1. Reality represents the input into the economy.
2. Economy is the motor which occasions product.
3. Social and social benefits the product that benefits man.
However, treating the above -as totally separate notions is wrong; they are individual but related in the sense that reality relies upon social input in terms of work and so does economy. In fact, social values are as much an input value as product value.
It is therefore not unreasonable to suggest that social benefit/social input remain the overriding values in lifestyle as the management of reality and economy.
In realistic thinking the aim is to concentrate on the creation of relationships as a distinct source of value and for this the elements of life support need common direction.
Historically, anti-relationship was the way of life, to use reality in order for the economic motor to produce, the products of economy being two-fold: (1) Money - money accumulated; (2) the adjusted reality for social benefit - usually to depreciate. Money remains the managerial force over reality and economy.
YET WHAT BECOMES CLEAR IS THAT REALITY ON A PROPENSITY TO NOTHING IS GOING IN THE OPPOSITE DIRECTION TO MONEY WHICH IS ACCLIMULATING. This puts man into a quandary - does he alter the value of money or reality and adjust either's role? With this dilemma the effect on social issues is damaging as eventual products have largely only short term benefits yet man increasingly invokes the reality/money anti-relationship.
It is quite clear that man cannot afford to depreciate, diminishing reality ad infinitum; soon will come a time when man is backed into a corner.
The real task is to make reality and economy relate rather than anti-relate. Man cannot work on reality and recreate it (other than regenerables) but he can work on economy with the aim of inverting from anti-relationship into relationship.
Economics versus realistic thinking
Economists largely believe that price is the -key to economic activity. Realism believes that understanding of transaction (which is the market or economic central force) is the motor which affects and effects values, i.e. the motor does not rely solely on price on the sell side of transaction, it needs capacity to buy on the buy side. Price or sell meets capacity to buy. The energetic change of relationship, the transaction is the force. Even more difficult to fathom is that both sides sell/buy come from the same source.
By definition the income of buy (labour costs) is lower than sell price. There is always disparity between total sell and total buy in favour of sell.
The real danger to economy is that disruption of the already existing disparity between sell and buy could worsen. Firstly the problem has to be realised, then something done about it. The economy has two-fold problems, an internal problem of how to relate sell ability more closely to buy, and how to invert economic activity making it match reality in such a way that it is the economy under pressure of work, rather than reality which cannot work on its own.
Money
All the problems in the economy centre around the use of money. It is crucially the handling of money, the fact that money is an artificiality makes it pliable. Money can only be reflected in reality. The problem is that in a well developed economy whereby money assumes a self-appreciating role it becomes a pressure upon reality, reality already under pressure because of its propensity toward nothing. Therefore there comes a stage whereby pressure upon reality will become too great to bear and the role of reality will collapse.
Reality having to chase money is inappropriate and in the long run unworkable, i.e. historically reality has done all the work whilst money simply accumulated. This is no longer a proposition in a well developed economy since the requirements of reality interfere with the requirements of money.
The dream of limitless wealth, if left unchecked, will turn into a nightmare of a cul-de-sac. Now it is necessary to reverse roles; reversal of roles puts money to work in the market, ostensibly to inflate the buy side of the market, namely to cure a wide disparity between the real volume of buy capability and sell necessity.
Money manufactured centrally is sold to private banks; these banks buy and sell money; on the way they revalue (inflate) money upwards thereby covering bank expenses and making profits that profit being nothing more than an inflationary private tax, inexpressible in real terms, as money's self-appreciating style causes it to make reality chase it. Reality will reach the stage whereby it can no longer chase as it will be exhausted. The influences upon reality by reality itself are greater than monetary influences.
All the above means that no longer should reality chase money but the reverse must come into being; money must learn how to chase reality, that reality being in a constantly diminishlng state.
So what does this mean in real terms?
1. It is necessary for banks to charge for rather than give interest on money; this notion immediately takes money out of self appreciation and makes it have to work to accumulate, remembering also that as money is an artificiality it can always be regenerated i.e. new money can always be created.
2. Banks should be coerced into lending money into business fixed capital creation. Banks must pay interest on the loan at a current lending rate, the banks to become shareholders of the capital reality, receiving longer term repayment of capital1 plus dividend from profits that will offset interest paid.
It is hoped that the combination of 1 and 2 have particular effects; these effects will be the short term stimulation of product as prices in the market drop, hopeful1y labour costs rise to reduce disparity between sell and buy. In the long term money will settle down to chase reality, i.e. inputs directly into the market to earn profit and dividend, but it is important that there is a healthy relationship between buy and sell earner so that there is strong support for transaction in the market. Effectively banks would settle down with a portfolio based on liquid asset and fixed appreciating asset share. This would tie the banks into the need for fixed capital appreciation i.e. reality as well as money.
