While much is up for debate about the capitalistic system, we are assured of one fundamental truth: the worker cannot purchase his own product. At the end of the day, he comes up short.
In fact, the driving motivator of the capital system, second only to the search for ever increasing monopoly profit, is the search for someone, anyone, to buy the results of production. For if the worker who produces the product can’t buy the product, who will?
It has been suggested that the capitalist system is simply a re branded version of the Monarchial system, with the serfs toiling away in the third world while the noble Euros and Americans divvy up and devour the produce. While this is a decent observation, it misses a fundamental point. The physical product of monopoly capital is primarily infinite multiples of run of the mill consumer items. While the system copiously rewards its controllers with great wealth, the system cannot operate without the worker, not only to toil but to buy.
How can this be achieved when labor cost of the finished product can run as low as ten percent and seldom over thirty percent of the product’s selling price? How to do this when American corporate industry profits seldom run below fifty percent of selling price? How to do this when the bulk of profits are recapitalized, driven back into the process with the intent of increasing production efficiency, increasing profits and in the process further lowering the ability of the worker/consumer to purchase and consume?
The initial answer came unwittingly from Monopoly Capital itself in the form of price competition. While the wage was always suppressed below market value, the product pricing was initially subject to market competition. This had the effect of nullifying some of the wage loss and allowing the worker to at least purchase what was minimally necessary and alleviate inventory accumulation.
But by the twenties, price competition had been eliminated in many sectors through collusive industry cooperation and government intervention. Counteracting this trend was union progress which had increased purchasing ability for those protected by unions.
Still there was a great capital surplus, much of which was invested in stock paper Ponzi schemes. When the house called in the chips and the economy sank, the days of Monopoly Capital seemed numbered.
While infinite war spending was credited for pulling the nation out of the depression, two factors continued the expansion and fed the capital machine; the advent of large scale social spending and the long term decline of oil prices that lasted through the mid seventies. Social spending allowed many to purchase goods that were unaffordable left to their own devices. The sustained fall of the price of oil allowed industry to base profits on energy consumption and forego for a time dismantling the labor pool. The massive energy subsidies and incentives provided by the government helped push industry in this direction.
The reversal of oil prices in the mid seventies changed the game. Capital went on the warpath to raise profits by scaling down labor costs. Reaganomics, the revival of the robber baron mentality, exacerbated the perennial problem of monopoly capital, finding consumers who can afford to purchase the product, by concentrating ever increasing capital in the hands of the capitalists.
Debt became the “modern” solution; both government and personal debt. Debt enables the purchase of what is unaffordable now with the notion it will become affordable in the future. To the wage earner, it is similar to the pension, the promise that his inadequate wage will be made whole again at some future point. Debt is a justification of monopoly pricing.
But, the capital machine is always trying to consume itself. It strives to profit not only from the productive output of industry but also from the non productive output of its financial arm. Laws require debt to be repaid with interest, whether the result of investment is profit or loss.
And the flow of non productive interest is almost always from the capital poor class to the capital rich class, further undermining the balance. Even when the capital rich class stumbles and falls over one of their harebrained alchemy schemes to magically produce capital from capital, the state refuses to allow the inevitable capital losses to tip the scales back a bit and intervenes with socialized loss insurance known as “bailouts”.
Such is the “capital conundrum”: the continuing effort of Monopoly Capital to undermine its own stability by depriving the wage class of the ability to purchase its own product.
The interesting paradox is that while the primary inclination of the controlled system is to concentrate capital and ultimately starve itself by withdrawing too much from the labor side of the production mode, the solution, diverting capital back to the labor/consumer force, if left to its own natural course, eventually has the reverse effect but the same outcome: dispersion of capital and the disintegration of monopoly capital.
It seems the long term outlook for Monopoly Capital, no matter how you look at it, is not so good. What a shame!
“While much is up for debate about the capitalistic system, we are assured of one fundamental truth: the worker cannot purchase his own product. At the end of the day, he comes up short.”
This is economic nonsense. It’s not “his” product. I know a trader for a large oil company who “makes” $100M a year in trading profits. I suppose he is “coming up short” because his pay is only about a million a year.
