Topic: comrades, is bitcoin a great leap forward for international socialism? (Read 7819 times)

An old article and another interesting indictment of Bitcoin from Marxists.org. Except for some fundamental misunderstanding of hacking, I think the piece makes some realistic and uncomfortable points. I wonder what the people here think. Capitalist responses welcome, but keep it CIVIL.

The digital currency Bitcoin has hit the headlines in recent times for its novelty, as well as for its phenomenal rise in price over the past few years. But how much of the Bitcoin sensation is hype, and what is the reality?

Bitcoin is a method of payment and a digital currency that was launched in 2009. It has been described as “cash for the internet” and the price of all bitcoins in circulation currently amounts to USD 1.5 billion. One of its key features is its decentralized structure that prevents regulation of the currency by a central authority or bank. It is this aspect of Bitcoin that is trumpeted by Utopian libertarians who see it as the embryo of capitalism without regulation or control, a dream that is already being scuppered by the realities of the modern world. Others see Bitcoin simply as an opportunity to get rich quick and then get out before the bubble bursts, and in that sense Bitcoin paints a microcosmic picture of the nightmarish short-termism and irresponsibility that is the hallmark of capitalism in decline. It is hardly surprising that such a phenomenon should take off in the midst of a global crisis of capitalism.

According to some, the technology pioneered by Bitcoin and other so-called crypto-currencies is potentially game-changing when it comes to online transactions, with as much potential for a revolution in payment processing as Napster was able to achieve with music downloads. However, what is already becoming clear is that this technology can never be used to its full potential under capitalism: to really unleash the power of technology in all fields, not least in online transactions, we require a socialist plan of investment in technology and a plan for the use of technology to develop the economy in the interests of need and not profit.

Bitcoin as a currency

The most hardcore Bitcoin enthusiasts insist that the crypto-currency hails a brighter future free from human error and untrustworthy governments. The economic collapse in Cyprus in 2013, which led to the government seizing a percentage of the deposits of the wealthiest accounts in Cypriot banks, was seized upon by Bitcoin developers who pointed out that such a situation would never arise if only those deposits were held in Bitcoins, out of reach of governments who need bailing out when crisis hits. Similarly, supporters of Bitcoin point to the eye-watering quantitative easing that is being carried out, most notably in the USA, and the damage and instability the tapering of that easing is causing in the emerging markets, as evidence of the irresponsibility of central banks when it comes to managing currencies.

By contrast to normal currencies, which are backed by central banks and governments, the Bitcoin network is maintained by volunteers, who receive bitcoins in return for maintaining the network (a process referred to a “mining”). Transactions are indelibly recorded on the ‘block-chain’ – a ledger of all transactions ever made - of which every Bitcoin user has a copy. This decentralized setup makes it impossible for one person or entity to control the currency; instead any changes to the network have to be agreed upon by all those who work to maintain it. This may look good on paper, but the proof of the pudding is in the eating; and in the complex and dynamic reality of the modern economy Bitcoin seems to be leaving libertarians with an unpleasant taste in their mouths.

The value of a bitcoin is incredibly volatile. On multiple occasions it has seen its growth mushroom, only to collapse by as much as 50% in a matter of hours. Recently it increased in value by 60 times over the course of a single year, reaching over USD 1,200 in December 2013, only to have fallen to around USD 650 today. It goes without saying that such a volatile commodity makes for an extremely bad currency. Bitcoin enthusiasts insist that the currency will stabilize given time and wider adoption of Bitcoin, but this seems unlikely.

