Money and Wealth: Zero Sum Game?

[bboyu]

I have a question that I've been pondering upon for a few days now.

There's a belief that Money and Wealth is the same thing. Apparently there's a difference between the two.

There's a set amount of money which is circulating around a country or the world for that matter. So when you pay someone something they have gained but you have made a loss, if the thing you've bought is not satisfactory.

Their gain is your loss = Zero Sum Game of money.

Yes someone can create a chair from a tree and create value but that has to be paid for with money? Where is the extra wealth created? How is wealth created? How is the extra Wealth then created if there's a set amount of money? and where does the extra money come from to make someone more wealthy?

The same money that has been paid for the chair has come from somebody else who got it from somebody else and now sits with the chair maker who will pay the guy who makes the chainsaw who now has the same money?

How has that made the chair maker more wealthy?

 

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[jon.a]

"Money is a tool" You've heard that before. It is a means of transferring value, nothing more. Money for time, goods, etc.

 

[Nick314]

There is no set amount of money--at least not in our current monetary system.
A bank charter is literally a license to print money.
When someone goes to the bank and takes out a loan, the signed loan document--which is a promise to pay, is *new money* created out of thin air by the banker. That note is then sold on the market as a debt-backed asset for the value written on the paper. Some debt assets have physical collateral (like a car or real estate), others are merely backed by the word of the debtor (unguaranteed loans/personal lines of credit etc). Thus they get a risk rating--it only gets more complicated the deeper you get into it.

I agree that wealth and money are not the same thing. Wealth includes assets--and IMO that includes both physical and immaterial such as knowledge, experience, and skill--thus teaching someone something makes them wealthier because they are subsequently improved. Ever heard the term "a wealth of knowledge"?

Clearly not all monetary transactions involve wealth at all. I wouldn't say that selling entertainment is imparting wealth (in most cases)--but it can enrich the recipient's life in a meaningful way.

So no, it's not a zero-sum game in the sense you mention.

In the current monetary system (and this is risking delving into politics of sorts), it's actually a negative sum game--since the banks take money off the table every round--they are the dealer at the table earning a hefty rake.

 

[bboyu]

Okay so the banks create more money out of thin air but wealth itself is not

"Money is a tool" You've heard that before. It is a means of transferring value, nothing more. Money for time, goods, etc.

What is wealth then? and why is wealth measured in this "tool"?

 

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[bboyu]

Okay so the banks create more money out of thin air but wealth itself is not created by printing money.

 

[jon.a]

Okay so the banks create more money out of thin air but wealth itself is not


What is wealth then? and why is wealth measured in this "tool"?

In average peoples terms, wealth is just stuff that can be traded for other stuff.
Stuff is measured in monetary value to give us a guide in trading with others.
Crap, someone else do this. I'm not doing it very well.

 

[Digamma]

You are thinking about it completely wrong. Abstract.
Money is literally paper. It is only a placeholder we use instead of bartering. Ignore it. It doesn't exists, it's a useless variable here.

Wealth is created by creating new value*.
You have a wood log you bought from a passing merchant. It's a good log. Pretty and solid. Nice color. Smells like forest in September.
Now, you are Geppetto, so you know it could be more than what it is. You work on it and it becomes a majestic chair, with rounded armrests fit for a King . It's still the same wood - but now you can sit on it and it's pretty comfortable. That makes it more valuable. It also speaks, giving wonderful business advice, and has a tendency to bite when you take bad financial decisions.

As a craftsman, you know that the peculiarity of your chair might be useful to the most powerful man in town, Mangiafuoco. Hell, the guy is scary, but you're sure about this: the chair would be awesome in his office, and its advice could make him even more powerful than he is.
Also, he's pretty fat, and the chair is made with top shelf wood.

So you bring the chair to him. He looks at the chair and offers you good money, honest price.
But wait, you say. This chair is much more valuable. So you ask him to keep the chair for one business day and, if after that day he doesn't want to pay a hundred times the price he offered, you'll take it back.
That afternoon, Scrooge comes by to finalize a deal with Mangiafuoco. But when they are getting ready to sign, the chair bites. And it bites hard. Surprised, Mangiafuoco jumps on his feet. Then the chair explains why Scrooge is a scammer, and Mangiafuoco is stunned: this wooden chair has just saved him a lot of money and grief. He is a smart guy, so he immediately knows the amount of money he will make with that chair under his bottom.

After kicking Scrooge's a$$, he comes to your shop, and pays you not only 100 times the initial price - he throws in a lifetime free entry to his puppet show. With that money, you never have to build a coffin ever again!

The difference between the value of the talking chair and the value of the log is wealth that didn't exist before. You created it.
Congrats!

