Occasional X: How it works (DXXXVII)

“Remember that no matter who or what a worker may be, if he works for wages he is in precisely the same economic position that you are. He is in your class; he is your brother; he is your comrade.” (Eugene Debs) No, there are no classes. Eugene Debs never understood cross-over exploitation. He never understood profit, and consequently, how the economic system works. Utter ignorance is the representative economist's normal mental state. Left/center/right does not matter. The proof is given in table AXEC221b ⇓. Microfoundations are methodologically false; therefore, the elementary production-consumption economy is given with three macroeconomic axioms in lines 1, 4, 7. Under the initial analytical conditions of market-clearing and budget-balancing, this yields the price P in line 16. The price is the dependent variable here. In the initial state, the price is equal to unit wage costs W/R, and is equal for both firms. The workers get the whole product O. The profit Qm for both firms and the business sector as a whole is zero. Then, the business sector is split. The axioms are differentiated in lines 1-2, 4-5, 7-8 Now, the wage rate W in firm 1 is lowered arbitrarily; otherwise, both firms are identical in every respect. As a result, the market price P decreases in line 12. The profit of firm 1 increases in line 19; firm 2 makes a loss in line 20. Total profit remains zero. The household sector as a whole still gets the whole product O, but the workers of firm 1 can buy less with their lower wage income; the workers of firm 2 can buy more with their unchanged wage rate W and a lower price P. The firm that somehow manages to pay less for the same labor input increases profit Qm. Firm 2 makes a loss and will go bankrupt if it does not also make a wage cut. As a result, firm 1 wins the race to the bottom. The workers of firm 1 cannot move to firm 2 because it no longer hires or doesn't exist any longer. This process of cross-over exploitation is inherent to Capitalism and inevitably leads to higher concentration. Cross-over exploitation means that one firm gains at the cost of the others, and that one group of workers gains at the cost of the others. That means that there are no classes with a common interest. Eugene Debs got the fundamentals wrong. If profit is positive in the initial state, firm 1 increases profit, and firm 2 decreases it. If a firm can undercut minimum wage regulations, it can be said that the criminal firm wins and the honest firm loses. What remains in the long run is a degenerated/ corrupted free-market economy. Whether OC takes over the State is an open question. On closer inspection, economics is revealed as intra-sectoral cross-over exploitation among firms and among households. Ultimately, the market is not primarily an allocation mechanism but a quasi-Darwinian selection mechanism that increases the survival chances of the corrupt entrepreneur and decreases them for the honest.

— AXEC (@EgmontHandtke) November 8, 2026