FNORD
The Source Of All Potential Wealth
All new potential wealth, the foundation of all prosperity, comes from the earth. You can either harvest something or mine something to create new potential wealth.
Human labor produces raw materials to create jobs and incomes which consolidate into the basic industries of agriculture, forestry, fishing, mining, and recycling. This consolidation of human labor producing raw materials enables the economic cycle that manifests new wealth.
The economic cycle emerges through the structure of trade that manifests sufficient new wealth to afford all finished goods and services. This structure of trade must manifest a sufficient level of wealth to afford all finished goods and services or it becomes unsustainable due to growing debt.
If it is correct, as argued by Milton Friedman and Paul Samuelson, that money is a factor of production in the same sense as labor and raw materials are, that money has the same standing as labor and raw materials with respect to production or wealth creation, then money obviously has a claim to a share in output or wealth created. But, alas, it is not so.
The End of Mainstream Economics: An Interview with Gunnar Tómasson
The Economic Cycle
The economic cycle begins when raw materials producers manifest new wealth by trading for the finished goods and services necessary to live and produce raw materials. All the finished goods and services of the economic cycle come from the processing of raw materials.
Providing services creates a drain upon manifested new wealth.
Producing raw materials and processing them into finished goods by manufacturing creates service jobs in transportation, utilities, finance, and trade. Manufacturing and service jobs depend upon receiving a portion of the manifested new wealth.
It is fundamental nonsense to view money as a factor of production. Money plays many roles, but we live on what we produce. We do not live on paper money that we create as a superstructure on the foundation of our production.
Gunnar Tómasson, financial consultant and former senior staff member (1966–1989) of the International Monetary Fund
Producers Permit All Manifest Wealth
When raw materials producers by their labor extract potential wealth from the earth their manifested wealth must allow them to participate in the economic cycle without borrowing against future production.
Interest paid by the production sector does not reward any contribution of money to wealth creation. It must derive from money newly created in the banking system, which means that it must be loan-financed.
Gunnar Tómasson
Trade based on underpaying producers so they must borrow to begin the next round of the economic cycle and “structure debt” to hide their lack of manifested wealth is unsustainable. Producers must manifest wealth beyond their needs and the demands of manufactoring and service jobs.
Prosperity originates with raw materials being added to the economic cycle. Financial systems based upon ever growing debt are doomed to eventually collapse.
Impoverishing raw materials producers with unpayable debt impoverishes us all.
The proper word to use is: Parity.
Parity means that farmers are guaranteed to receive a price for their production that covers their cost. This protection from the predatory practices of the financial services industry becomes required with the political power exercised by the banksters.
Isn’t human labor where real wealth comes from? Raw materials from the Earth is the source of real wealth, it is the labor required to extract them for use that is real wealth.
This is why countries ‘rich’ in raw materials but lacking in development aren’t rich at all.
Also the idea that ‘wealth’ is anything but an artificial construct is false. Wealth is a human perception, nothing more. Throughout history, wealth was measured by different things, all which were reliant upon human labor. Salt, gold, metals such as bronze, copper, even goats, sheep, etc. These things only have ‘intrinsic value’ because of human perception.
Wealth isn’t then actually ‘created’. It’s resource base exploited by human labor. Only by exploiting resources and leveraging human labor is wealth realized, but this is still just a concept (it’s not real). All it measures (or means) is that some humans value it, while others don’t or won’t.
Markets are nothing more the manipulation (of human perception) of these human valuations. The ‘succeed’ when enough humans are convinced of their value and / or need. They fail with the opposite occurs, but notice the resources are still there, which is why material things are not real wealth and never can be. All you’re really ‘doing’ is manipulating humans to create or destroy ‘value’.
Jay Greathouse Reply:
June 3rd, 2009 at 10:41 pm
Reader, you introduce the idea of “real wealth” when my discussion centered upon “potential wealth” and “manifested wealth” and then you define your “real wealth” as labor. The intellectual fallacies in your argument precludes open discourse, so I move on.
Then you indicate a conditional use of the word ‘rich’ and compare it to the word rich used in a different context, obviously employing two different meanings to avoid nullifying your own argument. So, do raw materials make a country ‘rich’ or not? And then, if a country only possessed human labor it would be wealthy even without resources? You will need to clarify. Further, you do not suggest why nations go to war over raw material resources if they do not represent anything of value.
While wealth is conceptualized by people I disagree that it “is a human perception, nothing more.” Wealth is both tangible and necessary for human survival when denominated in food and shelter. Wealth does possess a recognized exchange value in tangible and necessary commodities.
You seem to favor the labor theory of value – the most influential of the intrinsic theories – which holds that the value of an item comes from the amount of labor spent producing said item.
While I would say food is valued by all entities who can consume it as evidenced by the obvious conflict and competition in both the animal and plant kingdoms for nourishment I also certainly agree that human perception enables human valuation. What’s your point?
I refer to the “processing of raw materials” and you want to go with “resource base exploited by human labor.” I refer to “raw materials producers by their labor extract potential wealth from the earth” and you want to go with “by exploiting resources and leveraging human labor is wealth realized” and it is hard for me to see anything more than a superficial semantic difference here so perhaps more explanation of your position would be helpful.
While individual commodities may not be equally valued by all people, it is the mutually agreed upon exchange value of commodities that enable markets to exist in the first place. I do not know what you choose not to value, but anything that I can eat, use for shelter and warmth or employ as a tool seems to be something more that just a concept and about as real as it gets to me.
The market and existential truisms you offer adds nothing to the discussion. I clearly take the position that raw materials in nature represent potential wealth only made manifest with the involvement of human labor.
Is your position that “real wealth” is never material things but solely human labor? Is your conclusion that the “value” of “real wealth” (human labor) is merely a manipulation of human perception?
I find it difficult to discern how you define the words wealth, rich and value. You seem to be making a linguistic argument regarding the human invention of words and their proper usage in your estimation. Please note I refer to real world tangible items as manifested wealth because of their survival value.
If you actually wish to make a Marxist argument, please consider starting with the privatization of the common as primitive accumulation and the evidence of theft that represents. The continued theft of the common through the privatization of common social resources such as communication and cooperation would prove a fruitful argument as shown by Michael Hardt and Antonio Negri in their book Multitude.
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