* - You could actually argue that wealth is never actually created anew, only transformed from something that can't be quantified or valued to something that can. For example, you could argue that whatever you do, you are actually transforming your time, money, expertise and energy in new wealth.
But this is simply irrelevant to understanding how wealth is created in the real world. Let's leave it to the big tenured professions.

 

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[Nick314]

Wealth has many definitions.
http://dictionary.reference.com/browse/wealth says:
noun
1.
a great quantity or store of money, valuable possessions, property, or other riches:
the wealth of a city.
2.
an abundance or profusion of anything; plentiful amount:
a wealth of imagery.
3.
Economics.

1. all things that have a monetary or exchange value.
2. anything that has utility and is capable of being appropriated or exchanged.

4.
rich or valuable contents or produce:
the wealth of the soil.
5.
the state of being rich; prosperity; affluence:
persons of wealth and standing.
6.
Obsolete, happiness.

Notice that many definitions don't involve monetary value at all. Clearly some things that satisfy the definition can be created out of thin air.
Ideas can. Changing the form of raw materials into some other, more useful form can be also.

 

[GSF]

Money = A medium that can be exchanged for goods and services and is used as a measure of their values on the market

Wealth= A measure of the value of all of the assets of worth owned by a person, community, company or country. Wealth is found by taking the total market value of all the physical and intangible assets of the entity and then subtracting all debts.

Copied and pasted from Google results for wealth and money definitions

 

[jon.a]

Let me try again.
Money doesn't matter.
Wealth would be a zero sum game if it weren't for value added innovation.

 

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[bboyu]

You are thinking about it completely wrong. Abstract.
Money is literally paper. It is only a placeholder we use instead of bartering. Ignore it. It doesn't exists, it's a useless variable here.

Wealth is created by creating new value*.
You have a wood log you bought from a passing merchant. It's a good log. Pretty and solid. Nice color. Smells like forest in September.
Now, you are Geppetto, so you know it could be more than what it is. You work on it and it becomes a majestic chair, with rounded armrests fit for a King . It's still the same wood - but now you can sit on it and it's pretty comfortable. That makes it more valuable. It also speaks, giving wonderful business advice, and has a tendency to bite when you take bad financial decisions.

As a craftsman, you know that the peculiarity of your chair might be useful to the most powerful man in town, Mangiafuoco. Hell, the guy is scary, but you're sure about this: the chair would be awesome in his office, and its advice could make him even more powerful than he is.
Also, he's pretty fat, and the chair is made with top shelf wood.

So you bring the chair to him. He looks at the chair and offers you good money, honest price.
But wait, you say. This chair is much more valuable. So you ask him to keep the chair for one business day and, if after that day he doesn't want to pay a hundred times the price he offered, you'll take it back.
That afternoon, Scrooge comes by to finalize a deal with Mangiafuoco. But when they are getting ready to sign, the chair bites. And it bites hard. Surprised, Mangiafuoco jumps on his feet. Then the chair explains why Scrooge is a scammer, and Mangiafuoco is stunned: this wooden chair has just saved him a lot of money and grief. He is a smart guy, so he immediately knows the amount of money he will make with that chair under his bottom.

After kicking Scrooge's a$$, he comes to your shop, and pays you not only 100 times the initial price - he throws in a lifetime free entry to his puppet show. With that money, you never have to build a coffin ever again!

The difference between the value of the talking chair and the value of the log is wealth that didn't exist before. You created it.
Congrats!

* - You could actually argue that wealth is never actually created anew, only transformed from something that can't be quantified or valued to something that can. For example, you could argue that whatever you do, you are actually transforming your time, money, expertise and energy in new wealth.
But this is simply irrelevant to understanding how wealth is created in the real world. Let's leave it to the big tenured professions.

Appreciate your response but what I'm trying to understand Is how can a country or an area within a country become wealthy and come out of poverty and the dark ages by simply building things and bartering with others for things they have made? the original money that he has paid for the chair has come from somewhere else hasn't it? how is true wealth actually created? Is it not just banks printing money and then people accumulating that money and storing it? Is it all not the same money circulating around? So money is a zero sum game? The people who have accumulated wealth in money form have amalgamated money that was already in the economy?

 

[jon.a]

Appreciate your response but what I'm trying to understand Is how can a country or an area within a country become wealthy and come out of poverty and the dark ages by simply building things and bartering with others for things they have made? the original money that he has paid for the chair has come from somewhere else hasn't it? how is true wealth actually created? Is it not just banks printing money and then people accumulating that money and storing it? Is it all not the same money circulating around? So money is a zero sum game? The people who have accumulated wealth in money form have amalgamated money that was already in the economy?

The money (tool of exchange) that the buyer spent came from money (tool of exchange) that he received for providing something of value to someone else. Barring scams, we all just trade value back and forth. To be successful, you only have to do a little more than normal people. Normal people just get by. Value adders get rewarded.