Means of exchange

The use of a commodity as a currency gives it a two-fold function. Firstly it makes it into the universal equivalent in which the value of all other commodities can be measured. And secondly it makes it into a means of exchange. These two functions are closely linked. Historically, precious metals like gold have been used for this task because they concentrate a lot of value - i.e. socially necessary labor time - into a physically small and durable object. This is possible because gold, as a rare metal, requires a significant quantity of socially necessary human labor to extract and form into a tradable commodity. It therefore does not require much gold to reflect the value of large quantities of other commodities, making it easier to transport and thus facilitate trade. Its physical property of durability also recommends it as a means of exchange. Clearly gold fulfills both the functions required of a currency; but it’s also clear that the second function of currency, as a means of exchange, could be fulfilled with even greater ease by banknotes or even just electronic transfers. What matters when it comes to currency as a means of exchange is not the intrinsic value of the currency but the ease with which it can be moved around.

However, whenever tokens representing valuable commodities replace the commodities themselves it’s important to remember that the tokens are only replacing one of the functions of currency – that of means of exchange. The function of being a universal equivalent in which all value can be measured must still be fulfilled by a commodity that has a real value (i.e. contains socially necessary labor), something that banknotes or electronic signals hardly possess. For this reason, any tokens that are used as currency must be backed up by a commodity of real value, i.e. they must ultimately represent the actual value of commodities in circulation in the economy.

In the modern world banknotes and electronic transfers clearly aren’t convertible into metallic money, e.g. gold. Going into a high street bank and demanding the equivalent in gold of a ten pound note is not likely to get you very far. Instead the currency is guaranteed by the government and backed up by the strength of a nation’s economy. Today, banknotes fulfill the function of money as a means of exchange, while the strength of the nation’s economy as a whole provides the value against which goods and services can be measured and traded. So where does Bitcoin fit into all this? Clearly it is a means of exchange, but it is not backed up by a government and a national economy. Bitcoins do not have an economic anchor and so their value is entirely driven by speculation and subject to the whims of investors. Such an empty currency really cannot be considered a currency at all as it is entirely crippled by contradictions.

Money as a social relation

There is an upper limit on the number of bitcoins that will ever be produced, which has been set by its developers, and which will not be reached until the early 22nd Century. But this is entirely arbitrary. Marx points out that when it comes to money, the amount in circulation in a given economy is determined by the sum of all the prices of the commodities being exchanged, divided by the speed at which those commodities change hands. In other words, the amount of money needed in circulation for the economy to function properly cannot be set arbitrarily or on a whim, but is determined by the strength and development of the economy as a whole. Bitcoin is not tied into an economy; in fact it is extremely hard to find real commodities to buy with bitcoins, and therefore the number in circulation is entirely divorced from the real world.

It is this abstract attitude to the concept of money that seems to plague every aspect of Bitcoin. Tyler Winklevoss, one of the twins who claim that Facebook was their idea and who are high-profile backers of Bitcoin, declared “we have elected to put our money and faith in a mathematical framework that is free of politics and human error”. Strangely for a man so closely linked with the world of social networking, Winklevoss seems unable to grasp the fact that money is, by definition, social.

It is not possible to separate money from the societies that use it, nor to place it outside of the influence of the real people who use money throughout the wider economy. This is the reason, historically, why central banks arose in the first place – not as a dark conspiracy forced on society by incompetent governments, but as a result of the development of trade using a universal equivalent. Money, as a universal equivalent, seeks to neutralize the “private” aspect of commodities in general by making all commodities convertible on the same terms. In that sense it is a socializing instrument and can no more be separated from society and placed under mathematical control than trade as a whole could be.

Bitcoin transactions are currently illegal in Russia, and Chinese banks have been banned from handling Bitcoin transactions. Singapore has classed bitcoins as goods rather than currency, but Britain has scrapped plans to charge VAT on the mining of bitcoins. The USA is reviewing the situation and has yet to indicate what its stance in relation to the crypto-currency will be. Finland classifies it as a “digital commodity” not a currency, and Germany treats it as private money. The status of Bitcoin at the moment is clearly not that of a legitimate currency, but it is also obvious that governments are not entirely sure in what way they should classify it.

