Moving to the Other Side

After reading the previous postings on The Other Side of Capitalism, perhaps you more or less agree with the points we made. Perhaps you are asking yourself what comes next. Let us do that. Rather than listing directives toward a specific plan right now, this will be more of a discussion. It is time for you to engage your minds in thinking about the future and its possibilities. Be like the rich and spend some time working on your visions of our collective future. Here are some thoughts that may help.

Most important, the goals must be "good." We must spend our time and resources as best we can toward ends that expand human minds, encourage everyone to improve themselves, and encourage everyone to participate freely in the markets, as both consumers and producers. We must deny our time and resources to ends that diminish, dominate, and exploit others. If you are someone who seeks to dominate others, then you are by nature an opponent of The Other Side of Capitalism.

While we are imagining new futures, however, we should remain grounded in reality. It is so easy to lose touch with reality. Great wealth can even amplify the problem because people can only indulge their delusions until the money runs out. Rich people can indulge their delusions for a long time.

To keep touch with reality, we must work with people the way they are, not as we wish them to be. Communism failed in part because it had a rigid but simplistic and incorrect view of human nature. Since "re-education" does not really work, in many cases communist policy devolved into simply isolating or killing those who did not "think right." North Korea is still in this phase now with its gulags, starvation, and even outright killings. After the historical evidence of the last hundred years, those who are still communist today are holdouts from reality. Communism does not work. Give it up and join the other side of capitalism.

The reality is that to get what we want, we work and get paid, and we want an environment in which we can do that. Then we spend our pay in markets that offer what we want.

The key individual determinant in this process is whether individuals can earn more than they spend. Whether they can produce more than they consume.

Some produce nothing at all. Others produce some, but not enough to support themselves. Still others produce enough, but not much extra. Those who have a lot of economic strength produce a lot of extra wealth, over and above the amount they need to support themselves.

It is only natural that energetic and productive people control more resources than those with less economic power. That does not mean that they should control all resources, however. History shows that freedom for the few and slavery for the many, total wealth for the rich and only subsistence at best for the rest, make weak and poor societies.

The key point about markets is that individuals have to have wealth to participate in either the buying or the selling. Subsistence dwellers cannot participate. Shortsighted leaders make policies that drive people out of the markets, often under the mistaken impression that they are gaining wealth. They need to change their thinking. The size, strength, and energy of their free markets is their wealth. Damaging their markets to try to make themselves richer or in some perverse fantasy of dominating others simply damages themselves.

This is a greater danger if a society feels that it has peaked and that the future at best will only equal the past. If we reach a summit, the only way forward is down, and perversely our leaders will be just as energetic taking us down as previous leaders led us up. It is not clear that we are in this position today, but there are signs. The journalist Tom Brokaw famously memorialized "The Greatest Generation," those who lived through the Great Depression and then "won World War II." It makes for great publicity and politics, but in reality Mr Brokaw set off a destructive bomb in American psychology  If there really was a "Greatest Generation," then the rest of us are doomed to mediocrity and decline.

If you are prone to feeling that the future will be worse than the past, then you should work to get over this "decline-and-fall" mentality. It is not helpful. We should look and walk forward into the future. We will only stumble if we look backward and walk backward. It is wise to learn from the past, but not to invest in it.

So let us forget about "greatest" generations and other "Golden Age"-style mythologies. Let us get to work on the future.

Earlier we were making the point that it is in our leaders' interests to seed the public with wealth and encourage market participation. U.S. leaders have done that more than others around the world. We think that is the main reason for the enormous wealth in the U.S.

Even individuals who consume more than they produce can help energize the markets. Therefore it is wise to subsidize them rather than complain about them. We should not ruin them or drive them into ruinous debt. We should train them as best we can to improve their skills and increase their market participation.

To some extent we already do this in the U.S. with a variety of programs including food stamps and student loans. However, these policies are not effective enough because they are bound up in archaic prejudices, concepts, and laws. Food stamps have a slight advantage over student loans because they are grants rather than loans and in some senses they are a different currency from the dollar.

