Why Exchanging Labour for Purchasing Power Will Fail

Money is a term which represents an abstract form of exchange of labour for purchasing power. This article will not investigate interest, loans, debt or the creation of money. For in reality money could be gold, silver, match sticks or pine nuts. Here we will concentrate on the direct result of defining a value to labour to use in exchange for purchasing power.

While it may be offered that the abstraction (money) simply allows for delayed trade to take place, such as;

  • Human x has some chocolate.
  • Human y wants some chocolate and has a chicken farm but at the time has no eggs to trade.
  • So human y offers an abstraction so that s/he can have some chocolate and when eggs are available human x can trade in the accepted abstraction in return for some eggs.
Labour exchange
F.S. Church
Published in Harper’s Weekly
January 17, 1874, p. 61.
Public Domain

What we are actually seeing here is little more than what can be considered as the natural progression from barter to a more refined system of economics. For the idea of exchanging goods or services directly as a system of economics (barter) is still in and of itself an abstraction of the exchange of labour for purchasing power.

As an example while it may be agreed that two eggs are a suitable exchange for some chocolate, those two same eggs would not be sufficient in exchange for a house as the expressions of labour are not in equilibrium for that exchange. No matter what is used to define the value of labour, the fundamental ramifications remain the same.

  • An employer must have a product or service to produce or distribute in order to turn a profit.
  • An employee must take part in the production, distribution, or peddling of a product or service in order that the employer turn a profit, and can in turn pay the employee in exchange for labour.
  • Both the employer and employee must take part in the consumption of goods and services as consumers in order to perpetuate the entire system.

The very products that are manufactured are strategically produced to sustain this form of economics, it is a requirement that nothing produced outlasts the need for continual consumption. Even the most cursory of searches can identify a multitude of items that are either poorly manufactured, designed to break/fail within a given time frame, or that have small aesthetic changes made to them over time resulting in a need or desire to have that item replaced.

John Seb Barber
Dead batteries

In this economic system it simply would not do to produce goods that would last, could be easily upgraded, or could have the external aesthetic manipulated with ease. This would place insurmountable strain on the consumption model and would lead inevitably to ever growing levels of unemployment, any decreasing need for consumption translates directly into a decreasing need for production. An inevitable result of reduction in humans employed is a situation of poverty due to nothing more than the inability to exchange labour for purchasing power.

Stratification of not only the general population but also of products is a direct result of the use of such an abstraction, as the value equated to labour changes in regards to a multitude of factors such as; complexity: technical and or physical skill sets: and of course abundance or scarcity of the labour pool to point out a few. In order to allow for consumption of goods and services to continue, we as a species must produce a stratified range of products that will encourage all economic levels of our society to take part in the process of continual consumption that is required to sustain the system.

This range of value for labour not only creates massive economic disparity, but also means that in order to have lower cost products for those of lesser socio-economic means to be able to purchase they must be produced cheaper. This can be accomplished by; use of poor materials: a reduction or complete disregard of employee working conditions: and or using off shore factories in countries where employees are paid next to nothing for a days work.

Human trafficking in Nike’s sweatshop factory in Malaysia

As a society becomes increasingly technologically advanced and employment opportunities are replaced through machine automation it becomes evident that a growing number of the population will have their purchasing power reduced resulting in increasing strain on the consumption model. As consumption slows further jobs are lost through a reduction in the need for production, resulting in a vicious circle of continual loss of purchasing power to the general populace.

There is also the insidious reckless waste of our planetary resources that goes hand in hand with the need to sustain the consume throw it away, consume throw it away economic environment we have all been so heavily indoctrinated into.

Mark de Bruin ANWB 15 july 2014

We have generated a multiplicity of product duplication. Some may be missing certain features in order to keep cost down, yet all of them use almost identical resources in the production process. All of them will almost certainly fail or be outdated within the next ten to fifteen years. None of them will be capable of being easily upgraded or having faulty parts simply removed and replaced, instead when the time comes and the product either fails or is outmoded it is thrown away.

Thrown away….? There is no “away”! These objects don’t simply disappear into some great empty void never to be seen again, they fill landfills, end up in our oceans, creating piles of toxic e-waste.

We have reached a point as a species that implores us to ask the hard questions about the economic environment we have created, no politician is going to seriously address the issues that arise due to the exchange of labour for purchasing power. It is up to us together, as one unified species to stand up and find solutions to; endless waste: the misuse of finite resources: social stratification, disparity: war: needless pollution: and cyclical consumption.

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