I wonder why he doesn’t just go make the $100M on his own. Hmm, maybe he needs the capital, support, and infrastructure of his horribly exploitative employer.
Hi Stephan,
My guess is that your trader is dealing exclusively with “capital”? Do you consider him a “worker”? what “product” has he helped produce at the end of the day?
We could also argue about the use of the word “his” all day and get nowhere. For your benefit, replace his with “the”, it won’t change the parameters.
Maybe you have an argument that the “worker” CAN purchase what he produced during the day? If you do, I am all ears and actually there is a trainload of folks that would like to hear it!
Gene, the trader produces profit. He does it by helping to arbitrage, hedge or provide hedges/insurance, and to allocate capital to more efficient uses. Or not. Who cares. If you make a profit by voluntary action, it’s fine.
If you change it from “his” product to “the” product, then why would anyone think in the first place the worker should be able to purchase “the” product? Say I hire a guy to build widgets. I provide a workspace/factory, tools and equipment, and a supply of ingredients. He makes ten a day. I sell them for $100 each, getting a revenue of $1000 per day. I pay him $200 a day. He can’t purchase all 10. He didn’t make them by himself. HE used my ingredients and my know how and my setup and my tools, and relied on my customers etc. to keep the whole thing going. Should he be paid more? less? It’s up to voluntar negotiation between them. He is not exploited. He can quit. This is libertarianism 101.
Marc, a current property holding is just, even if there were injustices in the past, so long as the current holder is private, not partof the state, and did not collaborate with the state to steal it. Then, he is the just owner with respect to everyone in the world–unless some particular person can show a better title to it. If and until then, the current guy is the owner.
Thanks for the comments!
Steve, your widget worker guy can buy 2. better get busy selling the other 8. that's the whole point of the article.
Marc, good points!
Joe, i should have explained that further, production unit cost/selling price. not including capital monopoly costs [marketing, etc.].
personal loans, credit card debt, etc. laws back unsecured corporate interests but allow corporations to rate their debt as "investment" and walk if the going gets rough.
Less, won't argue the 10% you are citing using ALL costs [including recapitalization costs] .but much of the costs are based on capital concentration not production. who markets when there is price competition? how does marketing "produce" the product?
production labor and material costs tho are anywhere from 10% [nike shoes] to @50% [autos].
the capitalist can certainly buy the product of one laborer/ how many laborers per capitalist? [also, not limiting labor to simply production but rather anything connected with direct production, but not super costs that are due to capital accumalation and lack of competitive forces].
your missing the point, it isn't about who is taking advantage of who, it is a question on how capital set up the way it is can sell it products? why do you think we have fiat currency? to help labor? its designed to aid in the consumption of monopoly priced products.
free ranger, yes it seems barring direct theft, capital would flow back the other way.
Steve,
So is Microsoft's property rights [mostly due to IP privleges] private or that of the "state"? What about Columbia University which receives big state handouts? How about Nike, who here where I live never pays property tax on 10 prime acres while us peons pay four grand a year on 1/8th acre lots? whose property is just and whose isn't? Are our little lots more or less just because we pay and Mr. Nike doesn't? Does BP own the gulf now that they spewed "THEIR" oil all over it?
The problem is, libertarianism 101 ingnores the genesis of property accumulation and assumes that current property titles are legitmate. Since property and capital accumulation was driven by government intervention in the first place, it is hard to say that the position of the laborer is voluntary, or that he has a chance to challenge the superior position of the capitalist. Rothbard in the Ethics of Liberty, as you may well know, pointed out that who holds property is not what matters, it is wether or not the property claim is just. Ancaps are always assuming that primitive accumulation was the result of wise business men using their intellect to excel in voluntary ways, when in fact it was a sitution of privlege and goverment largess that has and did drive the primitive accumulation that the current capitalists rest thier laurels.
“How to do this when American corporate industry profits seldom run below fifty percent of selling price?”
Do you have something to back up that statement? IMO it may be true of companies in service or IP industries like MSFT but not for manufacturing and other “real product” companies, like MON. JIC, what I’m talking about is Net Income as a percentage of Revenue.