Could Bitcoin ever become a bona fide currency as its advocates argue? Many point out that it’s simply a case of getting Bitcoin to be more widely accepted – it’s a self-fulfilling prophecy whereby if more people use it then it will become a viable currency because it will have economic activity backing it up. This is a classically abstract and Utopian idea. Purely hypothetically this idea may be true, in much the same way that if everybody simply stopped obeying the law then the law would no longer exist. But an idea is not correct simply because it looks good on paper; its validity is proven only by its capacity to be implemented in practice.

Governments and central banks

It seems highly unlikely that Bitcoin will gain wide acceptance for a number of reasons. Governments and central banks are unlikely to give up their control of national economies, precisely because that is the method by which they seek to regulate the economy. For example, since the slump of 2008/9 quantitative easing has been carried out on an extraordinary scale in order to try to keep money flowing around the economy. The good sense and impact of this policy on millions of workers around the world has been discussed elsewhere. It is important to note for now that this is viewed by the bourgeoisie as one of the only solutions they have to the crisis. Any threat to take that kind of control out of their hands to be dispersed through a decentralized structure is going to be met with the full weight of the bourgeoisie and their state apparatus in opposition to such an attempt.

For Bitcoin to be widely adopted it would have to offer something better for people than the currency they already use. Bitcoin’s advocates explain that its advantage over traditional currencies is that it can stop meddling by governments. In other words it affords the wealthiest people, who already have a great deal of money or who have enough money and time to “mine” bitcoins, the security of knowing that when economic crisis comes their money will not be threatened by governments looking to raise funds to bail themselves out. This may be an attractive prospect for all the wealthy Russians who lost money when the crisis took hold in Cyprus, but for the vast majority of people Bitcoin, as a method of exchange, offers them nothing because they have no money to exchange for commodities in the first place. Whether we use Bitcoin or Dollars, it makes no difference if we have none of either. Bitcoin as a currency has no impact on the ownership of the commanding heights of the economy and therefore is of little interest to the vast majority of ordinary people.

Finally, Bitcoin appears to be extremely vulnerable to hackers, with the most recent in a long list of scandals being the bankruptcy of Mt Gox, the largest Bitcoin exchange in the world that handled 70% of Bitcoin transactions, following a major attack in which USD 500 million worth of bitcoins were stolen. Also, already this year USD 2.5 million has been stolen from the Silk Road 2.0 website (which uses bitcoins to trade) and Flexcoin (a Bitcoin bank) was forced to close following the theft of USD 600,000 from its system.

Some of these thefts have been possible due to bugs in the software that supports the bitcoin network, demonstrating the vulnerability of an entirely digital currency. Because Bitcoin transactions and owners are anonymous, trading with Bitcoin is akin to handing over a bag of cash down a dark alleyway; and storing it is like keeping wads of cash in a shoe-box under your bed. Even firms who specialize in keeping bitcoins safe seem unable to protect themselves against hackers, so to expect everyone to have the technological skill to protect their computers sufficiently to avoid the theft of their life savings is frankly ridiculous. Banks spend billions protecting themselves from theft; for Bitcoin to be widely adopted would require similar efforts on the part of each and every member of the public – such a situation would be impossible.

A Utopian fantasy

Making Bitcoin a currency is not simply a case of declaring it to be so and watching it take off. At the moment it clearly is not a currency, given its abstract nature and lack of an economic anchor, and its prospects for becoming one are slim. It exists in a world that already has historically evolved and established currencies, compared to which it has little to recommend itself for the majority of people. On top of that, at a time of economic crisis when governments are doing all they can to regulate their own money supply, and with increasingly nationalist inclinations as is inevitable at a time of capitalist crisis, a decentralized, international currency will be met with firm opposition if it tries to begin to tether itself to any kind of real economic activity.

As if this wasn’t demoralizing enough for anarcho-capitalist Utopians, recent developments have burst another of their bubbles. Bitcoin is supposed to prove that building a system that runs perfectly well without centralization is possible. This is yet another fundamentally mistaken idea of how the economy works. Bitcoin was set up as a perfectly decentralized system, but to expect it to begin working on a capitalist basis and remain decentralized is pure fantasy. Everything changes and nothing remains the same – under capitalism that change takes the form of concentration of capital and, in a capitalist system where capital equals power, that means the centralization of power in the hands of a smaller and smaller number of people.