3. Building societies would become housing associations and, like banks, would charge investors for holding-money, and would pay interest to borrowers in return for a percentage in the appreciating value of property; like the banks a housing association portfolio would include a valuable portion of reality as well as liquid asset. Building societies would effect the monetary realisation of appreciated capital upon property sale, what volume of interest to capital and governing the amount of appreciation paid. Housing associations could pay for new houses prior to construction, thereby relieving builders from having to seek credit, credit acting as an inflation on price.
The effects of points 1,2 and 3 would be felt directly in the market and directly affect transaction, either labour costs go up or the buy side of the market would increase; alternatively prices would comedown without affecting profitability.
4. The concept of prepayment of new expenses in a newly formed company or a company struggling to meet expenses could be handled by sponsorship. Existing large companies such as insurance, manufacturing and service effectively buy into struggling or new companies in return for scheduled debt repayment and interest based on share of profit, this would relieve banks from being involved with expenses but solely to lend on capital.
5. Pre-payment; as much as possible pre-payment accompanying orders should be actively encouraged. Pre-payment means an end to wasteful credit and follow-up for credit. Credit is seen as the mortgaging of the future, a corruption of profitability - profit being declared before real product is created.
Credit financed much of the boom in the mid eighties, such credit only going to prove the unsatisfactory level of disparity between buy and sell motivators.
The above points are just exploratory, looking at new ways in which money chases reality instead of reality chasing money and looks at ways to end the trend towards market sterility; they could revive profitability, effect price deflation, put money directly into the market, i.e. the market cannot sell out of sterility; it must buy and largely by support for the buy side of the market.
Appreciation and Depreciation
The fact of the direction of reality, i.e. it is on a propensity to nothing, shows a necessity to either dissipate or to reverse this trend. In economic terms it can be said that the earth is depreciating in value. Therefore in real terms the problem of depreciation needs to be addressed. Man can do little about those energetic realities that he uses for energetic purposes; he cannot replace spent oil, gas or coal and must realise that instead of blindly producing and using energy he must develop alternatives such as water, wind, sun and wood, and use more animal properties such as man himself, horse, elephant, camel, dog, this way the problem of depreciation becomes much reduced.
Depreciation is an economic menace, applying to the capital creation of product as much as the product itself. Therefore it is suggested that the nature and application of depreciation should be reviewed, the purpose of which should be aimed at depreciation reduction.
There could be a depreciation tax payable at the source of purchase that would be based on longer term waste expense. When things get used or expire and become no longer valued, they become anti-value. Income from depreciation tax could be used to develop, repair. and renew business to rival manufacturing as a source for labour and profit, the job of repair and renewal to constantly postpone full depreciation. Other areas that would prove helpful are the growth in the use of regenerables in product, reclamation of land, recycling product, restoration of the weathered, could share in the income from depreciation tax. It should be possible for business to reconsider the value of a capital product before it reaches the end of its economic life; such review together with any necessary repair or renewal cost should allow for re-appreciating such renewed goods into the balance sheet for at least a further term. Businesses should be encouraged to re-appreciate to avoid the use of new reality, but at the same time gain value from re-use. The longer that capital goods both in a business and private sense be stopped from depreciating the better.
The instant depreciation of many different products that does not consider the true wastage of reality must wherever possible give way. The concept of appreciation must become a recognised valuable tool, for it is the ability to build value and therefore economic support without a need to constantly resort to new reality to create.
It is important to put economic strength into those areas of creation that only use reality in order to give it long term increasing value; this implies that once again the application of art, skill and craft as application and expression of individual regenerable man is a formidable economic value.
The more that man can develop profit and labour cost out of human application the better, and the more it shows a reduced need to resort to finite reality the better. Appreciation in real terms is fundamental to life, the constant ability of man to appreciate all that is around him notioning value; this just implies that appreciation rests upon the relationship which develops between man and earth.
It cannot be stressed too strongly how important appreciation is to man; it invokes quality and endorses the quality of life leading to high standards of living. The fact that depredation may lead to the short term improvement of living standards does not mean that it adds to the quality of life, as both in terms of the work it creates and the product, it falls short of lasting value.
Price and capacity to buy (labour cost) relationship
Unless a loss or shrinkage of activity is required it will always be that price is greater than capacity to buy, but it is only price exchanging for capacity to buy that is the market.
Price (or the abstract of product) contains labour cost, other costs of production, other costs of selling, unappropriated profit inflation and tax inflation. Remember that price is a forethought; an essentially inflationary supposition, only realised when it becomes contract; therefore price is only effective after production unless pre-payment is made. Capacity to buy becomes realisation before price is met, which means that capacity to buy and price are always playing catch-up, with the possible need for credit to support capacity to buy before it can meet the requirements of transaction.
