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One Big Business

Imagine that corporate mergers and acquisitions continued to their ultimate conclusion. One big business now owns everything. One company now produces everything on earth. Now ask yourself... what would their production costs be?

Raw materials taken directly from nature are free. We don't pay the earth anything for the fish we catch, or the trees we cut, or the oil we extract. Of course there are removal and processing costs, but at the source our cost is zero (except perhaps for taxes).

But since one big business owns everything, all removal, transportation, processing and distribution costs are now internal costs. Nothing is purchased outside of the company. Energy, machinery, components, packaging... everything is produced internally. Transferring money from one department to the next is simply meaningless when all departments are owned by the same company.

The only cost remaining to the owners of the business would be wages & salaries. The owners would still need workers to run their operations. For everything made, the only expense would be the labour hours needed to produce and distribute things.

This is the simple truth about real costs, whether one company owns everything or not. The only additional cost that is added when many companies are involved is profit. Each company in the supply chain adds a little profit to its link in the chain. Each good or service purchased by any chain member already contains the accumulated profits added by all of the other previous suppliers in that chain. By adding profit to their own link, each chain member compounds all of the previously embedded profits. And, of course, interest costs and taxes have also been embedded in the chain.

The only real cost of all production and distribution is labour. At the source, natural resources are free. Everything else in the price of everything made is either profit, interest, or taxes. All input costs are really just bundles of labour, profit, interest and taxes. All durable, non-financial capital assets are just combinations of human and natural resources that have been stored in a particular shape or form.

Think about the one big business scenario and the truth about costs will become obvious. Even though workers produce all of the commercial and government assets in existence, and then pay for them (via prices and taxes) more than once (due to interest and profit), workers own none of them. Workers receive only a small portion* of the value that their labour creates. The rest of that value is taken from them to build business and government empires.

* in Canada, salaries and wages account for only about one-sixth of total corporate operating expenses. see Statistics Canada: Publication 61-219-X, Financial and Taxation Statistics for Enterprises