 

[Leo Hendrix]

Money
http://www.investopedia.com/terms/m/moneysupply.asp

Wealth = Money + 'other things" material or otherwise YOU place value on. I guess wealth is subjective.

The Chair Maker is more 'wealthy' due to the fact he has contributed something of value to society, feels he has gained something from doing so, finds his place and purpose in life & society so and so forth etc...I guess Wealth is more an introspective/subjective value.

 

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[Digamma]

Appreciate your response but what I'm trying to understand Is how can a country or an area within a country become wealthy and come out of poverty and the dark ages by simply building things and bartering with others for things they have made? the original money that he has paid for the chair has come from somewhere else hasn't it? how is true wealth actually created? Is it not just banks printing money and then people accumulating that money and storing it? Is it all not the same money circulating around? So money is a zero sum game? The people who have accumulated wealth in money form have amalgamated money that was already in the economy?

LOL, what? Ok, I think I get what you question is.

If I get the wood from you for 5$ and sell the chair for $50, I created $45 worth of value. Now, you are asking where that $45 come from, as in "where the money bills come from" - implying that, if the $45 exist in paper form, the value must have already been there somewhere.
You need to understand that money is paper. Literally, paper. The only reason it has value is because we convene on its value. If a nuclear war happens tomorrow and we're in chaos, money won't have value anymore. Value is always subjective.

Now, the simple (and simplistic) answer to your question is: there is no $45 in bills. It will eventually be printed by the central bank.

Money is a symbolic representation of value. If the combined value of everything in Lilliput is $50m, there will be $50m in paper bills around (of course, in reality it's not like that, because not all wealth is in bill form). Suddenly, great oil fields get discovered in the country, and the export value of those fields is an immediate $100m of added value to the country's total wealth.
There are no $100m in Lilliputian bills right now. But people need them - "hey Guv'nr, we need to spend this millions to buy some damn Ferraris, but we can't go to the dealer with oil barrels, can we? It will stain our RED car".
So the central bank prints the bills. The rich bastards who own the oil fields sell the oil in exchange for bills (the actual way this works is beyond the scope of my forum procrastination, and you should pick up a macroeconomics book to understand it) and buy Ferraris.
The wealth has gone up, and so has the amount of money paper around.

Of course, this is a terrible simplification I will be expelled from the Economists Guild. Fortunately I'm not an economist. All is well in Lilliput.

 

[TJH]

I have a question that I've been pondering upon for a few days now.

There's a belief that Money and Wealth is the same thing. Apparently there's a difference between the two.

There's a set amount of money which is circulating around a country or the world for that matter. So when you pay someone something they have gained but you have made a loss, if the thing you've bought is not satisfactory.

Their gain is your loss = Zero Sum Game of money.

Yes someone can create a chair from a tree and create value but that has to be paid for with money? Where is the extra wealth created? How is wealth created? How is the extra Wealth then created if there's a set amount of money? and where does the extra money come from to make someone more wealthy?

The same money that has been paid for the chair has come from somebody else who got it from somebody else and now sits with the chair maker who will pay the guy who makes the chainsaw who now has the same money?

How has that made the chair maker more wealthy?

The way I think about money is it is a object (Dollars, Euros, gold, bitcoins, electronic funds, etc.) with a store of value, and it is more easily exchanged for something than anything else you might have. Using money is just a special case of barter that is more efficient than trading physical objects. The way I think of wealth is as a kind of abstract form of all the resources I have available to me. My house, furnishings, car and investments all comprise my wealth, or the resources I have available to me.

Regarding the exchange of money for a chair, and the buyer losing out... you are right that if the chair is broken, then the buyer loses. But if the chair turns out to be really nice and durable, then who is the winner? I'd say the buyer is because the buyer received something of value. The seller received money, and may or may not use that money to purchase something else. Maybe the buyer purchases food for the family, then the buyer is also a winner. Both sides win.

Wealth creation is something you will read about, if you study economics. My take on wealth creation is it is composed of several parts. One part is the labor involved in collecting and processing raw materials. Another part is process improvement, such as innovating and specialization. Another part is investment and lending, to fund expansion.

Regarding the supply of money... yes, this is always an issue. Most developed economies use paper and electronic money that is controlled by central banks. There is not a set amount of money, if you are referring to the kind created by central banks, because the supply of money can be adjusted by the central bank of a state. Something else to consider is that central bank money is almost always accepted as the primary means of exchange. You could use an alternative form of exchange... again money, of the central bank type, is just a specific form of something used in a barter system.

