Envelopment

Alfred Marshall titled his main work "General Principals of Economics", which was a revolutionary title in those days, since economics was not really a science. The proper term was 'political economy', since it is the purpose of government to manage the value of money (Karl Polyani, "The Great Transformation"). However, Adam Smith did show a universal correlation between gold and grain, in the relatively constant proportion of the weight of gold required to purchase a given weight of grain. Still, John Maynard Keynes, the person who edited Marshall's book, also wrote a book outlining the problems with interest. He showed that interest does not find a natural or functional level in the marketplace, since lenders, if they can find anyone to lend money too, will have no problem charging more interest than the profit that can be made. So long as there is money in the economy, the interest rates will rise. As interest rates rise, inflation occurs and money becomes more scarce, effectively increasing the 'price' of money. As money gets more scarce, it commands a higher interest rate. The negative feedback cycle goes on and on like that untill a depression happens to correct it. Boom and bust economies are not favorable climates for capitalist ventures.

Keynes proposed that the government regulate the rate of interest in order to keep the rate just below the rate of profit, so money is more profitable to invest in physical capital rather than lend out. That control has been squandered away, and all that is left of it is a 'discount rate'. Banks today carry an astronomic amount of debt because there is a hopelessly naive population of credit card holders who do not comprehend that the interest on their credit cards represents a higher price and is the primary source of inflation (war spending is the other main source, and its current influence is in fact growing). Hence, the banks are more than willing to borrow money at the discount rate and collect 30% interest on it from the consumer/wage-labor base. The consumer/wage based labor, however must be maintained at a functional level or there is insufficient consumption to sustain capital. The short term fix is to import from lower wage countries, but without a functional wage base, the debt fix can only be short term as well. The correction to this interest based inflation can come from no other place than the profits of capital.

From the perspective that the boom and bust cycles of the 19th century economy were in fact entirely the result of monetary policy, it becomes suspect that Alfred Marshall and John Maynard Keynes were both involved in a program of sustaining this disfunctionality and not, as it seems, remedying it.

How do I get that?

First, Marshall declared political-economy to be in fact a science and independent of politics. That strategy disuades investigators from pursuing the political-economy angle any further. Keynes came along and instituted the sophistical solution of managing the interest rate, although, he well knew that monetary interests held a powerful sway over governmental policy. Hence the interest rate remained indirectly under the influence of the major banking families. We know Keynes was aware of the powerful interests because he was an influential economist in those days and was physically present in meetings with them.

The result is that the climate was set for the common people to be rendered ignorant of the functioning of government , especially due to the fact that this was the era of the populist revolt, and popular power had become rebellious, at least where the 'land store' owners were concerned. We find at this point in U.S. history a diminishing of the awareness of the works of Livy, Machivell, and Virgil, not to mention the founding fathers. And we also see economists such as Marx and Ricardo becoming demonized and marginalized. Notice today, there are works about founding fathers promoted everywhere, and they are in fact highly distorted, but little promotion of the actual works written by the founding fathers. A lament by James O'Connor in the journal "Capitalism Nature and Socialism", I forget which issue, but it was several years ago, complained about how many individual writers on Marx had never even read "Capital vol.I", 1867 (actually, the criticism is still valid if you read the comments at the Amazon link ). Of the five copies of John Adam's "Defence of the Constitutions of the Governments of the United States in Response to the Letter from Mr Turgot to Dr Price", in this State available to the public, the copies I took out of the library had not been read for over 20 years. This is the work set out for the Aristocracy to read, as it was basically the 'teachers guide' to the Federalist papers. It is the principals behind the functioning of the United States as a liberal republic.

This censorship was brought about by powerful interests in Washington who set about producing the textbooks for the American public to learn. All allusions to democratic power were removed from public consumption and the principals of liberty, republicanism and even capitalism were distorted into mirror images of what they really are over the past century.

The vast array of educational materials, entertaining novels with their smidgens of disconnected facts, educational television and even this internet, combined with a steady diet of distractions, have led the American people to the brink of a modern slave state. In a slave state there are only two classes and not three, land owners are essentially microcosms of governance and then there are the slaves or peasants who are the governed. There is no capitalist class necessary when commodities are commanded into being.

This would all add up to a pleasant read under the heading of 'conspiracy theories' if not for the fact that the end of fossil fuels is on the horizon and with it the need to coopt manual labor to replace it. Capitalism in its present state rose to predominance in the market economy with the emergence of fossil fuel power, as outlined by many, including Marx in "Capital volume I", although it was closer to the beginning of the 18th century with Thomas Newcomen and the invention of the heat engine, rather than at the end of the 18th century when James Watt invented the steam engine. The raw materials that fed the latter engines was produced on the backs of slaves, and the labor that worked the factories was no better situated.

