I know I'm a little late in getting around to answering this. Capitalism has been keeping me rather busy lately, working roughly 10 hours a day. Haven't had time to keep up with Bay12
resource control.
resources are constantly draining from one group of people and consolidating into the hands of a shrinking handful.
If you're talking about
money, yes that trend does exist. But why are you using the word "resources?"
If you mean, like..."natural resources" I think what you're saying doesn't describe the world very well.
Money tends to consolidate, but for the most part it's not really like there's a finite number of "resources on earth" that people are fighting over. Sure, wars have been fought over oil, but for example...Bill Gates. What "resources" is he, as you phrased it, "draining from other groups of people?" Warren Buffet. Is he "draining resources" from people? Oprah? She's a billionnaire. Is she "draining resources" from people?
Well, in a way, kind of by definition, yes, if you think of money as a resource. If I give you a dollar for your apple, you're "draining money" from me in the sense that you have the dollar and I no longer do. That makes sense. But my impression is that's not what you meant.
It kind sounds to me like you're thinking of the world and money and "resource control" as if it were a game of starcraft: there are a fixed number of crystal and vespene gas nodes on the map, and people fight for control over them, and once they have control of those resources they become unavailable to other people. But while that model does describe some cases, kind of...sort of, I think it's not very descriptive of modern economics as a whole. Even in case like oil or diamonds, the people getting rich from having control of the resources are only getting rich because they're giving those resources to somebody else, in exchange for money. More to the point though, very few rich people in the modern world became rich by "wrestling control of finite natural resource" like forests or mines. Land, yes. Plenty of real estate millionaires, but it's not like there's a shortage of land. What makes land valuable is not the land so much as what you do with it. If you want land, you can buy cheap desert land for $1000/acre, pretty much all you want. There's a huge abundance of it, and people who make money in real estate generally don't make money because they've "wrested control" of land away from other people.
Go through the
Forbes list of billionaires. Do you see
anybody who made their money from taking or controlling large quantities of physical resources like lumber, water, metal, etc? I don't.
So what exactly do you mean by this resource control thing you're talking about?
Because currency represents control over resources,
the incentive is to gather as much of it as possible.
Again, that seems like an odd way to look at it.
How does currency represent control over resources specifically? Yes, if you have money, you can use that money to buy resources. But you can use that money to hire people, to pay for the processing of resources you happen to already have, etc. I don't see a strong connection to resources in particular unless you're including things like money and people as resources, in which case yes, you can use money to acquire more control over those things. But I don't think that's quite what you mean. Please clarify if I'm wrong...but again, it sounds like you're using a starcraft crystal and gas model for economics. Which...again, I don't think is a very accurate way of looking at money.
So...clarify?
I'm going to reverse the order of your post, and start by answering this part.
There is a finite amount of money in the economy. If their weren't, it wouldn't have value. This is why inflation is a thing, right?
Money being a finite thing, if one person gathers a really huge amount of it, that has to mean that there are others who have less as a consequence. This is represented pretty often lately by stuff like
this.
There's also a finite amount of every other resource imaginable, even the majorly abundant ones are finite enough to be controlled... except for intellectual property and other abstract stuff like that, but that's not really relevant to my point and you'll see why. Pretty much every physical resource, barring the likes of sunlight, is claimed and controlled by some person or social entity. Any finite resource that can be exchanged has a market value expressed in currency. Anyone who wants to partake of those resources has to exchange for them.
So, yeah, money can be used to buy resources. But there are major differences between how a person who is wealthy and a person who is poor buys resources, and how they obtain the money to do so. This is how the control I'm talking about comes into play.
You bring up apples, so let's use that. A wealthy person (let's call him Mr. Warren) buys an apple orchard, and labor to maintain the orchard and market its apples. A poor person (let's call him Joe) can't buy an apple orchard. The best Joe can hope to do is convince Mr. Warren to buy his labor, so that he can use those wages to buy individual apples to eat and sustain himself. Mr. Warren sells these apples for a profitable price. What this means is he'll have made more money back from all his apple sales than he spent on maintaining the orchard (including labor) and marketing the apples.
As this cycle plays on, Mr. Warren continually gathers up more and more of the finite amount of money in the economy, leaving less and less for everyone else poorer than him to compete for. Over time, he can afford to buy more resources to generate more profit. Meanwhile, the number of poor people who have no choice but to sell their labor to people like Mr. Warren continues to increase, and the value of their labor decreases as they are forced to compete with each other.
What's market competition going to do about it? Nothing. Like in any other competition, somebody eventually wins. Usually, it's whoever makes the most profit. If somebody competes against Mr. Warren, they do it by doing the same thing he's doing, but doing it better. Maybe they make better quality apples that they can sell for better profit, but all that means is people who can afford to spend a little more on their apples get more pleasure from them. The end result of wealth consolidation is exactly the same.
And yeah, that's a simplistic example. So I'll go ahead and modernize it. It's true that most of the fantastically wealthy today don't exert direct control over resources as I've described above. Instead, they exert partial control over a large number of companies, and those companies exert direct control over resources. Mr. Warren is in fact upper middle class... maybe even lower upper class. He gets a good amount of money for managing the orchard, and maybe even the opportunity to climb up the social ladder, if he plays his cards right. But he doesn't own his company. A handful of investors do, who give Mr. Warren and his business money to help it grow profitable, under the assumption that it will grow profitable enough to pay back those investments, plus more. Maybe Mr. Warren also took out some bank loans to help launch his business, so he has to pay them back too (plus interest). If he fails to do so, the bank comes and collects what resources he has.
