Economies and How They Work

The world's biggest nightmare, these days, is "the economy," but what is it.

Generally speaking, the economy is a system of production and consumption, but there are different systems. There are, for instance, regulated economies and unregulated economies, planned and unplanned. If we include ownership as part of the system, then Communist economies involve ownership of the means of production by the community; Socialist economies involve ownership of major production by the political system; and Capitalist economies involve ownership of production by individuals. Communist economies tend to be planned and regulated; Socialist economies tend to be regulated at least; and Capitalist economies tend to be unplanned and unregulated.

One way or another, a system of economy ought to be for the mutual benefit of the people. Everyone contributes through production of what they can manage and everyone has an opportunity to consume what they need for their livelihood. Unfortunately most systems break down. Even Communist systems that supposedly embrace the "mutual benefit" notion in principle tend to fail because of the difficulty involved in planning. Capitalist economies don't even try to embrace the "mutual benefit" notion but, rather, rest their faith on the bizarre idea that everything will work out OK if you just leave it alone (Adam Smith).

That is pretty much the picture of where we are today. America is such a super-inflated Capitalist system that it would vastly prefer to destroy itself in a mire of individual greed rather than look anything like even a regulated Socialism. Under the theme of "globalization" our Capitalists (owners of our production capacities) are moving Capital into the rest of the world where they can produce with lower obligations to the labor forces and at lower costs of most resources. Under the theme of "free trade agreements" they can then turn around and export/import their products for American consumption. But what's left out of this picture? The American worker of course! When Capitalists perform their productivity in a way that excludes the mutual benefit of allowing their own countrymen to share in the production, the "system" is broken. Americans have to produce in order to consume.

Right now, Americans seem to believe that politicians must create jobs for them. They ignore the fact that it is Capitalists who create jobs by hiring workers to engage with the means of production they own. What can politicians do? They could hire Americans to do government jobs, but the same American voters do not want "big government"! They could regulate the behavior of Capitalists so that the system works for American workers. But the same American voters are opposed to government regulation!

All I can say to the newly seated Republican House-of-Representatives is Good Luck. They will certainly need it. So far as I can see there is only one way, given these political preferences, in which the Capitalist system in American will be "healed." Capitalists will have to be lured back onto the mainland and that will only happen when American labor and resources are sufficiently cheap to meet the Capitalist's greedy expectations. That means re-making the American Dream into a vision of a Third-World Country. How proud will we be then?