Student loans are worse than food stamps because they are denominated in an international currency and, because of politics, there is no escaping them. Bankruptcy will not save the borrower from unreasonable amounts of student loan debt. That is not to say that it will be impossible for borrowers to get out from under impossible levels of student loans, but that it will be a political decision, not an economic one. This raises the spectre of a serious movement toward a political economy rather than a capitalist one in the U.S., one in which individuals must submit to domination by political patrons in order to survive. Tosoc.org has already commented on the folly of this path.

Despite their faults, these programs show the way. Food stamps in particular could be turned into an internal, exclusive currency, and the program could be expanded to include most of the people (excluding the rich). This might be the first logical step toward our goals.

There are several other logical steps we might take. Let us list a few here.

Another logical step might be to create a political movement. It is probably worthwhile to start down this path, but it should be done carefully. It would be very easy to overpromise and then fail the people. It will take a lot of political capital to make these changes and we cannot afford to waste any.

Third, it might be possible to merge with an existing party. This would be a fast-track to political influence and should be seriously considered.

Finally, it might be better to demonstrate results in a smaller venue first. There are many ways to accomplish this.

Perhaps a smaller nation than the U.S. would try it. We have already suggested that a possible way out of Greece's economic problems would be to bring back the drachma as an exclusive internal currency. The same is true of Cyprus, but there are other nations such as Venezuela or Argentina that might benefit from multiple exclusive currencies and markets.

U.S. states, individually or in groups, could try the tosoc.org ideas, too. This would require some national support because the U.S. Congress regulates the currency. There may be a precedent in that U.S. food stamps are already distributed by the states and to some extent the states administer them.

Alternatively, multiple exclusive currencies and markets might be tried first by private business. There are already multiple electronic or digital "currencies" being tried online, such as bitcoin. Right now the volume of transactions is low so the regulatory interest is also low. It is not clear how these will be received by Congress if large numbers of people start to live by them. Even so, there is a precedent in the U.S. for corporations providing a living for individuals that is outside the dollar-denominated markets, so the possibility of corporate sponsorship for tosoc.org's ideas is possible.

We expect that it would take a major corporation to attempt it, perhaps even multiple major corporations working together with multiple retailers. The idea is that seigniorage would make the system profitable for the corporations and maintain corporate interest. With enough employee producer-consumers and their dependents in these markets, it seems likely that the markets would be large enough to give these ideas a try.

We suggest that financial firms, including insurance companies, consider organizing such a trial. These companies might find it easier than other types of businesses because the business of these companies is money and also participation in the businesses of other companies. Organizing other businesses around new currencies and markets seems like a natural extension of their existing work.

There are many ways that the ideas presented by tosoc.org could be put into practice, both public and private. We hope that this discussion has inspired readers to have their own ideas and think of their own possibilities. Done properly and well, we believe that these concepts will prove to be a benefit to society, so we are out to recruit as much help as we can get.

TheOtherSideOfCapitalism (admin@tosoc.org)

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

Copyright © 2013 TheOtherSideOfCapitalism

Vote for The Other Side!

At the risk of inducing election fatigue already, we at tosoc.org believe it is time to start our political campaign for change. If you are not sure where we stand, just read our other blog posts to get started.

Here is our facetious campaign slogan – with a grain of truth:

Vote yourself some money this time! Vote for The Other Side!

Here is our draft platform. We are still working on it.  Here are four planks that we hope you find interesting.

1. We need a national lottery run by the IRS. This will be a numbers system based on taxpayer Social Security numbers. Enter the lottery by checking a box on your tax return. What an incentive to do your taxes! One million dollar prize, 1,000 winners per month, costing twelve billion dollars a year.  Pocket change for the U.S. Government and probably the spending would be made up just by people's increased interest in doing their taxes (to enter the lottery). The rules can be adjusted in many ways, such as excluding corporations and the rich. Another advantage – it makes the IRS more popular.
2. We need a national repository of American lives. So many Americans are marginalized and simply forgotten when they are gone. As a way to improve our national history, every American should have the opportunity to deposit writings and record audio, visual, and/or audiovisual statements in an official permanent record of Americans; our thoughts, comments, and opinions.
3. We need a national fiberoptic superhighway for communications. Every American should have access to high-speed communications. It will also be important in support of multiple exclusive currencies and their markets.
4. We need multiple exclusive currencies and their markets, of course. This is what tosoc.org has been saying all along.

