Actual Capital versus non-Capital Wealth

What is Actual Capital versus not

Key to successful taxation and public policy is clear crisp language and definitions.

Actual Capital as defined by Adam Smith or Henry George, was a very different concept from what is called "capitalism" currently. Thomas Piketty in his book on capital defined capital as basically all wealth. But according to Henry George, that is not actual capital unless it is used as capital.

WEALTH is:

“All material things produced by labor for the satisfaction of human desires and having exchange value.”

This means that wealth must have all of these characteristics:

• Wealth is material. Human qualities such as skill and mental acumen are not material, hence cannot be classified as wealth.
• Wealth is produced by labor. Land possesses all the essentials of wealth but one — it is not a product of labor, therefore it is not wealth.
• Wealth is capable of satisfying human desire. Money is not wealth; it is a medium of exchange whereby wealth can be acquired. Nor are shares of stock, bonds or other securities classifiable as wealth. They are but the evidences of ownership. None of these satisfy desire directly; if they are destroyed, the sum total of wealth is not decreased.
• Wealth has exchange value.
Source: http://www.henrygeorge.org/def2.htm

Capital

Of course most financial mavens and economists don't use this narrow definition. Thus actual capital is:

Actual Capital is that portion of produced Wealth used in the process of production or in the course of exchange.

Capital is a factor in production as is:

• Labor
• Land
• Raw Materials, Georgists include "Raw Materials" under their definition of land, which causes more confusion than helpful but helps them narrow their focus on taxing "land" without modernizing it to account for all sources of economic rent.

Production of things and services are what drive the economy and keep all of us clothed, housed and well fed, when things are well run and regulated.

Actual capital deserves protection. Actual wage compensation the same. Wealth from land rents, inherited property rents, etc... should not be protected. Wages include things like savings, retirements and debt acquired to sustain life from a persons wages. But if a person deserves all the products of his own labor and inspiration. His Children do not. That is why I consider myself a heretical Georgist so I don't have to argue this point.

For More Detail:

Georgist Defintions of Labor, Capital Wealth

THE TYRANNY OF WORDS

Often the corruption of society starts with the corruption of language and George Orwell tried to explain in his writings, including "1984." The sophism of the "tyranny of words" is corrupting and leads to dysfunctional economic policy.

The retired VP of Dun and Bradstreet, Roy A. Foulke, in 1949 wrote an article in the New York Daily news called the "Tyranny of Words" about how modern business and economists. It explains the sophism of modern business language. My Friend Rick DiMar reproduced the whole of this on his facebook page.

Adam Smith On Production

“In WEALTH OF NATIONS, Adam Smith pointed out, over and over again,”

“that all production is divided into three streams:

1. one in the form of wages to employees,
2. one in the form of rent to landowners,
3. and one in the form of PROFITS to suppliers of capital.” [Tyranny of Words]

He explains:

“These terms, as used by Adam Smith, carry connotations that are somewhat different from their meaning in our present-day industrial life. ” [Tyranny of Words]

1. “In wages to employees is included payments to officers of corporations, to proprietors and to partners for their services, as well at to labor.” [Tyranny of Words]
2. “The payment of rent represents the return to the landowner on the value of the land in its natural state without improvements of any kind, and not the payment of a monthly or yearly sum, which today has generally come to include two payments, economic rent on the value of land, and a return on capital (i.e., the improvement)” [Tyranny of Words]
3. “Profit, according to Adam Smith, is the return to capital after the payment of all wages and the rent of the land in its natural state has been deducted from production.” [Tyranny of Words]

And then Smith carefully observed:

“‘When those three different sorts of revenue belong to three different persons, they are readily distinguished; but when they belong to the same they are sometimes confounded with one another, at least in common language.’” [Tyranny of Words]

Of course that meaning got confused, on purpose sometimes. So,

“Because of the confusion in the term ‘profit’ as used by Smith in 1776 as the return to capital, and by the general public as the excess of income over cost, Henry George in 1879 decided to substitute the word ‘interest’ in place of the word ‘profit’ as used by Smith to represent return on capital.” [Tyranny of Words]

Which of course, was in turn deliberately obfuscated as the rise of modern financial institutions pushed "interest" as a main goal:

“It is possible that substitution in terms—though carefully explained with great clarity—has been the source of steadily increasing confusion in the mind of the pragmatic businessman.” [Tyranny of Words]

So the author calls it:

The ACCOUNTING PROFIT of business, representing the excess of income over cost . . .” [Tyranny of Words]

Therefore

“has nothing to do with economics.” [Tyranny of Words]

By which he means that business profits are not the same thing as "the profit to investors" as a person. A corporation is an institution, not a person. At least til clever lawyers got involved:

“Few business corporations were in existence in 1879.” [Tyranny of Words]

He notes:

“Not until 1886 did the Supreme Court decide that a corporation was a person in the meaning of the ‘due process’ clause of the federal Constitution. That decision gave an element of unprecedented security to the existence of the large corporation, which was just becoming a dynamic power in our economic life.” [Tyranny of Words]

Sources and Citations

Citations (note you may need a facebook account to see it):

Doc #145: Accounting (unearned) profit vs. economic (earned) profit

https://www.facebook.com/notes/common-wealth-tax/doc-145-accounting-unearned-profit-vs-economic-earned-profit/1123980124381796/

http://www.henrygeorge.org/def2.htm

Further Reading

https://holtesthoughts.blogspot.com/2015/09/georgist-definitions-of-labor-capital.html

Disambiguating Capital from Simple Wealth

Piketty, Capital Versus Unearned wealth

The Trouble with Capitalism

Lincoln the Marxist

Confusing Capital with Rental Opportunities

I don't know what to do

I don't know what to do.

