Saturday, January 28, 2012

A Democratic Economic System – Is this possible?

Economics is the science that tries to find answers to the question: How to distribute scarce resources to satisfy unlimited wants and needs?

The way in which Capitalism answers this question is through prices. The price of a good or service determines who has access to the good or service: those who are able and willing to pay the price.

So – who determines prices?

The answer to this question requires a bit of explanation. See – what determines the price of a good or service is the interaction between supply and demand.

So – let’s first have a look at those two words: Supply and Demand.

The Law of Supply states that: if nothing else changes, suppliers will supply more goods and services to the market when these goods and services have higher prices, and will supply less if these goods and services have lower prices. The underlying ‘assumption’ here is that: if goods or services have higher prices, more profit can be made from them. This attracts people to want to sell/supply these products.

The Law of Demand states that: if nothing else changes, people will buy more of a product when the price of the product decreases, and will buy less of the product when the price of the product increases. You can cross-reference this with your own experience – you may like an expensive brand of clothes, but because of the high price, you may not buy as many as you’d like. Whereas, when there are sales and the prices go down, you may be willing and able to buy more items.

So – suppliers will be inclined to make the prices high, so as to make profit. Yet – if they make the price too high, too few people will be willing and able to buy the product – which will lower their profits. So – this is how the interaction between the market-forces of Supply and Demand determine the prices of goods in our economy. I suggest you also read Leila’s blogs to read up on the specifics of how prices are determined, so that you get a more clear understanding of our economy: http://leilaequalmoney.blogspot.com/2012/01/our-economic-system-doomed-to-face.html

Now – it is important to note that Demand only refers to those people are wiling AND ABLE to buy a product. This means: you want it and you can pay for it. This is very important considering the role demand plays within the determination of prices, and thus who gets access to the scarce resources of the Earth. Because – not everyone has the same amount of money. That means – the amount of money you have determines how much you are able to influence the price of a product – and thus, whether or not you’ll be able to afford the product.

The economic system really works like a form of auction. Let’s take a simple example to clarify this: Let’s say there is a car for auction. The bidding starts at $5. At$5, everyone present is willing and able to buy the car – but there is only one car on auction. So, the price goes up. At $5000, there are still a lot of people willing and able to bauctionuy the car, but less than before. The problem is still not solved, because there is only 1 car. So, the price goes up again – and again, and again – until a price is reached that only 1 person is willing and able to pay for the car. The car is then sold to that one person.

Our economy works in the exact same way – except that there are usually more than one item of the good available. Say that there are 50 cars for sale. At a low price, everyone would want the car – there would be too few cars for the amount of people demanding a car. This would cause a shortage in the market. So – what happens is, the price goes up. At a higher price, there may still be many people who are willing and able to buy the car, but less than at the low price. Unfortunately – the amount of cars available is still too little to satisfy this group of demanders. So – the price goes up again, and again, and again – until the amount of people left who are willing and able to pay a certain price – is equal to the amount of cars that are available.

So – what can we learn from this example: that those with more money have a huge advantage over those with less money. The fact that you can only demand a good or service if you’re willing and able to pay for it, means that you have no voice, no way to demand a good if you can’t back it up with money. In economy it is said that who has access to which goods, is determined through money-votes. Well, considering that not everyone has the same amount of money and thus, the same amount of money-votes, we can start asking some serious questions – and really… this is all you need to know about economy to understand that this system is unjustified!

I mean – most countries in the world uphold democratic electoral systems and values: one man, one vote. We wouldn’t think of giving one person 5 votes, another person 1000 votes and another person no vote at all when it comes to politics! Yet – that is exactly how our economy works. For those who live in a democracy – you actually don’t! How can you live in a democracy when the primary system that determines people’s lives doesn’t comply to the basic democratic principles! There is no such thing as a democracy on this planet! It’s a lie! What does it matter if your interests are equally represented on a political level, if they are not equally represented on an economic level – the level that actually matters! I mean – what do you worry most about? Who is the president in your country or the amount of money in your pocket?

If a country were truly governed by democratic principles, then so would the economic system in that country. The only way to do that is through Equal Money. In our current system: 1% holds 99% of the money-votes, while the remaining 99% holds only sorry-ass percent of the money-votes. In an Equal Money system it is simple: 1 man, 1 vote. Badge - 2008 electionIt doesn’t matter where you live, it doesn’t matter where you come from, it doesn’t matter who your parents are: you have an equal vote to everyone else – and in that, you have equal access to everyone else to the goods and services you require.

Be 1 vote for World Equality!

Educate yourself on the Equal Money System proposal at www.equalmoney.org – join us on Facebook: http://www.facebook.com/groups/9203980618/ - and make your vote known!

1 comment:

  1. Cool explanation Maite, thanks - Democracy: demo of crazy

    ReplyDelete