For now we are simply listing these planks without a great deal of explanation. The 2014/2016 general election campaigns are far enough away that all we are really doing is expressing intent, anyway.

Until the next election cycle really begins, let us simply present some of our more general viewpoints and visions of the future.

Tosoc.org is about general prosperity and abundance. We see a worldwide trend today toward general poverty, scarcity, and exploitation. We see a trend today toward centralization of wealth – wealth for the few and "austerity" for the many. If this trend continues, then it seems that the worldwide vision governing our future is that the rich shall inherit the earth.

In a sense we are seeing the end of the American Dream.

Before there was a United States, there were educated and industrious Europeans who were dissatisfied with their own cultures. When the new frontiers opened up, they were willing to risk their lives to get away, be free, and direct their own destinies. For many generations they struggled and grew and spread throughout the new lands. They formed their own nations and their economies grew again with the industrial revolutions.

This frontier mentality is the basis of the American Dream of rugged individualism, constant growth, and ever more new lands to conquer – limitless resources. Liberty, individual rights, democracy, and equality before the law.

Now all the land on earth is occupied. All the resources are under someone's control. There are no more enormous technological breakthroughs, just a filling in of gaps. For a variety of reasons, outer space has turned out to be a boundary, not a frontier. The original American Dream is gone.

The only frontiers left are social. We see it in the rise of social media as the darlings of business investment. We see it in the aims of radical fundamentalists who view the people of the United States as a frontier of their religion, a place to be invaded and conquered. Finally, we see it in the growing disparity between rich and poor.

The old social contracts of the frontier society are going away. The struggle is over what will replace them.

Recall that just because some are capitalists does not mean their visions of the future contain capitalism. In the same way, just because some are populists or democrats or republicans does not mean that their visions of the future are about social justice, democracy, or even representative government. The question is which form of social organization suits humans on an earth with no more physical frontiers.

Different people will come to different conclusions, and that is just as true of the rich as anyone else. The historical record of bounded civilizations, however, points to a "Pharaoh future." According to legend, Joseph made all the people of Egypt slaves to Pharaoh in a classic economic squeeze play. In the fat years, he took ten percent of the produce of the people and stored it away. When the business cycle turned, the Great Famine came, and the people were starving. Joseph then used extortion. He made the people pay for the food that they themselves had produced in the fat years. He first took their money, then their animals, then their land, and finally their freedom.

This same sort of thing has been done in many times and places and it still goes on today. Tosoc.org has already described the business cycle as the "extortion cycle." We have already pointed out that the Great Recession has been used as an opportunity by the banks to extort enormous debt out of the U.S. government. They did it by holding the people hostage using the declining economy and the "credit freeze."

The rich have not created a Pharaoh and we are not slaves. However, it is also not clear that the rich will restrain themselves if these opportunities arise. That is not a chance that we should take.

If your vision of the future like ours is of a prosperous, bright, and industrious people living in peace rather than of dull-witted slaves of the rich fighting to survive at the subsistence level, then there are certain principles we all need to keep in mind.

First, we should not work to get rid of capitalism. Instead we want to preserve it within a system that is strong enough to support it. Our current system is failing to do that and capitalism is slipping away from us. Tosoc.org's new slogan is "Capitalism as it should be."

Second, we are not working to get rid of the rich. In fact, we want them to get richer. The difference is that we do not want them to get richer at the expense of the rest of us. This has become a lot more difficult now we have reached the limits of our physical frontiers. We all share in the pie, but if the pie is not growing, the only way the rich can grow their wealth is to take it away from the poor. The question is how to keep this from happening.

Third, we must abandon our Frontier Society ways of thinking. We have populated the earth. We see the limits of our resources. We know that there are limits to growth. It is time to modify capitalism so that it is not so dependent on overall growth. Our frontiers are social and our major gains will now be in the improvement of the human race.

Mainly, we need to acknowledge that society has the power of eminent domain over all major physical resources. This is necessary because both insiders and outsiders will take advantage of openness if they can. (We in the U.S. tend not to think about this because in general, we have so far been the outsiders taking advantage.)

There have been poor nations where the people did not really have enough to eat, yet the crops they raised were exported to earn hard currency – for the rich. Sometimes the rich have re-invested in their own societies, sometimes not. The point is that this should not be solely the decision of the "owners." Those who labor should also have a stake in what they do, and should be able to gain wealth from their work. Simply being allowed to survive at a subsistence level is not enough.