 

[DayIFly]

Appreciate your response but what I'm trying to understand Is how can a country or an area within a country become wealthy and come out of poverty and the dark ages by simply building things and bartering with others for things they have made? the original money that he has paid for the chair has come from somewhere else hasn't it? how is true wealth actually created? Is it not just banks printing money and then people accumulating that money and storing it? Is it all not the same money circulating around? So money is a zero sum game? The people who have accumulated wealth in money form have amalgamated money that was already in the economy?

Forget about money. You don't need money to become wealthy if you think about it from the ground up. Imagine you're part of a tribe some loooong time ago and money doesn't exist yet.

Let's say you're nomads. You and your people need to hunt to survive. But after some time you realise that you can settle down if you raise cattle. And then someone invents bread and agriculture is born (potatoes, etc.). People begin to dig for wells so they don't need to go so far. A small village develops, etc., etc. Now life is a lot easier. You got there through innovation, clever thinking and hard work.

So in summary, you got wealthier through real work that you can see, i.e. tangible things.

// end of thought scenario

For me wealth is freedom and time. Now as for money, this is a tool for trading your time. I saw a youtube video a couple of months ago and I heard a very nice take on it that I wrote down.

"It's a container to store your economic energy until you're ready to deploy it."

In our time money exists and it makes our lives easier. The functions are (standard definition, wiki):

• medium of exchange (portable, interchangeable, etc.)
• a unit of account
• a store of value

Obviously it's not a store of value. Governments print more of it without creating any real value. And banks can create it too like @Nick314 wrote above. So this dilutes the purchasing power of it. The dollar lost like 95% of it or so the last 100 years. Look at the massive amount of national debt. Gold, for example, maintains it purchasing power because governments can't print it.

In the end, this fiat money (google it) is based on confidence. Because of this some countries aren't considered as bankrupt although they have more debt than others.

PS:
As a side note: https://en.wikipedia.org/wiki/Greater_fool_theory
"The greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants. A price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price. Or one may rationally have the expectation that the item can be resold to a "greater fool" later."

 

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[RBefort]

Didn't read responses, but just from your post...you make it sound like someone buying your stuff means you win and they lose. If you provide a product that is worth/valued 10x what you are selling it for, everyone wins. You make money, people get something of equal or greater value. If people don't think your product is of value equal or greater than the price they pay, they won't buy it. IMO, money and wealth are not zero sum games, relatively speaking, because everyone is exchanging something or other that they want/value more than the price of the paper created.

 

[Dwight Schrute]

If you owned a Bugatti, a Lamborghini, a Ferrari, a Pagani, a Mercedes AMG, a Koenigsegg and whatever, most people would say that you are wealthy. But if you have an anal fissure and every ride with those cars is literally a pain in the a$$, I'd say you are poor.

Money can buy you stuff, but stuff isn't important to life.

Heck, there are even guys out there who would consider everyone on this forum poor because we are "chasing money" and
they think they have figured out that living the good life is all about having good sex/reproducing and food/survival.

It all depends on your standards.

Let's assume that you created an ugly chair out of said piece of wood, and a millionaire gave you ALL of his money because he searched for such an ugly piece of furniture his entire life.
He has no money now, and you are a multimillionaire.
If that chair makes that ex-millionaire happy and he doesn't need anything else in his life, he's pretty wealthy.
But if you don't know what to do with all the cash and you just stay in your room watching movies on the net, you'd be poor.

"Wealth is authored by strong familial relationships, fitness and health, and freedom-not by material possessions"
Source:TMF


I hope this makes sense somehow, I've just read one of IceCreamKid's posts and decided to get drunk.

 

[mt_myke]

Okay so the banks create more money out of thin air but wealth itself is not created by printing money.

The goal of the banks is to try to match up the "fake" financial capital (money) with the real capital (wealth, more or less). It's best to think of banks (central banks) as separate from both government and business. Their role is as an intermediary between the two.

The fact that money "is made from thin air" doesn't matter that much because any change in the money supply can be worked out in the bond markets, and many others. There is enough transparency and degrees of freedom in the total system that the ability to arbitrarily change the money supply becomes mostly a knob in a larger policy framework, rather than completely destroying the world (how gold bugs thinks the world works).

 

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[masterneme]

What you need to know about money is that it's allways moving from hand to hand, it's in constant circulation.

When you grow the number of people you impact using the Law of Effection, you will force higher amounts of money to circulate to your hands.

You create wealth by the impact you have and the objective amount of money you get in return. In other words, "impact millions and you'll make millions".

Money is not a Zero Sum Game anymore and it's very important to get rid of this belief or it will create self-sabotaging behaviours.

The value of money is constantly decreasing because the supply is constantly increasing, nowadays is just bits of information and we create more money about thin air, because money is just a very useful tool.

Wealth is the total acumulation of your possessions rated by an X amount of money, which is determined by the subjective value we give them.

Money is also wealth because of its intrinsic usefulness.

