Wednesday, October 16, 2013

Beginnings of a Comprehensive Economic Theory: Economic Crisis, Especially in Capitalism

What causes an economic crisis? I'm not certain, but, given what I've investigated so far, I'm inclined to think it is an imbalance in the three struggles. Indeed, imbalance in one of the struggles leads to imbalance in at least one other, if not both. If the buyer start winning the struggle between buyer and seller, profits fall, which companies turn into laying off workers allowing them to lower wages. One company dominating a market leads to high prices and low wages, since they need hire less people to produce the same amount thanks to economics of scale, though profits soar. Bosses starting to crush workers leads to lower wages, which means that the companies can't sell as much. Sellers winning out on prices more, but causes buyers to stop buying, so the sellers begin losing, and the buyers start winning. Workers winning out over bosses causes bosses to rise prices to compensate for high wages and fire a lot of workers, which causes them to dominate the seller-buyer struggle.

Notice how in all of those, the workers and buyers are hurt far more than the companies which employ them and sell to them.

A good example of a worker crisis is the stagflation in the 70s. Unions gained a lot of power. In response, bosses raised prices and culled workers. This was termed stagflation, and is exactly what should happen when unions gain power.

Our current recession is a boss crisis caused by a buyer crisis, which expanded with the boss crisis, caused by a seller crisis, otherwise known as a clusterfuck. The housing bubble was caused by sellers lying to buyers to convince them to buy. As that kept going and going, they made a ton of money. However, the lie got exposed, and buyers stopped wanting to buy. This caused the companies to quickly lose a lot of money. This meant they started firing workers to lower wages. As they did so, people stopped buying elsewhere, so other markets were forced to fire workers to lower wages and earn less.

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