If I did what would it mean to you?

Last Night I dreamed of a university

Where Mozart slept and Tchaikovsky too

There was a garden across the street

With a low symbolic wall, studded with gates.

I dreamed that too.

I watched the doves fly over the wall.

 

I don't know what to do.

All I can see is a better world right next door.

Where Narcissists are treated.

And not allowed in office.

Pierce the veil,

and people are good too.

Pierce the veil another way,

And previously good people do evil

How do we get there?

I don't know what to do.

 

We can do better

Why don't we?

₽rivateering and Smuggling

Elements of Privateering

Original Definition:

Legalized theft and warfare against commerce on the high seas.

Modern Defintion

Usurpation of Government or public functions for private profit

₽rivateers engage in the following:

Filibustering
Private warfare against unorganized places or countries the country the privateer is at war with.
Smuggling
Usually private sea captains would do legal trade with whoever they could. But often privateers would engage in illegal smuggling if it made them money.
Slave Trade
Privateers often combined private warfare elements with smuggling by grabbing people for sale like they were any other good for sale. The Navies would even recruit their own sailors by grabbing them from ports and "pressing them" to service. Privateer sailors were often little better than slaves.
Piracy
One reason that the saying "Dead men Tell no tales" is that if a privateer took a prize of a ship not at war, if nobody survived to rat them out, and no evidence could be found of a crime, the now pirate could continue to pretend to be a privateer. This led to some confusion among pirate captains. The famous Captain Kidd of the 1700s went to England to argue his case that he had been a legal privateer, not a pirate. He was hung as a pirate. Many pirate/privateers got away with that.
Private government and colonization.
Private government was always an element in privateering. King James granted them the East India Company charter in 1600. This was the real beginning of the Tory Party and of the movement to modern Privateering. But when Christopher Columbus got his permission to sail west, it was with the aim of establishing private government in the lands he discovered.

Privateering And Large Scale Swindles

The theme of piracy and privateering to describe our current economic system, much of our current political system, and the ideology of our modern Republican Business classes. Not that Democrats aren't sometimes pirates and privateers. It is just not their stated ideology.

Privateering is at the heart of the worst of modern capitalism; the "privateering spirit. As I've noticed before privateering is defined as using private enterprises to accomplish missions assigned to government. Initially the term was window dressing for legal piracy. As I've noted before both the British Navy and the USA navy emerged from the private navies of legal pirates like Sir Francis Drake. The successful descendants of pirates became the lords and barons of British Society, and more importantly of British foreign trade, adventurism and the admirals of the fleet.

For more Information on this history:

Origins of the East India Company

Pirate Contracts

The heart of the matter is that modern business relies on contractual relationships, and ₽rivateering relies on the inequity of contracts that involve power relationships. The difference between a pirate and a privateer is that privateers are bound by contracts that grant them license, and use those contracts to abuse law and power.

To illustrate, Pirates, were simply outlaws. For that reason pirate ships often were more democratic and the officers and crew more free, aboard ship, than the crews of privateers, who were often little more than slaves to ambitious, greedy power hungry captains. However, the ideal privateer operated his ship as if it were a pirate ship and treated their crew with respect. Thus the lines between pirate and privateer were often blurred. On land they had to follow rules. At sea "dead men tell no tales" was often practiced to avoid getting caught by officials while robbing and stealing at sea while ostensibly doing legitimate business. The result was the legal pirates were often hanging known pirates. Privateers have always tended to be pirates. But pirates rarely get to be privateers unless they can manage to avoid being caught.

Modern Privateers

Modern privateers don't need eye patches, peg legs. They wear Armani suits and carry briefcases. They enslave through contracts, loans, lawsuits and hostile takeovers. No need for cannon. They frequently own (or are) Judges and law enforcement. But when the cops are the criminals, who will enforce the law? Piracy led to privateering and privateering enabled:

• Private Warfare, Filibustering, legalized robbery and looting.
• Conquest and colonization
• Vast estates for the successful Pirates
• Layers of Oppression

Power establishes Inequitable relationships established through abusive contracts and debt. The robbed can be robbed over and over again. Privateers would do anything for trade goods and property:

• Smuggling to acquire trade goods
• Monopoly over vital properties
• Rent from that property

So the irony of modern privateers is that often they are playing all sides. Robbing people, and arresting robbers. Smuggling and arresting smugglers. Bribing people and taking Bribes. Piracy attracts con artists and grifters. A Grifter is a con artist who has a plan B for avoiding getting caught. Grift + Drift to new marks. Privateering only works when the pirates can attract a crew and governments can hire them. Since it is based on looting, it hollows out any actual capital that might have been there.