As best we can, we need to make sure that everyone in the world can accumulate wealth from their labor because what we allow to be done to the poorest will surely be done to us.

Fourth, some thoughts about population. On the one hand, tosoc.org believes that the universe would be meaningless without a mind to see it. In a way, each mind is a universe itself because it can see and appreciate the universe around it. In that sense, the more minds there are, the more intelligence there is, and the greater and more meaningful the universe is.

On the other hand, we wonder how populous the earth should be. Right now a lot of human minds are dulled and damaged by poverty and subsistence living. It is a painful yet valid question to ask whether it is better to have trillions of "extra" minds damaged by poverty or trillions fewer minds so that the remainder can be brighter, better-educated, and economically secure. We do not have an answer to that question.

We can predict one outcome of low growth, however. If growth becomes zero because we reach the true boundaries of the earth's resources, then depopulation is one way to simulate physical growth. The Black Plague of Europe was a horror but can also be interpreted as an economic boon for the survivors. The rich had to bid higher for the labor of the survivors.

This simply illustrates how important the question of the earth's population is. We can now control the earth's population without horrors, but the morality of it will always be ambiguous. Furthermore, we need economic changes to deal with the consequences. Consider the effects of the Baby Boom generation on U.S. economics.

It has been perfectly obvious for decades that the retirement of the Baby Boomers was going to be a problem for the U.S. economy and its social programs. As the Baby Boomers retire, they will be net sellers of assets, hammering the markets when they are down and inhibiting growth when they recover. Government income through taxes will decrease and no one knows who will take up the slack.

Furthermore, the labor force will decline at the very time that the Baby Boomers will need increased services. For example, who will replace the Baby Boomer doctors? It seems that fewer and fewer doctors will be working at the very time that the Baby Boomers will grow older and need more health care.

It is silly to envy the Baby Boomers with respect to retirement. They have paid higher Social Security taxes than their parents, then had their taxes raised again to pay for the "Social Security Trust Fund." Then they will have to work more years and have to pay more taxes a third time. Except for the rich, the Baby Boomers will never be able to retire like their parents did. In a way, the Baby Boomers will have to pay for their retirement three times. Once for their parents (Social Security is "pay-as-you-go.") A second time for the "Trust Fund." And a third time when they work more years than their parents did before retiring.

At tosoc.org, we see the Great Recession in some ways as an opening event in the economic effects of the coming retirement of the Baby Boomers. It will take decades  for this "lump in the snake" of the demographic charts to work itself out. This is yet another reason to strengthen capitalism so it can survive.

If your vision of the future is of a prosperous, happy, democratic people rather than desperate, subsistence-level, Pharaonic slaves, then we need to make some changes. Some of these changes are in ourselves. We need to care about others and care about the future, meaning that we cannot maintain frontier mentalities that no longer apply to the real world and we must be very smart and diligent about how we work for the future.

We must deny resources to psychopaths and sociopaths who would be our slavemasters. We must strengthen capitalism against its own self-destructive tendencies.

Naturally, as tosoc.org has been recommending all along, multiple exclusive currencies and markets is one of the tools we should use to strengthen our capitalist system.

First, society acts through government. The only way we know to keep the international rich from running the government for their own benefit is to align the economic interests of government officials with the economic interests of the poor. That is, government officials will only be allowed to gain wealth in internal currencies that they cannot use to escape the effects of their own policies. Their economic fate is bound up with that of the nation they claim to serve.

Second, we cannot allow the rich to trap us in another squeeze play. There should be internal banks and external banks, the one using the internal currency and the other using the external currency. If the external banks want us to save them, we can simply print the external currency to build up their reserves. The people of the U.S. cannot be held hostage and there will be no need to increase public debt. The value of the internal currency will only be loosely related to the value of the external currency because the purpose of the internal currency will be to represent and preserve national wealth without regard to the safety of the international rich or the national debt to international sovereigns.

Third, the division into internal and external currencies automatically gives us collective controls over how much of our national resources are used to enrich the external rich and other nations rather than our own people. "Free trade" is not free for the poor and if they can the rich will use it to take even more from the poor, as has happened already in Greece and Cyprus.

