Credit: Shutterstock. All rights reserved.

As a small business-owner, I live a life that’s full of lies. Usually a lie implies deception, but there is no deception in capitalism. It is expected that everything I sell has been purchased for less and sold for more, and I get to keep the difference. ‘Buy low-sell high’ is ingrained in our culture, and it’s the centerpiece of a ‘free’ economy. But this ‘truth’ is one of the lies I’m referring to: ‘buy low-sell high’ is actually the root of many of our current economic problems.

Take a product as simple as apples. All along the supply chain there are businesses that are struggling to survive the cascade of expenses incurred in growing, harvesting, transportation and sales. The problem with ‘buy low-sell high’ economics is that the final transaction in this chain must end with ‘buy high:’ the final consumer pays the profits for every business that touched the product previously. So profit creates inflation. If you buy something for one dollar and sell it on for two, then that generates one dollar of inflation. We all create inflation by ‘buying low and selling high,’ even if the only thing we sell is our labor.

Products like apples are real, of course, but the measurements of value that get attached to them along the supply chain through prices are all invented. Inflation is a byproduct of our accounting methods. Since everyone is following the same behavior, it takes on the appearance of being normal.

There was a time when alchemy and genuflecting to kings was also considered normal. ‘Buying low and selling high’ occupies a similar position of absurdity.

The next problem is that inflation causes wealth to concentrate. If you’ve ever played Monopoly, you’ve seen how this happens. Everyone gets paid the same amount by the bank at the beginning of the game, yet small differences in the routines of buying and selling are enough to channel all the money into the hands of a single player. Every sale favors one party over the other. As all the small transactions during the game are compounded, large imbalances are created between the different players.

It’s the same in real life, where this kind of economy can only sustain itself through perpetual lending from the banks, which creates even more debt - $17,413,220,474,647.90 and counting in the case of the USA. It should be obvious that issuing more debt is not going to change the underlying structural problem that’s caused by ‘buy low-sell high’ economics. The profits of the winning 1% in the private sector drive public-sector debt ever upwards, while creating more debt and misery for the other 99% of the population. The math has to balance.

Not surprisingly, corporations are the biggest winners because they make the most advantageous transactions, and get many more turns at selling. They also controlled most of the real-life Monopoly board before anyone else was born. And they can only be defeated by another equally large corporation which will simply take their place. Of course, most corporations started small. My small business profit is as toxic as theirs. The only difference is that they have more opportunities to compound the problem.

That’s why ‘growing the economy’ or ‘market-based solutions’ actually make things worse. More growth produces more disparities to scale: a bigger economy that follows the same pricing configurations creates even more inequality. Prices and percentages have negative consequences. That’s what we should learn from Monopoly. Winners and losers are a permanent fixture of a ‘buy low-sell high’ economy. Any boom created by new deficit financing must be followed by a bust. ‘Free market’ capitalism will never satisfy the needs of everyone simultaneously. Greed is not a virtue.

When the next generation arrives, most will be penniless in a world that’s grown even more expensive. They will be taught to sell their labor, and the clever ones will be encouraged to create new products, preferably items with obsolescence planned into them, as that also maximizes profits.

If the problem is ‘buy low, sell high,’ then the obvious solution is ‘buy low, sell low.' Lower margins will curb inflation, waste and inequality. So what can we do to move towards a ‘buy low-sell low’ economy? The answer lies in new economic institutions and new attitudes to money.

In my case, I’ve already reduced my profit margins, sold my stocks, and declined to accept interest in any form. Tough choices, you might say, but my quality of life is pretty high. By myself, I’m not going to make a difference.

But together, everything could be transformed if we followed a few basic principles.

Structurally, we need non-profit businesses as the norm and not the exception. They aren’t difficult to design. Benefit Corporations (B-Corps), worker cooperatives, credit unions and Employee Stock Ownership Programs (ESOP’s) all attempt to make fairness, not profit, the central operating goal. These approaches have to be expanded enormously.

Intellectually, we have to think differently about how the economic system works. We must be willing to follow new standards of accounting and incorporate different measurements of value, especially in two key areas: property and time.

Land and housing values should not be allowed to appreciate. Towns and cities can act as a clearing agent for all property. When you buy, you buy from the town. When you sell, you sell back to the town. Prices do not change. Private ownership is maintained, but the private real estate market as we know it would be abolished.

As to how time is valued, forget about focusing so much on raising the minimum wage. Instead, let’s agree on a standard wage that uses a bell curve based on age and occupation, with a maximum 10:1 ratio between the highest and lowest-paid individuals. A high school student might make 10 cents an hour, while an experienced surgeon would make a dollar. A single-payer system might also work - you work for a business, for example, but are paid by the local government. The struggles that traditional businesses face to pay their expenses by inflating prices would be rendered moot.

Under a system such as this, the expectation of every business would be to break even. The result would be full employment, affordable housing, and enough goods and services for a decent quality of life. Pension payments could be universal and uniform for all retirees.

To be honest, I’m not even sure that we would need money anymore if these ideas take off. All that’s really happening in the current system is the transfer of electronic digits, and money would be less essential if debt and profits were abolished. Nevertheless, in the short-term we have to get a grip on how those percentages are applied, which is the most significant part of how money is currently handled.

Many people falsely believe that larger profit margins and more money will raise their standards of living. In fact, the opposite is true. To raise the quality of life, we must lower the cost of living for one another, and that’s what ‘buy low, sell low’ economics has to offer.

There will never be enough money, as the multi-trillion dollar deficits of the US and other countries can attest. Wealth may temporarily seduce, but a society divided by rich and poor is a prison for both classes. Wealth doesn’t make rich people free, since they live in constant fear of losing their advantage.

The choice to restructure our relationship to money requires courage and determination, but if we can identify the problem then we can certainly develop a solution. If we want peace and prosperity, then 'buy low-sell low' should become the first principle of economics.