Consider the historic divide between Eastern and Western Germany. I recently found out that the majority of individuals who attempted to flee from Eastern Germany were highly skilled professionals. From an economic perspective it makes perfect sense, a highly skilled worker regardless of whether it was due to talent or hardwork, would enjoy a higher wage in the more capitalistic West Germany than the East. If open borders were implemented, it wouldn't be surprising that adverse selection would eventually erode the Eastern Bloc from within because as the more highly skilled individuals move to the West for higher wages while lower productivity workers move to the east, the difference in average output between the two blocs would grow larger and larger. Looking at the extreme case of free flow of labor, the size of the economic pie within the eastern bloc would shrink and destroy the post-scarcity utopia as there are not enough production to cover "basic needs". This will plummet the economy into an even worse downward spiral, as the economic pie shrinks, it incentivizes even more people to go and leave the country.

It is therefore mandatory for the Eastern Bloc to stop this from happening by heavily militarizing the border and rationalizing capturing/killing deserters to prevent adverse selection of labor power. What's interesting is that the moral and economic justification used is that the deserters of the Eastern Bloc received investments in the form of schooling, public roads, healthcare, etc which was paid by the workers when they were a child. Fleeing to the west is basically treating the investments received on their schooling as a private property and selling it to the capitalistic west, justifying the capture of these deserters. Doesn't this actually imply that even the communist leaders acknowledge the laws of economics, that there is nothing that is free. Labor and resources are scarce which has to be paid for, it simply changes the form of payment from cash into servitude to the communist society who had invested in you. Isn't this simply turning human need which communist thinkers championed to be what made communism superior to capitalism, into a moral leash which keeps individuals locked in place.

Non-Market Coordination of Labour, Production, Distribution, and Exchange Necessarily Precedes, and is Continuously Required, to Sustain the Modern Market Economy:

The foundational premise is that, before you can have a modern market economy - the kind of impersonal, price-clearing trade at scale that Adam Smith described in The Wealth of Nations (and which is virtually synonymous with the modern nation-state) - you require the formal institutions that enforce contracts, protect property rights, and underwrite a stable medium of exchange. [1, 2]

However, to have such formal institutions, you first require people who will perform those roles and conduct that work - alongside a means of directing and coordinating both the people and their labour.

And this is what establishes the logical necessity of pre-market logic to coordinate and direct labour and production before the market can ever attempt to do so. For anyone to have time spare (from the necessity of subsistence farming) to be able to dedicate any of it towards staffing those institutions, society must already be producing an agricultural and material surplus - which in turn requires an existing division and specialisation of labour. Because society needs a division of labour just to build the institutional foundations that make a market possible in the first place, the market itself cannot be what coordinates that initial division of labour.  [3, 4]

Throughout history, human societies have solved this pre-market coordination problem in different ways. Within small tribal units, labour was coordinated through personal, kinship-based reciprocity; across early agricultural empires, it was coordinated through overt physical bondage in the forms of slavery, tribute, and feudalism. Yet while these non-market logics could organise production, none of them could birth a modern market economy. Kinship reciprocity collapses beyond small networks of personal trust, while slavery and feudalism immobilise workers through direct domination - stripping people of the autonomy required to become free consumers and flexible market participants. 

To generate a modern market economy, society required a different mechanism capable of scaling the reciprocal cooperation of the village across millions of strangers, without resorting to the physical bondage of feudalism or slavery.

And that mechanism was taxation - a form of legal coercion exercised by a sovereign authority who can mobilise labour, command resources, and ultimately create the demand for the very currency on which a modern market will run. 

And this requires the issuance of tax credits (otherwise known as money). The sovereign authority and currency issuer first began by imposing a tax obligation (of n taxes) on their citizens, and then created specific jobs that people could perform to acquire the tax credits necessary to satisfy their outstanding tax obligations. [5, 6, 7]

Of course, taxation did not begin as an enlightened or benevolent force. For centuries of early statecraft, taxation operated as a violently coercive instrument of extraction - not far removed from the slavery, imperial tribute, and feudalism it existed alongside - used primarily by monarchs and warlords to provision armies and enrich ruling elites. Yet unlike direct physical bondage, taxation contained a crucial structural difference: by demanding payment in _currency_ rather than owning the worker's body outright, it preserved a space for human autonomy. And as societies progressed and became more civilised, this fiscal mechanism began to be utilised in far more **amicably coercive** ways - directing resources not merely toward the crown's barracks, but toward the foundational institutions of civil society.

By issuing currency toward public provisioning and reclaiming it through taxation, the sovereign manufactures the **diffused, impersonal trust** required for large-scale specialisation to begin. It is through this fiscal architecture that a widespread societal web of mutual expectation is woven amongst strangers: the farmer can focus on his crops because he trusts that the soldier will protect his land; the soldier protects the land because can expect that he will be fed and sheltered at night; and the soldier can also trust that there are practicing nurses who will be there to tend to his wounds if he is to get injured. 

