assets and materials required by the productive system. Labor provides the ideas, designs, philosophy, direction, management, physical work, etc. that is required to generate the goods and services which will be sold by the organization. Labor can be either intellectual or physical. By intellectual labor is meant creative activities such as designing, developing, planning, organizing, managing, writing, etc. Physical work covers a wide range of activities from those involved in manufacturing and construction to playing sports to singing and acting to speaking to teaching to nursing. In the initial or start up stages of the production system, the capital is provided by individuals or capitalists. After the production system is operating in a profitable mode, the capital is no longer provided by capitalists but rather is generated by the system or organization itself. This is a very important point to understand. After an organization is generating a profit on its own, the organization itself generates its own capital. For a corporation that has been in existence for a few years, virtually all of the land, equipment, materials, assets, and cash that it owns has been generated by the organization itself and the workers who were responsible for producing the goods and services which were sold to generate the capital used to either buy or pay off the loans on the property, equipment, materials and other assets. After the corporation has begun to generate capital, the initial capital provided by the capitalists is no longer relevant and the capitalist provides absolutely no contribution to the enterprise. Virtually all of the assets or capital of the vast majority of corporations is capital that was generated by the organization itself through the labor or the workers.
Production provides the goods and services that satisfy the demand of consumers. Production always seeks to match demand. Every planning function within an organization is continuously working to forecast demand and match capacity, production, procurement and inventory to forecasted demand. Increased consumption (which increases forecast) increases production; decreased consumption (which lowers forecast) lowers production. Production of goods and services comes essentially through the labor of the working class (the lower ninety-nine percent of the population) facilitated by capital from the capitalist class (the top one percent of the population) assuming the organization has not reached the point where the capital of the organization belongs to the organization itself. In this case the profits from this joint venture of labor and capital must be equitably shared between labor and capital, that is, between the capitalists and the workers.
The working class constitutes the majority percentage of the consumptive part of an economy. Given that consumption drives the economic cycle and that the working class is the major part of consumption, it follows that the economy is driven by the working class’s consumption. However, the working class can only consume to the extent to which it is capable of buying goods and services. Since the working class is the main factor in both the production and consumption phases of the economic cycle, it must be given its fair share of the profits so that it can purchase and consume.
Unfortunately, what has happened and is happening is that the capitalist class has been taking far more than its fair share within the national production system. And because the total is limited, the more that the capitalist class has taken, the less there is for the working class. This has caused the great imbalance between capitalists and workers; the imbalance that is severely affecting the economy in a negative way as is seen in the high percentage of unemployed, under-employed, those living in poverty, homeless, and those living from paycheck to paycheck.
Over the past forty years, the wealth, financial stability and earning ability of the working class has significantly declined. Most working class families’ assets have shrunk. Twenty-five percent of the US population have zero to negative net worth. Over a hundred million people in the United States live from pay check to pay check. Tens of millions of families have had to resort to excessive debt to operate financially and millions of these will suffer from the burden of their debt which will never allow them to retire. There are over 48 million people living in poverty within the United States.
Because of the great amount of income spent on debt and interest, because of the lag in wages behind real inflation, and because of out-of-control costs, especially energy, food and health care; consumption by the working class has been and continues to be reduced drastically. As consumption by the working class decreases, production which is driven by and is correlated to consumption proportionately decreases. When production is down, businesses react by laying-off workers to reduce operating expenses. Of course, when people are unemployed, they have even less money to spend. This in turn leads to even less spending by the working class which businesses respond to by laying off more workers. This downward trend will continue without end except for the total collapse of the economy unless something is done to stop it. The United States is now is this downward trend with nothing to stop it because those who can stop it are politically powerless to act and those with political power are in fact responsible for the imbalance between capital and labor that has created this broken economy.
The vast majority of elected officials represent primarily the capitalist class. This means that their primary focus with respect to administering, legislating, and adjudicating is to promote the welfare and goals of the capitalist class. It has been and is this biased representation that has led to the gross imbalance between capital and labor which is the cause of this continuing economic crisis. These elected officials ignore the fact that they have been elected by the people and are obligated to promote the welfare of the general public, not a very small, select and elite group within the population.
These elected officials, who represent the capitalist class, have allowed and facilitated a virtual attack by the capitalist class on the working class. While it would be more appropriate to consider this assault on the working class by the capitalist class as a war, it is a one-sided war in that the working class has done nothing to defend itself. And, it is a pre-emptive war.
Within the domestic area, the United States government has eliminated the proper controls which seek to maintain the appropriate balance between capital and labor. Within the foreign area, the United States government has promoted and is promoting a global empire for the capitalists.
At the heart of the capitalist campaign is the fallacy of free market economics. The fallacy hides behind the misleading term ‘free’. Because everyone believes in and desires freedom, people blindly accept almost any concept that uses the word “free.” While people want freedom, they do understand that there is no such thing as absolute freedom; freedom without any limits whatsoever. A person’s freedom is limited by the freedom of every other person. In the United States, a person is free to drive down a highway. In its general sense, everyone will agree with that statement. At the same time, everyone understands and agrees that the freedom to drive down the highway is limited. Only people who have the ability and a license are free to drive down the highway. A person’s freedom to drive down the highway is also limited by the other people using the highway. The government passes laws and enforces those laws in such a way as to maximize the freedom of everyone. Speed limits, stop signs, and traffic signals provide the necessary order to a free society of drivers.
The fallacy of free market economics lies in the assumption that there should be no restrictions, no regulations, and no oversight by government. It is similar to the idea that there should no speed limits, no traffic signals; everyone will naturally respect everyone else. While this would work for most people, it definitely would not work for everyone. There would be a small group of people who would not respect the rights and privileges of the rest of society but instead would take advantage of the lack of appropriate and agreed upon controls in order to capitalize on the situation for their own personal and selfish purposes. A free market with no rules, regulations or management is not a fair market, but a fair market is always a free market. A fair market is based on rules, regulations and management. To achieve a free market, it is first necessary to achieve a fair market.
There has to be government controls and government oversight within the economy in order to maximize the freedom and opportunity of all. There cannot be a free market in the sense promoted by the capitalists; a market without any regulations and controls. It is like a football game without any rules or referees. Rules bring order; without them there is chaos. The natural constraints on the economy come from a free and representative government: a government that represents the people; serves the will of the people and acts to regulate the economy so as to maximize the wealth and prosperity