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Old November 16th, 2008, 05:22 AM   #1
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Market Economies Demand Subordinated Market Societies

Market Economies Demand Subordinated Market Societies

“A market economy is an economic system controlled, regulated, and directed by market prices; order in the production and distribution of goods is entrusted to this self-regulating mechanism.”

Such a system contains the following assumptions:

1) Human behavior is such as to seek maximum money gains

2) The supply of goods and services are available based on demand at market prices

3) Money, functioning as buying power, is in the hands of prospective buyers

4) Nothing beyond prices must interfere with markets

5) All incomes are supplied through markets

6) Prices, supply, and demand respond only to market forces

Production and distribution will thus depend upon market prices alone. “Self-regulation implies that all production is for sale on the market and all incomes derive from such sales.”

Under feudalism and the guild system land and labor formed a part of the social organization: the status and function of land were determined by legal and provincial rules, all questions about land were removed from any organized market of buying and selling and subjected to various institutional regulations; the same was true regarding matters of labor, the relations between journeymen and apprentice, the terms of craft, and the wages were regulated by the custom and rule of the guild and the town.

“The self-regulating market demands nothing less than the institutional separation of society into an economic and a political sphere…It might be argued that the separateness of the two spheres obtains in every type of society at all times. Such an inference, however, would be based on a fallacy…normally, the economic order is merely a function of the social order…Nineteenth-century society, in which economic activity was isolated and imputed to a distinctive economic motive, was a singular departure.”

A self-regulating market cannot exist unless society is subordinated to its requirements; a market economy can exist only in a market society.

Quotes from “The Great Transformation: The Political and Economic Origins of Our Time” by Karl Polanyi
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Old November 25th, 2008, 06:51 AM   #2
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A self-regulating market cannot exist unless society is subordinated to its requirements; a market economy can exist only in a market society.

To place this concept in simple terms it comes down to wealth of resources and the absence of wealth with the right to own property. Take a new land in America at its founding; the land has great value if the products of the land can be exchanged for something of value. Without a customer the land has no value, with a customer for the wealth of bounty it may produce is the possibility of great wealth. The wealth is the potential held by the owner, so ownership determines who will be most wealthy.

The king of England looked at foreign lands in two categories; colonies and exploitation. In the case of exploitation the natural resources were stolen, gold, trees, salt, furs and so on. In the case of colonies the king desired to establish a situation where continued wealth could be produced from ample natural resources that were in demand within his kingdom and his trading partners. To exploit wealth from natural resources requires the exploitation of those who have no wealth or property. All wealth is reverted to the authority of the deed, in this case the King. The king announces this state belongs to him and he grants a deed to one of his friends of let's say 10,000 acres of valuable farm land capable of producing large quantities of products in demand for other people's gold. To exploit the land requires willing or unwilling workers so the king offers his friend let's say Thomas Jefferson that he will send him unhappy citizens on one of his ships to work on his land and for the transportation to the new world the citizen must work for room and board for seven years without other compensation. The king starts to receive the wealth as the land produces exports back to England and up the offer to Jefferson that for every 100 indentured servants he takes stewardship over he, the king will give him another five hundred acres. Jefferson, now owning the deed to large portions of land can offer those indentured servants the right to purchase this wealth producing land from him as their contracts expires if they continue to work for him for compensation making him and the former poor person wealthy to differing degrees.

Wealth's root is in the authority to issue the deed. Natural resources are the root of all wealth. Over time brainpower has become a natural resource so the holders of natural resources can trade them for other people's labor and gold.

As an example, South Korea and North Korea are nations that have few natural resources, the south has managed their population to the point that the nation can support its citizens with basic traditional natural resource... food and shelter and has developed its citizen’s brainpower to become wealthy. Without brainpower South Korea would be impoverished as North Korea is.

America economy is far removed from the concept of trade at the individual level of the average citizen; we walk into a store and look at the price tag to see what something costs. In Korea people walk into a store, there are no price tags and make an offer and if the price is too high they walk away... they consider their brainpower the asset that determines if they make an appropriate trade, often a person offering an item for too high price will see it left on his/her shelf to rot even if the prospective customer is hungry for that product.

The authority for deed in America is the government and in America the government is of the people so the people can manipulate the way the economy works. This could cause the system of a market economy to try to exist in a market society controlled by those without wealth; this could cause the economy to fail.

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck."

-Robert Heinlein
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