Rather than replacing the cooperative reciprocity of the village, sovereign taxation is the very mechanism that allows civil society to scale it to the level of a nation-state; because each has a tax obligation that they must fulfil to appease a superior physical power, and yet they are welcoming and amicable to such an arrangement because they can observe the results compared to the alternatives where no such tax obligation exists. 

In the modern day, this is not a particularly relatable story, because the causal chain has mostly become invisible, especially since we do not exactly have tax obligations levied against us _before_ we find work. Yet, to the best of our historical and empirical knowledge, this market-preceding logic of compulsory taxation and public provisioning remains a permanent prerequisite for price-clearing markets to emerge and endure. 

This is because, without the state continuously issuing currency, enforcing tax liabilities in that unit of account, and directing real resources toward non-market foundations (courts, schools, healthcare, and infrastructure), the private market would lose both the stable money it trades with and the social system of capable people it trades within - two foundations that market logic can never provide for itself.

Firstly, it would lose its money, because a price-signalling market cannot bootstrap its own universal unit of account. Left purely to market logic, any private commodity-money fluctuates in value like a speculative asset, and its acceptance in trade remains fragile. It is only through the non-market compulsion of taxation that a currency acquires a permanent, universal baseline of demand - allowing it to transcend its primary role as a tax credit and become a stable unit of account and medium of exchange for private trade.

Secondly, it would lose its people - because, ultimately, the market cannot build its own foundations because it cannot create its own participants. Unlike commodities, human beings are not produced in factories in response to price signals for profit. Price-clearing markets only respond to _effective demand_ - desires backed by existing purchasing power - in pursuit of short-term, capturable returns. Yet human beings enter the world with zero purchasing power, and require nearly two decades of continuous care and investment before they can ever enter the market to work or trade. Because meeting these existential, non-discretionary needs across an entire population is inherently unprofitable, citizens must first be raised, educated, kept healthy, protected, and socialised outside of market logic - by a web of families, communities, and public institutions.

The market uses productive, healthy, literate, and law-abiding citizens, but it does not manufacture them - ensuring that non-market coordination remains the permanent prerequisite for private trade.

And embracing these facts is the most productive thing that capitalism could ever do. Because, when a market economy forgets its own origin story, it begins to treat the social sphere as a parasitic burden - rather than a structural foundation.

Dissolving the Public–Private Dichotomy and the False Conflict Between the State and the Market:

Under the illusion that private wealth is entirely self-generating, it seeks to minimise taxation, starve public institutions, and subject healthcare, education, and justice to the short-term logic of profit. In doing so, the market begins to saw off the very branch it is sitting on - slowly eroding the health, literacy, and institutional trust of the workforce and consumers that it relies upon to function.

Conversely, when a society recognises that social coordination precedes the market, the false war between the public and private sectors dissolves. Funding teachers, nurses, courts, and infrastructure is no longer mischaracterised as a "drag" on the economy, or an act of charity paid for after the market has done its work. Instead, it is understood for what it truly is: the primary investment that makes private enterprise possible in the first place.

A business cannot innovate if its workforce is chronically ill or poorly educated; entrepreneurs cannot take risks if contracts are unenforceable or infrastructure is crumbling. And thus a flourishing market economy does not require a retreating state; it requires a competent sovereign that continuously replenishes the human, social, and institutional capital which private enterprise then has the privilege to utilise and draw upon.

So, once we understand that a sovereign currency issuer does not need to "extract" money from the private market in order to build society's foundations (because state provisioning and taxation are what create and anchor the currency in the first place), our entire economic outlook changes.

The central question of politics is no longer "How much public education, healthcare, and infrastructure can the private market afford to fund?" Instead, the question becomes: "How do we mobilise our real resources and labour to build the strongest possible human and institutional foundation for our market economy?"

The True Macroeconomic Circuit, and Reconceptualising the True State–Market Boundaries:

Once we ask the right question, the true macroeconomic circuit comes into view: first, the sovereign authority issues currency to fund the workers and enterprises that enable fruitful social reproduction. Next, a portion of each individual's newly earned currency is reclaimed to settle the tax obligation levied against them (which helps to anchor the demand for the currency, and thus its value). Finally, the surplus financial wealth that remains in the hands of households and firms becomes the very purchasing power that funds the private market economy.

This reveals that the sovereign’s net spending is the private sector’s net financial surplus. So, when a government obsessively pursues austerity - slashing public provisioning while maintaining high tax extraction - it does not merely starve schools, hospitals, and courts of the financial resources necessary for adequate operation; it actively drains the private market of the net financial assets required to buy goods and services too. Deprived of state-issued purchasing power, households and businesses are forced to turn to commercial banks where they must take on ever-increasing loads of private debt just to keep the market turning. Starving the social foundation does not make the private market leaner or stronger - it instead renders it fragile, indebted, and prone to crisis.