Think about money as a ruler, a measuring tool.

Your possessions are measured by it and you're as wealthy as how much money you're worth.

You really need to believe in people and that they use money as wisely as they can in order to exchange products and services, they're not "losing" because money is worthless, it's just a tool.

And using it with skill, you can "lose" money to buy wealth that in return can be worth more money than what's paid for.

Imagine that I'm a farmer, I have my farm, my terrain, machines and so on. Everything I have is worth 500000$. If you want to know how wealthy I am I can give you an exact figure which is the supposed amount of cash I'd get if I sell all my possessions.

One day I notice a very dense and dark mud flowing from some rocks on the side of my farm.

I consult a geologist, he makes some analysis and tells me that I have huge amounts of oil under my farm.

Now my farm and my terrain are worth millions.

But what would have happened if this same situation occurred hundreds of years ago?

My wealth would be worth the same amount of money because in the past oil didn't have any practical use.

It's all about value.

 

[DomtheDominator]

Hmm...value is often defined as the monetary worth of something while money can be defined as the pricetag or tangible representation of value. It is a cyclical definition. But if we think basic, what is value? Value is demand. How much does someone desire that chair and how much are they willing to pay for it?

Value is created everyday, and money is printed to compensate for this addition. Value, thus money, does not have to be zero-sum as long as there is a demand to meet the supply of value. Value can be affected by such thing as scarcity, competition, etc. meaning monetary worth will go up and down. When wealth is printed without the addition of value (manufacture, trade, gold) inflation rises as the money literally becomes just paper.

On the other hand, I think wealth has already been well defined by the posts above. Wealth is intrinsic and not the sole result of money.

 

[Nick314]

Sounds like some people skipped their economics class.
The fundamental concept used is *utility*. Utility takes many forms, both tangible goods and services. Supply and demand of something with utility determines it's market value (not necessarily intrinsic worth--just what people are paying for it *right now*), regardless of how units of the substance are exchanged, be it barter, diamonds, hunks of metal (raw gold or minted coins), sticks of wood (eg tally sticks that Brittain used centuries ago), or paper fiat currency.

Money and wealth are not interchangeable. Like others have said, money is just a means to transfer wealth. Wealth is real stuff. Assets. Real estate, your clothes, your car, and also the intangibles such as your knowledge, skill, and experience--those also have value and they can be traded for--by you teaching, getting a job that uses that knowledge, selling a service that requires it, etc.

While the wealth of two people can be compared by measuring the current market value of their respective sum total assets in units of the money of the day, it is a mistake to say that their pot of saved money *is* their wealth. Yes, it is an asset, but only while that remains the money of the day.

Many wealthy people will diversify their fiat currency, or hold their wealth in more tangeable, yet liquid forms than simply currency. All it takes is for a coup'd'etat and the market value of a fiat currency can be wiped out overnight. More than one basket for the eggs.

As for being a zero sum game or not, recall that utility is also provided by services. Thus *doing something* for someone else in trade is injecting something of market value into the system--you are literally producing something with market value out of thin air. This dovetails perfectly into TMF concepts. Someone with a regular job in a services company is trading their work performed for their employer, who is in turn selling that productivity result to some client. It's clear who has leverage--the worker can only trade as much of his time as he has--which is limited, but the employer can hire as many workers he needs to meet his client demand and thus scale, arbitrage of his employees time. *Both* the employer and the employees are gaining something in the transaction--both are producing something of market value out of thin air which is traded for to the company's clients. It's a net positive sum game because the total assets in the market afterwards should be greater than before the work was performed--assuming the work also increased the utility of the client that commissioned the work.

It's not a lose-win. Of course there are cases where it could be. Usually it's a win-win--otherwise no transaction takes place. But just like MJ discusses, there are different roles in the transaction that benefit drastrically differently. The employer is fastlane (well, could be), and the employees are definitely not.

 

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[Charmander]

Wealth would be a zero sum game if it weren't for value added innovation.

Based on what you are saying - it is actually a negative sum game, because what kind of value are we talking about here?
Obviously value in "your" eyes is even a T-Shirt that some artist sells for $50 (when it is worth 1$).
The artist(or Nike brand) ADDS(creates?) $49 of intristic/perceived value - therefore it is syphooning off cash out of the world (making it a negative sum game), because THE TSHIRT ISN´T WORTH THAT MUCH - the added value IS TOO MUCH, but people are willing to pay for it and that is the problem (not for those that are selling though)
Therefore - value is relative

There has been a lot of phylosophist debating this issue (for example Karl Marx in his writing "The Economic and Philosophical Manuscripts" where he discusses THIS ALIENATED LABOUR and the problem of personal ownership
Good read https://en.wikipedia.org/wiki/Marx%27s_theory_of_alienation

and all just basically came to the same conlusion, that this system is unsustainable and wrong, even though a lot of you who profit from it would try to defend it.