Ghash.io is a bitcoin mining pool that allows members of that pool to aggregate their resources and processing power to mine bitcoins more effectively. So far this single mining pool (in essence a cartel) has gained more than 40% of the total computational power on the bitcoin network. All that is required is for this cartel to gain 51% of the processing power for it to be able to control the network entirely, giving it the power to reverse transactions and invalidate other people’s currency.

Under capitalism centralization is inevitable. As has already been pointed out, central banks are not the result of conspiracy or accident, but the inevitable product of economic development and trade. The Utopians behind Bitcoin dream of giving people power over their own lives; but long as capitalism exists that will never be possible. We should not see centralization as the enemy, but rather the class that controls these centralized institutions. Only by bringing banks and businesses under democratic workers’ control can we socialize production and allow people to govern their own lives.

Bitcoin as an investment

Marx points out that, when it comes to tokens as currency, those tokens only have a use-value if they have an exchange value. In other words, unless those tokens are accepted as a valid currency then they have no useful function whatsoever and therefore have absolutely no value (even if human labor has gone into producing them). Bitcoin is barely a valid currency since it has almost no economic anchor (pretty much the only place it’s possible to buy things with it is the illegal Silk Road website) and yet bitcoins are changing hands for extraordinary amounts of money and are therefore attracting the attention of investors. Why is this happening?

This is a classic example of a speculative bubble. Bitcoin is new, fashionable and often in the news. Its cult status, anti-government aura and lack of clear regulation or understanding of it by the authorities makes it attractive to investors looking for somewhere to make some quick cash. Because it does not have an economic anchor it is very susceptible to waves of speculation that can have a snowball effect in pushing the price of bitcoins up – hence a 60-fold increase in price over the course of a year.

Of course, the same factors that mean the price can increase rapidly also mean that it can collapse in the blink of an eye. News of hacking or other malfunctions have caused Bitcoin prices to take a tumble multiple times in a short space of time. Mere rumors, or rumors of rumors, can cause jumpy investors to abandon ship which, without any real value to back it up, has the capacity to cause Bitcoin prices to collapse entirely, wiping out fortunes in the process.

Investing in Bitcoin is therefore a risky but potentially profitable business. At the present time this is a rare thing. Investment in Britain has fallen 25% since 2008; many large companies have zero debt on their balance sheets (meaning that they are not borrowing any money to invest); there is GBP 750 billion in cash sitting in British banks, owned by big business, that is not being invested; and, most damning, industrial production and trade is in the doldrums all over the world and yet the stock markets are booming. Clearly there is a lot of money sloshing around the world, and yet none of it is being invested in real production as there’s no profit to be realized there. This is a process that has been going on for years, but has taken a particularly acute form since 2008/9.

The contradiction of overproduction

The reason for this is the crisis of overproduction that is paralyzing the global economy. In the last period capitalism has been extended well beyond its limits, primarily thanks to the vast expansion of credit. Working people, who are paid less than the value of the goods that they produce, were able to borrow money to allow them to continue consuming. But this can only go so far, and for the last five years the economy has been suffering the hangover for the previous period of wild borrowing. There is now a glut of commodities in the economy, which means that capitalists cannot profit from investment – why invest in more production when you can’t use the productive capacity you already have?

The result is that capitalists look to speculation and gambling on the stock markets to make their money. In such circumstances, Bitcoin is an attractive prospect. It holds next to no real value, but it is something that can be invested in, traded and made a profit out of. No new value is created – it is simply making money out of money – but from the capitalists’ point of view that is the only thing that matters.

