Capital Goods and Services

Production often requires tools and other material resources. These goods are property and are owned by individuals. Organizations are not people and therefore do not own property.

The new money cannot buy goods designated as capital. Some goods obviously are neither capital or luxury exclusively. Some people work with wood making furniture for a hobby, for example. Are their tools capital or luxury? Just as in a baseball game the umpire must call either ball or strike on the pitch in the new money economy the "call" must be made. In the relatively few cases where the decision is difficult it really doesn't matter what the decision is. It really doesn't matter much, therefore, who makes that decision nor what organization, if any, to which they belong. (Personally I would say those wood working tools were capital.)

Those who make capital goods own what they make. If a capital good requires or uses the work of more than one person or the use of other capital goods owned by more than one person then the capital goods belong to the person designated in the agreement between those parties involved. It is no other party's business. The owner(s) can keep the capital goods or give them away. They may give them to whomever they like, whenever they like, however they like. They may trade the capital goods. They just cannot sell the capital goods.

In order for a producer to be paid for the production of the capital goods the capital goods must be used in such a way that other people benefit. That is such that people other than the owner benefits. The greater the payers think the benefit to be, the more money will be credited to the account(s) of the producers, regardless of who owns the capital goods Therefore, owners of capital goods will be motivated to give those goods to individuals who will use them to benefit others. The persons gaining ownership of the capital goods can use them as they see fit. If they use the goods to produce benefit for others then all who helped produce the capital and those who owned the capital at one time before the current owner will get some money as a result. They will be more willing to provide still more capital goods to that individual in the future. Others who own capital will also be more willing to give their goods to those involved since they are getting money. The reputation of all parties involved is their most important business asset. While one's reputation is good it is easy to get capital. Once it is bad it is very difficult to get capital.

Just as a banker loans money on the expectation that the borrower will be able and willing to repay the money with interest, so the owner of capital gives that capital on the expectation that the person receiving it will use it well and gererate money for the previous owner(s).

You will notice that it does not matter whether the owner gives the capital or merely allows someone else to use that capital. The pay for benefits to all parties is the same. The owner retains the right to withdraw permission to use the capital if only allowing its use. But the owner also has to keep track of the capital and find someone else to use it if the previous user stops using it. Therefore, the higher in the distribution chain the goods are and the better reputation the person has who receives the goods the more likely it is that actual ownership will be transferred. Owning capital does one no good if the goods are sitting idle or if one has given use of them to persons who don't use them well.

As with military weapons the producers of capital will want their goods to be flexible, durable, and recyclable: flexible so they will be useable to provide many different benefits; durable so the work done to produce the goods will generate income for a long time; recyclable so the cost to the society of producing the goods will be less and therefore the net benefit greater.

Capital goods, unlike money, can be inherited. They have to belong to someone.

Persons just getting started and persons trying to recover their damaged reputations will have to make do with capital "leftovers" which the owners cannot place more advantageously. By doing good work one can attain a good reputation and gain capital more easily. Those who have a long term reputation for getting a lot of benefit from their capital will tend to attract capital producers eager for them to use their goods. Thus does the free market tend to find the best producers and give them more control of the economic resources without a central controlling organizing agency or power.

Capital services are inherently different than goods. Since services are only potential until actually provided and since they are the actual work of individuals, no individual can control more than their own personal services. Capital services are owned by the person providing them. Several persons who provide capital services may agree to work together to augment the value of their services. But they still own only the services they personally provide. This is why the payers pay individuals and not organizations. Each person's pay is that individual's compensation for services rendered to the society.

Coordination is a capital service. Producers who want to maximize their income will try to coordinate their activities with those of other producers. Anyone who assists that process will be paid for that service. Most of coordination has to do with information gathering, organization, and distribution. Since almost all producers will want to have their activities fit well with the other producers they will want to make available any information they feel is relevant about their own activities. Business secrets will be rare since they will reduce production. By willingly sharing information about their own activities producers improve their chances of success. Since coordination is so important to the productivity, those who are very good at coordinating will earn sizable amounts of money. Once again, the better the reputation of the privider of the coordinating service the more willing producers will be to use that service.

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