Modern pirates operate through the use of contracts, courts and information and power disparity. This post is about their historic involvement in drug smuggling.

Captain America A Nazi?

Things have been in the twilight zone lately. Captain America a member of Hydra? Movies like the Man in the High Tower, where the Nazis rule America? Russians in the white house?

And a fracking Russian Agent as President of the USA!
FRACK!

Research & Journalism

This article gives wonderful insight to the importance of "reading everything" when researching a person & seeking evidence or understanding about a person. In this article he talks about Lyndon Baines Johnson origins, fictions & deeds as a politician.
https://www.newyorker.com/magazine/2019/01/28/the-secrets-of-lyndon-johnsons-archives

Selling the Country for Parts

The Russian Mob merges with the USA One

Last year I wrote about the relationship between what our Republican operatives did to the Russians after the collapse of the soviet Union and how that paved the way for them to infiltrate our own government. I titled the post.

“We gave the Russians Oligarchy & now they are giving back"

Well that gift is the gift that keeps giving. There is abundant evidence now that that is exactly what Trump, combined with Trumpist Repubican Grifters, operatives and ₽rivateers, Russian and American, seem to be trying to do.

Experts on Authoritarianism, the mob, like Malcolm Nance or Sarah Kenzior
(and amateurs like me) are pretty sure that this
current shutdown is no accident!

Forget the Wall. Trump is the National Security Crisis

1. Trump's Shutdown is a “a power-grab as a policy proposal”
2. “insert[s] misleading statistics, grisly depictions of violence”
3. Feigns a “fatuous humanitarian framework”
4. Overstates grossly “the threat of Central American migrants”
5. Deflects from the reckless, violent & criminal treatment of refugees
6. and their children

The unsaid words of every Donald Trump demand are the most important,
for they never change: “Or else.”

“Forget the Wall Trump is the National Security Crisis”

Trump is following the rules and protocols of countless dictators to get into power and expand that power until they had total control of the government and could use that power for themselves with impunity. Trump's shutdown is not about the wall now, just as his pre-campaign propaganda strategy was not about Obama's birth certificate. It is the second act in a plot to destroy democracy. His shutdown is part of a campaign of extortion. She writes about Trump's speech Sunday:

“the speech was akin to a hostage video, and American Viewers were his captive audience.” [Sarah Kendzior]

We watch in horror as Trump tries to gin up a “national emergency” and indoctrinate people with sufficient fear and hatred that he can end Democracy in this country. He's also using Trump to destroy NATO, help destroy the European Union, and undermine the entire West, but that is for another post.

“Trump has taunted us with talk of declaring a “national emergency” – an act which gives him the power to do things like kill the internet, freeze bank accounts, and turn military troops into a domestic police force. We watched because Mr. Trump has long applauded death through his praise of dictators and criminals. We watched because the path to American autocracy was laid out upon his election, and we wanted to know which victims were next.” [Sarah Kendzior]

The playbook demands that he “ceaselessly goad” (indoctrinate) people to live in his “noxious fantasy world” with the help of a feckless and enabling media. If we don't stop him and those who actually like his authoritarian, and kleptocratic agenda –soon– we will soon be beyond the point where we can.

I have a lot more to say on this. But I think this is enough for this post.

On this day one has to think of Martin Luther King:

“We gave the Russians Oligarchy & now they are giving back"

http://holtesthoughts.blogspot.com/2017/03/we-gave-russians-oligarchs-now-they-are.html?m=0

Forget the Wall. Trump is the National Security Crisis:

https://www.theglobeandmail.com/opinion/article-forget-the-wall-trump-is-the-national-security-crisis/

Malcolm Nance The Plot to Destroy America: How Putin and his Spies are Undermining America, and dismantling the West

With Trump's Help

https://www.amazon.com/Plot-Destroy-Democracy-Undermining-Dismantling/dp/0316484814

Dug in Dugin Traditionalism as Evangelical Heresy

Duginism is Alexander Dugin & Putin's World Wide Fascist Movement

Duginism is an ideology created by Alexander Dugin, in tandem with the Russian State. It is obviously meant to serve as both a domestic and an export ideology. It replaces the Leninist ideology, which at least on its face was intended to be modernist and pro science and technology, with the older "conservative", "nationalist" and "traditionalist" & "Eurasionist" ideologies put on the backburner. Dugin, Putin and the post "Glasnost" Russians have dusted off Russian Chauvinism and tried to fashion it into something new. They may call it "fourth political theory" but it is just fascism rebranded. Fascism was always about manipulating people using ideology, patriotism and emotion. Duginism is just a modern variant.