Let's say there is only one tribe on the entire planet Earth.
To survive, this tribe has to determine how it will provide necessities such as food, clothing and shelter.
Two choices: every man for himself, or, barter for needs.
This will be our model as we discuss what an economy is and how it works. Then, we'll extrapolate to the world we have today.
Everybody ready? Let's go!
Hunters can come up with meat and hides to barter, but, how will they offset the fact it takes a lot of time and effort to hunt, kill, skin and prepare food? The American Indian was nomadic to a large extent. The tribe followed the bison because they had to. Tribal status never exceeded bare subsistance. Why? The American Indian was locked in a no growth economy. Trading was confined to items that could never increase their wealth. The only way for any tribe to increase prosperity was to TAKE IT BY FORCE from any other tribe weak enough for them to exploit.
The agriculture-based society is precarious. If the crop doesn't come in because of drought, flood or other unforeseen event; everybody starves. Anastazi indians exploited their natural resources to the limit and destroyed their own economy. Finally, they turned to cannibalism. The same is true of the Maya. The Maya lived off natural resources and destroying surrounding tribes by warfare.
Egyptians exploited the Nile river flooding and were immune to outside attack until late in their history because of the natural boundries that protected them. Their ability to produce surplus grain gave them a huge advantage toward prosperity and liesure (for those producing and controlling the wealth.)
The Greeks had fits and starts of prosperity by virtue of exploiting the sea in ships and extending their reach in outposts for trade. Where they sunk into economic disaster was their petty fights among cities and vulnerability to attack from larger nations.
Bottom line? All groups must struggle to find a way that works for them to build an economy to the point it can be managed predictably.
What is our overview?
Whatever way a tribe decides to sustain itself, it simply MUST produce enough surplus in order to flourish. Otherwise subsistance living is the tribe's destiny.
Where is the economy?
A hunter has to hunt MORE than he needs for himself and family. A farmer has to produce MORE crops than he and his family need.
The SURPLUS is the key to an economy. Surplus pelts can be bartered for surplus crops or surplus eggs.
What determines the value of each in trade? This is a key question. The demand and the supply of each commodity will determine the value in an exchange.
Now, with our model in place, let us focus on some basic questions about economy in general.
What is the most carefully guarded asset that an agriculture based economy has? It is the seed. A family farm must produce enough grain to last through the winter and maintain a surplus grain for FUTURE PLANTING next season. Under no circumstance can a farmer eat his seed for next year's crops or his family faces ruin.
The seed is his investment in future wealth!
For a hunter, on the other hand, there is no predictable supply of game unless the hunter turns into a rancher and captures and breeds animals for perpetual food supply (and the resulting benefits of fat, butter, eggs, milk, etc.). The hunter can never eat his breeding stock or his family faces ruin.
In both instances it is the SURPLUS which is the investment for future prosperity that must be attained and guarded above all.
FAST FORWARD.
Most households in the world today are like our tribe model.
Each household must determine how it will base its own economy. Will it be based on self-sufficiency (owning a farm or ranch, family business, production of a surplus for transaction) or will it be a wage-earning base where the labor of one's own hands is traded for a paycheck?
A quick view of both tells us readily that working for wages is the least likely to produce a surplus that can be used to invest in future wealth.
But, how does a household, a family or a tribe become self-sufficient in the first place?
Our model tells us the answer.
The surplus can only come from:
1.Intelligent exploitation of a natural resource (land, game, seed) to the point of surplus
or
2.Combining two or more of the above for a society of barter for leverage to produce surplus
or
3.Exploiting the work of others by slavery, warfare and theft. *(This creates an impoverished under-class forced into subsistence living for the gain of the controlling group.)
What good is this information and what do we do with it?
I'm glad you asked!
A look at the past will tell you how the world today came to be the way it is now.
Tribes became cities. The cities that survived were perched on impregnable sites with a water supply and manageable natural assets such as agricultural and ranching. Weaker groups were swallowed up and became the underclass. The controlling groups were parasites off the labor and assets of the underclass.
Egypt was never much of a world power because the technology of its armies was inferior. It suffered conquest as a result. The Egyptian grain supply became a cash cow for the Roman empire.
GREECE has a brief moment of glory producing Philosophy, Mathematics, Art, technical vocabulary and Logic. Alexander the Great spread this culture. But, this vast network dissolved upon Alexander's death as his generals fought with each other. GREECE itself faded into a mythic model for Rome to emulate.
ROME produced a Federal Government with the power to enforce its will. The length of its supremacy (approx. 1500 years!) proceded from its ability to adapt and manage all its assets and enforce its law. Rome weakened and vanished as its government corrupted from within and the outer borders were eaten away by outside invasions. The wealth of Rome was the wealth of Patronage exploiting slaves and weak nations.