All the above means that price and capacity to buy are related at source but become later separate notions which in a developed economy realises even greater disparity in real terms. All this makes it difficult for the market to exist in a way that is necessary to support the level of investment in the supply side of the market.
Just quickly to look at an example, say product price is £100 but labour cost is £20 if it is supposed realisation of inflation at 5%, capacity to buy increases by £1 whilst price increases by £5, a common percentage leads to a vast difference in real terms which compounded over a few years creates a situation whereby price is increasingly out of kilter with its necessary component of capacity to buy.
The problem is firstly applying a common percentage which acts like a tax on quality, forcing higher prices in real terms than are probably necessary. Another problem is the waste of high credit, expensive advertising, dependence upon high energy consumption, over choice in product, unappropriated profit, unappropriated tax, all these things built into price which act to suppress labour cost, pushing it back in real terms, stifling the market and it is this that brings about the effects of recession.
For an economy to be healthy it needs strength and support on both sell and buy sides, otherwise an already unequal existence becomes hampered and inefficient.
This already adds to the view that companies cannot sell their way out of recession; they need to juggle with expense to buy their way out. The effect of high price and high profit margins is to slowly drive a wedge between a realisable price and suppressed capacity to buy. The effect of the above problem is to open the door to a flood of cheap imports that more identify with capacity to buy, the result being that the country already needing exports to balance the books, needs even greater export market to pay for imports.
This means that elsewhere in the world has to have a higher standard of living than us; we reach the unenviable position that our workforce become slaves to wealthy foreigners who feed us scraps from the table. This is a situation that cannot be allowed to happen as every developed country and under-developed country looks to export alone to keep them in the black; every country needs strong home markets to economically survive, otherwise without the ability to export off the planet, there is no Q.E.D.
Capital and expense
What is capital is real tangibility and money owned by a company. What is expense is that which has been immediately depreciated in the course of business. The above is true for business but not so of reality; man sees (including himself) all reality as being capital. Man does not see himself as "an expense" to the earth but of prime importance as part of the earth's capital; everything of monetary value revolves around man.
Energy is treated as an expense, when in fact what is being used up is another of the earth's capital values.
It is not necessary to change the structure of business accounts, but it is important for business and government to maintain an overview of reality over and above sheer profit making enterprise.
National capital
It is suggested that all publicly owned fixed capital with a depreciation rate of ten years or more should be placed in a national capital trust, each capital value to be broken down into categories, eg house, office, school and so on; it should all be broken down by ministry This would have the effect of building a national asset record which could be assessed m market terms thereby creating a continual picture of what national assets are valued at.
The effect would be to realign annually all fixed capital to the retail price index; this would mean that at least publicly owned assets would have a self-appreciating value.
AU assets with 10 year life or over to be assessed for the second-hand value to include inflation, e.g. if an item were to be valued initially at £10,000 depreciated over 10 years, in the second year it would be worth £9,000 but if the inflation rate is added to the second-hand value at say 5% this would revise the value to £9,450; meanwhile new value is increased to £10,500, therefore in practice depreciation takes longer than ten years but new value increases tremendously to offset this. This single action could save millions in wasteful depreciation.
Ministries would still assess capitalisation considerations but would hand over the functioning of it to the national capital trust. The trust would adequately reflect the national wealth at any time.
Growth and Associates
Growth is a hindsighted notion, ie something has happened. The idea of growth in an economic sense implies a growth in the product; there is more use of reality.
More use of reality leads reality on a propensity towards nothing. Sooner or later there will not exist the necessary finite reality to be able to assume growth. In actual fact there is no growth in reality, the only thing that man can make grow are regenerables. What really happens is that reality is displaced and that displacement results in transaction leading to wealth creation.
There are other associates to growth which imply getting bigger inflation, expansion, up, appreciation - all imply the notion of getting bigger whilst deflation, shrinkage, depreciation, devaluation, loss - imply smaller. Detailed below are three main groups that affect bigger/smaller.
1. Inflation/deflation. The forethought of what is going to happen, ideas applying to price and costs (particularly to labour cost) inflation/deflation in price does not necessarily mean an adjustment to transaction, a rise in price possibly reduces the likelihood of transaction, conversely deflation can have the opposite effect. Inflation of labour cost is far more likely to affect the market indirectly as there is an inflationary trend m market capacity to buy, deflation in labour cost has the opposite effect.
2. Realisation up/down. - This term is used to apply to ideas of price and cost, i.e. inflation/deflation becoming real. Realisation up/down represents the meat of transaction, the reality that occasions transaction, and will/will not be affected by inflation/deflation.
3. Growth/shrinkage represents the post-transaction state depending upon the realisation effected and enacted in real transaction.