What does this look like in a real-life example? The real Warren Buffet owns a majority of Berkshire Hathaway and operates it as CEO.
Berkshire Hathaway exerts varying amounts of control over all these companies. All those companies exert direct or indirect control over various resources. As long as Berkshire Hathaway and its subsidiaries and partial ownerships remain profitable, Warren Buffet's control over the world's resources is constantly expanding. As compared to the totality of the world's resources, the portion he controls may seem pretty small. However, he's not the only wealthy person in the world.
99.99% of the world's population lives at the mercy of the remaining .001% that Warren Buffet is a part of. That tiny upper class exerts the majority of influence over all the world's resources. If anyone who is not among that elite class wants to partake of any resource, which they inevitably must in order to survive, they have to pay money to entities that are owned and operated by that upper class. In order to obtain money to pay for those resources, they have to sell their services to that upper class, which means working to expand specific upper class person's profits / control over resources in the majority of cases. It's a cycle of control.
I work for a company that is owned by a handful of people who are much, much wealthier than I. I work to make them money. In exchange, I get to keep a small portion of the money that I make for them. I use that money to purchase resources from a variety of other companies also owned by wealthy people and operated by poor people in order to sustain my life. The entire economy is a game of resources consolidation that everyone is forced to participate in.
Let's say I have a billion dollars, but
it's just money. I don't actually own or exert influence over any real resources. I still have remarkable influence. That huge amount of money I have is a significant chunk of the total finite amount of money in the economy. The fact that I have it means that there is a large number of other people who don't have it. The fact that I have this money means that others who don't have enough money are going to come to me asking if they can have some of it, so that they can live their lives. I can pointlessly cling to it, I can give it away, or I can exchange for goods and services. If I exchange for goods and services, I am exercising influence over resources. I am preventing other people from accessing resources by reserving a chunk of the finite money economy. If I don't ask for goods and services that generate profit for me, my influence may be shorter-lived than other billionaires who do, but it's still influence. And the money that I pay for goods and services will inevitably be ending up in the hands of other billionaires that
are seeking profit.
I'm greatly disturbed by how often it's repeated that the more wealth a person has, the more representative it is of more work being done on their part. Bullshit. There is no way in hell that the CEO of Fedex does 288x more work than me in a year. It's physically impossible. And considering my net worth is negative, trying to figure out how much more work than me he's done in his lifetime isn't even computable. It's seriously offensive to me when people repeat the nonsense that money made is proportional to work done.
I think this might be a misconceptualization.
Setting aside theft and counterfeiting, there's really only one way for a person to "make" money: for somebody else to give it to them. Right? Any time somebody "makes" money, they're not really "making" anything. Somebody else is giving it to them. The amount of money you receive is not a measure of how much "work" you do. It's a measure of how much money people have chosen to give you.
Now, why do people give other people money? Sure...there are gifts, and inheritances. But generally people give people money in exchange for perceived value received. For example, if I have a dollar and you have an apple, we might trade. You give me the apple, and I give you the dollar. To me, receiving the apple was "worth" giving you the dollar. Maybe somebody else also has a dollar but they don't like apples so they choose to not give you their dollar for an apple. To them, that apple was not worth a dollar. There's no "fundamental value" to apples. There is only what apples are worth...to the people who have money available for them to choose to give, or choose to not give it.
Whether someone has one dollar, or a hundred dollars or a million dollars...every one of those dollars, somebody
chose to give to them.
Money exchanges are not measures of "work." They're measures of perceived value received. That CEO you mentioned didn't do 288 times more work than you. He convinced other people to give him 288 times as much money as you convinced people to give you.
And if those people
chose to give them that money...how you can be justified being angry about it? What the CEO of Fedex does might not be worth it to
you to give him 288 times your salary. But it was obviously worth it to
somebody or else they wouldn't have chosen to give it to him. How is that any different than me and the other guy choosing or not choosing to give you a dollar for your apple? To him, your apple wasn't worth a dollar. Does it make sense for him to be
angry because I thought your apple was worth giving you a dollar?
Why are you angry that other people think it's worth giving somebody else money?
And what if the choices you speak of are between finding a way to exchange for those resources or dying? Then your whole point is moot. No person will put a price limit on their own life. I pay half my income just to have a place to live. I think it's absolutely ridiculous. Would I still pay more if I had to? Absolutely. Perceived values can only be applied from to luxury goods, and to necessities from the perspective of a person who doesn't have to worry about necessities. And a predictable irony of the modern world is that many luxuries are so incredibly cheap that buying them has almost zero effect on one's ability to afford necessities. I can upgrade my computer every couple years to keep it nice and up-to-date with the demands of whatever I want it to do. To do so costs me roughly one third of one month's rent. Society has reached a point where the topic of perceived value has almost zero relevance to any discussion of the economic dynamics between the rich and the poor.
As for the whole thing about value of work vs amount of work and money earned -- what is the real value of a CEO or successful investor's work? A CEO or investor is successful in our economy if they generate profit. While generating profit sometimes coincides with generating real value in quality of life terms, the opposite is also often true. And the fact always remains that as their work only pertains to generating profit what they do only makes sense within the abstract context of economic functioning (the imaginary number game), and the things of real quality of life value that their companies do could very likely be done without them.
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Topic: Let's talk Capitalism. (Read 26775 times)