“Laws require debt to be repaid with interest, whether the result of investment is profit or loss.”
Please provide citations or examples of such laws.
Pretax corporate profits average less than 10% of corporate sales (after-tax profits are even lower, of course). Labor costs average around 60%. It doesn’t help the cause of statelessness to make easily-refuted mathematical claims.
We all agree that there are people obtaining unjustified rents for unimproved land and “intellectual property”, but it is equally absurd to claim that only the direct laborers on the final consumer good are responsible for the product. No single factor of production can buy the entire output of a corporation. Not the workers, not the capitalists, not the entrepreneurs. We all want a society in which producers receive the product of their labor, but the direct laborers are not the only producers.
I, Pencil: Revised Version:
“I was bought for 10 cents. The guy who pulled me out of the machine and packaged me only got 6 cents. Apparently, the other 4 cents was stolen by a bunch of people who had nothing whatsoever to do with my creation.”
“Say I hire a guy to build widgets”
Capitalists always argue in terms of hiring others as a drone employee. In anarchy, absence of monopolies, and all the State privileges to capital, who the hell would want to work for a capitalist if workers can have easier access to own and control their own means of production?
@ Gene
The cost of capital goods is not a part of a company's profit, and to the extent it is a part of the selling company's profit, that is already in the sub-10% figure I provided. Marketing people are workers, not capitalists: the fact that you have contempt for them and think Tom Knapp and Brad Spangler are being paid for nothing when they help promote your writing is your subjective opinion, and doesn't make them capitalists, since they are not being paid for their ownership of capital. How many capitalists are there? There are over 100 million shareholders in the United States.
The point you said you were trying to make is that workers don't make enough to buy back their entire output, which is just another way of saying that less than 100% of company revenue goes to the people you think create all the value. My point is that your contempt for the people who built the capital goods the company uses, market and distribute the goods, pay workers now and accept the delay and risk of being repaid later, and organize the entire process doesn't make all those people "capitalist exploiters."
If you want to argue that many, if not most, large corporations in today's America receive extensive monopoly profits because of government intervention, that is a different point entirely. I'm in total agreement, and I suspect Stephan is as well, since he is one of the leading advocates, or perhaps even THE leading advocate, for the total abolition of IP protection, and regular excoriates large companies benefiting from government intervention.
That's not the same as arguing that ALL profits, rent, and interest are monopoly payments. In a free society without hierarchy, many people will choose to specialize in one aspect of production, pay to buy or rent the produced capital goods of others to simplify their own production, and eagerly accept guaranteed pay now instead of speculative pay later (wage employment), while simultaneously using savings to make diversified bets on the production of others. In a mutual society, I'd like to think we'll each own stock in the businesses of millions of other people, spreading the risk and profits around widely, while most of us reduce our personal risk through more guaranteed forms of income for our direct labor.
I'll be glad to live in a free society without imposed authority, even if it doesn't look the way I think it will, but I think you're wrong to believe all wages, rent, interest, and profits will disappear. Or that they should.
@free ranger
Even if you removed all violent obstacles to the means of production, only unimproved land would be "easily" obtained: unless you're an advocate of anarcho-primitivism, you have to realize that the capital goods needed to sustain a modern society don't grow on trees. And there are plenty of reasons for someone to choose guaranteed current wages for their work instead of speculative future income. What is important to avoid exploitation is that they always have the option of self-employment, with the removal of all violent barriers to it that presently exist. Then, only someone who offered terms of employment superior to their own self-employment would be able to attract them.
Free ranger: I brought that up b/c of the very example given. but this kind of talk is so naive.
Stephan Kinsella wrote: "Marc, a current property holding is just, even if there were injustices in the past, so long as the current holder is private, not partof [sic] the state, and did not collaborate with the state to steal it. Then, he is the just owner with respect to everyone in the world–unless some particular person can show a better title to it. If and until then, the current guy is the owner."
By that reckoning, the Middle Ages in Europe were a time and place of perfect justice, considering that the feudal system as such was anarchistic and was not a state creation – and never mind the fact that original asymmetries had given rise to an enduring separation into haves and have nots and to emergent behaviour that produced hierarchical structures.
