Usable and consumable services and goods, produced, bought, and sold by the interactive components of an operative economic system, the ordinary workers, constitute the crux of a market economy. Yet, financial control over the means of producing the goods and services remains the deciding factor in determining who ultimately profits from the system.
For instance, John, the American capitalist, has inherited the financial capital to build a factory in order to manufacture a consumable entertainment product that would be readily purchased by millions of impulsive American people. Before building the factory, John has realized that each individual manufactured product will require ten-dollars of materials purchased wholesale, for twenty-percent of their actual value, from sources outside of the United States, and has provided for its purchase through a London brokerage firm. John then hires fifty-employees to operate an assembly line, through which each product is assembled and packaged in five minutes time. John sets a retail price on the item five-hundred percent above the amount required to manufacture it, and only pays his employees, the menial unskilled men and women who assemble, package, and ship the completed products to the purchasers, the legally required federal minimum wage for their work.
Subsequently, in a week's time, John actually does no work, at all, after production commences, except hire an extremely efficient accountant/plant manager to run the factory, keep track of his accounts receivable and accounts payable, and ensure that his employees are paid on a weekly basis. John remains at home, communicating with his plant manager by Internet.
In a month's time, John, the capitalist, sells 50,000 products for a gross figure of $5,000,000, during four six-day work weeks, eight-hours per day. After receiving his gross payments from the buyers, John pays his employees a total of $56,000, the utility companies (electricity, water, telephone services, Internet, etc) - $4,000, the building lessor - $5,000, and shipping/receiving through Fedex and UPS - $10,000. He also pays his raw resource/material providers $250,000 and his trusty accountant $10,000 for his services. Advertising, over a month's time, adds up to another $200,000.
Now, let's add up the figures and see just how much profit John derives from the menial labors of his employees, on whom he relies for his revenue. The total expenditures for John is $535,000. That is subtracted from his gross income, of $5,000,000, which yields $4,446,000 profit for the aspiring capitalist. After deducting $699,750 for federal taxes on his business, John takes home $3,765,250. In some states, he might incur state income taxes, a county tax, and city taxes, but they wouldn't be more than another $500,000, which would leave John with an incredible $3,265,250 of monthly net income.
That's quite a bit of money for one month of industrial operation, but twelve-times that amount, or the yearly net income, is an even-more-staggering figure, $39,183,000. That is, if the demand for John's product remains stable for, at least, one year. This is entrepreneurial capitalism at its most productive state of operation. Nonetheless, when you consider that only a little-over two-percent of the people, in a population of a little over 300,000,000, have the financial resources, on a continual basis, to invest in start-up companies, as John did, you can clearly see the gross inequity that can systematically prevail in such an economy. The entire working philosophy of market capitalism is based primarily upon the productivity of a labor force, and deriving a consistent, increasingly greater, profit through the work provided by that labor force. This governing principle simply means that the 2 controlling percent of the population would not be wealthy and affluent without the 98%, comprising the labor-force. Hence, one, or more, wealthy capitalists remain continually reliant on the labor of other human beings for continued acquisition of wealth. This is basically why slavery was so appealing in the Southern United States for such a long period of time. Southern cotton growers couldn't have made their great wealth without the involuntary servitude of black slaves. Free slave labor was regarded by Southerners as God's gift to the proliferation of capitalism.
The evolution of present-day free market capitalism began anciently with the practice of bartering goods and services, leading, later, to exchange mercantilism. One meager farmer in ancient Gaul might have offered a poor hunter five-live egg-laying chickens for one-dead deer, or a cobbler might have offered a blacksmith a pair of boots for horseshoes and the shoeing of his horse. That was prior to the establishment of standard national mediums of exchange when most common people learned to perform a service, or produce a good, in order to trade for other needed goods and services, in order to merely survive from day-to-day. Even when precious metals were first introduced into state economies, and fashioned into to coins, to exchange for clothing, food, or shelter, there was a great number of the peasants, or serfs (the working class) who never saw any of it. Instead, they were allowed to have beds, food, and clothing in exchange for their services to the king, queen, Kaiser, or national leader. Pre-Medieval and post-Middle Age economies were structured to keep the money (gold and silver) away from the hands of the working class people, and in the hands of the nobility, landed gentry, and the priests in order to perpetuate the prevailing caste system.
Such pre-20th Century economic philosophers as Adam Smith and David Ricardo vigorously advanced the systemization of capital investments and the dynamics of individual investors reaping dividends from the re-investment of profits. From Ricardo's theory of comparative advantage, combined with Adam Smith's laissez faire doctrine of free market capitalism, the working notion, that a nation-state fares best when corporate and personal investment remains unregulated by government, has directly led to American corporate CEOs receiving multi-million dollar annual salaries and the proliferation of belief that, in business, the investor always does what is best for himself, at the expense of others. Nonetheless, economic gaming theory was later staggered, in the early 1950's, by the negation of Adam Smith's rule, that a person always does what is in his own best interest, by Princeton mathematician, John Nash. Nash theorized, and won a 1994 Nobel Prize for doing so, that a person fares better when he does what is in the best interest of the whole group, instead of himself. This principle of governing dynamics emphasized the "greater good" utilitarian principle conveyed in the philosophies of Jeremy Bentham and John Stuart Mill, that the greatest good for the greatest number of people should be realized in all economic and political endeavors. It is unfortunate that Nash's theoretical postulations were only applied to groups of competing corporations, trusts, and monopolies within a capitalist economic system instead of to the majority of the population receiving the end result of capitalism.