Does this mean a sovereign state can simply issue limitless currency without consequence? Not at all - and this is where taxation asserts its secondary modern role. While a currency-issuing state never faces a financial constraint, society always faces real resource constraints - as there are only so many trained nurses, skilled builders, megawatts of energy, and tonnes of steel available at any given moment - just as a nation's capacity to produce and sell exports will affect its capability to import critical resources without also importing inflation.

If combined public and private spending exceeds what our workers and enterprises can physically produce, the result is inflation. Modern taxation, across income, corporate profits, unearned asset appreciation, and consumption, is what drains excess purchasing power when competing demands outstrip finite real resources and ensuring those resources can be prioritised for more systemically vital non-discretionary and foundational needs, instead of being used to bid up prices to satisfy discretionary desires.

Understanding this sequence gives us a clear blueprint for where the boundary between state and market belongs. We should never subject either the prerequisites of market participation or finite, non-reproducible bottlenecks to the logic of for-profit ownership. Healthcare, education, basic security, and justice are not ordinary commodities to be rationed by price; nor can spatial land, natural resources, and natural monopoly infrastructure (like water, energy, and transport grids) be privately monopolised. Because these are the foundational inputs that allow citizens to enter the market as equals, allowing private gatekeepers to own them only breeds predatory market power pricing - making social reproduction unaffordable and productive enterprise artificially costly.

Conversely, when society guarantees its social foundations publicly and holds its physical bottlenecks in common trust, the private market is finally freed to do what it actually does best: generating useful price signals where competition is possible, demonstrating financial discipline, improving reproducible production, rewarding genuine innovation, and discovering operational efficiencies.

This is why the public and private sectors can work so well together when coordinated competently. Whilst non-reproducible bottlenecks cannot legitimately be owned for profit, private enterprise can still perform operations under public contract on terms that align the profit motive with the public interest. Instead of allowing the private enclosure of non-reproducible bottlenecks, the state can use reverse auctions - inviting private providers to compete to deliver public services within strict contractual quality and access mandates - where they can derive a profit from exceeding the standards and service requirements at a cost below both their competitors and the contracted price agreed with the government.

The Real Failures Are Thus Political:

Of course, recognising the indispensable role of the sovereign brings us face-to-face with an uncomfortable reality: it reveals the state as an extraordinarily powerful institution, or at least, an institution capable of extraordinary utility - if only it makes the right decisions. Too often at present, it does not. The reason our foundations feel neglected is rarely a lack of sovereign capacity, but a failure of political direction, because modern electoral dynamics (driven by short-term campaign cycles, sectarian partisanship, regulatory and oligarchic capture, cronyism, and the pursuit of popular support over long-term outcomes) systemically misalign the incentives of (often corrupt and/or incompetent) governments with the genuine interests of their citizens.

It is obvious though that we cannot simply abolish the need for social coordination - so we have no other choice but to perfect it. The next great frontier of political economy is not privatising the state, but pioneering democratic innovations; redesigning our political and administrative institutions so that the government becomes genuinely aligned, competent, effective, efficient, accountable, and autonomous.

So, Here's What I Believe That We Must Do About It: Constitutional Reform to Democratise the Sovereign and Finance:

Firstly, to cure electoral short-termism, partisan gridlock, and the society-wide polarising forces which make even the most broadly positive political actions often so hard to implement, we should transfer much of the core agenda-setting and policymaking to permanently institutionalised, sortition-based bodies of citizens equipped with genuine sovereign authority.

Because, by entrusting democratic deliberation to a stratified, representative sample of the public itself, the role of our elected officials fundamentally changes: rather than acting as ideological lawmakers, they are instead employed as executive administrators of the state's instructions and diplomatic representatives on the world stage.

Secondly, because sortition assemblies already guarantee true proportional representation of the electorate, this redefines the role of elected representatives and the purpose of elections themselves. We now no longer need electoral systems that fracture parliaments along ideological lines; instead, we just need robust mechanisms that select the most competent unifying administrators and diplomats.

And this allows us to even further reduce the polarisation and sectarianism within civil society (which can often make democratic governance a larger logistical challenge than it needs to be) by legitimately replacing divisive plurality voting and fragmented proportional representation with single-winner, cardinal voting methods (like STAR voting) - because cardinal voting methods uniquely select the single least-polarising candidates/parties with the broadest cross-societal appeal instead - promoting consensus building and widespread approval rather than the typically divisive and unproductive politics that most of us are more familiar with today.

