and allowed ourselves to be and so allowed it to be manifested within this world as an extension of ourselves


I commit myself to the uniting of divided interests into one interest as that which is Best for All Life -- where all play a role as giver and receiver within the realisation of the responsibility each one has to take on and live to make this place a world which is Best for All




I commit myself to expose the fake sense of 'equality' our current economic system presents -- where the concept of equilibrium sounds nice, and where the math adds up = the amount supplied equals the amount demanded -- it sounds so perfect so it must be right -- without seeing/realising that the equation had to be rigged for it to work out, and is thus not a real point of equilibrium, as it only wants to play equilibrium with those who have money




I commit myself to the responsible management of resources, where we actually look and investigate what is here, how we can use it, how long will it last -- how many beings are there, what are their needs, how can we get the resources they need to them --- where the system will not distribute to those with money and skip those without -- but will give to Life for the sake of Life, where all have a right to the resources to sustain themselves just because they are Here, not because they first have earn it

I commit myself to the establishment of an Equal Money Economic System, the first Economic System which cares about all Life and cares about the resources Earth has provided, managing them responsibly and with sustainability in mind at all times

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