To begin, I would like to propose an economic thought experiment befitting of fiscal policymaking. Suppose for a moment that there is a Liberal Capitalist nation somewhere in the world with a Market/Mixed Economy. It has undergone decades of deindustrialization or is in the process of deindustrialization within its Manufacturing Sector, despite not having the infrastructure or means to sustain a large Services Sector. There is large popular support in Civil Society to reindustrialize or curtail deindustrialization in the pursuit of the national interest.

Parliament has a number of mundane policy responses to that trend, all of which operate under the confines of its Fractional-Reserve Banking System and Financial Markets. Subsidizing the Manufacturing Sector might enable Parliament to guide the economic development of the Manufacturing Sector away from deindustrialization and toward reindustrialization. Cutting Corporate Income Taxes could give the Manufacturing Sector the Kapital to maintain or expand overall production capabilities. Lowering Interest Rates could make it easier for manufacturers to borrow Kapital and accrue Schuld toward that same end. Promoting Protectionist measures like Tariffs or Devaluation of the national currency (if it relies on Floating Exchange Rates) may discourage excessive importation and encourage greater exportation, thereby promoting a Balance of Trades and Payments.

Unfortunately, there are no guarantees that the Manufacturing Sector will achieve what Parliament is expecting its Industries to do. What are the odds that manufacturers, instead of investing Kapital into tangible production, decided to spend that Kapital on buying back Stocks in order to raise their Value for their shareholders? What happens if the manufacturers decide to “recycle” the Kapital at the Financial Markets, essentially “redistributing” Kapital to places where it will not fulfill its intended purpose?

Given those circumstances, one may be inclined to argue that there is potential for a disconnect between Parliament and the Manufacturing Sector. The priorities of both may not be aligned with each other. It is possible for the latter to act in ways different from what may be professed by mainstream neoclassical economics. Again, there are no guarantees that the Manufacturing Sector will act appropriately with the Kapital that it had received from Parliament, Kapital which just so happened to have come from the taxes paid for by Civil Society.

This conclusion brings me back to what I had written about the Reciprocal Theory of Value (RTV) in The Work-Standard (3rd Ed.), which maintains that every conceivable economic activity is an exertion of physical, mental and spiritual energy toward an intended goal that is in the interests of someone or something. Whether it happens to be the rendering of services or the creation of products, every production process contains those two trends, making the concept of Arbeit entertainable. Going back to the original thought experiment with RTV:

1. To whom is the Manufacturing Sector beholden to? Who ultimately benefits from the production processes of the Industries associated with the Manufacturing Sector?
2. Who and on what basis determines which economic activities are worth more than others? If certain economic activities are lacking within the Liberal Capitalist nation and there is a lot of Life-Energy available for the Manufacturing Sector, wouldn’t that make the Value of the Quality of Arbeit (QW) among its Industries higher than other parts of the Market/Mixed Economy? Or would Production for Profit and Production for Utility prevent that sort of realization from ever happening?
3. Who decides the Value of Arbeit and who determines its Price in Geld? Who or what wields the necessary legal and constitutional powers to enforce the agreements regarding the Value of Arbeit and its Price in Geld?

Either the Manufacturing Sector’s economic activities exist to benefit the people who invested Kapital into its production processes or the people who will ultimately purchase the finished products. Whatever is bound to yield the most Kapital is going to be prioritized over all other considerations. The Market is supposed to decide but it lacks the ability to properly enforce its decision-making. Mainstream neoclassical economics presupposes that the Industries of the Manufacturing Sector are not interacting with other in any relationship that goes beyond that of suppliers and distributors.

It is easier for me to envisage some State under the Work-Standard to collaborate with its Totality to make decisions through organizational or institutional bodies that are intertwined with the Manufacturing Sector. For a Liberal Capitalist nation with a Market/Mixed Economy, however, I am always left with the impression that Parliament and the Market do not always see eye to eye with each other and Civil Society. Eventually, I must arrive at the conclusion that the Intent of a given production process is more decisive than the Incentives.

In essence, can anyone really expect the usual fiscal policymaking measures of old to be reliable anymore? Something tells me that the older policies of Parliament intervening in the Market are no longer reliable and that new methods are needed. It is definitely going to stay that way for the foreseeable future. I will definitely consider expanding my thoughts here in a future post because I am interested in ascertaining whether I can reapply the Work-Standard to understand Liberal Capitalist nations better and how they operate.

Categories: Blog Post

Tags: Economics, Finance, National Intranet, Philosophy, Politics, Psychology, Socialist Finance, Third Place, Work-Standard, Work-Standard Accounting Practices