Home | FAQ | Thesis | Diary | Projects | Resume | Todo | Index |

Related: _FAQ, imputation,

Profit measures property misallocation.

The purpose of property is the product.

When the consumers of outputs are owners of inputs, the product is not sold, and so price and costs are the same and profit is undefined.

A promise to work in the future is another kind of investment.

When workers commit to work for others within a Cross-Crowd organization, those workers receive a bundle of property and promises we call the IOTA.

Profit is separated from wages as the number of owners per physical source increases.  Workers are then hired by the collecitve owners explicitly instead of the labor being 'assumed' by some of the owners who may otherwise overpay themselves.

Consumers already pay all Costs (including Wages) AND they are paying the Price above Costs which the Owners title "Profit".  Consumers pay more than Cost when they don't control Sources because they cannot "go around" the owners unless they were to buy some of their own Physical Sources and start a fully separate corporation.  But the goal of such a venture would most likely be the same as the business it was meant to out-compete: to keep price above cost.

When a consumer owns the Physical Sources required for the production of the objects he uses, he might pay other Workers to change the inputs into the outputs while he works at his own specialty, but that Wage would be a Cost of production.

Consumers who own Physical Sources can't pay profit unless they were to pay it to themselves as an investment toward future production.

Owners separate Wages from Profit for a Physical Source when they allow all possible Workers to compete for those jobs - with the ideal candidate having the highest skill/wage ratio but usually with a skill level minimum and a wage maximum.

Workers are also Consumers.

Workers needs food, water, shelter, clothing, sanitation, transportation, education, etc. and expect other people to apply their own skills so he can buy lunch after trading his labor.

But there are barriers to Trade Freedom.  I think of this as a matter of resource allocation.  Humans are mostly innocent because of ignorance.

It is a technical 'performance' issue related to the mis-distribution of Property Ownership that results in a very inefficient system with larger Owners clearly working against the rest of society only because we misunderstand the meaning of profit.

Typical corporations have incentive to stop real progress and permanent solutions because profit requires consumers NOT have control of the physical sources of production.

So "The Economy" has for-profit corporations in a strange position where they FAIL (by definition) when a consumer can get product "At Cost" because profit is nothing more than keeping Price above Cost.

Profit *REQUIRES* the object consumer be dependent upon the physical source owners, and may be minimized by treating it as an investment from the consumer who paid it.  This distributes control and independence (freedom).


Profit is the difference between consumer_price and owner_costs.  Why would anyone seeking to solve the economic troubles we face want to keep price above cost?  Must we perpetuate poverty for most to insure profit for the few?

If everyone in world had "at cost" access to bread, would you say bread has no value?  I'll bet the starving Haitians wouldn't agree.  Isn't "use value" worth considering?

Of course things lose "exchange value" as we approach abundance, but that only proves that profit is an inverse measure of development.

We don't NEED to keep price above cost when the users and the owners are the same set.  Wage is also a cost, and work is paid before profit is even calculated.

Users are willing to invest in "for product" production for the purpose of "use value" alone.

Users already pay all costs anyway, and they ALSO pay "price above cost" (profit) whenever they do not yet have sufficient ownership in the means of production (the physical sources) required to meet those objectives.

A for-profit mindset thinks "'how can we, as separate entities, capture value.'", but what makes us think the founders of an enterprise MUST remain divided from the users it was supposedly created for?  Don't we want to create true public utilities?

Governments at all levels and every non-profit corporation and/or organization keep control away from the users they claim to serve by not understanding the "price above cost" those users pay should be considered an INVESTMENT from the very user that paid it - for the only reason a user pays the portion called profit is because the do not yet have enough control to achieve those goals "at cost".

The "Land Rent" (or "Single Tax") of Henry George has a large amount to do with sprawl and excessive transport of humans.

Permaculture addresses the movement of product by putting it at our doorstep.

We become more vulnerable as the beast grows these heavier arteries with the funds we give them every time we pay a Price above Cost.  Their Profit against us is a microcosm of the Military Industrial Complex based wars that we are fooled into believing are about righteousness and goodness.

Every purchase we make is a concentration of power into the hands of Nestle, General Mills, ConAgra, Hershey's, Dole, Monsanto, ...  They use that power against us to ensure their reign.  Their reign is held in place through simple property ownership of the Means of Production needed to re-create our daily bread.