Our final frontiers are social frontiers. We need social solutions for our problems rather than systems and solutions that worked (at least as far they actually worked) for our society based on physical frontiers. The fact that our physical frontiers are now essentially closed should suggest to us that we need to re-think those solutions. The evidence suggests that the old economic solutions do not work any more. We need new solutions based on social principles, and that is what tosoc.org is trying to provide. Vote for us! Vote for The Other Side!

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Nothing to Lose but your Chained CPI

The Obama Administration's proposed budget contains a provision to change the way Social Security Benefit changes are calculated so that they use the "Chained Consumer Price Index" (Chained CPI) instead of the CPI. The purpose is to reduce cost of living adjustments (COLAs) to Social Security benefits and save money. We will be told that the result will be just a small sacrifice and it will not have a significant effect on how well retirees live. We will be told that everyone will have to sacrifice a little bit in order to move toward a balanced budget.

The Chained CPI works like this. Instead of using the same product to calculate price rises as one would expect, a product is thought of not by itself, but as one link in a chain of products that can be substituted for one another. For example, U.S. beef is graded with a USDA grading system. The highest grade is Prime, and beef grades down through Choice, Select, Standard, and other grades. Naturally, the price of the top grade of beef is highest and the price goes down as the grading goes down.

Instead of calculating COLAs based on inflation of U.S. Prime beef prices, the Chained CPI calculation assumes that if U.S. Prime costs too much, people instead will purchase U.S. Choice or lower as a substitute. So inflation of beef prices can be calculated by whatever substitute has the lowest rate of inflation. Calculated Social Security increases then can be lower relative to living costs. The very purpose of which is to encourage retirees to eat lower quality beef. They can still afford to eat beef, just not the best beef, and that will reduce Social Security spending.

This seems almost reasonable until we realize that there are many things that can substitute for beef depending on how the government defines "substitution." If the definition for beef substitution is that we eat beef just for the protein, then any food with protein can substitute for beef. The substitution chain used for COLA calculations might also include pork, turkey, chicken, peanut butter, soy products like tofu, or even dog food. However, the point is not that the government wants to make the poor eat dog food in their retirement. The point is that the government can pick any Chained CPI rate it wants by juggling the complex calculations of prices for all the products in the chain.

This already happens up to a point. The current CPI calculation is the result of decades of increasing complexity and is already deceptive. The Chained CPI just adds another layer of complexity to manipulate for political reasons. It is just another political tool.
Some will see the Chained CPI as a political weapon, not just a tool. Partisans always view government policies as a set of clubs with which to punish their opponents, and they will see the Chained CPI as just another club.

Others will worry that the Chained CPI is yet another way in which our society is losing touch with reality. They will see the Chained CPI only as a way for the government to cheat. This group is simply a reflection of the partisans. The partisans strive to get a grip on government power while this group wants to limit government power in case it falls into the wrong hands.

While tosoc.org has more sympathy with this last viewpoint than with the partisan viewpoints, we believe they are all misguided as far as policy is concerned. The real trouble is that the government is pressured by many different economic interests, but it has only one currency through which to take action. We have already commented elsewhere that a single currency is a chain that keeps the poor in place to be whipped by economic uncertainty and further impoverished. With a single currency, the Chained CPI is only one link in the larger chain.

Just as the Greek government impoverished its people to pay the Germans, for example, our government will impoverish us to pay its external debts. Our government has to make its payments to the Chinese and Japanese in the same dollars that we use. The rich must also be paid. To that extent our government is not really ours but represents foreign interests and the rich.

It is actually easier for a government to break its promises to its own poor people than to cheat sovereign nations or the rich. That is what the proposed Chained CPI is all about. It gives the U.S. government a way to cheat poor retirees as needed to pay foreign interests and the rich, and it has the advantage that it gives the government political "cover." All the government has to do is manipulate the cost of living adjustments in plausibly-deniable ways. Sometimes the adjustments will be higher and sometimes they will be lower, but the adjustments will never be made with the interests of the poor primarily at heart.

