A Summary of the Problems and Solutions to a Failing Economy in a Capitalist Nation
Window to the World's Faults
What would happen if all of the machines were smashed? Wouldn't that create many more jobs and much more employment? Frédéric Bastiat, the well-known economist, mentioned this as an economic stimulant in 1850 in regards to broken, store windows, "Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade -- that it encourages that trade to the amount of six francs -- I grant it." [*1]
There was one disclaimer that Bastiat put upon this theory: this discourages the owner of a shop from using that money productively elsewhere. Or, as Bastiat put it, "It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another." However, this assumes that the shop-owners are living on a starvation income, where they earn so little that they absolutely have to spend everything they receive. Shop-owners, however, are not wage-slaves. If you smash a window owned by a multi-billion dollar company, they're not going to stop all of their investments just because of that, or any for that matter.
The total value held by Capitalists today in the United States amounts to $188 trillion, or approximately 13 times the Gross Domestic Product. [*2] Assuming a window replacement costs $100, with another $100 for labor, then that's nearly one trillion windows. Let's take Bastiat's thinking again. If a group of Capitalists possess $188 trillion dollars, and they lose $200 from a single window, can we really expect this to cause them to withdraw investments everywhere? According to Bastiat, you're pushing the economy for every window you smash -- as long as they can afford it, which is absolutely the case today.
The amount of money that is being saved every year by Capitalists, instead of reinvesting it into the economy, is somewhere between $1.7 trillion yearly to $2.1 trillion yearly. Use of investment funds decreases as recessions grow larger. "Gross Domestic Investment," or how much of this funding is going back to create jobs, was climbing from 2005 until 2008, when it collapsed. According to the statistics for 2011, investments today in the economy are smaller than those in 2006 or 2007. Annual savings "not spent" by these investment firms revolved between $1.5 trillion and $2.1 trillion. [*3] These statistics are provided by the United States Federal Reserve.
If some investment firm's window gets smashed, and they decide not to invest in the economy, it's out of bitterness -- economic factors don't enter into it at all. So, unless all of the windows, factories, and buildings are smashed together, there probably won't be enough anger and irritation to cause a slow-down in the economy through crime. Bastiat's starving shop-owner doesn't exist. It was an illusion made in a time where the wealth differences between the poor and the rich were exorbitantly worse than they are today.
The Financial Incentives of Blowing Up Machinery and Factory Equipment
When investments increase, employment increases. When investments decrease, employment decreases. Research by John B. Taylor, Professor of Economics at Stanford University, has confirmed this. A graph of unemployment is an extremely close inverse of a graph of investment-to-GDP ratio -- when investment drops, unemployment rises an equal proportion, and when investment rises, unemployment drops an equal amount. [*4]
If you want to get more jobs for the people, encourage investment. If it happens that you don't control $1 to $2 trillion dollars right now, then smash windows. Capitalists may see themselves as having no economic incentive to produce new business; but they will greedily hoard up all that is currently keeping them afloat. If you can't make more business with more jobs, make more jobs with less business: not only does Walmart have keep on its regular staff, but it has to hire construction workers every few days. And as long as arson isn't excessive, it won't seriously interrupt the flow of business, and people can still keep shopping there -- even if it resembles a plain warehouse after the firebomb.
Even better than that, we should seriously consider the destruction of machinery, mining equipment, and factories. After all, today someone working eight hours a day on a farm can produce enough food to feed hundreds. What happens if we drop that number significantly, so that more laborers are needed to produce our food needs? Well, that means more money to the workers, more money to those who are so poor and shackled to the system, that they couldn't spend less. Capitalists will lose, since instead of buying equipment from each other, they need to buy more labor from the working class.
