In order to move away from the notion that there is no alternative to the market economy – and likewise from the notion that it can only be overcome through socialisation – we need to take a fresh look at some of the basic concepts of economics. Both conventional economics and the Marxist tradition operate with concepts whose meanings are fundamentally shaped by the historically developed market and monetary economy. Anyone wishing to conceive of an economy beyond the market must redefine these concepts. Two of them are central: the origin of costs and the concept of the means of living.

The following chapter does not develop a proposal for reform within existing economic theory, but rather introduces a new theoretical framework. The starting point is a pair of revised basic assumptions regarding costs and the cost of living. The further considerations in this book stem from these.

The concept of cost: What does production really cost?

In conventional economics, everything used in production is regarded as a cost: raw materials, energy, machinery, labour and capital. This perspective seems self-evident as long as one operates within the logic of the market. Yet it obscures a simpler truth that becomes apparent as soon as one views production from the perspective of physical reality.

The material components of all produced goods and the energy required for production originate from natural resources: raw materials, natural energy sources, water and air.

These natural resources are not produced by humans. They are not products of labour, but gifts from the earth and the sun. Therefore, they have no natural price. There is no source that could confer a financial value on these purely material and purely energetic foundations of production as they make their way to the finished product – except for the human decision to claim them as property and demand money in return for access to them.

If the material origin of all goods is free of charge, then the entire value added within the production chain – beginning with the cultivation of land and the extraction of raw materials and energy sources – must be generated exclusively through human labour. Human labour is the decisive social force that transforms natural materials into economically usable consumer goods. Even machines and infrastructure are nothing other than labour embodied in natural resources: labour that was performed in the past and now functions as a productive force.

This leads to a new perspective on costs: costs are not a physical necessity of production, but a social construct. They arise because people must demand wages for their labour and because owners of resources must demand money for their use – not because nature or labour itself costs money, but because those who work or own resources must finance their livelihoods. Labour costs and profits are therefore not technical facts, but an expression of a society in which access to food, housing and basic necessities is tied to income.

Livelihood: Why we engage in economic activity

Today, entrepreneurial activity is almost exclusively associated with the pursuit of profit. The cliché of the profit-hungry capitalist shapes public perception – and it is not entirely wrong, for the market does indeed reward those who maximise their profits and penalises those who prioritise ethical or environmental considerations over profit. Yet this behaviour is less a question of character than of the system itself. If one asks what profits and wages are actually for, one comes across a deeper purpose hidden behind the money.

The real purpose of making a profit and receiving a wage is to secure one’s livelihood. People work and engage in economic activity so that they can eat, have a place to live, clothe themselves, maintain their health and provide for their children. This also includes social security provision for illness, old age and emergencies. Furthermore, the pursuit of profit and saving are about long-term security – including that of one’s descendants. Today’s business is meant to still be in existence tomorrow, and the family is to be provided for into the next generation. What appears to be the pursuit of profit is, at its core, the understandable desire for security in an uncertain world.

In addition, entrepreneurs incur expenses on hospitality and networking, which serve to secure market share and business relationships. To outsiders, these expenses often appear to be a form of luxury consumption and fuel the stereotype of the super-rich. In fact, they are part of the competitive landscape: those who cannot keep up lose contracts and influence. This pressure, too, is not a personal failure, but a structural necessity dictated by market logic.

Everything that goes beyond an individual’s basic livelihood, including social security, flows into the accumulation of wealth in the form of savings and capital. This wealth is no longer available to the individual for immediate consumption – it becomes abstract wealth, title deeds, shares in companies or financial investments. Yet even this wealth generally serves the same purpose: securing one’s livelihood in the long term, providing for uncertain times, and safeguarding the next generation.

Yet this logic has a built-in lack of limits. In a market economy, there is no natural upper limit to wealth. Once capital has been accumulated, it can be reinvested, multiplied and channelled into ever-new forms of investment. This gives rise to wealth that exceeds any measure of individual subsistence – sums running into the billions that no longer serve the purpose of provision, but rather that of pure accumulation. Money turns into more money, without any connection to tangible goods or needs. The financial market becomes detached from real production and generates profits from price movements, interest rate differentials and bets on future prices. What was originally an instrument of security takes on a life of its own, becoming a system in which wealth grows for its own sake – whilst, at the same time, people are unable to meet their basic needs.

This lack of restraint is not a moral failing on the part of individuals, but the consequence of a system that knows no logic other than that of other exploitation. It shows that the market knows no limits – and therefore inevitably produces excess.

The key insight of this new perspective is this: costs, prices and profits are not laws of nature. They are social constructs based on a single premise: that people do not receive their livelihood directly, but must earn it through money. If this premise were to be removed – that is, if all people were unconditionally provided with the necessities of life – the economic function of wages, profits and prices would also cease to exist. The economy could then focus directly on the question of what people really need – rather than on the question of what can be sold.

Here is a comprehensive overview of this economy:

https://simple.economy.nu/book-the-simple-economy

Berlin, 24 July 2026

Eberhard Licht

licht at economy dot nu