Capital has always been more efficient
Since time immemorial, capital has always tried to streamline, automate and in every way reduce the cost of production. To some extent, that's good. It can free up resources for new production or research. But it has gone too far. Due to the declining proportion of salaries in relation to profits and compensation for the most powerful officials in the Western world since the 80s, we get a constantly diminishing production.
Work and consumption are the cornerstones of the social economy
In all societies, work and consumption are two cornerstones that are closely intertwined. The basis of all economics is each according to ability, each according to need. It is the people's need for school, care, care, food, defence, culture, entertainment, physical activity, police, railways, roads, housing, workplaces that give us the reason to produce. Capital tries to trick us into thinking that we produce to make the rich richer. But the basis is that we produce for the people's basic needs. Money has no value in itself, but gets its value from being accepted symbols with which we can exchange cooperation and resources with each other. Money acquires its value if it sustains the work and consumption/need satisfaction of the whole people. Low and middle income earners are the majority in society. When they can afford to produce and consume, this creates large profits for the companies and tax revenue for the state and municipalities.
Robotization can make it happen
Robotization is in full swing and even status professions such as librarians, photo models, accountants and doctors are under threat. Half of today's jobs will disappear. All in the pursuit of reducing the cost of production. But what capitalists forget is that robots can never be better than humans at consuming. The point of robots is precisely that they don't need a salary because they don't need to consume. And capitalists can't consume everything themselves, can they? A capitalist might want to get away with 100 cars, but does he really want a million cars for himself? There needs to be a rapid transition to a job guarantee with conditions in accordance with collective agreements and ensuring that states drive innovation and society's economy with government deficits and taxes for the richest. Taxes on income from low- and middle-income earners may disappear when such jobs are perhaps robotized. Then, high taxes on low- and middle-income earners are an impediment to production.
Financialization threatens production
Financialization has led to an increasingly large part of the profits of production not going to the wages and welfare of low and middle income earners, but instead ending up in the pockets of big capital and the highest paid officials and managers. These wealthy individuals have become masters at increasing their profits and assets, but they cannot consume everything they earn. Instead, they save and invest their money in various assets.
The value of savings
Saving in bank accounts is a common strategy. Savings are partly inactive money that does not keep production and consumption going. Part of the value of these savings is that they earn interest and multiply by being lent out again. When people can no longer take out new loans or when they start paying off their existing loans, the amount of money in society decreases . This can lead to a halt in production and a financial crisis.
Real estate value increase speculation
Another popular investment for the wealthy is real estate. But this is a passive form of investment, and the profit that comes from the properties increasing in value is often financed by ever-increasing loans. This can lead to more financial crises, as the increasing value of the properties is not linked to increased production. It is instead a form of inflation where the value of assets increases without the productive value increasing in the same way.
Shares often do not provide the conditions for production
Investing in stocks is another common strategy for the wealthy. Shares represent ownership in companies and expect a return from the company's output. Unfortunately, share ownership rarely provides the conditions for production to grow. In a company launch or an initial share issue, money can go to the company, but usually it ends up in the company owner's own pockets and not in the company's production capacity. Most share sales only involve changes of ownership where the requirements for returns are transferred between different owners. This does not mean that the company receives additional resources for production.
To create a stable and sustainable economy
To create a stable and sustainable economy, it is important to ensure that work and consumption remain in balance. This means ensuring that production gains do not only benefit the already wealthy, but also benefit low and middle income earners and are invested in increased production. An economy based on passive investment and speculation is vulnerable to crashes and financial crises. To avoid this, we need to re-evaluate how we allocate capital and focus on creating real economic security and well-being for all. Only then can we ensure that work and consumption remain equally necessary and keep society in balance.
Government deficits and higher taxes on the richest are also needed
In fact, many states can create their own currency and are not constrained in the same way as households. By using government money creation, the government can invest in important sectors such as infrastructure, healthcare, and education, thereby stimulating economic growth and creating jobs.
The state should not only be a passive regulator of the economy, but also an active entrepreneur. By investing in business and technology-oriented research and development, the state can contribute to innovation and economic growth. However, this type of investment requires financing, and this is where state money creation and higher taxes for the richest come into play.