How should it be? It is neither a reasoning nor a reasonable creature.
The Market Economy.
Supply and Demand.
The so-called "Free" Market Economy.
All human inventions. All requiring human intervention. All, indeed, are manipulated by human intervention, seen or unseen.
Privately owned means of production. Nice terminology but, where is the human element, the working man? Or the woman?
Is this by the cursed hand of that rogue, Adam Smith:
By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
http://en.wikipedia.org/...
Back in June of last year, June 8, 2007, to be precise:
Homeowners unable to pay monthly mortgage bills and facing foreclosure shouldn't count on help from Washington this year.
Regulators and lawmakers seem to be taking a wait-and-see approach as they confront the fallout from several years of lenders making too many home loans to people with inadequate credit.
It would be a mistake to overreact to a market that is already showing signs of self-correcting at a time when little evidence has emerged that the broader economy is at risk, according to regulators and some lawmakers. They also note that consumer spending remains solid, the nation's jobless rate is still low, and stock indexes have hit record highs in reaction to strong corporate profits.
http://www.boston.com/...
Homeowners. Working people, I presume. No damned help for them, by God! We'll use that "self-correcting market" excuse.
The magical market will correct itself, that "invisible hand" thing, maybe?
The damned metaphor of "the invisible hand." The metaphorical "HE"!
Who the hell is he?
Oh, the individual laborer? Interested in his (or her) individual gain?
every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain
Well, by Jove! It seems to me that Mr. Smith bases an economy on the wishes and desires and the gains of the laboring man (or woman).
The economy? Largely the same as the market? Based on the laboring person?
But, what of capital?
What is capital? Value? Valuation? A system of valuation?
Wikipedia offers a definition:
In economics, capital or capital goods or real capital refers to items of extensive value. The term can also be applied to the amount of wealth a person controls or is capable of controlling.
Capital goods may be acquired with money or financial capital. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business, sometimes referred to as Cash flow.
http://en.wikipedia.org/...
This definition I do not largely like. Extensive value! What the hell is that? Or the amount of an individual wealth. Or the wealth (credit) that an individual may control.
Capital goods? Is that the same as plain old goods?
Financial wealth? As it affects business, starting, maintaining, etc.? To be also known as "cash flow"?
But, in the midst of all this mumbojumbo, where the hell is the laboring person? How did that individual get lost in the flow of words (and invisible numbers and statistics) about wealth, cash flow, etc.?
More recently, (in the last 50 years, maybe?) a new term, "human capital," has been floated around.
Good old Wikipedia offers up:
Human capital refers to the stock of skills and knowledge embodied in the ability to perform labor so as to produce economic value. Many early economic theories refer to it simply as labor, one of three factors of production, and consider it to be a fungible resource -- homogeneous and easily interchangeable. Other conceptions of labor dispense with these assumptions.
http://en.wikipedia.org/...
And goes on to refer to good old Adam Smith:
Adam Smith defined four types of fixed capital (which is characterized as that which affords a revenue or profit without circulating or changing masters). The four types were: 1) useful machines, instruments of the trade; 2) buildings as the means of procuring revenue; 3) improvements of land and 4) human capital.
Fixed capital: four categories, the last of which is human capital, your basic individual laborer, or a collective of said individuals, whatever.
Hold on, Nellie! You've got your "useful machines." How do these dandy little things come about? Your human capital, that's how!
Then, your buildings, structures, etc. How do these items come about? Again, human capital.
Improvements of land? I've been around a bit of land and it may self-improve, but certainly not to my interest, or human interest, unless you love poison ivy, or just looking at a bunch of overgrowth or fighting through it and being devoured by mosquitoes or a bear or two. Lions and tigers in other regions. Your basic land is not always a friendly place.
But, what makes land pretty much people friendly? Once again, your human capital.
So, why is human capital this separate entity, separate from all your other capitals, your wealth, your bank accounts, your credit rating, your markets, etc., ad infinitum ... ?
Human capital. The font of wealth and goodness and stuff, pure simple stuff. The pickle in my sammich, the radish decorating my salad, the button on my shirt, all the products of human capital.
The basis, the foundation, of our wealth, our economy, our markets, I say!
This foundation has not been well-treated as of late. Millionaires and billionaires, people who do not have to work for a living, flourish. Other folks do not. The millionaires and billionaires are the frothy top of the pile, not the solid underpinning. So, why are we being asked to toss gold to the froth, not to the foundation of our economic existence?
And what of this TARP that the Treasury, aka Hank Paulson, wishes to throw over the mess?
Troubled Asset Relief Program (TARP)
Assets. Lenders. Lines of credit. Illiquid assets. Financial institutions. Fannie Mae and Freddie Mac. AIG. Lehman Brothers. Money and capital flow.
OK, where the Working Sot Relief Program? The foundation, not the froth. Whither the aid there?
Why, bless me! The TARP is just another stinking shroud of mold! To throw over the wounded bod of your common ordinary working sot.
So, how will this economy function if its engine, the working person, isn't given a hand?
The economy, the market, fueled by the spending of the working person who has capital, that would be cash flow, the result of decent income, decent wages, something called a living wage, the person who buys stuff, who consumes, who drives the market, the economy.
A pay raise. An increase in minimum raise. By five bucks an hour? Leniency on mortgage defaults for the moment, until the working capital of the working person corrects itself, a correction that is long overdue. Another thing long overdue: universal, affordable health care.