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This is an economics 101 riddle. In an economy of two people trading apples for oranges profits are impossible, in an economy of 3 people trading aples, oranges and potatoes profits are impossible except the disaster times would force one party or another to accept an enequal exchange. Profits are commonplace in an economy of 300 millions people. Is it because "disaster" mode is a permanent feature of mass economies?
If you want the answer to your title, profits and wages both come from adding value. The apples and oranges require an investment in land, machinery, and labor.
This is an economics 101 riddle. In an economy of two people trading apples for oranges profits are impossible, in an economy of 3 people trading aples, oranges and potatoes profits are impossible except the disaster times would force one party or another to accept an enequal exchange. Profits are commonplace in an economy of 300 millions people. Is it because "disaster" mode is a permanent feature of mass economies?
***SPOILER ALERT***
If I can make orange juice with 3 oranges, and "sell" it to you for 5 oranges, I have made a profit - it "cost" me 3 oranges and my "revenue" was 5 oranges - so I made a "profit" of 2 oranges.
If you want the answer to your title, profits and wages both come from adding value. The apples and oranges require an investment in land, machinery, and labor.
OK, let's asume we are stuck on an island, I exchange 5 my apples for 6 of your oranges. For me to profit (in a conventional sense) means that all the oranges I received from you I could exchange back for all my apples I gave to you plus some more. Impossible unless both of us to diversify into other activities or to coerce each other using various means. Even then, profits are shortlived, we must diversify our activities and/or coerce each other endlessly to have profits.
If I can make orange juice with 3 oranges, and "sell" it to you for 5 oranges, I have made a profit - it "cost" me 3 oranges and my "revenue" was 5 oranges - so I made a "profit" of 2 oranges.
Riddle solved.
Diversification into a juice squeezing biz solves the riddle temporarely only. At that rate sooner or later you'll have all the oranges and all the apples. The other guy must diversify and sell you apple juice not to lose his oranges. So it is back to square #1, except that you cannot trade oranges, apples, orange and apple juice at a profit for any extended period of time. You must diversify endlessly and then there are just 24 hours in a day. So two men island economy must be nonprofit or deadly.
Diversification into a juice squeezing biz solves the riddle temporarely only. At that rate sooner or later you'll have all the oranges and all the apples. The other guy must diversify and sell you apple juice not to lose his oranges. So it is back to square #1, except that you cannot trade oranges, apples, orange and apple juice at a profit for any extended period of time. You must diversify endlessly and then there are just 24 hours in a day. So two men island economy must be nonprofit or deadly.
If you have 10,000 people with lots of oranges each, and you are the one making the orange juice, it'll be an awfully long time before you've got all the oranges. If you never "spend" any of them, it will happen eventually, but if this means there is no profit, then the fact that you in theory will eventually have all the world's currency if you always earn and never spend would also by the same token mean that no one ever makes a profit. Is that what you wish to argue?
This is an economics 101 riddle. In an economy of two people trading apples for oranges profits are impossible, in an economy of 3 people trading aples, oranges and potatoes profits are impossible except the disaster times would force one party or another to accept an enequal exchange. Profits are commonplace in an economy of 300 millions people. Is it because "disaster" mode is a permanent feature of mass economies?
Here is my take. a small economy, two people one owner one worker. the worker makes something the worker uses but the owner doesn't. The owner pays the worker less than is charged for the product. The difference is loaned out. Profit margins are financed.
Here is my take. a small economy, two people one owner one worker. the worker makes something the worker uses but the owner doesn't. The owner pays the worker less than is charged for the product. The difference is loaned out. Profit margins are financed.
In principle, there is no reason you can't have an economy with profitable enterprises with zero debt.
In principle, there is no reason you can't have an economy with profitable enterprises with zero debt.
With non compensation for labor you are correct. Grow crops they work for no money, they get eaten. But you have to pay your workers less than their economic value in order to make a profit. The difference between their economic value and their pay has to come from somewhere. The accumulation of debt in the system is the result.
This is an economics 101 riddle. In an economy of two people trading apples for oranges profits are impossible,...
In a real economy, I would only trade apples if I had a surplus of apples. Surplus = Profit.
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