Returning, again, to John and his tremendous profit realized from the labors of fifty-workers over a month's time, the money he generated is, though legal, hardly equitable unless he freely divides the profits justly with his employees. Why? I mentioned that John does not provide health care, or any other benefits, for his employees, but only the federal minimum wage salary required by law. The average 2 percent of the U.S. population that continually controls 98 percent of the money within the United States numbers around 3,000,000 people. That's enough people to populate three cities the size of Seattle. Yet, when you further consider that there are approximately a total of 110,000,000 male and female adults (both the 98% and the 2%) in the American workforce who are constantly required to earn enough money just to pay rent/mortgage, utility bills, food, clothing, and transportation costs for themselves and their dependents, 98 percent of that number is a staggering 107,800,000 people. These are the people who work for the wealthy 2 percent. Out of that number, you can deduct 7,848,484 people, around the country, who are federal, state, and local government employees. These people do not receive salaries from revenue produced by their government employers, but, rather, from tax money collected from the incomes of most private-sector workers. This leaves 99,951,516 private-sector people who, on the average, earn $60,000-or-less in annual wages or salaries.
These statistics are heuristically static, in effect, unless you further consider other accurate socio-economic ratios, such as the 2005 findings that one-out-of-five people in New York City does not know from where his next meal is coming, and that one-out-of-six people in Los Angeles doesn't have proper shelter, food, or clothing to sustain a person over a week's time. These same relative ratios can be applied to the U.S. cities of Philadelphia, Boston, Washington, D.C., Houston, Pittsburg, Oakland, etc. (which have populations of over 500,000). When you consider that there are, presently, 38 major corporations in the United States who would rather outsource 60 percent of their employees from third-world nations, than employ only U.S. citizens at decent, livable, wages, you can see why unemployment within the 50 states averages 5 percent from year-to-year. This means that, at any given time, there are approximately 6,000,000 people in workforce who are unemployed. Free market capitalism chronically carries with it these inherent socio-economic problems. Federal laws are also geared to perpetuating these problems by enhancing the liberty of corporations and companies to produce exorbitant profits at the expense of the physical security of their meagerly paid menial workers. I have, in other essays, described the political process, and purpose, for deliberately introducing high inflation into a market economy. Social, political, and financial dominion over the lives of the consuming population is the end result of a capitalist system that is ultimately placed in the hands of private bankers (the Federal Reserve) to manipulate for their own, and corporate, benefit.
Equitable government regulation of a nation-state's economy can only be properly effected when the tax money collected from the citizens is utilized for the utilitarian purpose of providing for the safety and happiness of the greatest number, or majority, of the state's population. If, perchance, citizens pay standard portions of their minimum wage salaries to federal taxes, they should he provided the same benefits of health insurance, shelter, food, and clothing, by the government, as the individuals making $1,000,000 per year are receiving, especially if the work-efforts of the minimum wage citizens directly determine the salaries of the $1,000,000 per year citizens. Why is this just? If one human being's luxurious lifestyle is directly supported by the work product of other people who are forced, by their wages, to live in poverty, the opulent individual should be constrained, by law, to redistribute his income for the greater public good. Some might call this state socialism, but I see it as the only just and moral recourse to ravenous greed, a simple characteristic of human nature. When someone climbs to wealth and affluence on the backs of poor people paid inequitably, a serious moral crime is committed, as, or more, serious than the felony crimes committed by the, now deceased, former CEO of Enron, Ken Lay.
Most capitalists (the 2 percent of the nation) eschew democratic socialism as an aberration of economic theory and application. Economist John Kenneth Galbraith, however, pointed out the socio-economic inequities emanating from unregulated capitalism in his book, "The Affluent Society." Moreover, Galbraith accentuated the rise of chronic social problems in the United States in a purely capitalistic society. When Social Security, Medicare and Medicaid were introduced by the federal government as a means of providing for the health and security of elderly and infirm retirees, the inequities stemming from prevailing corporate capitalism were hardly corrected. In the year 2006, 17,000,000 Americans, 65 years-of-age, and older, ceased working in order to receive their earned Social Security payment entitlements. The average monthly Social Security payment check issued to these millions of retired Americans was $1,200, hardly enough to provide a meager subsistence.
