Is there a relationship between profit and unemployment? There is enough evidence that would suggest yes.
In the past when trade was done via bartering, the village concept was such that persons in a village produced in so far possible what they needed first for themselves and any excess above this production would be traded with another village or villages. Most persons fail to see the importance and benefits of this village concept. One of the core benefits among many who lived in a village concept is that the interdependency was and had to be strong among the people for them to survive. Interdependency creates bonding and the essence of the word community (together among each other) is maintained. As persons continue working from day to day they become more knowledgeable and they learn more creative and efficient ways to production. These efficiencies help create an excess to what the village can consume and thus trading with other villages would increase. Trading with other villages also created markets and also interdependencies among the various villagers. The key in all of this however is that productive trading based on real human needs was central. Employment was also never an issue because the production, storing, and distribution of the basic needs are a constant ongoing affair. And since most basic items in the past perished easily, hoarding made very little sense.
All consumable goods have their original source in the earth. From the earth matter is moved by mining, by agriculture, or by some other process into some form of manufacture. From the factory the finished product moves to the wholesaler, thence to the retailer, and finally to the consumer. Goods move in one direction, from the earth to the consumer and back to the earth again; money moves from the consumer to the retailer, the wholesaler, the manufacturer, and finally the landowner. But this monetary stream is being tapped at each section of its length, and being fed back as wages, rent, interest, profits, etc., and becomes the income of various individuals, who are themselves consumers. By the time this monetary stream reaches the ultimate landowner, who is the last person in the physical flow line, every cent that was originally paid to the retailer has been in this manner accounted for. Thus, if a million dollars passes from the consumer to the retailer, a million dollars worth of goods will be produced and consumed, and this same million dollars in the form of wages and salaries, rent, interest, profits, royalties, etc., will be paid out to individuals who are consumers, and will accordingly increase their incomes by the amount of one million dollars. Thus the sale of one million dollars worth of goods in this manner ultimately should provide consumers with one million dollars with which to buy another million dollars worth of goods. That is, provided that none of the million dollars originally spent is retained (savings, profit retaining or unbalanced redistribution) in any manner. Let us suppose, however, that somewhere along the route a part of this money passes into the hands of corporations, and that these corporations are making a profit, only part of which they payout as dividends, the remainder being held as corporation surplus. If, in this manner, out of each million dollars paid in by the consumer, 100,000 dollars was held out by the corporation as surplus, then only 900,000 dollars would be returned to the consumer. Consequently, the second time around, the consumer would be able to buy only nine-tenths as much goods as he bought the first time (assuming no credit are bank loans are taking). Industrial operations would, accordingly, only be nine-tenths as great. This process would continue with industry shutting down one-tenth of its previous production for each time the money made its complete circuit until ultimately complete industrial paralysis would result. This, of course, assumes that the money which was saved by corporations was locked up in a vault or hoarded. The same result would occur if individuals, thinking that they might need some money for illness or old age, instead of spending all they received, should decide to lock a part of it up and keep it. To the extent that this was done, goods would not be bought, and industry would not operate. Thus we come to the conclusion that if prices remain the same, and if either corporations or individuals save by withholding from circulation a part of the money which they receive, the ultimate result will be industrial paralysis. This of course assumes no buying on credit or consumer loans. - This paragraph was adapted from the Technocracy Study Course free download booklet, pages 138 to 141, technatedesign-tnat.blogspot.com -
Emilio Kalmera
Nothing exists in a vacuum, but this article tends towards saying that saving is bad. For the same token these villages salted fish, pickled their vegetables and stored their grain. Saving is just as much a part of the general economy as spending and borrowing. To say that saving will result in industrial paralysis does not do the whole picture justice. Money, historically precious metals, was an excellent way to store value. Technically if it is stored, those that store it can be incentivized to use/borrow it out. In today's specialized economy i.e. (central)banks and insurance companies are the vehicles that can be used to put money back into circulation while compensating the owner/saver. Post WW2 money was linked to the US$ via the bretton woods accord. At That time the dollar was linked to gold. Nixon pit a stop to that and ALL money became fiat when dollars could no longer be redeemed for gold.Now we need to trust that it is worth what it is said to be and will remain so in the future. Money is now something that can be created at will, by turning on a printing press. Governments allowed themselves to monetize debt and borrow future production. Defecits ( and governments) increased exponentially and the number 1 tool governments have for paying off these debts is inflation. They erode the value of money and create more so that it hurts less when nominal amounts need to be paid back. At the core inflation is another tax imposed by those that "own " our money supply. Our guilder bills, that are our official currence belong to a country that no longer exists. Why do we still use them? because government says we can/must? The only reason we use them is because they are still accepted as legal tender. People that take them as payment still have faith that they can use them for payment. Is this wise? Who knows? I certainly don't. In the end it will depend on monetary policy and the balance of payments. If productivity is high excess value can be stored after all the bills are paid. If productivity is low, the guilder will bleed value to the point where nobody wants them and we devaluate. We have a guilder that works in our and Curacao's economy. If these 2 economies do not produce value nothing can save the guilder. The private sector is not allowed to opeate at a defecit. the public sector has and does. I will argue that saving does not lead to industrial paralysis. Defecit spending and bad tax systems by government do!