Capitalism

 

Mary Poppins - Fidelity Fiduciary Bank

You can purchase first and second trust deeds
Think of the foreclosures!
Bonds, chattels, dividends, shares
Bankruptcies, debtor sales, opportunities
All manner of private enterprise

Are the interests of investors the interests of society?

In economics, a production equation that determines the quantity of goods from a seller/producer is often given as

quantity=function(capital, labor). 

For example, if a child sells lemonade from a stand, the production function might include the cost of pitcher, the cost of the lemons, and the cost of the labor.  The lemons are the raw materials in making lemonade and do vary with the amount sold, but the pitcher is only purchased once.  Thus capital is the investment in the pitcher, which is a one-time cost, and costs of the lemons, which is a variable cost . The investment in the pitcher should have a return on investment, ROI, but the lemons don’t require the same return on investment, (e.g.  if you sell less, buy fewer lemons). Additionally economists classify goods as private (exclusive and priced) and common/public (exclusive and non-priced) goods.  You can’t make lemonade without water, a common good. Therefore the expanded production function should be

quantity= function(investment, private goods, public goods, labor).

Producers/sellers want to maximize the amount that they produce,  since revenue is quantity sold times price, and thus they will receive  more revenue.  If they reduce the unit cost for labor, then then can produce more goods. But slavery is illegal and there are minimum wage, maximum hours and child labor laws.  If the labor is not supplied by the producer, then society has an interest in requiring that there is a reasonable cost for that labor, to protect itself, other producers, and those laborers.  Similarly the cost of using common goods are regulated/priced by society to ensure that these common goods are used responsibly.  Producers should not lower the price of private goods. There are anti-trust and anti-competitive laws to prevent producers from lowering the price of private goods for only themselves.  If there were no controls on private goods, public goods, and/or labor, or these controls are violated, then the Return On Investment, ROI, could be higher.

But this is only from the perspective of the investors.  Society can, and often does, ensure a reasonable ROI, e.g. for regulated utilities, but it also can not ignore protecting private goods, public/common goods, and labor.  Protecting only the interests of investors is not in society’s interest. Supply side stimulus is NOT ensuing a higher ROI on investment, e.g. by reducing taxes on investment.  That is only an investment stimulus and ignores the other components of supply. Capitalism is support for free markets.  Those free markets do NOT consist only of investors.