By : Dr. Tamer Momtaz
Egyptian economist
Depression is a phenomenon to the capitalist economy and the most dangerous phase after a prolonged recession; this is the result of a flaw in the design of economic philosophy since the fourteenth century
It has relied on the private sector, which can never achieve the growth rates necessary to produce enough for society, nor can it achieve the salaries that society needs & cannot employ all of them!
This has led to increased bottlenecks in investment paths and the prevention of the employment of human resources. This demonstrates the inability of capitalism to guarantee a decent life for humanity.
People are amazed at the reason that has brought them to this state of poverty and hunger, despite having followed the instructions of "capitalism" and taken the paths it laid out for them.
Unfortunately, the result has been a drop in their standard of living.
The Depression:
People's income falls below the fair value of their effort, so they exert effort that is not met with sufficient returns (of course, taxes are deducted to cover the expenses of the unemployed in society).
They prefer to stop working because they cannot support themselves or their dependents. Prices continue to rise at a rate greater than income increases, leaving people unable to consume.
With a decline in productivity, non-productive countries resort to importing and borrowing to meet their domestic market needs.
The result is a doubling of inter-state debts, exceeding the combined value of their national products & The value of the local currency declines.
Of course, the value of the currency of the exporting countries rises, while the value of the value of the value of the currency of the importing countries declines.
in the importing countries, We see goods stagnant on shelves because willing buyers cannot afford to pay the price, causing losses for producers.
Producers will not repeat the production again experience and exit the market, because products are still unused until their expiration date due to insufficient income, so they have a loss.
No profit & no return.
this reducing supply, unfortunately, leads to higher prices,
The production cycle comes to a standstill. Here, governments attempt to remedy the situation by changing monetary and fiscal policies. Unfortunately, this will be ineffective, as the problem lies solely in productivity to satisfy the needs.
Monetary policy focuses on tools to attract money from the public to reduce demand, such as raising interest rates.
This reduces the purchasing power of society, and they postpone purchases due to the reduced availability of cash. This temporarily controls prices but exacerbates suffering.
The price of borrowing from banks rises, forcing merchants to charge the excess cost (interest paid) to the price of products.
Because the market cannot tolerate a price increase, halting operations is the most preferable decision for investors.
Successive, interconnected crises arise, like dominoes, as they fall one after the other until the economies grind to a halt.
We discovered that capitalist philosophy contains within it the factors of its own destruction. The losers are humans, and this is what we see 100 years after the 1930 crisis.
The solution:
Don't focus solely on increasing foreign exchange earnings or increasing the extraction of natural resources, because these cannot create a better life. Rather, the foundation is to create sufficient productivity for consumption by and for society, which increases growth rates, raises living standards, reduces imports, increases the value of the local currency, and allows people to earn enough income from their work to save. Prices stabilize and later decline with increased productivity.
How can we achieve productivity when the private sector cannot employ society, nor can it generate income for them or achieve productivity sufficiently to meet their needs?
The answer:
Each of us carries one of the four elements of production or more, so he can integrate with other individuals to complete the production cycle in the face of the demand .. They all live in the same region
Yes .. The four elements of production exist in the same region, but they can't see each other, so they cannot communicate to each other’s, So they can't integrate.
all of them do not know where is the existing of demand
the Four elements of production to see each other (land, capital, labor, organization) when they reach each other’s & know the demand they will automatically satisfy the demand according to the available resources
We will halt the stages of decline, achieve a true miracle in changing the course of events, end the Great Depression, and protect future generations from a recurrence of the crisis in the future.
