Dear Friends,
It seems to me, the human body is not designed, nor is it suitable, for decades of physical toil, that is why people retire in their 50s and 60s. The system where we put aside some of our earnings for retirement is elegant, because it sets up a paradigm where people provide labor to the market system when we are young, and capital when we are too old to work. Those who claim, people will have to work until we are 70 or 80, have no concept of the physical toll of labor, because the have never physically toiled at a job. The system, where we provide labor when we are able and then capital once we have accumulated it, works well with the human body and it’s basic limitations as well as it’s abilities. Once we have moved from providing labor to providing capital, we can pursue new things, like starting a business, personal enrichment or helping with the grand kids. This is just another of the myriad of ways the market system benefits humanity and human beings.
The market system requires two basic inputs to function, labor and capital. When Marx derisively labeled the market system, capitalism, he was pointing to one of the fundamental requirements of the market. Marx considered labor to be the most important input, and that the introduction of capital into the equation rendered all human interaction, including that of the laborer and the manager, into a crass means of exploitation, the cash nexus as he called it. This is why he claimed, when we labor within the market, our work is alienating. What he failed to understand, is that the improvement in the human condition that the market system brought, and brings about, is based on capital funding the new ideas that create the improvement.
The market system allows the efficient transmission of ideas into production, while every other system, including and especially Marxism, discourages it. This transmission of new ideas requires capital, to purchase the means of production, and labor, to provide the production itself. As new ideas are incorporated into the existing system, old less efficient ones are rendered obsolete. This creates a basic instability to any nation that uses the market system, but that instability comes with a wage… an ever increasing standard of living for everyone.
When we are young we are able to labor without damage to our bodies. That is the nature of youth. But as we age, labor becomes more and more dangerous, even as our knowledge of our labor becomes greater. In the most efficient economies, as we become less able to labor and our knowledge about our labor becomes ever greater, we are promoted into management to take advantage of that practical knowledge. This has been undermined by the rise of the New Class, who go directly from school to management bypassing the labor phase. Thus crowding out those with practical knowledge. This means they enter management with very little practical knowledge but a large amount of theoretical knowledge and thus, hubris born of ignorance. Since this paradigm has become entrenched, the market system, which is ever evolving to meet the needs of humanity, has evolved to allow people to retire at earlier ages, even as our life spans get longer.
But our physical limitations remain. This is born out when we see ever more people getting hurt in their labor. The rise of physical therapists is the market system’s reaction to people laboring at older ages. Our bodies only have a few decades of physical labor in them, and then we must move from providing our needs from labor to either management, or by providing capital. Since the market system needs two inputs, labor and capital, both have value and either can be a means of support for people. Those who have labored for decades, and have set aside money for retirement, or where they have taken less in immediate wages in exchange for a defined pension, are able to retire from a labor based sustenance to a capital based one. Those who have been spendthrifts however undermine their own best interests.
Since capital is a basic input into the market it has value and in a functional market is paid commensurately with that value. This is upended when government policies lower the demand for labor, and thus wages, by importing cheap low skilled labor by immigration, making it harder to run a business through regulation, taxing labor, etc… or where national banks change the value equation of capital, through inflation or low returns on equity, caused by market warping policies, like money printing and nationalizing debt. When governments or central banks do this, they make it harder for those who have saved for retirement, to move from providing labor to providing capital. Other ways this paradigm is undermined, is when government’s seize the retirement funds of the people, (like in Argentina or Cyprus), or where the New Class manage companies so there is little return to shareholders, but huge wages paid to upper management. These economy damaging practices create the conditions, where people will have to labor far longer than is optimal for our bodies, and gives the incentive not to save but to spend.
Today we have people in the intelligentsia, (The New Class), who claim our children will have to work until they are ready to die. This is less of a burden for the new class, because they don’t labor, they manage. The human condition is such that, it is in everyone’s best interest to have a system where we labor when it is most efficient and least dangerous, and where we move to providing capital instead of labor, when our bodies become less efficient and more prone to damage. This has the added benefit of freeing up those who are retired to expand their minds, and perhaps provide some of the ideas, ideas that are fundamental to the market system’s growth. The practical knowledge and skills we build up throughout our working careers is excellent fodder for new ideas and new business possibilities. Rejuvenating the market with new ideas that become available, because people can switch from providing labor to providing capital, frees us up to pursue new ideas to the market, creating a rising standard of living. Unless the system is warped by our own leaders that is…
Sincerely,
John Pepin