Thirdly, to ensure these elections and administrative offices remain free from oligarchic capture, we should ban all corporate, trade association, and foreign political donations entirely. Individual private donations should be capped at a modest egalitarian ceiling, with elections publicly funded through "democracy vouchers".

Fourthly, to police the boundary between the commons and the market, our economic governance must look far beyond narrow antitrust law toward a comprehensive constitutional settlement: ring-fencing public goods from privatisation, enforcing strict public utility and common-carrier mandates on natural monopolies, and taxing away the unearned economic rent extracted from finite land and resources.

And finally, to free the state and the productive economy from its institutionally self-imposed financial capture, we must overhaul our banking and fiscal architecture. For too long, we have allowed commercial banks to pump credit into unproductive asset speculation - bidding up those very same land and monopoly bottlenecks - while allowing private bond markets to hold public provisioning hostage. A competent sovereign must use credit guidance to steer private finance toward real innovation and productive enterprise, while coordinating its central bank and treasury to ensure that the funding of our social foundations is never subjected to the veto of financial speculators.

In the end, a thriving market economy depends on a thriving social foundation - and that foundation depends on a democracy worthy of the power it wields. We do not need a weaker sovereign; we need a smarter constitution to democratically steer it.

In this section, I will attempt to separate between the broad diagnosis of ‘what’ I believe needs to change, and my more personal opinions and conjectures on the alternative mechanisms which could underpin more specifically ‘how’ we might practically engineer those outcomes. 

Even if one disagrees with the exact suggestions below, I hope to bring awareness and spark debate around the existence of alternative frameworks, concepts, ideas, systems, and mechanisms which could be adopted. 

Firstly, at a structural level, we must cure electoral short-termism, partisan gridlock, and the polarising incentives that make even broadly popular, long-term investments so difficult to implement - transforming the roles of our elected officials from ideological combatants into executive administrators and diplomatic representatives of the state.

My favoured mechanism to achieve this, would be to transfer much of the core agenda-setting and policymaking authority to permanently institutionalised, sortition-based bodies of citizens, who would be equipped with genuine sovereign power. By entrusting democratic deliberation to a stratified, representative sample of the public itself, elected politicians are no longer tasked with warring over ideology, but are instead employed to administer the citizenry's instructions at home and represent the state on the world stage.

Secondly, I believe it is important to realign electoral incentives, so that elections select unifying, competent administrators - rather than divisive and popularist politicians who encourage the electorate to turn against each other. 

This goes hand-in-hand with the first recommendation of implementing sovereign sortition-based bodies of citizens, because such bodies would already inherently guarantee true proportional representation of the electorate within government, which would allow us to shift the focus of elections towards the competence and broadest cross-societal appeal of a single coherent party, to encourage politics to be about consensus-building and constructivism rather than the polarising partisanism that often results from plurality voting (such as FPTP) and the incoherent, fragmented and tribal sectarianism that often results from the ‘proportional representation’ promised by ordinal methods (like STV or IRV). 

My preferred voting method would be a simple cardinal method, like STAR voting.

Thirdly, we must sever the link between private wealth and political power so that these administrative and diplomatic offices remain completely free from oligarchic capture.

Practically, this can be achieved by banning all corporate, trade association, and foreign political donations entirely, capping individual private donations at a modest egalitarian ceiling, and publicly funding elections through egalitarian mechanisms such as "democracy vouchers".

Fourthly, we must permanently police the boundary between the commons and the market, ensuring that neither the human prerequisites of market participation nor finite, non-reproducible bottlenecks are enclosed for private rent extraction.

To make this operational, our economic governance must look beyond narrow antitrust enforcement toward a comprehensive constitutional settlement: legally ring-fencing foundational public goods from privatisation, enforcing strict public-utility and common-carrier mandates on natural monopolies, and using land-value and resource taxes to reclaim the unearned economic rent extracted from finite land and natural assets.

And finally, at a structural level, we must end the state’s institutionally self-imposed financial capture - stopping commercial banks from pumping credit into unproductive asset speculation, while preventing private bond markets and offshore currency speculators from holding public provisioning hostage.

As a practical overhaul of our banking, fiscal, and monetary architecture, a competent sovereign should use targeted credit guidance to steer domestic bank lending away from land and monopoly bottlenecks toward real innovation and productive enterprise; directly coordinate its central bank and treasury (so that funding our social foundations is never subjected to the veto of financial markets); and deploy well-targeted capital flow management whenever necessary in the public interest - insulating the nation's currency from predatory speculation and destabilising capital flight to safeguard its foreign exchange health and domestic purchasing power.

In the end, a thriving market economy depends on a thriving social foundation - and that foundation depends on a democracy worthy of the power it wields. We should not demand for a smaller and weaker state; what we should demand is a smarter constitution to democratically steer an adequately and proportionately sized one. 

