A Letter to All
Greetings to whomever this reaches,
This letter is intended to create a public dialogue about the future and to lay down a strong case for the inevitability of structural economic change. I hope and think that you do care about the well-being of humanity and making the world a better place. This is why it is imperative that you seriously weigh and deliberate the ideas below.
The world faces numerous crises, above all: climate change, war and poverty. These problems are the products of fundamental social forces which shape our society. Presented below is a brief examination society to explain these forces and their development. Understanding how society has evolved allows us to comprehend the process of change and support progress towards a more sustainable, peaceful, and prosperous world.
Society exists only through human interactions with the goal of satisfying desires. Humans consume to survive, which requires the production and then consumption of those desired goods. First, humans produced food, shelter, clothes, fire, etc. to meet the most basic needs and then expanded to other, secondary needs related to maximizing survival. Those who maximized their survival rate maximized population growth and were able to guarantee human survival to today. The ability to produce certain things requires the ability to process available resources with tools. Using tools, our species was able to spread and dominate the globe. Society is an extension of the process of evolution.
As our tools advanced, jobs become more specialized to the tool and labor became more efficient. Time was freed up, and production expanded into new areas. Governments and economies developed as a result of increasing complexity, efficiency, and abundance of wealth. Political structures, established through laws, organized this complex system of producers and consumers as society expanded, helping to maintain the social and economic order.
All life relies on the consumption of goods, or the use of goods. The distribution of these goods is determined by institutions that create and enforce the laws relating to it, by how the process of production and consumption of goods is structured. Therefore, the maintenance of human life, and of society, relies on the compatibility of the social relations, the relations of the process of production, the relations of consumption, with the tools of production.
With production as society’s foundation and guide, it will now be examined. Modern production is dominated by private firms producing commodities for sale. Money, and all other commodities, are the products of human labor. The accumulation of wealth drives society; firms produce to accumulate and grow and investors follow the highest profit. The power of money comes from its ability to be exchanged with all other products. What makes commodities exchangeable with each other is a common trait they share. Exchanged goods have an objective value, a comparable quantity that is steady across a specific market. This objective value comes has to come from an objective measure comparing production; the expenditure of production time.
All production costs boil down to past labor input. As Adam Smith and all the other classical economists presented, this is a result of value representing difficulty in reproduction, i.e. labor saved by the purchaser. A trade is fair if the input for both commodities was the same, if effort was equal. Otherwise, the one trading more effort for less would simply perform the other task to save time and thus gain more. This idea goes back to famous philosophers like Aristotle and Thomas Aquinas, among others. More resources are needed to produce valuable commodities like diamonds, precious metals, and the high tech equipment used to mine them. The added time for this production results in higher value. This is self-evident when looking at the prices of competitive goods; low labor input results in low cost production and low prices, with basic goods cheapening as productivity allows more goods to be produced with less labor.
Value in a market manifests as the average production times. This is because competition and supply and demand act as a mechanism driving prices to a balance around the real value. Prices below value result in more sales, while higher prices return more profit per sale, so an equilibrium between the two is found. This equilibrium tends towards the time needed for the market to reproduce the commodity; the market is a collection of producers and consumers and so the individual producer has little say on the price, as does the consumer.
Modern capitalism prioritizes growth because the entire system requires profit to exist; capital needs to expand for its own survival. Capital is simply commodities that aid production. It supplements labor, increasing productivity and enabling surplus.
A market requires an exchange of one good for a temporarily fixed quantity of another good for it, as prices on a market are not subject to bargaining. For surplus value to be extracted by the capitalist, the buyer of labor and owner of capital - commodities must be exchanged at a fixed price and a surplus pocketed. Because an exchange of unequal values negates the meaning of value, it is nonsensical that profit arises from or in exchange. This means that production creates surplus; labor creates surplus value in real time.
The reason profit can be made is due to the special quality of labor. Labor produces more value than it is worth. Value is the average time for production, not what the commodity produces. Labor, or the capacity of the laborers to work, can be produced in less time than what the laborer expends. For example, this means that a worker can be reproduced (all the goods for his life created) in only two hours of the day while still having to work for eight or more. The worker’s commodity is exchanged for less value than it produces, creating surplus. This is the meaning of exploitation.
A contrary belief to labor giving value is the subjective value theory. It claims that price comes from personal satisfaction or simply just supply and demand. However, no set quantity can be found through this subjective feeling, and supply and demand do not give a full description of price either. A large demand alone does not increase any price, as the most purchased goods are not the most expensive. All subjective theories of value fail to represent reality because thoughts alone do not reach beyond the mind. The action resulting from the subjective process, effective demand, still does not account for the cost of production. When supply and demand are balanced, we cease to have an explanation of value except for past values, which must have a beginning with some objective measure.
In our economy, high levels of productivity have allowed massive growth and abundance. As technology continues to improve upon productive efficiency, wealth becomes even easier to produce. This productivity allows goods to be made with much less new labor (represented by wages), while more previously spent labor (capital, usually money) is necessary to purchase the productive tools (machines). This causes a fall in the rate of profit. Less new labor imbues less new value and less surplus. As better machines enable high productivity, selling more goods at a cheaper price allows for greater profit. But, as the machines disperse in the market, the product no longer outcompetes others, and the rate of profit decreases for all as the machines require more investment than value creating labor. More money towards machines, less towards new value. This eventually results in a rate of profit so low that near-monopolies form to distort price. As monopolies and oligopolies (acting effectively as monopolies) increasingly dominate production, the system becomes progressively more inefficient. The profit making of private firms ultimately ceases to be viable, and production will become subsumed by government in the interest of the working class. This process is already happening with monopolies in capital intensive industries including tech, communication, pharmaceuticals, agriculture, oil, and housing, even while many benefit from government subsidies.
The domination of the economy by fewer and fewer self interested firms results in huge wealth inequality, now at a historic high. The concentrated profit creates a disparity of power which keeps in place the system that encouraged it, thriving off more extreme exploitation. The inefficiency of the system is in resource allocation, choosing profit over the well-being of people. This is why poverty is hardly being tackled, war is encouraged and expanded, and climate change has been largely ignored by those in power. The global south has seen increases in standards of living mainly through struggle against exploitation, and even the most developed countries have experienced stagnant wages for decades with an increase in household debt. Underdeveloped countries often lack significant investment in well-being.
The inefficiency lies in the type of production itself; whatever private institution controls the surplus of production gains financial power, controlling the economy and politics alike, and neglecting the rest of society. Resources are now used to exacerbate inequality, decaying democracy, fomenting war, and harming the environment.
People around the world still do not have access to basic health services, secure income, formal education, and much more. These take a back seat to billion dollar profits, rampant consumerism, and waste, fueled largely by the destruction of our global ecosystem. In light of such disaster, we ask you to join a cause more significant than profit and power. Individual philanthropists, even the wealthiest, can only do so much for so long. This is not true within a more rational world system. We ask you to consider the significance of a political movement for the masses, against the ruling elite, corrupt career politicians, and corporate owners around the world maintaining a status quo of rank, callous disregard for suffering.
Our society possesses the material abundance and knowledge to create well-being for all and stop such excessive, profit-driven suffering. We need a democratic economy, not an exclusive one, centered on the needs of all citizens.
It is understandable that many questions may arise from viewing the world in a new way. Doubt is a likely response, and complex issues are still not fully understood by anyone. Correspondence about anything that may be unclear is encouraged. These views are grounded in a rich tradition of science and history which would be happily shared with anyone interested. As society develops, our view of it must, too.
Please do not be hesitant to share any thoughts.
Thank you for taking the time to read and understand this letter.