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Saturday, 28 April 2012

What is 'growth'?

Another thought provoking point raised by Tom Joad has led to the following post, I hope this fully demonstrates that I firmly believe that the welfare and happiness of workers is fundamental to a business' success.

The much touted 'growth' that all nations seem to be extolling the virtues of, as the 'alternative' to austerity is a funny thing, which has never quite been defined and remains a buzz word.

To truly understand what growth means, we need to understand what it is that is 'growing' and that is the arbitrary measure of the economic value of a nation's activities.

There are four ways, within the purview of government, that growth can be achieved:
1) Increase the number of people working
2) Increase the notional value of each person's activity
3) Increase the level of taxation and activity by government employees
4) Inflation (increase in the money supply)

None of these represent 'real' growth. There are three ways of delivering 'real growth' none of which are within the control of government.
5) Revolution in the means of production
6) Individuals devoting a greater proportion of their time to productive activities
7) Individuals making more productive use of their time

None of the first four will solve the problems of the burden of overspending by our parents, grandparents and great-grandparents and in the absence of a revolution in the means of production it requires a fundamental change in human nature which is unlikely to happen without a serious re-education of people.

As an example, when Coal Mines were first opened miners were self-employed and were paid based on the amount of coal they extracted but the mine owners found that the miners were only working sufficient hours to ensure that they earnt enough to live and they recognised that if the miners could be made to work longer hours then they could make more profit. As a result Contracts of Employment were introduced which compelled workers to work a set number of hours and paid them on the basis of the time spent 'under contract' rather than how productive they were during that time.

The amount of coal that was extracted did increase slightly but the productivity per hour significantly decreased, such is the difference in productivity between a free man and a slave.

Of course it is not just mine owners who are slave to the profit motive, now the worst culprits are government. Governments are obsessed with increasing the level of economic activity, but it does not follow that citizens share this desire.

In 1976 during the three day week economic activity remained at the same level as it did before and after the  oil crisis, as much activity was completed in three days as was in five.

The human factor shows that each person will only produce a set amount of work in a given time period, almost irrespective of how much time within that period is given over to 'productive activity'.

The long term solution to growth would thus seem to be to create the means whereby productivity is maximised by ensuring that a person is paid on the basis of their productivity and that there are no contractual obligations placed upon that person in terms of the hours that must be worked, what work must be done, how it must be done.

Two free men working three days each should be more than twice as productive as one slave working six days. That these two free men suffer no detriment to their earnings but enjoy greater leisure time in which to be a consumer, real growth will inevitably follow. Unemployment would decrease.

If we apply that same situation on a national level, the greater the liberty and the lower the taxation, enjoyed by citizens, the greater the economic activity of a nation will be, as all citizens will be more productive and greater consumers.

Unions I am afraid are a tool of repression particularly against the individual, discouraging individual innovation and productivity and enforcing slavery, or as it is more commonly referred to a contract of employment.

Unfortunately what these nations mean by 'growth' is taking ten pounds and giving it the same value in exchange for goods as one pound has today, thereby turning their trillion pound liabilities into a mere one hundred billion pounds of liability and changing a GDP of £500 million into £5 billion. The change is not real but simply arises because the definition or value of £1 changes. This is only a problem for wage slaves, pensioners, benefit recipients and people with savings denominated in pounds.

If you have land or you have gold then it really doesn't matter how many pounds one unit costs because one unit of land is always worth one unit of gold, always has been, always will.

That is why I am not, nor will I ever be, an employer again, not even a self-employer. I am a free man and I will work together with other free men, if we both agree to do so, knowingly and willingly, by mutual consent towards a common goal.

Employment is simply a limit to one's earnings potential.