Introduction to Economics

Day 300, 02:48 • Published in Sweden Sweden • by Radsoc

The economy is modelled realistically enough to warrant economic analysis.

How does a company work?
There has to be some so called "initial capital" involved in the formation of a new company. It's usually 40 Gold, or at current exchange rates 800 SEK. This is more or less an impossibility for the newcomer to reach within a close time frame.

But then, how did the first companies spring up in the first place, when there were no jobs or opportunities to earn money for anyone? Well, as this "initial capital" makes the difference between a pre-capitalist and capitalist economy there would be no economy at all without capitalists. In other words a capitalist class had to be created. So the first players got 50 Gold they could do whatever they wanted with, some started companies.

A new player today doesn't have the chance of inheriting money like the first few players had. His choice is either to starve and lose all his skills or work for a company. The salary pays his everyday needs like food which he maybe buys from the same boss he worked for. He is a so-called wage-slave.

Why hire you?
Why are the capitalists (ingame GM's) so interested in hiring you? Primarily it's because they can profit from your work. They earn money on having you employed, else they fire you. Every day you work you produce an amount of goods with value X. The capitalist gives you the salary Y for this. So his profit P is:

P😶-Y

This is an amount he has earned by owning a company, -not- by working. -You- worked for him to earn his profit. In reality it's you who pay him. But he's a GM and has the legal power to have this money.

With the profit he can do anything he likes. He can invest in new companies, upgrades and other things to make himself richer and accumulate even more money. Or he can just put it in his own pocket and be a political figure and use his economic power over market prices to make economies of other countries scream.

An alternative company model.
You may ask; are there any alternative ways of earning money? Yes, there is. Workers can own their own companies, then called combinates or cooperatives, and share the profits among those who work based on their part in production. Then there is no so called capitalist exploitation. Another version is for the state to own companies. The main difference is that the profit does not end up in private pockets. It's reinvested back into society, defence, hospitals and things like that. Money will not end up in the hands of a few.

The importance of politics.
As we know, there has to be initial capital, which means that a lot of workers either have to go together and found a company, or the state can. For the state to go in and organize state-companies or support worker-companies, it has to be a worker-state. Usually a far-left government. But this is very dangerous to those few capitalists who already own companies as people would find their way to the companies that offer best wages and conditions. As there basically is no need for profits in a collective company it's generally these who offer this. Workers would jump from capitalist companies to the state companies.

Capitalist companies would get less and less employees and less profit until they reach a point where they go bankrupt. Now think, if you were a capitalist, would you like this to happen? Of course not. That's why a government that supports collective ownership mustn't get into power. They have everything to lose. So, they need to create a party or fund one that does not want to introduce a collective economy. This is the logics of classes. There are two groups with different interests in society. Those who own, and those who don't.