RE: [Futurework] http://www.glaesernemanufaktur.de/

[Harry Pollard]

Ed, The $10K could be called a dividend, a bonus, a commission, a salary, or even perks. However, any return for human mental and physical exertion is called Wages in Classical PE. The residual could be “contingency or insurance – part of ordinary business expense with a dynamic operation. However, this is the way we look at Capital – material products of exertion kept in the production process. One of the three tasks of Capital is to maintain itself. If a factory begins the year with $10,000 worth of Capital, but wear and tear reduces it to $9,000, then $1,000 must be set aside  toward replacement. So, at any time the amount of Capital remains the same. That residual might be replacement for wornout Capital. A well-used ploy by both business and government is to put off the replacement of Capital, so funds become available for important things like higher salaries. This is why our roads and bridges are a disgrace. It may well be why an apparently solid corporation is found to be buckling at the knees. Arthur and I – and probably you – agree that the problem is not production, but distribution. As you know, Classical Political Economy has three avenues of production – Rent goes to Land, Wages go to Labor, and Interest goes to Capital. After the distribution, there is nothing left. The accountants bring in residuals, dividends, and profits – but accountancy is not economics. Economists should have stayed with their discipline. The issue then becomes clear and simple. Why is the distribution to Labor constantly being pressed down? Why - in the words of Henry George – with our constantly increasing power to produce is it so hard to make a living. Of course, he said that 130 years ago so it’s out of date. It doesn’t apply now – or does it? You might think that the Classical stuff isn’t fitted to today’s complicated situation, but it is directly applicable to modern conditions. On FW it’s hard to get past the basics, yet the Classical view is that an understanding of the Basics is essential if one is to proceed any further. Yet, most people want to get to the good stuff right away. They don’t want to work up to it. ‘Twas ever thus! Harry ********************************************   From: Ed Weick [mailto:[EMAIL PROTECTED] Sent: Monday, December 29, 2003 5:31 AM To: Harry Pollard; 'Ray Evans Harrell'; [EMAIL PROTECTED]; [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Subject: Re: [Futurework] http://www.glaesernemanufaktur.de/   Harry, I'm not an accountant, but the $10K we each got would surely be considered a dividend, and if the company kept $8k, that would surely be retained earnings.  Both dividends and retained earnings come out of profits, don't they?   Ed ----- Original Message ----- From: Harry Pollard To: 'Ray Evans Harrell' ; 'Ed Weick' ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Sent: Monday, December 29, 2003 4:48 AM Subject: RE: [Futurework] http://www.glaesernemanufaktur.de/   Ray,   By George, I think we’ve got it!   Profit may be a “residual” or a “surplus” or anything else you want to call it. But it is an accounting term and has no economic significance.   If you, I, Ed and Arthur ran a business and shared out $40,000 at the end of the financial year, leaving nothing – then the $10,000 we each got would be part of our income, but the company would show no profit.   If we each took $8,000 as income (wages) the firm would show a small profit of $8,000.   If income taxes were hitting us hard (but profit taxes were low), we might decide to take nothing, leaving it in the firm where it will be a handsome $40,000 profit.   To repeat, profit is an accounting term and is not of any importance in economics.   In Classical Political Economy, there are only three avenues of distribution, Rent (to land), Wages (to Labor), and Interest (to Capital).   There is nothing else to distribute and no-where else to distribute it. If FutureWorkers want to examine Work and Wages and the nub of the subject – why wages constantly trend towards barely enough to earn a living, they could do worse than look at the analyses of the Economic Classicists.   Harry ******************************************** Henry George School of Social Science of Los Angeles Box 655  Tujunga  CA  91042 Tel: 818 352-4141  --  Fax: 818 353-2242 http://haledward.home.comcast.net ********************************************     --- Incoming mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.553 / Virus Database: 345 - Release Date: 12/18/2003 --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.557 / Virus Database: 349 - Release Date: 12/30/2003

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