Why don't socialists acknowledge the difference between wage labour and enterprising labour?

They are both "labour" but one is not like the other and one is considerably rarer than the other.

So why don't socialists acknowledge the reality that they are different and produce or are of different value that they belong in a different category?

I do.

Left Anarchism is directly created by action, according to prefigurative politics. It is not something that can be changed top down, but instead come from bottom up actions.

From my understanding of anarchism, it essentially is like hierarchical institutions and governance being replaced by an egalitarian horizontal civil society.

If people are convinced to willingly associate with each other in this way, then they can set up mutual aid federations.

These federations are entirely voluntary and are regulated through local social trust. This social trust is built by prefigurative politics, and both feed into each other.

People who trust each other will be less likely to rob or commit crimes against each other. Anarchy forces accountability through its fundamental way of association. If you are a freeloader, with no good reason, you will eventually feel the need to contribute to mutual aid.

And people would have free speech and gun ownership.

There are historical examples of medium scale societies ran with lower coercion, and without binding commands from above. It could be seen in some parts of Europe (maybe Iceland, and definitely the Wendat tribe).

People are not compelled to be anarchist in an anarchist society. Instead, if you don't like how things are run, you can leave and set up your own community organized around different principles.

One of the major freedoms that people used to have before the era of nation states, was this ability to move freely and associate more fluidly.

To me, all of this sounds very free. There are multiple senses of the word "liberty", and this fits as a specific type of it to me. Unless you define liberty narrowly, I think this sounds sufficiently libertarian.

Capitalists,

I remembered that the Scandinavian countries are capitalist,

But what exactly is the core reason for welfare but from a capitalist perspective in contrast to a socialist perspective of welfare?

When asking capitalists about the point of welfare I ran into this:

workfare; - traditional, means-tested welfare provided to people who have no choice in their inability to work - skills-based, training, work/community service welfare incentives for people who are able to work but don’t

According to this, wouldn't a communist society expect to have workfare instead of welfare?

In a moneyless society that provides to the vulnerable isn't this workfare

The only question I have is what incentives would exist in communism for those who do not want to work?

As we all know, the USSR fell apart in 1991. Russia and its former colonies dumped their socialist economies, and in most cases the already weak economies have failed to prosper. In contrast, formerly socialist China has been successful in its economic transition to state capitalism. Why do you think this is true?

I was checking some statistics and I saw that socialism is getting more popular, at least when we're talking about university students and professors.

Almost 50% of graduates have answered that they support the socialist ideation, and about 30% said that they support it fully. Capitalism was met with a drop in popularity in comparison to previous years.

The research was based in the USA which was even more surprising. My question is: Why is it that more people are supporting socialism? Is USA doing a worse job in propagating "capitalism"?

Source: https://www.campusreform.org/article/half-college-students-say-socialism-better-capitalism-poll-says-/28674

Under socialism, one of the biggest unresolved questions is how we actually define democratic ownership. Does it belong directly to the workers inside each workplace, or does it belong to society as a whole? Both models aim to end capitalist exploitation, but they define the franchise in fundamentally different ways. The real tension comes down to who gets a ballot, and whose democratic rights take priority when interests clash.

Worker Ownership and Workplace Autonomy

The worker-ownership model, favored by market socialists and syndicalists, eliminates shop-floor alienation. The people doing the labor directly elect their managers, set their conditions, and decide what happens to the value they produce.

The democratic dilemma is what this means for everyone else. A semiconductor plant or a modern chemical refinery generates massive surplus, not just from individual effort, but from generations of accumulated societal knowledge and infrastructure. If only the workers on that specific payroll get to vote on how that wealth is allocated, the rest of the working class is effectively disenfranchised. Teachers, nurses, and farm workers get zero say over the massive industrial bottlenecks that shape their lives, turning high-yield co-ops into something resembling exclusive guilds.

Societal Ownership and Majoritarian Control

The society-wide ownership model, favored by democratic planners and communist traditions, treats the economy as a shared commonwealth. Every citizen gets an equal vote, production is guided by human need rather than enterprise competition, and wealth divides between industries are eliminated.

The democratic challenge here is majoritarian rule over the direct producers. In a society of millions, the broader public can always outvote the people doing the actual work. If a regional assembly votes to run a metal foundry on expanded shifts to hit green transit goals, the foundry workers have effectively lost control over their labor. When your daily conditions are dictated by an outside electorate that never sets foot in your facility, shop-floor self-determination disappears.

The Problem of the Final Veto

Many people propose hybrid models like nested councils to balance local autonomy with community needs, but that still leaves the question of the tie-breaking vote. If power plant workers vote to cut their hours for safety, but the regional community votes that the grid needs those hours to keep homes warm this winter, which vote wins? If the community overrides the workers, workplace autonomy is conditional. If the workers override the community, the public lacks democratic control over vital resources.