Quoting from Wikipedia(link above - no need to read the entire thing):
In a capitalist society, the worker’s alienation from his and her humanity occurs because the worker can only express labour — a fundamental social aspect of personal individuality — through a private system of industrial production in which each worker is an instrument, a thing, and not a person; in the “Comment on James Mill” (1844) Marx explained alienation thus:

Let us suppose that we had carried out production as human beings. Each of us would have, in two ways, affirmed himself, and the other person. (1) In my production I would have objectified my individuality, its specific character, and, therefore, enjoyed not only an individual manifestation of my life during the activity, but also, when looking at the object, I would have the individual pleasure of knowing my personality to be objective, visible to the senses, and, hence, a power beyond all doubt. (2) In your enjoyment, or use, of my product I would have the direct enjoyment both of being conscious of having satisfied a human need by my work, that is, of having objectified man’s essential nature, and of having thus created an object corresponding to the need of another man’s essential nature . . . Our products would be so many mirrors in which we saw reflected our essential nature.[1]

In the Economic and Philosophic Manuscripts of 1844 (1927), Karl Marx identified four types of alienation that occur to the worker labouring under a capitalist system of industrial production.[2]

(I) Alienation of the worker from the work — from the product of his labour
The design of the product and how it is produced are determined, not by the producers who make it (the workers), nor by the consumers of the product (the buyers), but by the Capitalist class, who, besides appropriating the worker’s manual labour, also appropriate the intellectual labour of the engineer and the industrial designer who create the product, in order to shape the taste of the consumer to buy the goods and services at a price that yields a maximal profit. Aside from the workers having no control over the design-and-production protocol, alienation (Entfremdung) broadly describes the conversion of labour (work as an activity), which is performed to generate a use value (the product) into a commodity, which — like products — can be assigned an exchange value. That is, the Capitalist gains control of the manual and intellectual workers, and the benefits of their labour, with a system of industrial production that converts said labour into concrete products (goods and services) that benefit the consumer. Moreover, the capitalist production system also reifies labour into the “concrete” concept of “work” (a job), for which the worker is paid wages — at the lowest-possible rate — that maintain a maximum rate of return on the Capitalist’s investment capital; this is an aspect of exploitation. Furthermore, with such a reified system of industrial production, the profit (exchange value) generated by the sale of the goods and services (products) that could be paid to the workers, instead is paid to the capitalist classes: the functional capitalist, who manages the means of production, and the rentier capitalist, who owns the means of production.

(II) Alienation of the worker from working — from the act of producing
In the Capitalist Mode of Production, the generation of products (goods and services) is accomplished with an endless sequence of discrete, repetitive, motions that offer the worker little psychological satisfaction for “a job well done”. By means of commodification, the labour power of the worker is reduced to wages (an exchange value); the psychological estrangement (Entfremdung) of the worker results from the unmediated relation between his productive labour and the wages paid him for the labour. That division of labour, within the capitalist mode of production, further exploits the worker by limiting his or her Gattungswesen (species-essence) — the human being’s power to determine the purpose to which the product (goods and services) shall be applied; the human nature (species-essence) of the worker is fulfilled when he or she controls the “subject of labour”. Hence does capitalism remove from the worker the right to exercise control upon the value and the effects of his and her labour, which, in turn, robs the worker of the ability to either buy (consume) the goods and services, or to receive the full value from the sale of the product. The alienation of the worker from the act of producing renders the worker unable to specialize in a type of productive labour, which is a psychologically satisfying condition; within an industrial system of production, social alienation reduces the worker to an instrument, to an object, and thus cannot productively apply every aspect of his or her human nature.

(III) Alienation of the worker from himself, as a producer — from his Gattungswesen (species-essence)
The Gattungswesen (species-essence), the human nature of a man and of a woman is not discrete (separate and apart) from his or her activity as a worker; as such, species-essence also comprises all of his and her innate human potential as a person. Conceptually, in the term “species-essence”, the word “species” describes the intrinsic human mental essence that is characterised by a “plurality of interests” and “psychological dynamism”, whereby every man and woman has the desire and the tendency to engage in the many activities that promote mutual human survival and psychological well-being, by means of emotional connections with other people, with society. The psychic value of a man consists in being able to conceive (think) of the ends of his actions as purposeful ideas, which are distinct from the actions required to realise a given idea. That is, man is able to objectify his intentions, by means of an idea of himself, as “the subject”, and an idea of the thing that he produces, “the object”. Conversely, unlike a human being, an animal does not objectify itself, as “the subject”, nor its products as ideas, “the object”, because an animal engages in directly self-sustaining actions that have neither a future intention, nor a conscious intention. Whereas a person’s Gattungswesen (human nature) does not exist independent of specific, historically-conditioned activities, the essential nature of a human being is actualized when a man — within his given historical circumstance — is free to sub-ordinate his will to the external demands he has imposed upon himself, by his imagination, and not the external demands imposed upon him by other people.

