Why free market econoics moves towards extreme inequities

[Mo212]

It took me a while to figure out what was fundamentally wrong with free market economics, it is the INVENTION of money itself because as population size grows, each person must have enough money to live on (to prevent revolt/revolution) for basic needs everyone requires, one problem of course is skills and talents, wants, desires, etc, are not equally distributed but the FUNDAMENTAL most important problem is large population sizes and the use of money as a medium of exchange itself, which leads to extreme inequity


Here's a quick table, table 2 is the money each person 'starts out with, column 3 is the amount of money one person would make gaining 2% of that total society (populations) income, say we'll say for hte sake of argument he is running one of the most successful businesses, watch it grow to enormous proportions as population size increases and money supply must be increased.

Population - Money per person - One person gaining 2% *note I can't get the table working correctly, but you can see it yourself in a spreadsheet, start with a population the size of 100, then increase it by 10 each time, while starting out each person with 10,000 per person (assuming basic needs, etc, etc), then the third collumn representing a successful person making a product/providing a widget, which whole population buys, 2% of their income for the entire population.

100.00 10,000.00 20,000.00
1,000.00 10,000.00 200,000.00
10,000.00 10,000.00 2,000,000.00
100,000.00 10,000.00 20,000,000.00
1,000,000.00 10,000.00 200,000,000.00
10,000,000.00 10,000.00 2,000,000,000.00
100,000,000.00 10,000.00 20,000,000,000.00
1,000,000,000.00 10,000.00 200,000,000,000.00
10,000,000,000.00 10,000.00 2,000,000,000,000.00

This is why rich people do not "earn" their enormous wealth, their wealth is an artifact of the monetary system of exchange itself and having no limits on accumulation, property, etc, and so this necessarily gives birth to UNJUSTIFIABLE inequality.

It took me a while to figure out that the invention of money itself was flawed and it is one of the main causes of the extreme inequality gaps in modern capitalist nations.

[Kronos]

Money is not to blame for anything. In fact, it is a very efficient means to exchange. Its "liquidity" helps economy avoid what is called "the double coincidence of wants" problem present in simple barter systems.

The issue you have, it seems to me, can be traced back to the interest system, credit system, and the self propelled momentum of capital investment.

It is not making profit from exploiting wage workers, alone, that is the reason why degrees of wealth are enormously different among the classes. It is the ability to make money with money that is the major problem. Through investment (spending X amount and gaining Y amount), granting credit (which is a finance system) and making interest (which is the cost for the opportunity to finance), capital multiplies itself without ever appropriating labor force.

The capitalist says to the consumer: "I want X amount of dollars for this, but since you are broke (chuckle), I'll let to have it if you promise to make payments. But, since I am giving you a deal by not demanding that you pay for it all at once....I'm going to tack on some interest, which is the price you pay for the opportunity to finance from me."

The capitalist says to the capitalist: "I want to buy that factory from you now, and in one year it will pay for itself as well as make me extraordinary profits."

In neither case is the wage worker directly exploited.

This is a strange kind of capital because it cannot be classified as constant or variable capital....but something like a hybrid of both. Credit and the interest gained could be considered constant because of "fixed" rates, but investment profit depends on the fluctuation of market value.

But really these three factors are the reason why capitalists increase their wealth at amazing speeds.

[mikelepore]

I think several important facts affect inequality.

One is the strong nonlinear relationship income and savings. People can save money if anything is left over after they spend their income to live. Therefore, comparing two people who have the same bills to pay, it's possible for one person to have slightly more than than the other, but perhaps save ten times as much, or a hundred times as much.

There is also a random distribution of luck. One person says, "That money I was going to save last year, the car needed a new transmission. And that money I was going to save this year, the house needed a new roof." Just like rolling dice repeatedly will occasionally come out to be 1-1-1 or perhaps 6-6-6, some people will have sequences of good outcomes and others sequences of bad outcomes.

Then each condition, either having or lacking, is inherited by their children, and the cycle is repeated.

Extreme inequality should be no surprise. After these random processes being repeated for many generations, it would be surprising if we_didn't_ find 5 percent of the people owning 95 percent of the wealth.

[Kronos]

Here is another subtle effect.

Whenever large capitalists raise prices, small capitalists have to raise their prices too in order to make up that lost margin. For instance, a coffee bean distributor raises its whole sale prices. Then the petite bourgeois, small business owner, slightly raises the price of one cup of coffee.

In this case, the effect is "deflected" through the small business owner directly to the consumer. The consumer loses while the big and small capitalists do not.

I went to do my laundry earlier and the price has gone up on the machines. I asked the owners why, and they told me because taxes went up. What was funny, though, was the fact that the owner somehow thought that we could sympathize together- like he was trying to pretend he was struggling like myself. I saw through this smoke screen, of course, and then began to pester him about having the hot water turned off....which he had done to save money on his electric bill.

This is fine. But what isn't fine is the fact that HE DOES NOT NOTIFY THE PUBLIC that there is no hot water. People who use the machines BELIEVE they have a hot water option....but they do not.

His excuse was "well, most locals know and they don't mind," and then he tries to be a scientist- "actually the soap is what cleans the clothes, not the temperature of the water".

With the first I said just because ten, or even fifty people know there is no hot water DOES NOT EXCUSE the fact that you are lying to the general public by allowing them to assume there is hot water. You do this because YOU KNOW that if people knew there was no hot water....you would get less business.

Then I told him that hot water certainly does expand the fibers in fabric, which allows dirt and stain molecules to dislodge and loosen.

Needless to say I won't ever go there again. He was humiliated. A liar and an idiot.

What struck me the most is that this parasite actually thought he had a right to complain about his taxes and bills, and expect ME to have sympathy for him, after lying on two accounts.

This is the capitalist for you, comrades. The most vile and pernicious creature to ever walk the earth.

[RGacky3]

You have to remember before money was the main symbol of wealth it was land, feudalism, now was that more equal?

(BTW kronos I'm waiting in the Learning section)

[Kronos]

BTW kronos I'm waiting in the Learning section

I hope you brought a lunch, kid.

[RGacky3]

I hope you brought a lunch, kid.

Looks like someones gotta swallow their pride a little.