Let’s run through a quick primer on the economics of capitalism and its development. Briefly stated, the economics of capitalism grew out of the interactions of the following five items:
1. Commodities (C). There are basically two types of commodities: capital goods and con- sumer goods. Capital goods, such as land, raw materials, tools, machines, and factories, are used to produce consumer goods (e.g., television sets, VCRs, computers, and houses) to be sold to others.
2. Money (M). Money is, among other things, a standardized means of exchange. It serves to reduce all goods and commodities to a standard value. By putting a monetary value on something (e.g., a forest), it can be compared with any other commodity (e.g., government bonds). Money, thus, greatly facilitates the exchange of commodities.
3. Labor power (lp). Labor power is the work that is needed to transform one type of com- modity into another (e.g., steel into an automobile).
4. Means of production (mp). Another term for capital goods—that is, the machines, land, and tools with which other commodities are produced.
5. Production (P). The combination of lp and mp to produce commodities.