Relations of production
Whatever the character of a person’s consciousness (will and imagination), societal existence is conditioned by his or her relationships with the people and things that facilitate survival, which is fundamentally dependent upon co-operation with others, thus, a person’s consciousness is determined inter-subjectively (collectively), not subjectively (individually), because Man is a social animal. In the course of history, to ensure human survival, societies have organised themselves into groups who have different, basic relationships to the means of production. One societal group (class) owned and controlled the means of production, while another societal class worked the means of production; in the relations of production of that status quo, the goal of the owner-class was to economically benefit as much as possible from the labour of the working class. Moreover, in the course of economic development, when a new type of economy displaced an old type of economy — agrarian feudalism superseded by mercantilism, in turn superseded by the Industrial revolution — the rearranged economic order of the social classes favoured the social class who controlled the technologies (the means of production) that made possible the change in the relations of production. Likewise, there occurred a corresponding rearrangement of the human nature (Gattungswesen) and the system of values of the owner-class and of the working-class, which allowed each group of people to accept and to function in the rearranged status quo of production-relations.

Despite the ideologic promise of industrialisation — that the mechanisation of industrial production would raise the mass of the workers, from a brutish life of subsistence existence to honourable work — the division of labour inherent to the capitalist mode of production, thwarted the human nature (Gattungswesen) of the worker, and so rendered each man and woman into a mechanistic part of an industrialised system of production, from being a person capable of defining his and her value through direct, purposeful activity. Moreover, the near-total mechanisation and automation of the industrial production system would allow the (newly) dominant bourgeois capitalist social class to exploit the working class to the degree that the value obtained from their labour would diminish the ability of the worker to materially survive. Hence, when the proletarian working-class become a sufficiently developed political force, they will effect a revolution and re-orient the relations of production to the means of production — from a capitalist mode of production to a communist mode of production. In the resultant communist society, the fundamental relation of the workers to the means of production would be equal and non-conflictual, because there would be no artificial distinctions about the value of a worker’s labour; the worker’s humanity (species-essence) thus respected, men and women would not become alienated. (See: Marx's theory of human nature).

In the Communist socio-economic organisation, the relations of production would operate the mode of production and employ each worker according to his abilities, and benefit each worker according to his needs. Hence, each worker could direct his or her labour to productive work suitable to his or her innate abilities, rather than be forced into a narrowly defined, minimal-wage “job” meant to extract maximal profit from individual labour, as determined by and dictated under the capitalist mode of production. In the classless, collectively-managed Communist society, the exchange of value between the objectified productive labour of one worker and the consumption benefit derived from that production will not be determined by or directed to the narrow interests of a bourgeois capitalist class, but, instead, will be directed to meet the needs of each producer and consumer. Although production will be differentiated, by the degree of each worker’s abilities, the purpose of the Communist system of industrial production will be determined by the collective requirements of society, not by the profit-oriented demands of a capitalist social class who live at the expense of the greater society. Under the collective ownership of the means of production, the relation of each worker to the mode of production will be identical, and will assume the character that corresponds to the universal interests of the communist society. The direct distribution of the fruits of the labour of each worker, to fulfil the interests of the working class — and thus to his and her own interest and benefit — will constitute an un-alienated state of labour conditions, which restores to the worker the fullest exercise and determination of his and her human nature.

(IV) Alienation of the worker from other workers
Capitalism reduces the labour of the worker to a commercial commodity that can be traded in the competitive labour-market, rather than as a constructive socio-economic activity that is part of the collective common effort performed for personal survival and the betterment of society. In a capitalist economy, the businessmen who own the means of production establish a competitive labour-market meant to extract from the worker as much labour (value) as possible, in the form of capital. The capitalist economy’s arrangement of the relations of production provokes social conflict by pitting worker against worker, in a competition for “higher wages”, thereby alienating them from their mutual economic interests; the effect is a false consciousness, which is a form of ideologic control exercised by the capitalist bourgeoisie. (See: Cultural hegemony) Furthermore, in the capitalist mode of production, the philosophic collusion of religion in justifying the relations of production facilitates the realisation, and then worsens, the alienation (Entfremdung) of the worker from his and her humanity; it is a socio-economic role independent of religion being “the opiate of the masses”.[3]

Randy Gage says it in one of his books too (that this is just one BIG Matrix rigged by every possible way against everyone).

