Diagram of Economic Movements in a Capitalist System
Now, to devise an alternative to the way things are done within Capitalism, it is imperative to understand how that regime managed to finance new start-ups and expansions. For those will still be required even in a Socialist State.
Now, when a capitalist firm traded, it had to balance on the one hand its costs, including labour and all its committed to payments for all its used services, with its income. But that alone did not determine the price of what it was that the company produced for the market.
For it was “owned” by a group of investors, who had put up the original capital, and they would expect (and get) an annual dividend – a proportion of what they owned in shares of the company as regular recompense.