Craig:
But that is the argument against it.
Suppose an employer (not a capitalist) hires workers at $6/hr & employs them
on a project that pays him $7/hr/worker. From his profits he buys machines
(= capital) for the workers to use. As the workers are more skilled,
he raises their pay to $8/hr. & because they are much more productive,
he can charge $12/hr//worker.
So the capitalist splits his profit with the workers.
woods:
Chris, I don't see what the arguement is against Craig on this. What
Craig has provided is the IDEAL way the free market can work. As Craig has
pointed out though cronism is alive and well in the U.S. and this cronism, I
would argue, is what is pulling the free market into disarray. What's seems to
be messed up about the free market is the vacuum of morals. The social level
is still be guided by an SOM intellectual pattern with this absence of morals.
One word: inflation. That's what's going on with the U.S. dollar but I
don't want to make this post too long.
Here's a date: 1971. According to the "Bretton Woods System" gold was
the standard for all national currenies to be measured against during their
trading activites, until, the U.S. intentionally made the U.S. dollar not
backed by gold anymore. So, on the global market this Bretton Woods System
broke down, gold could NOT be the standard that all nations currencies could be
measured up against. This intention by the U.S. occurred in 1971. At that
moment there was all this U.S. currency (the dollar) floating around in
circulation that was NOT backed by gold. So how could the Bretton Woods System
[upheld by Bank for International Settlements (BIS) which is in Switzerland]
use gold as the standard anymore if money is floating around that is pure
paper, money that is NOT backed up by gold at all? This Bretton Woods System
couldn't work anymore, but what happened was the U.S. dollar became, one could
argue, more valuable than gold. People in all trading nations desired
the U.S. dollar even though it wasn't backed by gold anymore, so, this was a
revolution. The U.S. dollar became the standard that all nations
currencies/money's measured their money's up against when they tried to trade
with each other. Eventually other money's/currencies became worth something on
the world market, such as the Euro and the Yen, but the U.S. dollar was the
most valuable. So, as the U.S. economy weakens, so does the world for the main
trading standard is the U.S. dollar and if you can't trust the U.S. dollar to
be worth that much then nothing takes it's place on the world market, unless
the economy falls far enough and people then value gold again more than the
U.S. dollar. Then gold would be the standard again.
This trading of currency's and having to consistently measure the worth of
each nations money up against another nation's money in Europe was the argument
to go to the Euro. Countries in Europe had to keep checking how much, for
example, France's franc was worth before they traded with France. The franc
would go up and down daily, hour by hour, that's how the value of money
changes. So, countries would have to keep checking to see how much the franc
was worth before, say, they traded a car with them. They wanted to trade the
car with France and get the correct amount of money the car was worth, so, you
have to see what the Franc (is that how it's spelled?) is worth at the moment
you trade the car with France, say from Germany. The Germans would have to
look into it, check the franc, and then trade France for the franc at the right
price, the right value that Germany said the car was worth. This became so
complicated between all the countries in Europe, constantly c
hecking each other's currency moment by moment before each trade so Europe
went to the Euro to make it easier to trade between the countries for now the
countries agreed upon one standard called the Euro to measure the value of
their products in trade.
Is the Euro backed by gold? My guess is it is not. I don't know of any
country on this earth that has gold backing their currency anymore.
woods
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