Also - John F. Kennedy warned that we should be worried about this debt (even though it might not appear so from the context of the text - he reffered to it in multiple speeches). Here he was reffering how it makes no sense for any war to be anymore(that is - not even WW3), because of the way that debt has so sophisticatedly enslaved entire nations - therefore eliminating the need for war. (that is : bankers in suits are "wining it") (oh how can you not mock this sentence if you would reply?)

I speak of peace because of the new face of war. Total war makes no sense in an age when great powers can maintain large and relatively invulnerable nuclear forces and refuse to surrender without resort to those forces. It makes no sense in an age when a single nuclear weapon contains almost ten times the explosive force delivered by all of the allied air forces in the Second World War. It makes no sense in an age when the deadly poisons produced by a nuclear exchange would be carried by the wind and water and soil and seed to the far corners of the globe and to generations unborn.


Today the expenditure of billions of dollars every year on weapons acquired for the purpose of making sure we never need to use them is essential to keeping the peace. But surely the acquisition of such idle stockpiles - - which can only destroy and never create - - is not the only, much less the most efficient, means of assuring peace.

 

[xuyigang]

Money should be a representation of the total commerce of the society, fiat money is simply a paper with no intrinsic value with government stamped value as a mean of exchange.

Wealth is the value you have created to exchange for other services or goods.

 

[xuyigang]

The maker of the chair has created additional value to the society, new money will be printed to relfect the increase in production.

 

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[Charmander]

The maker of the chair has created additional value to the society, new money will be printed to relfect the increase in production.

You are talking about an ideal world. In reality - who dettermines IF the money will be printed?

In the end - in that process of creating new money by debt : the burden of it ALWAYS passes onto another person, therefore making it an unsustaǐnable system - a ticking timebomb - LIKE IT HAPPENED IN THE PAST IN EACH AND EVERY COUNTRY (for example ancient rome) WHICH DECIDED TO have CURRENCY instead of money.


Now you can thank Mr. President Nixon, (who besides destroying the health of the entire planet by adding sugar into food) was responsible for how many economic recessions since the 1970´s besides lowering the value of the dollar 20 fold?
When dollar was taken off the gold standard?

The worst is yet to come(although it may sound stupid/prophetic) - but systems like this (with fiat notes a.k.a currency) COLLAPSED EACH AND EVERY TIME in the history(and history is supposed to be the best teacher?)

 

[Nick314]

There's much more to it than that. Nixon certainly can't be held entirely to blame. But discussing the why's, who's, and hows would delve into a lot of history and a lot of politics stretching back much farther than Nixon--which IFAIK is off-topic for this forum.

Summarizing, though, you are correct in saying that our current debt-backed monetary system is not sustainable--this is not a subjective opinion but simply a result of looking at the math behind it. Hard-backed standards are also not a solution. I am not a doom-and-gloomer, but I do predict that changes, even big changes are inevitable--not ifs, just whens. Could be this year or decades from now--impossible to say.

Simply storing your wealth in assets besides fiat currencies--or at the very least diversified across multiple currencies is a very simple way to ride out possible changes.

 

[bboyu]

so guys Wealth can be created by taking something and making it into something else which solves a problem or makes something easier to do or saves time - this is something which didn't exist in reality but in someone's mind.

Wealth is now created as an extra resource for humans has been created.

However the kind of "wealth creation" I am trying to talk about about is the fastlane wealth that is created for you to free yourself from whatever it is you do not want to do.

This is allowed in our time if we have enough "money" (the medium of exchange, be it digits running through computer screens, or fiat money in paper form as we know it) to be able to survive for more than a set amount of time without working the 9-5 again.

The money you have accumulated as a result of creating the product would be the money that is in circulation at the moment and no extra money has been printed to represent the extra wealth created as the banks don't know that I've created something of value?

Where is the extra money come from which will go into the economy to help Mr X to use my product and then build wealth for himself? Same goes for me as well as I've created a product using other peoples materials? where is the extra money which has in fluxed into the economy as a whole and made everyone richer?

 

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[bboyu]

what are the real wealth creators? I mean fastlane wealth? is fastlane wealth = money?

where does the distinction lie between chasing money and chasing real wealth?

wealth creators that allow one to attain freedom? Can anyone list them?

for example the stock market is that a wealth creator too? how is it when money needs to be deployed first and then when you sell higher someone has to have bought it from you with the same money? how is wealth created there? in property etc etc

 

[Josh]

I like to think of it this way. In the end 'wealth' is zero sum as the planet only has a limited quantity of resources. Wealth really is just based on resources and their transmutation into useable goods. Humans produce wealth through harvesting resources and using them to create 'things'. For our generation and many to come, all these resources won't be used up so there will still be incredibly vast amounts of wealth that you can claim if are creative and industrious.

So yes wealth is zero-sum but it is nothing you should concern yourself with. Maybe in a few thousand years....