Speculative bubbles such as this are prone to burst, and Bitcoin is extremely volatile and has seen its price rise and fall dramatically since its conception. Normally such volatility would put investors off, with most looking to invest in something with more stability and a higher likelihood of a good return. For this reason, bubbles as flimsy as this one do not normally last very long. But Bitcoin has proven fairly resilient to the enormous shocks that its volatility gives rise to, and despite halving in price on a number of occasions it continues to attract investors. This is a reflection of the desperation of the capitalists who are completely starved of investment opportunities. There are so few avenues of profitable investment available at the moment that something a volatile as Bitcoin remains a viable investment.

Such activity is clearly not sustainable and has little to do with Bitcoin as a currency. Unlike the anarcho-capitalists who have an ideological attachment to Bitcoin, most investors are simply using it as a vehicle to make money. As soon as the bubble bursts completely or a new fashionable investment opportunity comes up, they will discard Bitcoin without a second thought. Such speculation is interested in making money out of money, not in investment in real production or in supporting libertarian pipe-dreams.

Bitcoin as a technology

According to some enthusiasts, while the currency itself may not be viable, the technology behind Bitcoin is of great interest, with serious potential for “revolutionizing” the way that online transactions take place. The technology allows for direct transfers from person to person, like handing over cash, without expensive payment providers such as PayPal or Visa acting as middle men and charging high fees for each transaction, as well as by removing high fees for cross-border payments.

This “revolutionary” potential for Bitcoin has already been seized upon by the major investment bank JP-Morgan Chase who, last year, filed for a patent for an online payment system that is based on Bitcoin technology. But this serves to highlight the real problem when it comes to technology under capitalism. The reason for high transaction fees is not a lack of sufficient technology, but rather that firms are out to make a profit out of transactions, rather than trying to facilitate exchange so that people’s needs can be met.

In other words, a revolution in the way that online transactions are carried out will not come from different technology but a change in who owns and controls that technology and in what way. For all its technological innovation, if crypto-currency is owned by JP-Morgan or some other capitalist firm we can guarantee that it will not be used unless it can make profit. It is this capitalist economic system that holds back the development and use of new technology – it is therefore capitalism that must be the target of our revolution.

In a socialist economy we could make full use of all the technology that currently exists for the fulfillment of need rather than the pursuit of profit. We would also be able to direct investment in new technology where it is needed most, as opposed to what might make the most money for an individual capitalist investor. This is not something that can be achieved under capitalism, nor is it something that can be achieved by demanding decentralization and anarchy. Only by socializing the means of production through centralization and democratic control can this potential be realized.

The future of Bitcoin

Bitcoin has little prospect for becoming an accepted currency, neither is it a long term investment option. While its technology has the potential to be developed, this will never be used to its full capacity as long as it is confined within the limits of capitalism. Bitcoin represents little more than an anarcho-capitalist pipe-dream and a speculator’s playground, and in that sense reflects the failures of capitalism and the inadequacy of anarchist, libertarian economic ideas. In short, looking to Bitcoin for revolutionary economics will leave us looking in vain.

Faced with an unprecedented crisis of capitalism and attacks on living standards people are looking to radical economic solutions and the ideas of socialism are gaining an increasing echo. People are looking for ideas to turn society on its head and for real control and ownership over their own lives. In this enormously turbulent period that we are entering into, fashionable speculative bubbles and trendy anarcho-libertarian ideas will disappear into insignificance and be overshadowed by open class struggle and socialist revolution.

imo bitcoin itself is like a toy that humanity has to figure out how it fits in our ecosystem.

right now it's docking in markets where its advantages (anonymous, nearly no regulation, to a a point taxfree) are needed most.
Drugmarket, Gambling, Illegal services & Moneylaundering. last one will boom in the coming years of chaos with regulative approaches until most of the gaps are closed.

The web as a global network with it's own world is in need of a tool for fast transactions of value and payment for virtual services (social networks, website hosting etc) and goods (first all kinds of digital media, then niche products etc), so that will be the next market to dock. (we're scratching heavily there already)
Hopefully this huge buying power triggers btc to spread back into everyday use of the real world economy accompanied by a political movement speaking out for more transparency like public taxwallets of governments and other stuff.