Where Should Authority Lie?

Both models have clear democratic merits and clear democratic blind spots. One prioritizes the direct producer's right to control their physical labor, while the other prioritizes the working class's right to equal control over shared wealth.

Which side of that trade-off do you think is more essential to genuine socialism, and why?

Understaning that there are more understsnding of socialism, what are the incentive structures in the system you envision. Do people work for the common good and that is incentize enough? Perhaps they are incentivized by professional accomplishment? Do they get more wages or good for doing a good job or being more highly skilled. What happens to people like what the Soviets called social parasites (who could be jailed)

1. Introduction

The marginal revolution occurred in the 1870s. Political economists tried to extend supply and demand reasoning to both the short run and the long run. They erroneously described the economic problem as allocating given supplies, of labor, land, and capital, among alternate uses. They generalized the principle of substitution. Higher prices of a good are supposed to induce consumers and producers to substitute other goods for the more expensive good.

These confused ideas became accepted partly as a response to Marx. They do not really refute Marx, of course. They merely offer a contrast.

Anyways, the marginal revolutionaries were shown to be mistaken over half a century ago. Many microeconomic textbooks are just wrong.

I like to echo these demonstrations by outlining numerical examples with upward-sloping demand functions for labor. In these examples, managers of firms choose to adopt more labor-intensive techniques, out of an existing menu of choices, at a higher wage. The examples apply under ideal assumptions of competitive markets, no information problems in the long run, no search costs in the long run, and so on. Opocher and Steedman (2015) is an example, out of a vast literature, on which I draw. I like to cite Borjas' textbook for muddled nonsense.

Anyways, I have posted four examples here, for those willing to work through a bit of math.

2. An Example With Natural Resources

In this example, given endowments of land limit how much can be produced. Even with the dependence on final demand, the noted problem with labor economics arises.

3. An Example with Three Produced Commodities

 You could check this example with a spreadsheet. Answers are given, so it can be checked with arithmetic. I outline something like a market algorithm when the wage is given. Two levels of the wage are given. (An example of supposedly educated economists being unwilling or unable to recognize results established sometime last century is here.)

4. An Example with Fixed Capital

This post works through a fixed capital example from Baldone (1974), in Studi Economici. A machine that lasts for three production cycles is an example of fixed capital. I take the interest rate as given. To check, you have to be willing to solve a linear system of four equations in four variables. (I do not go into the centre of a fixed capital system, which reduces that system to one of two equations in two variables.) This exposition asserts that firms will not produce commodities with negative prices.

5. An Example With Two Commodities

This exposition works through an example from Bruno, Burmeister & Sheshinski (1966, p. 545) in the Quarterly Journal of Economics. These are mainstream economists, and that journal, associated with Harvard, is one of the most prestigious in the world. This example has two produced commodities. The example requires you to solve two equations in two unknowns, given the interest rate (also known as the rate of accounting profits).

6. Conclusion

Many more examples like these can be produced, including with smooth production functions, rent, and so on. Empirical examples have been illustrated in the literature. I would have liked to have seen more. Innovation in actually existing capitalist economies is probably more about creating new processes and products, not the choice from an existing cookbook of recipes, as presented in production functions and the theory of supply and demand.

I want to note these responses and these responses, in comments from confused, presumably academic economists.

TL;DR: Mainstream economists agreed in the 60s of last century that what they teach is incorrect and illogical.

The rich are rich because they produce a lot, this means that there is a lot of products to go around, which means under supply and demand the prices of those products are low.

If you want to hurt the rich somehow, the following will happen by default they stop producing and now there is a lot less products to go around, so prices are a lot higher.

There is absolutely nothing in the world anyone can ever do to fix this.

What the rich are doing is running a company successfully, meaning the company makes money. If the company doesnt make money you nor anyone else would run this company because it will only cost you yourself money. So you now have to argue why you would want to be poorer. Either way.

Taking their stuff and be poor in 2 weeks or running their company at a loss which means you would be poor within 2 weeks.

Here is the one and only third option, run a company successfully yourself.

You see the problem is that you socialists doesnt see this, simply because you do not understand economics. If you did understand economics you would understand this and you would no longer be socialists.

People like Trump, Putin, Musk, and Zuckerberg have enormous wealth and power. How much is enough? When does greed become evil?

Ordinary people spend years studying, work decades, pay taxes, and struggle to survive, while the richest accumulate fortunes and influence our future.

And now robots and AI are supposed to replace us. Shouldn’t technology serve humanity instead of making us disposable while the rich get richer?

We build their empires, sacrifice our lives, and what do we get in return?

We deserve a future where human lives matter more than endless wealth and power. Why is that so difficult to achieve?