Please keep in mind that this is not because governments necessarily want to impoverish their own people. All governments want to be able to brag truthfully about how wealthy and happy their people are. It is just that governments find it hard to resist powerful voices. In our current capitalist systems, the poor have to unite to be powerful. When they unite, all it takes is a little money to divide some from the others, and usually the unity falls apart at a very low cost.

We know very little about the Occupy Wall Street movement at tosoc.org, but we suspect that this divide-and-conquer mechanism was used on them. We suspect that some, especially the leaders, were targeted by the rich. For those who cooperated, once their personal economic problems were resolved, they no longer had much motivation to keep the movement going. It takes an utterly desperate level of dedication to turn down what the rich can offer under any circumstances. In the U.S. today, it takes an insane level of dedication and most of us are not insane.

The real issue is that even if governments want to serve their people first, they are as much chained to their single currencies as the poor. When they start having trouble paying their debts, they start inventing deceptive policies like using the Chained CPI so that they can break their promises to their own people and keep their promises to the external rich (which includes foreign sovereigns).

Using multiple exclusive currencies is so far outside the box in which governments think that it seems unlikely that they realize that there is an alternative to policy tools like the Chained CPI. If all a government did was just use one currency for external transactions and another currency for internal transactions, there would be no need for complex, deceptive policies. There could be one simple policy for the external currency and another simple policy for the internal currency.

Governments should unite their poor under themselves and restrict financial access to them using the exclusivity of at least two currencies. This does not guarantee wealth, but it does guarantee that the loyalties of both the government and the people generally will be to one another, not to external influences. At tosoc.org we think this will help stabilize economies and protect the wealth that societies build, avoiding the fate that we saw befall the Greek government and people in recent years.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (tosoc.org)

 Copyright © 2013 TheOtherSideOfCapitalism

Theory of Wealth

Tosoc.org is about abundance, not scarcity. Wealth, not poverty.

We are also concerned about everyone – the many and the few. We feel compelled to act now because even in the United States, still the wealthiest nation on earth, the wealth gap between the rich and the poor is growing when it should be declining. We are against the use of tactics that increase the wealth gap in capitalist systems: business/extortion cycles, austerity/poverty measures, and economic fear. We therefore believe that understanding wealth is an important part of creating a better capitalism.

Wealth is the power to control resources. From a "hierarchy of needs" standpoint (see Maslow), the basic required level of individual wealth is to control enough resources to survive – that is, subsistence. Those who control a lot of resources are "wealthy" or "rich". The rest of us are poor. (At tosoc.org we do not have much use for distinctions such as "middle class" partly because the middle class is disappearing in the U.S.)

Previously we have said that the rich are those who can escape with their wealth when threatened by laws and regulations, either by running away or by countering policy with policy within the government itself. Let us add another way to distinguish rich from poor. The rich are able to avoid the business/extortion cycles and austerity/poverty policies. (They avoid economic fear of course by the very nature of being rich.)

The rich are not entirely immune to poor economic results, of course. For example, there were a number of suicides among the wealthy as a result of both the Great Recession and the fall of Bernie Madoff. Madoff himself did not escape the law, either. The general case remains however that the rich are getting safely richer while the poor are getting poorer.

Here is how tosoc.org understands wealth. Wealth only exists in a social context. In capitalist societies it is measured generally in money. In other societies, it is measured generally by political power. For example, in the old Soviet Union, resource control was vested in the Communist Party. Money was distributed as needed according to political needs. The "wealthy" in the communist system may not have a lot of money, but they do have a lot of clout within the Party. When they need money, they just print it.

In the U.S., it is often the opposite. Those with a lot of money often do not have much political clout. When they need it, however, they just buy it.

Even in capitalist societies it is worth asking if money and wealth are the same. The answer is that they are not quite the same depending on one's definition of money. For example, Warren Buffett is worth billions of dollars, but that does not mean he actually has billions of dollars in his personal bank accounts. He keeps most of his wealth in financial instruments like stocks and bonds. His wealth gets reported in dollars because reporters want to keep things simple. The dollar figure comes from marking Buffett's assets to market prices and adding up the dollars. Therefore Buffett is richer or poorer depending on market prices.

Since Buffett is one of the market movers, there is something of a circular quality to his wealth. If he wants to be worth more in a given period of time, he simply buys and drives the market up. Or sells and drives the market down if he needs to be worth less than before. (Note that this one of the ways that the rich have advantages over the poor. The poor cannot distort markets as they wish.)