We must purchase land and grow heirloom foods that will soon be extinct or outlawed if the profiteers have their way.  The profiteers will continue to have their way only for as long as we continue to pay them.  We will continue to pay them for as long as we do not have a realistic alternative.

Let's work together to design and implement a realistic alternative that keeps control and trade as local as possible.

Many tend to think rivalry (finiteness) is limited to certain *TYPES* of things (such as a loaf of bread or a washing machine), while we simultaneously mistakenly believe other things (such as movies and software) have no rivalry whatsoever.

Whether software or bread, everything is infinite (non-rivalrous) in potential, yet realistically constrained (rivalrous) in it's actualization.

A movie is obviously non-rivalrous in that the number of potential copies is infinite, but it is also constrained by the rivalrous space, time, mass and energy required to create, use, modify, copy and share it.  It is common to brush off these hosting costs as being 'marginal', but if they are so unimportant, why don't we just start a video hosting site today to replace YouTube?  Can we really pretend the warehouses of servers Google pays for are not physical constraints?  And it doesn't end there.  That movie cannot be utilized unless it is copied, which of course takes time, and consumes physical resources including the twisted-copper, fiber optics or satellite hardware (mass) to transmit it, and a local computer (more mass) and electricity (energy) and even land (space) to house these things.

Similarly, once the mechanical design of a washing machine (the type) has been created by an engineer, what are the potential number of washing machines (instances) that can be produced (how many times may it be copied)?  The design is just as infinite in potential (non-rivalrous) as the movie, yet is also constrained by space, time, mass and energy again.

Wheat is actually just a design (DNA or genetics) that has been 'applied' to the Mass called 'dust' or 'clay' or 'sand', and the Mass called 'water' using a little bit of space (land) and some SUN for energy.  The farmer and breadmaker apply their own designs as they harvest, thresh, grind, mix, knead, bake and cut to specialize that mass into a finished product.

But software also requires Mass for storage (a hard-drive, CD, DVD, RAM, even paper or your brain if you have not yet entered it into a computer) and a physical input device (such as a keyboard or microphone) for creation and an output device (such as a monitor or speakers) for "expression".  This Mass also requires it's own Space to exist and of course software has little value if it can't be "expressed" by temporarily applying that design to a completed computer components using electricity for energy.

While the time and personal energy (labor) needed to copy a grain of wheat appears to be much more than downloading a copy of a program and running it, if we factor in all the resources required to manufacture the hardware and supply the electricity as compared to allowing nature to propagate the seed, it may not be as much of a difference as we imagine.

So, even though different TYPES of things require different AMOUNTS of physical resources for their production, the fact remains that all things have infinite potential, and all things are realistically constrained by space, time, mass and energy.

                Object Oriented Production -- The Goals of Political Economy

Any software developer employing "Object Oriented Programming" (OOP) understands the difference between the 'type' and 'instance' of an object.  An object type is mostly defined as the design (code, methods or accessors) and any state (data, variables or slots) that will be shared among all instantiations of that type.  In contrast, an object instance is primarily defined by the extra resources required to differentiate it as an separable, individual 'copy' of that type of thing.

In the 'real' world, the type of something might be thought of as all of the cumulative design applied to all of the physical resources required for it's production.

Virtual sources are information such as ideas, plans, design, intellect, software, video, audio, genetics, etc. which must be stored and expressed by physical space, mass and energy.

Because of their inescapable connection to physical sources, virtual things can never actually be copied for zero cost.  Even across the internet there are costs for both the server and the client such as: bandwidth, slightly higher electricity to run the NIC, more CPU time to run the kernel module that controls the NIC, the usermode applications that serve and receive the data, RAM dedicated to that process and Hard Drive space needed to store the new copy.  There is also the 'cost' of the exclusivity of those physical resources to that data and activity during those time slices.  This may seem an unrealistic academic exercise, but it really isn't if we scale the problem toward the upper extreme.  Imagine these costs for YouTube.com, Video.Google.com, etc. when they are servicing millions of customers.  It is a very big deal indeed and requires huge rooms with expensive cooling equipment (I once read the cooling is commonly more expensive than the electricity for the computers).

Each instance requires more physical sources to storage and expression.  Physical sources are the rivalrous, material aspects of reality such as space, time, mass and energy required to host

The purpose of production is product (objects), not profit.

Profit is simply the difference between the price a consumer pays for an object(ive), and the costs the owners of the physical sources paid for it's production.

                Free Beer!
. Wages are a cost of production paid by owners to workers.
. Workers specialize by trading labor through barter or a currency.
. Competition and Subtle Monopoly.