Hace unos momentos ví un post en éste Subreddit dónde se hablaba sobre el evento de la Plaza de Tiananmén en 1989, y aquí va mi análisis: esto es un recordatorio histórico de lo que sucede cuando un sistema intenta abrir sus mercados manteniendo un control político absoluto. Desde una perspectiva liberal y capitalista, la tragedia no fue un fallo del libre mercado, sino el resultado inevitable de la falta de instituciones democráticas y de derechos de propiedad reales que limitaran el poder del Estado.

1. El origen del problema: La apertura económica sin libertad política

En 1978, bajo el mando de Deng Xiaoping, China entendió que la economía centralizada y puramente socialista de la era de Mao Zedong los llevaba al colapso así que introdujeron las reformas de "Reforma y Apertura", permitiendo la inversión extranjera y el comercio privado. La riqueza empezó a crearse, pero el poder político siguió concentrado en una sola entidad: el Partido Comunista de China.

El economista y Premio Nobel Milton Friedman, en su obra clásica Capitalismo y Libertad, argumentaba que la libertad económica es un requisito previo necesario para la libertad política, pero no es suficiente por sí sola si el Estado retiene el monopolio de la fuerza y de la ley. En 1989, la inflación y la corrupción que indignaron a los estudiantes ocurrieron precisamente porque no había un Estado de derecho independiente; los funcionarios del Partido controlaban quién prosperaba y quién no. Cuando los ciudadanos exigieron transparencia y libertades civiles el estado totalitario reaccionó de la única manera que sabe operar para mantener su monopolio: la represión... Y con ello me doy cuenta de una cosa.

1. Mi perspectiva como un capitalista conservador

Si todos analizamos cómo se podría haber gestionado o mejorado esta transición desde la óptica del capitalismo conservador (arraigado en pensadores de la tradición liberal-conservadora como Edmund Burke o el economista Friedrich Hayek), la clave está en el orden, la tradición institucional y los contrapesos jurídicos.

El capitalismo conservador no defiende el "libre mercado salvaje" en el vacío; sostiene que un mercado próspero requiere de un marco institucional sólido que lo proteja. Para mejorar el escenario de 1989, se habrían necesitado tres pilares fundamentales:

• Estado de Derecho y Seguridad Jurídica: Una economía de mercado requiere reglas claras que apliquen a todos por igual, no favores políticos. Si China hubiera priorizado un sistema judicial independiente antes que la discrecionalidad del Partido, la corrupción burocrática que desató las protestas se habría mitigado sustancialmente.

• Derechos de Propiedad Privada Sólidos: El capitalismo conservador entiende que la propiedad privada es la base de la autonomía individual frente al Estado. Al decentralizar la propiedad, se descentraliza el poder. En la China de 1989, los ciudadanos empezaban a generar ingresos, pero sus vidas y propiedades seguían dependiendo del gobierno central.

• Transición Ordenada hacia la Libertad Civil: A diferencia de las revoluciones caóticas, el conservadurismo aboga por reformas graduales pero firmes que fortalezcan las instituciones intermedias (familias, comercio local, asociaciones civiles) para que sirvan de amortiguador entre el individuo y el poder estatal.

De lo que me dí cuenta:

El capitalismo en su sentido más profundo, no es solo "hacer dinero"; es un sistema de dispersión del poder. Cuando el poder económico y el poder político están en manos de los mismos burócratas (como ocurre en los sistemas de partido único o socialistas), el ciudadano queda completamente indefenso.

¿Puede un sistema económico ser verdaderamente libre a largo plazo si el individuo no tiene el derecho legal y protegido de disentir políticamente?

- Esto te invita a mí y a ti a pensar que la prosperidad económica y la dignidad humana requieren obligatoriamente, límites constitucionales estrictos al poder del Estado.

Workers keep businesses running, yet major decisions usually belong to owners and executives.

Capitalists argue that private ownership rewards investment and risk-taking. Socialists argue that workers should have more control over the production they make possible.

My question is: why should investing capital grant someone greater decision-making power than the people whose work creates the value?

I'm interested in arguments for both sides, especially how each system can prevent abuses of power.

In short, money brings political power, and when a single person or group gets so much wealthier than everyone else, we no longer have democracy. The whims of the powerful become more important than the needs of the populace.

And for what?

Let's take Warren Buffett, the billionaire with the best reputation... mostly because he doesn't flaunt it. He lives in an upper-middle class neighborhood he bought long before he became extremely wealthy; drives a nice car, a Cadillac, but he drives himself; doesn't get overtly involved in politics. Fair enough.

What did he do that was worth a billion dollars? What did he contribute to the world in such a way that he somehow deserves to have vastly more political power than most others; that he and his children should never have to lift a finger, again?

All he has done his entire life is move money around, and while someone needs to be in charge of managing resources (ultimately what we are talking about), the guy distributing the resources doesn't somehow deserve more of those resources than the people who actually produced them, right?