I see a lot of potential for regional cryptocurrencies in local communities interchangeable with each other and backed up by btc (there are already some succesful analog predecessors that helped communities stumble through the crisis with little to no harm because they had a nearly closed circle of value exchange).
I'm no expert on this subject but that approach fascinates me since some years, this decentralisation seems like a good way of handling some of the problems. (not sure if it could work on a larger scale in big cities with a lot of import of global resources though)

yea well...bitcoin utopia 


on the other side....when i see how snowden affair leads to ridiculously few outcrys in public and demonstrations in the western world... (everybody's just trying to deal with it and go on as if nothing has happened, war in syria is already replacing public attention from this subject in the media)
then I'm sure we have to go through the Middle Ages of the Digital Era first until there's hope for any of these ideas.
And that would in fact mean btc becomes more like another new cashcow market in the hands of the above mentioned rich elite able to control spread of wealth even more than today.

there are always two sides of a coin. (internet went the same way -  humanity benefit a lot but at the same time we see more centralised control than ever before in its history)



interesting world we live in 

Check my posts -successfully identifying scams since Pirateat40 (before Micon).  Fortunately, I think I've only been scammed for a total of $40 in my entire life and that had no impact (as it wasn't security related) on my ability to question Pirate's operation, Patrick Harnett, or the more recent CasinoBet one.  It's my background in economics (and minimal investment experience) which is more useful.

Even if someone isn't planning on running a scam, with no effective enforcement mechanism - it makes sense for a lot of companies to run away with the money. Especially any company that has a lot of investor money (ex. Just Dice) in it or a product which is highly profitable (like an ASIC).  Now the fact that many of these people don't run away with the money is due to a combination of not wanting to take risks and thinking they'll make more money in the longterm from maintaining a successful business.

Note I'm not a huge fan of regulation. I'd prefer to use transparency and democracy.

And if the person promoting the scam is lying about it, then it might be hard to identify it as a scam. Regulations and laws are meant to protect against such scenarios as well. The smartest person in the world can still be lied to.

And in return, the people who were made stupid by regulation and security are forced to take responsibility for their own actions, leading to a wiser, more alert, and hardened people, capable of self-reliance without the crutch that is Momma Government.

When you, nrd525, spot a scam, do you:

A. Realize what you're looking at is a scam, thanks to having seen or been scammed before, and thus avoid being scammed

or

B. Ignore it and recklessly do as you please, and if anything goes wrong, bitch and moan about how Bitcoin has failed and capitalism can never work, and beg that some central entity be capable of issuing Bitcoin refunds so the next time someone recklessly does as they please, their sheepishness, which caused their turmoil to start, will overcome any sensibility they could've attained by taking the moment to analyze their situation and resort to the obvious option, A, but instead relied on Momma Government to magically fix their problems when they either couldn't or simply refused to take ownership over their own actions

Of course you would go for option A, but what about all the stupid people, incapable of thought and unable to handle any freedom whatsoever?  Obviously they need hand-holding.  Since, you know, they might otherwise have to do the horrible act of figuring things out on their own, and we can't have people thinking for themselves--just think of the anarchy that would ensue!

Wait what?
That's not what I got out it.
Look at mtgox, it used to be number 1 and no people are getting fed up with it because its witholding funds, so they're taking their business elsewhere.
Same with butterfly labs.
Also nobody is owed a garauntee on the money they lend/borrow. You do the background check.
Besides that its cool that bitcoins doesn't lose value.Well in the long run, maybe

Bitcoin doesn't do much for socialism as it does little to promote equality and democracy.  It is more likely that Bitcoin, like many new forms of business, will create a small rich elite.

Bitcoin does challenge the power of the state, but whether this attack is a strong one remains to be seen. It is equally possible that the state will be able to regulate Bitcoin (by regulating the conversion of fiat into Bitcoin) and use the blockchain to track transactions - effectively making anonymity very difficult.