Competition is perfected (though would rarely be perfect) when the amount a consumer pays above cost is treated as that consumer's investment in more physical sources.  When an object user is also the owner of all the physical sources required for that production (recursively, along the entire chain of production), profit is then 'undefined' since the payment of such would only be a payment to himself.  This even scales to the smallest case of a single stranded islander.  All 'payment' in that case is pure work, and "price above cost" would simply be an investment toward future production (for instance, planting some coconuts to replace older, dying trees).

Perfect competition would require the consumers (users) have control, not the workers. That control can be delivered as real controlling shares of collective private ownership in those productive physical sources (or toward the purchase of similar sources when there are no shares of the current factory or farm "up for sale").

Another way to think about "Profit" is to understand it as a plea from Consumers to Grow and have Control.  The Consumer is saying "I can't get bread any other way, so am willing to pay the Owner more than it really Costs to produce it because I am in a bind.".

In this way we see the amount called "Profit" would (in a better world) be an automatic investment for that Consumer in the Sources of production needed to create more of that kind of Object.  The Consumer should become a partial controlling shareholder in the Means of Production for that Object according to the amount he pays above real costs, so, after each iteration, Consumers will move closer to being Owners in the Sources of the things (plants, tools, water, land, etc.) that are required to insure their future needs are met.

But, since people's tastes change, this should be an incremental and continuous process that happens anytime an Object changes hands.  So holding this in place requires a sort of self-balancing constraint which can be implemented as an inter-owner trade agreement similar to the GNU General Public License - but using contract law over physical sources instead through Copyright over virtual sources.

Of course you know that if you Own a nut tree yourself, and are the only Consumer of the Objects of that tree, that "Price" == "Cost", and "Profit" is meaningless.  That does not mean you must be the worker.  We very much want division of labor and specialization; and in many cases doing the work yourself is impossible because you simply don't have the skills.  Ownership and labor is already separated in Capitalism, so this is no change at all.

As Object Users become Source Owners, employment can be safely minimized and there is no reason to hope other producers fail, as abundance is always good, and scarcity is to be avoided.  This is the positive-feedback that can close the loop on an economy and cause it to finally stabilize.

                User Owned

There is a special case in economics that occurs when the end users OWN the physical sources of their objectives:

* Abundance and real solutions are goal and never thought 'destructive'.
* Scarcity is not sought and those physical sources are real insurance.

* Unemployment is not a problem, it is the second goal.
* Work is to be eliminated as a hurdle on the road to riches.

* Low prices are always good and tend toward cost.
* Profit is meaningless except as consumer growth.

* Entire production chains are finally localized.
* Development is solved instead of being sustained.

This is clear for a static set of consumers, but demand changes over time while consumers come and go, so the difficulty comes in making this resource allocation 'dynamic'.

The FSF's GNU General Public License has been described as 'cancerous' and 'viral' because of it's dynamic nature.  It requires the virtual Sources of Production (source code, build scripts, etc.) be made available to any user (consumer) that receives an Object Instance under that law, regardless of price.  But physical sources are very different because they are rivalrous and finite.


Owners receive profit when consumers pay more than production costs.  Consumers pay more than cost when they calculate there is no better alternative.  That profit is therefore a measure of consumer dependence and also a measure of monopoly.  Wage is not profit, it is a cost of production.  Competition only occurs between source owners, never between non-owning workers since no work can be done without access to physical sources of production.

The GNU General Public Law offers consumers real ownership in physical sources of production whenever they pay more than cost.  The Consumer of a GPLv4 Object slowly gains joint control of the physical sources still available for investment; or grows the cooporation as those funds are invested in more physical sources {land, buildings, plants, tools, water rights, etc.} by the amount that consumer pays above cost for the last round of production.

A social Operating System can stabilize when profit is an investment for the consumer that just paid it toward more physical sources used to create more copies of that object type.  This holds the economy in a sort of tension that continually adjusts to the dynamic demands of object users so the perfect case of user ownership is always being approached, though never quite reached except for brief periods of time since community membership and consumer demand is always in flux.

Profit is a measure of consumer vulnerability and increases with their dependence on source owners.  Profit is therefore a measure of power, and and inverse measure of freedom.

Profit is a plea from users for growth that should be an investment in their name toward more physical sources of that type.  In other words, a user paying a price above cost indicates there is a demand higher than supply for that type of object, and is balanced by the user becoming a partial controlling shareholder in some sources that can be used to produce more of that kind of object.  This creates nearly perfect competition between consumers.