He was at least good at that function, though; most billionaires are parasites.

Elon Musk didn't come up with the idea of Paypal or program the website or engineer an electric car or develop rockets; he was the guy with the money to pay other people to do those things (some from family, some from fraud), and he took most of the profits.

Bill Gates isn't a "Rags to Riches" story, his father was a partner in the largest law firm in Seattle, he wasn't on scholarship at Harvard, and the only reason anyone has ever heard of Microsoft was because his mother was on the board of the United Way with the CEO of IBM, who told his executives to give Gates the OS contract for the PC (which Gates ripped off another guy to get, he didn't write any of it), and Gates shoved the knife in.

When we reward people whose primary talent is criminality, guess who winds up in charge?

You read that right. Unfortunately it seems to be a quite unpopular opinion. Hard men create good times, good times create weak men. And now we are here with the weak men who think Communism is somehow good. Have we not learned from history?

Communism is horrible. It's kind of obvious too. It murdered and starved over 100 million people. You might say, ehh whatever, what is 100 million anyway. But humans can't comprehend big numbers well. 100 millions is a damn lot. Don't you hear the screams? Communism is an unholy satanist sect.

Science shows us we should examine things by their outcome. And every time communism was tried it failed horribly. Stalin, Lenin, Pol Pot, Mao, North Korea...

Please don't disrespect the victims of communism. Let them rest in peace and stop promoting this unhumane parasitic shit system. Thank you.

India is a mixed economy, right? A mixed capitalist economy. But if it becomes a socialist country, does that mean everything will be distributed equally among everyone? The thing is, human beings naturally tend to seek superiority over others. So, even if socialism or communism is established, wouldn't the system eventually transition back to capitalism?

I have a quick question for any Holodomor deniers out there. First ill lay out my evidence for it being the intentional exacerbation of a famine to inflict harm on the Ukrainian population so you can understand where ive formed my opinion.

1. June 1932-Chubar writes a letter to Stalin informing him of the detrimental effects their grain procurement policies are having on the Ukrainian people, reporting hunger and death across the region.

2. August 11, 1932-Stalin writes a letter to Kaganovich calling ukraine “the main issue,” treating resistance to the grain quotas as a threat to soviet dominance, rather than the starving populations response to a brutal famine that it really was

3. November 18, 1932-new policy enforced which allowed for the confiscation of meat and later potatoes in ukraine if grain quotas were not met

4. December 1932-certain villages are blacklisted and cut off from all outside manufacturing and trade

5. January 22, 1933-the Stalin Molotov directive sealed off Ukraine, violently preventing starving populations from seeking out food.

If anyone would like i can provide sources but these are all primary soviet documents and are reasonably easy to find. As you can see the state acknowledged the famine early on, increased quotas and harshened enforcement shortly after, and justified it by accusing starving populations of being enemies of the state.

Now that ive explained why i believe it to be a genocide, by question for any deniers is why? What do you gain from denying an atrocity with so much evidence behind it, much of which comes straight from the state responsible for it? It seems to me an absurd and awful thing to deny considering the millions of lives which were lost, and in my view only serves to weaken your own credibility when discussing many other issues such as whats being inflicted against the Palestinian people.

Hello,

Me and a good friend me and her were talking about things but she asked a question that had me stuck so I wanted to bring it up here.

Assume a large community of people already freely exchanging goods and services,

What would ever compel them to eventually come up with banks?

I feel like talking about why money was made is relevant too.

Ok but I'm stuck. Why did banks ever come up to begin with?

The best I had to say was that I thought banks allow you to lend so this means that you can have things now and pay later?

I asked this here because the discussion did eventually get into how banks might not be necessary and then an eventual change into a moneyless society could happen. The thing is I still thought banks serve something necessary for society but if I can't exactly imagine how it originated then maybe I'm in the wrong?

British ITN's sealed Footage of the Tiananmen Square Massacre is finally released

Capitalists for a followup later I wanted to collect your opinions on this,

Is the government from the market, part of it, or is it separate?

This is because I ran into a definition of the free market that said it is when two parties voluntarily exchange without third party intervention.

Is the government always 'third party intervention'? What if they are the only representative agency left for some poor individuals?

Its a hypothetical scenario, you have a house and a lawn and you just hate mowing your lawn, so you hire a person to do it for you. But you have a lawn mower and you have gas for it. So once every week he comes over uses your lawn mower and your gas to mow your lawn.

One day he has an accident, he falls and somehow the lawn mower cuts off his fingers on his left hand?

How would you feel about this?

there are like only 3 people who constantly fight each other on here.

some cia agent vs “criticism of capitalism not proof of socialism” vs a pragmatist of a non-existent economic system.

The irony.

Peace.