If wealth is control of resources, then creation of (or discovery of) and destruction of resources corresponds to creation and destruction of wealth. The word "resource" covers a lot of ground. There are natural resources and human resources. There are also technical resources. Technical resources are non-human resources that do not occur naturally, but emerge from complex technical infrastructures. The automobile and radio telecommunications are examples.

There is a saying that there is nothing new under the sun. When it comes to technological advances, at least, this is simply not true.

There is some similarity between the tosoc.org theory of wealth and previous theories of value, such as the labor theory of value. Tosoc.org finds the concept of value to be too difficult and too narrow, however, so we prefer the concept of wealth. We think that "value" implies price and therefore is not general enough. Also, theories of value are usually narrow because they focus too much on only one element that contributes to value, such as labor or land.

So far, however, our notion of wealth has been static, as in control of quantities of resources rather than the movement of those resources. The fallacy of this is illustrated by the old Soviet Union which was so proud of itself when it surpassed the U.S. in production of steel. It evokes the image of Marx, Lenin, and Stalin perched on a giant pile of excess steel that they cannot use. They say to themselves that based on solid Marxist-Leninist principles, their labor force has created much more value than the dirty capitalists. So why aren't they rich?

The problem was that they focused too much on increasing labor (the production or supply side) and not enough on matching supply with consumption (the demand side). They also paid too much attention to relatively static quantities rather than flows that move production to consumption.

In other words, wealth is not just about static quantities of resources, but also about the dynamics of resource use. Resources can be held in reserve, but for the most part, wealth is related to the social context of resource use – as represented by purchases in active markets.

In the perfect market, the rate of production (resource use) exactly matches the rate of consumption by end-users. There are variations on this, such as the buildup of inventories and speculative purchases, but matching supply and demand is the basic principle. Suppliers do not waste any resources in unwanted production and no consumers are left unsatisfied. So let us modify our definition of wealth as control of resources in the social context of active markets that use those resources.

If static wealth can be measured in money, then the creation of wealth is measured by savings (a.k.a. profits). This is where tosoc.org's theory of wealth matches the common idea of wealth. The more of your income that you save, the wealthier you become.

This dynamic view of wealth creation also means that wealth is dependent on the speed of transactions. The faster a market moves, the more income it produces and the faster savings can be built. Anything that slows or stops markets destroys wealth – in the sense that less wealth is created than is possible.

Following the ideas presented above, it should be clear now that wealth is really a social concept in a social context. In a capitalist system, the meaning of wealth depends on markets. Control of resources only makes sense if saved money can be used to purchase resources in a market. (If resources cannot be purchased in a market, then it is not a capitalist system.)

These thoughts also lead to the idea that wealth creation is about leadership and the morale of the people. To maximize wealth creation, the people should be encouraged to both produce and consume at maximum rates. The best leadership is not found in "command" economies like that of the old Soviet Union. People do not respond well to forced transactions, markets that are not free, and the criminalization of saving significant amounts of money. Command economies will always create less wealth than free market economies.

Free market economies are best at creating wealth because they use natural human behaviors and desires. "If I work hard, I can save enough money to accomplish my dreams." It is easier to lead people in the direction they already want to go. Provide the people with the education, skills, and resources for both production and consumption, and they will feel that the system really is set up for them to get ahead, gaining wealth. This is positive reinforcement that will encourage wealth-producing behaviors. Superior leadership supports and invests in these things so that the system sustains itself.

Increasing the wealth of the people therefore means inspiring them to be as active as they can be at work and at play, consuming but also saving so that wealth is better distributed among the population. It seems to tosoc.org that the trends are in the opposite direction in the U.S. right now. The Great Recession and government policy responses destroyed a great deal of saved wealth, redistributed large quantities of the remaining wealth to the rich, and also made the people suspicious of the markets. No wonder the economy just limps along.

Nothing has really changed in our economy, so tosoc.org still recommends multiple exclusive currencies and markets. The cost is a lower wealth creation rate due to the required government controls over market-to-market exchanges, but the advantage is that the wealth of the poor will be better-protected. The people will not work hard and save if they are sure that they will only be cheated out of their wealth in the end.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (tosoc.org)

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