In the previous posting on this subject, we noted that usury has become so embedded in our economic thinking that it’s accepted as normal. Paradoxically, some proposals to abolish usury are themselves usurious, e.g., the government should simply issue the money it needs and abolish taxes. It’s accepted as normal for a government to back its own currency with its own debt and constantly change the value.
Today we’re going to look at another unquestioned assumption of modern economic thinking, and is at least as damaging as usury. We’re talking about the idea that labor is the only thing that really produces.
But wait, you say. Don’t economists traditionally list at least three, sometimes five or more factors of production, e.g., labor, land and capital? Yes, they do . . . and almost without exception immediately qualify their statement. John Maynard Keynes, for example, admitted land and capital as factors of production, but then claimed that these only provide the “environment” within which labor can become productive! (General Theory, IV.16.ii.)
|John Maynard Keynes|
More significantly, productivity is always reported in terms of output per labor hour. This becomes increasingly equivocal as advancing robotics brings the day of completely automated production from start to finish ever-nearer. The problem, of course, is that if most people don’t own the robots, all income generated by the robots will go to those who do own them . . . requiring massive redistribution, such as proposed in the Great Reset.
At the same time, the past savings assumption of most modern schools of economics makes it virtually impossible for most people to be productive by owning capital. As a rule, the past savings assumption limits access to money and credit to the already wealthy.
Making matters worse, the so-called “labor theory of value” hides the fact that it is essential that most people become capital owners, “The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.” This is because as technology becomes far more productive than any human being can hope to be and displaces people from wage system jobs, it also becomes more expensive than people without access to past savings can afford.
Proponents of the Great Reset and similar proposals fail to acknowledge this or admit that if people cannot be productive with labor alone, some way must be found for them to become owners of the technology that is displacing them. Instead, they make one or all of these five fatal errors:
· Sovereignty and thus natural rights to life, liberty and private property are not inherent or effective in every actual human person, but in an abstraction such as a capitalist élite or a socialist collective,
· Private property in capital is irrelevant as long as the fruits of ownership such as income and control can be distributed equitably among non-owning stakeholders (i.e., enjoyment of the fruits of ownership does not depend on ownership),
· It is not necessary for people to have production power if they have consumption power (i.e., the power to consume is more important than the power to produce),
· Only past savings can be used to finance new capital formation (i.e., the only way to increase production is by reducing consumption), or
· Human labor alone is productive; technology and land at best only enhance human labor.
Perhaps the most baffling thing about these errors is that at first glance they do not appear to have anything in common. On reflection, it can be seen that, yes, they all share a certain orientation away from the human person, but one does not flow logically from another, e.g., what does reliance on past savings have to do with the idea that labor alone is productive? Ultimately, the labor theory of value is a shift away from the human person because the capacity for labor is inherent in each human as a fact of being, while the capacity for ownership of capital is inherent in each human as a right of personality.
Nevertheless, and although this does not apply in all cases, we see that people who make one of the errors also tend to make the others. Further, because the weaknesses of each flawed assumption complement the others and seem to validate them, the combination — not to put too fine a point on it — is cataclysmic in human terms.
Having looked at the first four flawed assumptions in earlier postings on this subject, we now turn to “the labor theory of value.” Immediately we run into problems.
First, in classical economics there are two very different theories, both of which are called the labor theory of value. For Adam Smith, a thing is valued according to its utility to the consumer. Someone will value what he wants to purchase in terms of the effort (“labor”) it cost him to obtain what he offers to the seller in exchange for what the seller offers. To Smith, in this context “labor” was a general term not limited to human labor.
Believing he was
correcting Smith, David Ricardo declared that labor alone is productive. Therefore, a thing is valued according to the
labor that went into producing it, not for its utility to the consumer. Technology is accumulated or congealed labor,
so the owner of capital is due only what it cost him to obtain the capital. And the implications of that is what we will look at in the next posting on this subject.