Economy

Gold was thought to be valuable by the ancient Egyptians as it did not decay and because of this it was considered to be immortal and ultimately valuable by societies throughout the world. Our coins and bank notes today are representations of this gold. 

These coins and bank notes are now part of an incredibly clever and successful illusion which is used today in order to keep people working. Money is worthless, merely paper which has been marked by the government indicating that it is worth something when in fact in contemporary society it is simply an ‘I owe you’ and represents only a promise. British notes are inscribed with; ‘I promise to pay the bearer the sum of £10’.

Prior to the 1840s printed money was worth actual gold and governments needed the gold in order to buy or pay for anything, loans were not an option. This led to a destructive recession. Governments were unable to pay wages resulting in thousands of people starving to death. The African/American Gold Rush helped to pump money back into the system and end the starvation however.

In order to prevent anything like this happening again governments decided to simply print more money and circulate it even though they didn’t have the value of what was printed. This essentially led to a build up of debt. It was thought necessary to create this debt however so that people didn’t starve in the short term.

This debt has become so extensive today in England that even our taxes which are supposed to go to government services instead just go towards paying off the interest of government bonds. Government Bonds are again a promise to pay someone however they generate high interest which means the debt will never be paid off, instead just postponed to be paid at a later date.  

Karl Marx widely criticised the economic system used in capitalism predicting it’s penultimate collapse. He viewed it as unstable, a system which doesn’t work and should be changed. For example, if banks decide to stop accepting the government bonds and lose faith that they are ever going to be paid back, the entire system would collapse.

Thomas Malthus proposed something known as ‘the iron law of population.’ This theory suggested that over population would lead to mass consumption and limited production. Therefore he suggested an inevitable breakdown of the economy resulting in famine and a general failure of human wants being fulfilled.

A Keynesian economist would say getting into debt is the best method towards keeping the economy going, although the debts will never be paid off entirely, we should always be able to pay for the stuff we want in the short term. We will never be rich but at least we won’t starve to death. And workers will always be happy because they are always receiving their pay checks.

A classical economist would insist however that these debts need to be paid for one way or another. And a cut in the publics wages are necessary in order to do so.

Money circulates in society because of human wants, not needs. The theory of utilitarianism expresses how people left to their own devices will trade with one another. They will use their skills or assets in order to buy what they want.

How do we associate how much gold labour and objects are worth though?

Utility – utility is the fundamental, measurable, verifiable phenomena, it is the reference point of human wants. The values of objects are generally worked out into labour and part costs. A biro would be worth £1 however a grand piano would b worth £5000. Why is this? Why would the piano be exactly 5000 times more expensive than a biro?

It is how much people are willing to pay for something. In other words, how much time people are willing to work for in order to attain something.