In 2010, the United States Congress passed the Hiring Incentives to Restore Employment (HIRE) Act. It offers financial incentives, in terms of bonuses and tax credits, to companies that are able to hire the underemployed and retain them. [*5] Why would such an act even need to be passed, unless it is recognized that the Capitalist class is a parasitic landlord class, incapable of administration as much as it is of caring about the economy? "The existence of these people was by any standard unjustifiable. They were simply parasites, less useful to society than his fleas are to a dog," to quote George Orwell on Capitalists. [*6]
"Hire more, with less investment, through tax-breaks on a government whose national bank is already a minefield." This is the message of the HIRE Act. Why not just ban all productive machinery and require everyone to go back to hand tools? Is it possible that there wouldn't be enough money to hire thousands of more workers to harvest food and do the regular jobs that already need to be done? No, because there's trillions and trillions of dollars just sitting, rotting, and wasting. Is it possible that Capitalists would eliminate the production of food because instruments of production weren't sufficient? No, otherwise, there never would have been agriculture to begin with -- since it obviously didn't start with the tractor.
Is Our Curse in the Technical Organization of Society, or its Economic Organization?
Overproductivity. The vast majority of society can be supported by an extremely small amount of people working only eight-hours a day. While our technology in engineering and industry may be advanced, the technology of economic theory is the most regressive in the world. And science should be divorced from mathematics before it is divorced from sociology and history. What does the HIRE Act emphasize? It emphasizes that the needs on the economy can be satisfied without investing more, without creating new jobs -- the problem is not our lack of technology, it's the abundance of it.
Why doesn't the US Congress pass a 10,000% tax on productive equipment, technology, and research and development? These are the things that destroy jobs, not creating them. What new technology could be created that would be so great that it's better than providing economic opportunity, necessities, and a good standard of living for everyone?
But that's not really the problem with such an act. The real problem is that such a law would recognize the true basis of conflict: our economy is failing not because the workers are rebelling or because of unions or because of lack of tariffs or because of taxes -- no, the economy is failing, and failing for one reason only, because of the maladministration of society's productive wealth. It is the inference behind the HIRE Act, except much more specific, direct, thoughtful, and clear.
What is the basis of the HIRE Act? Why does the government believe in giving incentives to employers for employment? How is that a good method of improving the economy? It can only be a logical method of curing unemployment, if you take for granted that those with trillions uninvested have no need to create new jobs. There are enough jobs being filled today for the Capitalist class to retain its domination over every social institution, from economy to education to politics. More workers, for an already overproductive economy.
It is the philosophy of the economist John Maynard Keynes that has been officially accepted by the United States federal government. Whenever someone asked him how high spending in the economy could produce jobs in the long-term, he always responded, "In the long run we are all dead." [*7] That was the thinking of economists in the 1950's and the 1960's, and today, our economy is perfectly dead. It is time to reap the bountiful harvests of the long-term development of the Capitalist economy.
If it is true that the Capitalist class can subsist upon an undernourished economy, and that they need incentives to hire more, then why not work directly at the source? The problem is not the ability of people to produce enough food, clothing, and housing for everyone with only ten minutes of labor a day -- no self-respecting engineer or scientist could argue against that, even those who work at the UN. [*8] The problem is an overproductive economy, that completely satisfies the needs of those who own it, at the great detriment to everyone else. If the politicians understood the logic behind the HIRE Act, when they signed it, then they should have signed universal pardons for anyone caught destroying machinery or equipment. More employment, within the same amount of jobs.
There is another alternative: giving the land to the people, the factories to the workers, the land to the farmers, and so on. Overproductivity is only a problem when the economy is owned by a very few, and those very few are perfectly satisfied at current production levels, while the masses starve. When the workers themselves possess the industries and the machinery they labor upon, then overproductivity results in increasing standards of living and the abolishment of unemployment. But for a band-aid fix, the HIRE Act is interesting, in that it at least admits the premise of Marxism: the more developed Capitalism, the more pronounced the suffering of the masses. [*9]
*1."Ce Quezon vomit et ice Quezon ne vomit pas," 1850, or, in English: "That Which Is Seen, and That Which Is Not Seen," by Frédéric Bastiat, translated by Patrick James Stirling, republished by WikiSource, WikiSource.org .