The chaos of the middle ages was the chaos of feudal society of two extremes of survival; the top and the bottom. Religion dominated every facet of life both political and economic. The approval of the Religious leader was needed for any undertaking upon penalty of excommunication. The religious leader often WAS the political leader.
The printed word (Bible translation into the common tongue) gave ordinary men a glimpse of the ACTUAL content of the supernatural which was controlling his every move. Men broke away and started thinking for themselves. The common man seized his own destiny and began abandoning the guidance of "others".
Where is the economy in all of this?
The Renaissance was man taking his destiny in his own hands to produce WEALTH FOR HIMSELF by the efforts of his own intellect.
Until men could own their own land and control the product of their own manufacture---no personal wealth was possible unless you were lucky enough to be born into the ___right___family. The only alternative was a life of crime and easy death.
With the advent of Capitalism a brief opportunity for each man, woman and child to own themselves and exploit their own talent to advantage appeared.
(Capitalism is only truly Capitalism when there are no controls on trade (Free Trade) and no restrictions of any kind. What we have today is a Mixed Economy with many ills forced by corrupt legislation to exploit loopholes in one-sided laws.)
The boom of the Industrial Revolution produced an economy so huge and far-reaching the tide lifted all the boats of both rich and poor. The standard of living increased dramatically.
Until the crooked politicians began passing laws to control freedom of trade and giving themselves and their patrons built-in advantages the technology of the Industrial Revolution produced a sweeping boon in science and manufacturing that outstripped anything previously done in all of history.
How does the economy work today?
Each man, woman and child must produce a surplus--just as our original model shows--to have any chance at personal wealth. This investment opportunity is destroyed by the availability of credit!
Credit is what?
Credit is eating your seed and hoping for next years crop to appear by magic! The poor use credit to elevate their own standard of living beyond their means of maintaining it. The debt they create destroys their future and makes them perpetually dependant on those whom they owe. The CREDIT RATING is the bludgeon that keeps them down.
Productive people are the motor of the world economy. People who create, build, invent and develop resources are the source of whatever wealth there is or will be.
It is ONLY those who build, invent and create who have the right to CONTROL what they create, build and invent and develop by virtue of the fact it was their talent, energy and fortitude that made it happen.
Any economy without the correct philosophy as its base will fail.
Without a philosophy of individual rights, individual control and individual freedom of asset use---no economy can succeed.
Man's orientation toward reality is the practical fact that keeps him alive. Once man veers into fantasy and mysticism his grasp of reality loosens. He drifts into an unworkable life. He cannot fend for himself any longer. He must rely on the assertions of "others" who claim to "know" the answers.
Remember our model? There are only the owners and the slaves. Which one a man becomes is the result of his grasp on the right philosophical model.
Any man who produces by the efforts of his hands and the cleverness of his mind a product, service or resource to the point of surplus has the right (by law) to wield the resulting power to his own advantage. The business and wealth he produces and controls demands labor. The labor is the workforce kept aloft by this created wealth. The money spent by this workforce is the economy.
When you penalize the wealthy, the business owner and the inventor of wealth; you penalize the workforce depending on that infrastructure! The wealthy are the ocean and the workforce are the boats and the fishermen who reap harvests from those waters. You cannot injure one without destroying the other.
The problem with the economy today is always this.
1. The poor live off of credit and public taxes in a debt they cannot crawl out of. Their level of education does not give them the leverage to transcend their current status. The status of the poor is either that of wage earner or charity victim and underclass criminal. Without a means of surplus they are condemned to eternal dependency on their "leadership" (whose advantage politically is to keep them poor!)
2.Excessive controls on prices, markets, wages and taxes destroys the natural market forces of supply and demand. A mixed economy is one artificially constructed to grant advantages to patrons and exploit political forces.
3.Leadership is self-serving. Leadership has become creating Straw Man terrors that create fears and dependencies that distract the constituency from practical everyday life. The majority of the planet's population looks to leaders who keep them in perpetual fear of SOMETHING impending as doom.
4.The philosophy underlying the individual's efforts in life often works against his own best interests. Men are taught from infancy to depend on the expertise of "others" (who exploit his dependency). This exploitation is in the form of hijacking the man's mind into mind-controlled servitude. Religion, politics and general mysticism short-circuits the intellect and replaces it with the idea of Altruism: Your only value in life is in living for others and not yourself. This means there can be no true individual of worth. The sacrifice one is required to give (to achieve status) is slavery of many kinds. The young person who dies in the armed forces; the "freedom fighter" who explodes a bomb in a crowd of infidels; the missionary who strives to bring foreigners to God----each is an example of a mind-slave with no "self".
The only economy we will ever have stems from the acknowledgement that our first duty is to our SELF. By using our intelligence to gain the advantage in producing a value for market and generating a surplus, we will build a nest egg of wealth. Investment in the future comes from productivity in the past. What seed are we producing? Therein lies the shape of our future?
Terry
2.