Rolleyes! Imagine it the other way around then. You’ve set up your great little worker commune. A new guy comes in, takes your resources, uses your machines and workshops, asks for your know-how and then takes the complete product for himself. Is that any better? This marxist labour bullshit is lame.
In fact, american labour is totally worthless. I can assure you that nobody in Europe buys anything “made” in America. Why? Your labour is low-quality and expensive. The only things America exports are IP and war. If labour theory was right, America should collapse any second because there isn’t any labour in it.
Also, the whole love-hate-relationship is weird. You hate capitalists and would never work for them if you didn’t HAVE to, but if he fires you or doesn’t give you a job in the first place he’s a jerk. Capital is accumulated work. People who have already worked are jerks if Marx is right (which he isn’t). No wonder nobody in communist wonderland wants to work, it makes you a jerk almost immediately!
And what’s with the class-think. This is 2010. Mises showed that there’s no 100% classes, what, 50 years ago? 80? Show me the guy who is only a capitalist and not a worker or entrepreneur or consumer. Show me the guy who’s just a worker and not a consumer or a capitalist. We all are capitalists and consumers and workers and entrepreneurs to some degree. Do you hate upon your retirement account because it’s full of capital?
Let’s just grow up. Marx was wrong about pretty much everything. The only thing he got right was that there was something wrong. Everything after that is worthless. Das Kapital has grave errors on the first pages that disqualify it completely.
Hi Less,
of course marketing people are workers and please don't interpert my sentiments, they work as hard [or as lax] as anybody. but, their pay comes from monopoly capital not production capital and that is very important to the subject.
for instance, say you are building a dog house. you spend two hours blabbing to your neighbor how great that dog house is. does that have anything to do with the production? now, your other neighbor builds the same quality dog house and doesn't brag about it and sells it for half the price. Which dog house will have the "free" market advantage? marketing is a product of controlled market [and, thus capital] and subsidized transportation [you don't need massinve marketing when products are competitively produced locally]. you do need an outlet of some kind and that is a big part of capital monopoly, controlling the outlet.
shareholding in america is fundamentally based on monopoly capital. par it down to free market production and no one would put up with 100 mill salaries and zero say in the product. but that ain't how it is. also, the noble/serf analogy. no one working in some stink shop in indonesia is a shareholder.
most workers are also "paid" after they work.
never said all interest and rent were monopoly profit, that would be ridiculous. if you ask me, most profit in a free market would gravitate to wage, interest and rent. competition would eliminate profit except in rare instances. but we can only guess.
Bleicke, don't have a clue what your first paragraph means. of course, that would be crap.
You are interpreting the entire article as "class think" because that is the way you are thinking. It isn't class think at all. it is an observation of the movement [or non movement] of Capital {as it is, to use the term}. and, yes it involves people which connotates classes. If you think capital actually works in some other way than I mentioned, maybe you should offer up your ideas. but really, all i see is someone critical of many things but with nothing substantial to offer.
You have "disqualified" Das Kapital? gee, okay, let's have a book burning!
@RanDomino
re: "Oh, so it’s perfectly OK if they stole it without any help?"
Where did you get that idea? Seriously? Theft the state approves of / helps with is the only type of theft germane to the discussion — because only *that* type of theft gets mistakenly confused with property. Only in such cases is the thief widely considered the owner.
Hi stephan,
tying it in with the "capital" idea.
If the capital used for property acquisition is the result of state intervention and direction [monopolization] of capital then wouldn't it follow that that property has not been acquired justly?
If you believe property acquired from unjustified IP profits enabled by the state is not just property acquisition than how can the same not be said about property acquired by monopoly capital? Doesn't monopoly capital represent a history of unjust ownership {of capital}?
@Gene — I can't speak for Stephan, but my expectation is that his POV (as well as my own, FWIW) is that the particular capital in question may or may not be unjustly held and this ought to be determined on a case by case basis in accordance with individualist ethics. In other words, it's one thing to say that "Purported owner X is not legitimately an owner of Y property because it was acquired in manner Z". It's a rather different matter to say "nobody can legitimately own Y".
