Secondly, (bourgeoise) liberalism assumes that a society exists for the economy rather than the economy for society. This assumption holds that organizing the economy to favor capital will make an entire society optimally functional on the principal that a rising tide lifts all boats economically. The result instead has been increasing social dysfunction owing to distributional effects. Moreover, it involves striving for a standard of living that is incompatible with available resources.
The result here has been not only social dysfunction as the primary gains go to a few but also ecological disaster as the many try to catch up. Now a way to recovery that would include maintaining and ideally increasing the present standard of living in the developed world and extending to the developing world as it emerges from colonialism is unclear.
There is little appetite as yet to actually bite the bullet through concerted action that might be effective. Articles are well and good, but action is needed and promptly. But markets cannot do this as presently organized, and there is no authority to direct the concerted action that is needed. Then, there is the problem of knowing what to do. John Komlos makes some suggestions, but the issues are much broader than economic.
Real-World Economics Review
Humanistic economics, a new paradigm for the 21st century
Real-World Economics Review
Humanistic economics, a new paradigm for the 21st century
John Komlos | Emeritus Professor, Chair of Economic History at the Department of Economics, LMU Munich
Unlimited accumulation is less of an issue than energy consumption. Hence the unspoken logic of culling the herd.
ReplyDeleteWe are headed into a new era - one marked by decline.
First, the basic problem is with capitalism, which can be defined as favoring capital over the other factors of production, labor (workers) and land (environment).
ReplyDeleteThe factors of production are four. This from the Fed:
Factors of production are the resources people use to produce goods and services; they are the building blocks of the economy. Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship.
As for entrepreneurship, the article goes on to say (bold mine):
The fourth factor of production is entrepreneurship. An entrepreneur is a person who combines the other factors of production - land, labor, and capital - to earn a profit. The most successful entrepreneurs are innovators who find new ways produce goods and services or who develop new goods and services to bring to market. Without the entrepreneur combining land, labor, and capital in new ways, many of the innovations we see around us would not exist. Think of the entrepreneurship of Henry Ford or Bill Gates. Entrepreneurs are a vital engine of economic growth helping to build some of the largest firms in the world as well as some of the small businesses in your neighborhood. Entrepreneurs thrive in economies where they have the freedom to start businesses and buy resources freely. The payment to entrepreneurship is profit.
source: Factors of Production - The Economic Lowdown Podcast Series
Having said that, I agree that there is something seriously wrong with the system as it currently works. Blair Fix and others are doing great work on the idea of capital as power and how we should address the problems it causes.
As an aside, capital is stored labor, which means that the capital share is just another labor share. In that sense, it's labor all the way down.
"Land" includes natural resources. "Labor" can be divided into workers and management including entrepreneurs that participate in the work of running the firm. Entrepreneurs often work hardest due to the incentives. To the degree that workers own equity they are part of capital (ownership). Those owners who do not work and therefore do not contribute economically are the rentier class of capitalists. A basic idea behind equity shares owned by workers is that labor gets to participate in capital as owners. Retired people are supposed to rentiers in this model. Good idea as far as it goes but the distribution of ownership belies it.
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