Money Moyenage

Consolidating the Wealth

If a mature capitalist economy entrepreneurs profit without growth, then where does the profit come from?

Before the emergence of capitalism, in the age of feudalism, profit (economic gain) was a non-inflationary, zero-sum, no-growth endeavor of despoiling your competition--the wealth of the other overlords and their subjects. The accumulated wealth became capital to be invested to expand the pie and cause, create, a "capital" gain that, still, was not inflationary because it increased the supply, or caused economic growth.

Capitalism emerged as a peacefully prosperous means of using the wealth consolidated by royal monarchists to organize an expansion of the pie, or to produce economic growth with the result being the profit (the measure of economic growth).

As capitalism matured, wealth and power has again become a moyenage, no-growth endeavor in which the competition for profit is not to innovate productivity as much to innovate the means of despoiling consolidated fiefdoms of economic power--of acquiring profit before growth which effectively minimizes growth and effectively minimizes the competitive free-market mechanism of price competition that controls inflation.

It is a game of monopoly in which winning the game is to bankrupt the competition and subjugate all the other players to your power; not expanding the pie, but consolidating it.

The result is profit without growth and liquidity crisis--consolidation of the capital that we are now experiencing and that congressman Franks has misattributed to a lack of government regulation on a consolidated capital.

No! The cause of this crisis is a fundamental lack of the self-regulating mechanism of a free market economics due to consolidation of wealth largely caused by a regressive tax code and a lack of government regulatory authority to properly act to ensure it in priority as Adam Smith prescribed.

The problem is that capital has been allowed to consolidate and revert to a passe' state of feudalism--of profit without growth. It is an illgetimate operation and organization of capital without ensuring the free market mechanism to control it.

Socialism is an indicator that the free market mechanism (pluralism) is not ALLOWED to work, not that it does not work. Franks is wrong and this bail-out bill is wrong. It should be defeated because it is based on a fundamentally flawed analytic.

Very best wishes.