The New Economics 103 Businesses do not create jobs the reality behind the illusion

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New Economics 103

by Richard Gerber

Businesses do not create jobs

Let’s talk about the reality behind the illusion.

In some schools of prevailing fiction, they teach that business creates jobs but this is not exactly true. Jobs are created by consumer demand. Both private sector (individual) and public sector (collective) a business has no existence without the consumer needs and wants. It is the consumer that creates the jobs, and it is producers that fill them. Generally a producer specializes in a single area of production or service while as a consumer he consumes a multitude of products and services. This is the reason we need an intangible value exchange system backed by intangibles.

A business is simply a framework for a joint venture between a group of economic system participants to produce a product or service that is needed or in demand because of want by other economic system participants.

The economic system participants create all new money however the amount created is not based on actual production. New money is created by the creation of debt based on a commitment of said economic participant to produce future value. The amount of money that can be created is somewhat unlimited over time and is in direct proportion to the commitment to produce future value. In other words the consumers are not subject to any lack of money as long as they have a skill set or activity that opens a revenue pipe.

The amount of future value that needs to be created is collectively determined by the economic constituency first based on essential needs, public works, and then wants.

It is essential to all economic participants that every other ESP have a revenue pipe resulting from an available contribution channel allowing all economic participants the opportunity to participate in the creation of value.

One of the questions is how do we measure the value of a contribution. While we can determine the value of the finished good or delivery of service it is not always easy to determine the percentage of value each ESP involved in the production or delivery provided. A proper evaluation of the contribution involves a measure of skills, experience, knowledge, certification, creative intelligence, artful capability and genius.

To create jobs an economic constituency simply needs to collectively decide to create some value whether it is a dam, bridges, communication system, roads etc. Jobs are also created by collective want. If enough economic participants want a particular service or product it then becomes feasible for a smaller group to form a joint venture to provide the service or produce the product. If enough miscellaneous wants exist it creates a non-essential economy and with enough variety all ESPs can participate in not only the essential economy but also the non-essential economy.

There is one entity that can create jobs in an indirect way and that is the inventor. Often the general populations of ESPs are unable to conceive of products and services from which they might benefit, yet those gifted with a creative genius can invent new things seen to have value by other ESPs. In which case the inventor is then assisted by a group of ESPs in a collective effort to produce the product or service invented.

Usually the business owner is responsible for bringing together ESPs to produce a product or service. The business owner or manager has the most responsibility and in general receives a larger percentage of the revenue pipe feed. Some businesses can be owned by a multitude of people shareholders which elect a board of directors to over see a hired management. Creating value greater than the cost to produce said value is generating a profit.

As for government regulation in the new economics collective consumer control replaces most government regulation.