The bitcoin forum does encourage socialism by exposing some of the flaws of capitalism, unregulated markets, and excessive speculation.  The securities and lending sections of this board show what happens when capitalism goes to its logical (and libertarian) conclusion. You get scams and securities that are jokes.

Concentration of wealth, when it occurs to extremes, is merely wasted. Unfortunately for humans the trickle-down effect does not work. The 1% in America have 32 Trillion sitting in offshore accounts. The US deficit is only around 16 Trillion. If the 1% had been taxed properly to pay for their wars that mostly benefitted them, then the US would not have a deficit. Furthermore most of the 1% are psychotic in their level of indifference to the plight facing the lower class in society.

In order to provide for the needs of an increasingly larger world population a global collectivist society is the only one that will succeed. Humans by their very nature have leaders and followers, this has been the case through all history. Mathematics prove we cannot all be rich; someone needs to buy the products produced. Time and time again governments are called upon to bailout businesses that are too big to fail.

Global collectivism provides for leadership (elites) and re-distribution of the remaining wealth in a fair manner. The internet has brought about Digital Collectivism which is becoming more and more prominent every year. In 100 years we will all be cybernetic machinations of such. Resistance is Futile.

no, bitcoins doesn't aim at making everyone equal.
But it will make everyone richer.
I think, maybe...

is bitcoin a great leap forward for international socialism?

Socialism is taking from some and give to some by force. Socialism is about herding the subjects to start quarreling about which group is injustly receiving and which is unjustly taken away from. Socialism is sacrificing yourself and others to the collective. Socialims is being part of society when you are supposed to pay, and outside when you expect to receive. Socialism is about using all powers to feed the society beast, including debasing money.

Obviously, sound money like bitcoin doesn't support that. Rather, sound money like bitcoin support laws between men and women that are based on nature, individual rights and voluntary action, resulting in prosperity and life.

Nazis were socialists like the Tea Party are lobbyists for the chai trade.

Working on Starting a Bitcoin town here:
https://bitcointalksearch.org/topic/bitcoin-town-lets-make-the-future-come-to-us-216139

Africa is where China gets their exploitable labor/resources (mostly resources though)

No iPhones.

You may think its shallow but if you try to get a no free trade policy adopted, that's what your opponent will say and you will not get it passed.

Another option: Rather than compete, don't. Alls we really require is a supply of energy

I agree its simplistic.  And you make a good point about Germany. 

German unemployment is always about 8% and that doesn't include the people who are kept on the payrolls by a taxpayer subsidy.  My understanding is that the "natural" rate of unemployment is 2 or 3%.  So you have that 5% of people sloshing about the German labour markets as well.  And Germany is becoming more inequitable as a result.  Google "german inequality" and you'll see what I mean.

Even though what I say is simplistic, it seems to me that having a large group of people whose labour is surplus to requirement will affect inequality.  Of course there are other factors.  But adopting a socialist agenda while that lack of competitiveness is still there will achieve nothing.  For the same reason, I think a US budget stimulus will generate jobs in China more than in the US and worsen the trade deficit.  Increased demand without increased manufacturing competitiveness won't do much for US jobs.  But that's off topic to stevendobbs thread so lets not go there

carriage costs don't matter - as we can correct for market error in labour costs between territories with subsidy and tarrif barriers - but ideologically, these tools have been removed.

the reason for surplus labour coming from disparity is because elites require little labour to serve them being few in number, and yet demand the highest priority of production to go to them.

solution is to to level out disposable income with the tax system, and then growth and employment will increase.

Then why does Germany exists? And why does the industry does not go to Africa where the price of labour is way cheaper than anywhere else?

It seems to me your theory is too simplistic.

Yes - an English worker earns more than a Chinese worker so if its the same product and carriage costs are 1%, the English worker will be unemployed.  Make that apply across 5% of the labor force and you have a recipe for labour being squeezed and capital making better returns.

the disparity in earnings is the cause of surplus labour.