There is no reason to cause other owners to fail when you do not rely upon the scarcity that trading objects for usury requires.  Price becomes cost and profit meaningless when consumers are owners of the plants, as they own the output even before it is produced.  But, since our wants change, users must continually become new owners according to that which they invest in, and slowly lose control of that which they neglect.

When physical sources are finally free (though never zero cost, as they are rivalrous) we will not need to protect the act of working or be the least bit concerned about keeping wages at any minimum level.  It is the free use of objects we must assure, not our lack of leisure.  We have been fooled into believing employment is a need in itself instead of understanding it as cost we should strive to overcome as we meet our true goal of abundance at minimal cost.

A user that becomes an incremental part owner in the sources of his wants may choose to not work in those fields (and in some cases would never qualify), but is finally in control as nature intended before vassal fealty disturbed personal sovereignty.


Profit inverts our original goals of abundance to those of artificial scarcity through destruction and pollution of all competing suppliers.  But this is only true (is only meaningful) when Object Consumers are not Source Owners.

When an Object Consumer (of say an apple) OWNS the physical Sources (the tree, land, water rights, tools) of it's production, then he might pay a Worker some Wage as a Cost of that production, but Profit is undefined.

For instance, if I OWN an apple orchard and sell you an apple, you will likely be willing to pay a Price above Cost since you are not "set up" or 'developed' enough in that you don't already OWN the Sources yourself.

Now, paying a Price above Cost is not something we should try to stop directly, as it is an accurate measure of your dependence, and therefore your desire to grow.

Since you are willing to pay that difference usually called Profit, the best thing we (Owners wishing to build community) could do with that value is to treat it as an investment for you (the Consumer) in more physical Sources, or to payoff Sources that have already been purchased if the current Owners have trees up for sale.

By doing this, the Consumers become the funders, owners and controllers of their own instances of Productive Sources, and (as kind of a side-effect) they are also the owners of all the potential objects of that production even before production is complete.  For instance, an apple-tree owner also owns all the future apples that tree will ever produce.

This GNU Mode of Production is a striking contrast to Marxism which would have the Workers be the Owners and controllers.

As Object Consumers become Source Owners, (this will never be 'perfect', as Consumer demand always changing, and hence Ownership will continually 'flow'), profit disappears except as a measure of Consumer Growth - as it makes no sense to pay more than Cost at that point unless you were to pay yourself!

We should not speak of consumers and workers as though they were different classes.  All workers are consumers, and in a GNU OS, all consumers are workers unless they are being voluntarily supported by other workers (such as infants and elders) or by the productivity of their current property.

The act of consuming may be different from the act of working

Source ownership offers full control and "at cost" objectives.

The owner of physical sources also owns the objectives even before they are produced.
The nut tree owner is the nut owner even before growth.

Who will invest and risk?
What is credit and debt?

Incorporation is the original and only valid purpose of government.

Consumers of corporate production and citizens of 'representative' governments lose control over time because real control as divisible ownership in physical sources does not flow to those who pay price, rent or tax above the real costs of those objectives.

Owners of physical sources held public must receive rent from users as compensation for real costs, including the difficult to calculate costs of exclusion.

Life requires production.  Production requires sources and skills.

Specialization increase production efficiency.

Productive organization of joint owned expensive physical sources is complicated and risky.

Democracy is direct and price equals costs when every user owns physical sources in the kind and amount needed for the future production of his own demands.  This dynamic state can be held place by treating profit as an investment from the user that pays it.

Imperfect competition is subtle or partial monopoly.
Dependence increases profit.

Advantages of specialization.
Advantages of sharing.

State becomes private estate.
Mayor becomes hired manager.
Tax becomes collective rent, toll, ticket.

Public utilities as inclusive growth conduits.
Citizens defined as object consumers.
Consumers gain source ownership when paying more than cost.
Owners determine level of care, level of care determines costs.
Owners pay costs to retain ownership.
Vote weighted by ownership percentage in each physical source.
Conflicts may split realistically divisibile sources.
Borders privacy, personal, public, proprietary

====Implementation Jujitsu
Developers may start a church, club, corporation, community that treat profit as an investment from the consumer who paid it - so the corporation would grow through the user investment called Profit that is usually pocketed by the Owners as a prize (a prize that also happens to incent the anti-social behaviour we have already discussed).