We have commuted in terms of contract notions of bigger/smaller into 3 main groups. Inflation/deflation, realisation up/down, growth/shrinkage. The phrase "going for growth" is not well founded as reality has to pass through the two preceding notions of inflation/deflation and realisation. In effect the economy is like a tied balloon: apply pressure in one area and it deflates in another; apply too much pressure and the balloon will burst rendering it useless; let the balloon down and it becomes devoid of value; on the other hand, tie it and leave it alone and it remains existent value, only needing the occasional reflation to persist in its value. The above states can be readily applied in an economic sense; inflation acts as a spur to effort resulting in realisation. The view that inflation is best dissolved leads to the possibility of transaction rate curtailing. It is more likely that business will elect for growth in the use of reality to effect value in real terms; there will be greater displacement of reality in the chase for growth, a phenomenon that will not result in realisation of reality upwards as labour cost and ensuing capacity to buy is made to stand still or even deflate.
The portent of this work is that man by his own actions will be forced by circumstances to shrink economic activity in real finite existence; this will mean that economies will be forced backwards; in order to avoid the effects of this it is necessary to avoid the effects of the obvious and plan for the growth of value as opposed to the use of reality growth: price, profit and essential LABOUR COST leading to capacity to buy shows the growth in value as opposed to the use of reality is the only long term way. The value discrimination of reality sidelining wealth creation
The present basis of wealth creation sees money to be made out of reality as the principle product; in effect the earth's realities become the tool, use of which enables wealth creation. It is considered that in the longer term the present values of wealth creation will be unsustainable, as the earth's realities diminish due to over-use, the economic effect will be to drive prices high creating cracks in social fabric and social cohesion. To avoid the above it is necessary to adjust the way that we appreciate the earth's realities and it is suggested that we adopt "value discrimination" whereby in practice the earth's realities become highly valued and that such value is reflected in life style; money becomes merely the tool that allows reality exchange, therefore what is suggested is the antithesis of wealth creation.
Without any adjustment in economic activity the danger is that wealth will overshadow diminishing reality and extreme inflationary pressures will be brought to bear.
Value discrimination means that we treat goods and services as the highly prized values and that our expression of value is in the mix of created things and in the capacity to buy that it takes and is manufactured in major clumps of economic activity: economic activity aimed at the discrimination of values of reality with money allowing reality exchange that builds reality value.
Value discrimination suggests that there are values in economic activity that generally act to improve life style, life values and economic and social health and welfare, and that these values sideline wealth creation as being largely incidental; this is not to suggest that wealth is not valuable but that other aspects of economic activity must be of at least equal value to society as a whole.
Created goods and services are valuable to society, more so than what money is made out of provision and distribution of the goods, e.g. drugs; it is more important to society that healing drugs exist even though their manufacture is highly profitable; profitability becomes incidental to the entire economic and social health and welfare.
The element of provided work in creating goods and services is a valuable facet to the overall welfare of the nation in creating capacity to buy that home economic activity is so dependent upon.
There is a dangerous element to current thinking which is wherever possible denying work; this dents economic activity at home by damaging the relationship between price required to transact and capacity to buy the goods.
Value discrimination suggests key areas of value in the total economic activity that makes such a difference to life style and life values. Wealth should not be the main target for business; each company looks to provide value for its customers and workers to succeed. Detailed below are key areas for future value discrimination.
1. Real finite existence. Wherever real finite existence is used it should be to enable appreciating value; this means the revaluation and use of art, skill and craft. Appreciation leads to the probability of great value being created without the continual resort to reality to create value; high human input should result in high value.
2. Regenerables. It is obvious that anything that is useful and regenerable is of greatest long term economic value, eg food and textiles. Regenerables should be highly priced and effect high labour cost to develop the economic importance of regenerables. The management and use of more regenerables as opposed to more finite existence must be paramount.
3. Services and invisibles. Services and invisibles that have real exploitable value can build high price, high profit, and high labour cost and will be of increasing value as they do not create so much need for the use of reality.
4. Repairs and renewals. Directed at renovating that which prolongs the usability of real finite existence.
The above 4 key areas for the future and their importance to economic activity is great. Man has to put greater emphasis on his own value as a regenerable, a reality that has both energetic and thoughtful capacity, two highly prized values, which will become even more valuable in the future.
What needs to be fully understood is that human regeneration has infinite possibilities; this means that man must be more discriminate about how he bases lifestyle and life values. There has to be perpetuality of a good level of living standard from generation to generation.
Man must decide what is needed to maintain infinite life and determine just how and on what basis he assumes particular values.
If value discriminations not adopted the likelihood is that at some point in the future man will be forced to accept continually worsening standards of living as the earth's finite realities become uneconomical to use.
There is the danger that human life will turn full circle and man will once again be forced to live off the land alone.
