Occasional X: How it works (DXXXIX)

“Private markets contain mechanisms to guide economic actors. Property rights over the means of production incentivize owners to use resources efficiently because they reap the rewards for doing so and bear the costs of failing to do so.” (Christopher Coyne & Abigail Hall) Actually, private markets contain mechanisms to systematically guide economic actors to corrupt/criminal behavior. The representative economist never understood cross-over exploitation. He never understood profit, and consequently, how the economic system works. Scientific incompetence and utter ignorance are the representative economist's normal mental states. Left/center/right does not matter. The proof is given in table AXEC221b ⇓. Microfoundations are methodologically false. First, a Paradigm Shift is required. 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. The workers get the whole product O. The profit Qm for the business sector 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 Invisible Hand redistributes. 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 evade the wage cut and 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. Politically, intra-sectoral competition incentivizes 'class treason'. Both the economic and the political sphere favor the corrupt persons in a State, if unchecked. As a rule of thumb, the evolutionary outlook of free-market economies is not socially progressive but inherently degenerative. 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. Other incentives work in the same direction. A firm can increase its productivity and profits with the adoption of an invention. This is the first half of the chain of interrelations. The other firms then make a loss and are pushed to the brink of bankruptcy. The first firm has an incentive to keep the invention secret, because if the other firm can adapt, the profit lead vanishes again. The systemic incentive is to restrict the spread of innovation. The Schumpeter effect only appears if knowledge is public. 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 9, 2026