Money is a means of distribution.
The economy is comprised of three phases: production, distribution, and consumption.
Produced goods are meaningless if they are not distributed to consumers.
The economy needs distribution. And the economic system is determined by how the produced goods are fairly distributed.
However, only the production phase attracts attention in the economy, and the distribution phase is often neglected.
Distribution came about as a result of the separation of production and consumption. Markets were created through this separation of production and consumption. And that was the beginning of a social division of labor.
Many people have the mistaken belief that distribution takes place in the market. But, distribution is actually a two-stage process in which money is systematically allocated based on certain criteria in the first stage and then the required goods are purchased using the money that was allocated in the next stage, so what is most important and substantial to the distribution conducted is the process of allocating money in the first stage.
Money is a means of distribution.
Revenues and expenses are the reality of distribution. Profits are an indicator. This profit indicator is a variance account.
The market economy has an economic system that is centered on profits.
The largest issue in the developed economies of today is the decline in profitability.
The roles of revenues and expenses were forgotten in the pursuit of profits. This resulted in a loss of the function of distribution.
The manufacturing sector was weakened in part because the production sector lost the right to set prices. When prices can no longer be maintained, the only way to secure profits is by reducing costs and by selling in volume. Fixed costs are an important part of reducing costs. And labor costs are the most important target when aiming to reduce fixed costs. The reason for this is that the depreciation cost occurring from capital investment is fixed when the investment made.
In the past, the production sector had the means to maintain prices by selling at fixed prices. However, prices were destroyed in the name of deregulation and free competition, and the production sector lost the right to set prices. In order to maintain profits amid the widespread plummeting of prices, full-fledged reductions in cost were required. During the cost-cutting process, the portion trimmed involved losses to people, which were further incurred by the push to automation. The result is that humans were excluded from the production sector, and this trend has eventually extended to the distribution sector. For today's intelligent people, the focus is customer-first, immediacy, cheapness, and selling at bargain prices. For them, cost is only something that is thought to be bad. And this has resulted in the mechanism for distributing money becoming dysfunctional.
The pitfall of our Internet society is that by directly linking production and consumption the functions of distribution are becoming ineffective.
While there are those who would portray an Internet society in which humans are not involved at production sites in rosy, glowing terms, how would they propose to distribute money to people? It seems that at the root of this are mistaken values that labor is something hard or painful to do. It is hard work that makes labor painful, and it is right to free people from having to do hard work, but if you deny working and work itself, there is no place left for you to be. Automated shopping districts are surrounded by people without jobs. And, many IT companies looking for an IPO or M&A would like such an economic system. Those companies are receiving large capital gains despite having deficits in their core business. Moreover, many IT companies provide low wages and have poor retention rates.
And this could likely also restore the composition of capitalists and workers.
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