For example, Mabel, a 65 year-old unskilled female, without a high school education, began working for federal minimum wage in 1980, for a small company in Florida that began with twelve employees and grew to fifty employees by the year 2007. Mabel's wages topped out in the year 2000 at $12 per hour, and she retired in 2002 with 22 years of work service. The company refused to offer health or pension benefits for its employees, and Mabel quit her job to collect a monthly Social Security check of $1,500 per month, which was $420 less-each-month than was her company paycheck at top wage. Two months after quitting work, Mabel, a chain smoker, was diagnosed with malignant lung cancer. She applied for Medicare and Medicaid, but discovered later that the medical services, and medicines, she anticipated were not sufficient to properly treat her life-threatening malady. Within a year, Mabel, who had no family to care for her, took a turn for the worse and was forced to accept care at a state-operated convalescent home, where she died three years later. A sad story, huh? Well, it occurs much more frequently than you would expect.
Now, let's look back a moment at that company, for which Mabel spent the best part of her life working. The entrepreneurial capitalist owner of the company was named John, who in the year 2000 made his highest record yearly profit of $250,000,000 due to his product being in constant demand by the public since 1980. In that millennial year, John and his aging plant manager realized a net profit of $180,000,000 dollars, which they divided evenly. His employees, whom he continually hired, and replaced, over a twenty-year period, were all middle-aged, unskilled, and undereducated citizens who were quite content to receive their wages without any health and retirement benefits. The only perks associated with the job were yearly increases in wage, a $100 bonus at Christmas and Thanksgiving, along baked hams for all employees. What John had failed to realize, from the outset, was that, without the dedicated service of his employees, he could not have derived his gross profit. Hence, the intrinsic worth of the employees remained, and still remains, the primary issue.
In the year 2006, only 4 percent of the Fortune Five Hundred companies in the United States offered lucrative profit-sharing plans for their employees. None of the other thousands of corporations and companies in the United States offered any type of profit-sharing plan in their benefit packages. Why not? Voluntary redistribution of corporate wealth is not concomitant, and agreeable, with free-market capitalism. It is considered a heresy and is not popularly endorsed by the pundits of capitalism. In fact, like communism was in the early 1950's, it is derided and profaned in most pro-capitalist economic journals. Most CEO's, like capitalist John, will sit back in their easy-office chairs and gloat over their profits earned on the backs of their employees, and say that their employees should be content only with their wages.
For a democratic federalist republic, such as the United States, to install, and operate, a democratic socialist economy, the organs of government, supposedly comprised of elected representatives, must reflect the will and needs of the electorate. The Constitution of the United States does not mention, at all, an economy, or the establishment of a federal bureaucracy of administrative agencies, comprised of officers appointed by the Executive Branch, which assumes the Article 1, Section 8 duties of the Legislative Branch. For example, the U.S. Congress (House of Representatives and Senate) is empowered by the Constitution to coin money and to determine its value, just as it is empowered to create rules governing the movement of the land, air, and naval military forces. The Executive Branch, or the President, is merely empowered to execute the laws and rules created by the Congress. So asserts James Madison in the "Federalist Papers." The simplicity of representative government is cogently propounded in the letter of the Constitution and explained, as simply, by Madison, Hamilton, and Jay in the essays they wrote to explain federalism, which makes the convoluted creations of Franklin D. Roosevelt, with the permission of Congress, appear, in this age, extremely ludicrous and unnecessary. When 98 percent of a nation's population is controlled socially and financially by the opulent 2 percent, the 98 percent begin to speak-out in small numbers until a majority of them assert their economic power, as the backbone of a capitalist system.
History recalls how the French Revolution was mainly about harsh economic, social, and political inequity created by a monarchy that cared nothing for the plight of its subjects. The day, in 1789, when the Bastille was stormed by French citizens shouting liberty, equality, fraternity tolled the death of that despotic control. Today, the French people live under a basically socialist system of high taxes and government services designed to provide for the health and social security of the entire population. Of course, there are still the rich and the poor in France, but, essentially, no French citizen is now deprived of the basic necessities which constitute the needs of life. Higher education is even provided by government for French citizens who aspire to the professions. That, unfortunately, isn't the way it is in the United States, the wealthiest and most capricious country in the world. Yet, history does repeat itself continually, and another revolution, in the likeness of the French Revolution, is bound to occur again.
Norton R. Nowlin took M.A. and B.A. degrees in the social and behavioral sciences from the Uiversity orf Texas at Tyler, studied law for one full year at Thomas Jefferson School of Law, in San Diego, California, and earned an ABA-approved advanced paralegal certification from Edmonds Community College, in Lynnwood, Washington. Mr. Nowlin as attended LaJolla, California's National University and Malibu's Pepperdine University to attain graduate credits in business management and economics. Mr. Nowlin also attained a Texas State Teaching Certification, in social studies and psychology, from the University of Texas at Tyler. A paralegal, published essayist, poet, and free-lance fiction writer, Mr. Nowlin resides in Northern Virginia with his wife, the renown math tutor, Diane C. Nowlin, and their two very intelligent cats.
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