It seems that the powerfully ignorant have decided to ignore sustainable energy options in favor of a return to the days of slavery and drudgery. Capital's last and best chance to win this old game is to invest wisely and heavily in renewable energy technologies. Remember, everyone passes the buck, but one should be smart enough not to pass a buck up.

VOTE: U. S. CAPITALIST PARTY

Word Shortage

Words and what they really mean v.s. what they are assumed to mean as a consequence of the media and a few thoughtless tanks gradually permuting them, sophistically in their own best interest. A quote I found that really applies is by David Hume, written in 1739 :

"There is a great difference betwixt such opinions as we form after a calm and profound reflection, and such as we embrace by a kind of instinct or natural impulse, on account of their suitableness and conformity to the mind. If these opinions become contrary, 'tis not difficult to forsee which of them will have the advantage. As long as our attention is bent upon the subject, the philosophical and study'd principle may prevail; but the moment we relax our thoughts, nature will display herself and draw us back to our former opinion. Nay, she has sometimes such an influence, that she can stop our progress, even in the midst of our most profound reflections, and keep us from running on with all the consequences of any philosophical opinion."

sweet

A republic is a complex government structured to balance the power between the three primary components of society, the people, the aristocracy and the executive. These three components have each taken their turn in history governing nations, and each suffers the digression put so eloquently above by Hume. Only when government is mixed in such a manner that all power can not accumulate to one center or one branch, can there be liberty enjoyed by all classes. Such a balance is only possible when there are checks and balances outlined by a constitution between the three.

Of the individuals I questioned, a republic is a representative form of democracy. Well, they have one third of the equation. Thomas Jefferson was a slave owner. In a democracy there will always be a minority and a majority. The minority will always be available for exploitation and oppression by the majority. This fact was common knowledge in that era. John Adams worked against Jefferson to establish the republic which was capable of putting an end to the existence of the classification; 'minority'.

Liberty is the freedom to question the habitual and dogmatic processes that govern the behaviour of a civil society. It is accomplished by preventing the passing of any law that does not directly bear on the prevention of harm to either persons or property. The only caveat is that the category of "offensive" can not be construed as causing harm, since this argument is the basis of every instance of religious persecution in history.

When asked, most people say liberty means 'freedom', but it is taken to mean freedom to do whatever one wishes and has no bearing upon its purpose - that of questioning the basis of laws.

Capitalism is the freedom to profit from the ownership of property. Modern banking with it's fiat money has perverted capitalism to mean the freedom to profit from the extortion of capital. Since a fiat money is not capital and only a symbol of value which is supported by the political power of government through laws governing exchange, there is no principle nor principal upon which to draw an interest from a fiat money. Investment to gain profit must be entirely premised upon the ownership of true capital.

Most people confound capitalism with the market economy. The market economy is the only truly functional form of economy, but capitalism is part of the basis of liberty that allows individuals to stand against many of the arbitrary intrusions of political power and form the material world individually.

Rent, historically, as defined by David Ricardo, is the difference in the profit earned between rich fertile land that requires little capital input or labor to produce a bounty, and the most marginal land in cultivation necessary to satisfy the demands of the population. Ultimately, rent is the value of the free gifts of nature. What are often called 'capital intensive industries' are in fact not capital intensive at all, but rent bearing industries. Adam Smith emphasized the distinction between the capitalist and the landlord (and labor as well) showing that the capitalist was the one who produced the profit through his industry, the landlord collected a rent based strictly upon the ownership of the property and labor earned a wage in exchange for doing the work. The farmen who owned his own land and did all his own work earned all three; profit, rent and wages. What is called 'rent' today is most often in reference to leasing property to tenants, but this is not actually rent since it has nothing to do with the free gifts of nature. In fact, someone who owns an apartment complex or duplex does not collect a rent, but makes a profit from the ownership of the building which is in fact capital. Since we typically own the land the building is sited upon, one could call part of the income from tenants a rent, but it is an insignificant part, since it has little or nothing to do with the difference in value between one 'property' and another. The difference in value between a productive oil well and a non productive oil well can readily be called rent though, since it is in fact a gift of nature.

Most people are of the mind that rent is the payment we make to a landlord or collect from a tenant. This has no basis in any principle whatever. I would really like to know how this came to pass.