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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.
No, you do not need debt to have currency - you can simply issue bills, much like United States Notes (distinct from Federal Reserve Notes like we use today).
If your employees produce goods, you can let them take some of the goods home and you keep the rest for your role in the enterprise. No one has to owe anything.
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.
No.
You worked to get your 6 apples and you exchanged them for 6 oranges. Your "profit" is 6 oranges.
If you want to keep profiting, then you need to keep working to collect things you can trade.
You might be able to hire someone who will do the apple picking. Sell you 5 apples for 4 oranges, which you can then sell for 6 oranges. Then you profit 2 oranges without needing to do any manual labor.
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.
???
The difference between their pay and what you can sell their product for, is your profit. Debt doesn't come into this anywhere. Debt only allows entities to invest in capital in excess of what they currently own. Basically it facilitates economic growth.
The difference between their pay and what you can sell their product for, is your profit. Debt doesn't come into this anywhere. Debt only allows entities to invest in capital in excess of what they currently own. Basically it facilitates economic growth.
Go back to my hypothetical economy. The owner pays the worker to make a product the worker uses but the owner doesn't. In order for the owner to make a profit he has to pay the worker less than he charges for the product. What is true for the small economy is true for the global economy. The difference gets loaned to the worker. The profit margin is financed. Debt accumulates over time and can't be cleared ever.
No, you do not need debt to have currency - you can simply issue bills, much like United States Notes (distinct from Federal Reserve Notes like we use today).
If your employees produce goods, you can let them take some of the goods home and you keep the rest for your role in the enterprise. No one has to owe anything.
I'm not talking about debt as money. I'm talking about where does the difference between wages and the prices for goods come from? The owner has to pay the worker less than he charges the worker for the goods in order to make a profit. Where does the difference come from? New debt is my answer. Pay raises.
It takes 1 hour to make something the worker gets $7.25 for making it. The owner has to charge $12 to cover the labor, taxes etc. and to make a profit. Where does the $4.75 come from? The in house credit plan?
Go back to my hypothetical economy. The owner pays the worker to make a product the worker uses but the owner doesn't. In order for the owner to make a profit he has to pay the worker less than he charges for the product. What is true for the small economy is true for the global economy. The difference gets loaned to the worker. The profit margin is financed. Debt accumulates over time and can't be cleared ever.
The difference does not need to be loaned to the worker, it can be kept by the business owner until spent.
The difference does not need to be loaned to the worker, it can be kept by the business owner until spent.
You're not making any sense.
I get $1 for making something. I buy that thing from the person paying me to make it for $0.90 does he make a profit? I buy that thing for $1.10 does he make a profit if my labor was his only expense?
Where does the $0.10 come from? Over time I need to borrow that money.
It does not resemble reality. Flawed model and reasoning.
The profit the owner makes is like the oranges example I gave above. The difference between what the workers make and what the owners make isn't debt, it's extra product.
The owner is buying things as well or investing his share. Growth requires that a portion of production be reinvested.
I get $1 for making something. I buy that thing from the person paying me to make it for $0.90 does he make a profit? I buy that thing for $1.10 does he make a profit if my labor was his only expense?
Where does the $0.10 come from? Over time I need to borrow that money.
Or you can simply produce 11 of them and only buy 10 back.
Or you can simply produce 11 of them and only buy 10 back.
Quote:
Originally Posted by rruff
It does not resemble reality. Flawed model and reasoning.
The profit the owner makes is like the oranges example I gave above. The difference between what the workers make and what the owners make isn't debt, it's extra product.
The owner is buying things as well or investing his share. Growth requires that a portion of production be reinvested.
Assumption. The only cost is labor.
Profit, is the difference between what you pay labor and what you charge labor for your good or service.
The assumption is not 100% accurate. But it is reasonably close.
There is a lot of math between The two person simple economy and the global economy, Very little of the product of our labor leaves the planet, but largely it adds up. there is one world gross product. It is produced by one world population. The population gets paid less than what they make gets sold back to them for. The difference gets covered by the issuance of new debt.
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