So, for example, where you say "than how can the same not be said about property acquired by monopoly capital?" the question at hand is whether "monopoly capital" is capital that has been monopolized (accumulated) based on state granted privilege or if it's "capital" in the simple accounting sense of accumulated savings with no issues of legitimacy (in terms of how it was acquired) attached.
Gene: in replying to “Steve” are you talking to me? Of course I abhor IP, so I don’t know what you are asking me that for.
P.M.Lawrence:
I don’t agree with that for obvious reasons.
"this is in fact the problem with occupancy-based property theories: it boils down to a bare right to maintain possession. Maybe there is a right to regain possession if you are physically ousted, but tha’ts thin gruel. You need a full-fledged property right so that the victim or his heirs can still eject the current possessor if he is a thief or got his title from the thief."
Full-fledged property right? And just who is going to protect that right? The police? The military? I say, if a community takes something from someone, they probably had a good reason. If you don't think it was fair, don't have anything to do with them. People who are in complete control of their lives and their ways of having their needs met largely aren't greedy or even particularly selfish, and that's true all around the world.
"Anyone who owns a resource knows it’s not infinite free profit. In any case, if you own something, you are entitled to exclude others from using it. If thye are willing to pay you for permission to use it, this is a use of your libertarina property rights."
And suppose you're not actually using it and have no plans to. Is it still yours? If a capitalist who owns a thousand factories has never stepped foot in any of them nor had any hand in their management, why should they be his/hers?
"But the basic reason is freedom of contract: whatever people agree to. People wiht the hangups about labor as you seem to have usually are willing to use some crankish inalienabilit-of-labor/exploitation nonsense to trump sanctity of contract, to say that contracts should be abrogated, for some paternalistic reasons."
If by 'contract' you mean formal contracts that stipulate repercussions for failure to abide by the agreed terms, then to hell with those. It should not be possible for anyone to effectively sign away their freedom (it may be possible, though, to *ineffectively* do so). Furthermore, for any contract to be enforceable, there would have to be an organization which would perhaps sell contract enforcement services (by going around threatening to steal from, injure, or abduct the supposed miscreants). Wonderful; now we have to-the-highest-bidder freedom!
Contracts make no sense in a gift-based/communal society anyway, as there would be no terms that could be violated.
"Title just means the identification of who the owner of a thing is"
That makes no sense in a use-based ownership system. That's why I reserve the word for the ownership scheme used by capitalism, which is title-based because it is tracked by transactions which could all theoretically have physical documents of reciept. To me, that makes about as much sense as inheritance.
"You have a similar rule even when the property is still being used: being used by an agent of the owner on his behalf, according to a private contract between them:"
That is NOT use. The person who lives in a house is the user and therefore the legitimate owner. The person who physically puts their hands on a tool is its owner. If multiple people use a tool, they are its owner collectively. I consider no other thing to be use and no other form of ownership to be legitimate.
"If I loan you my car, I suppose you get to keep it."
Of course not, if you intend to use it again.
"It is leftism and Marxism that has killed hundreds of millions. Shame on you."
I'll leave it to others to explain how ignorant it is to blame on Anarchism the crimes of Marxism-Leninism.
Stephan Kinsella
“Marc, a current property holding is just, even if there were injustices in the past, so long as the current holder is private, not partof the state, and did not collaborate with the state to steal it.”
Oh, so it’s perfectly OK if they stole it without any help?
Why is it that if a person does the physical work to produce something then they are only entitled to compensation for their time, but if a person merely *has* wealth, they are entitled to *infinite free profit*? I don’t agree that risk is equivalent to work! If you won’t let other people use your stuff unless there’s something in it for you, it doesn’t make you a hero… it makes you a jerk.
Rather than a one-time redistribution of property, Anarchists (not you fake non-Anarchist “anarcho-capitalists”) want to change the rules of property ownership from title-based (you own something because there’s theoretically a piece of paper somewhere that says so) to use-based (you own something because you actually use it; if you stop using it, you stop owning it). You want to own your thousands of machines, capitalist? Fine- if you can operate them all yourself. That’s human nature.
Unfair? Go cry about it. The capitalist system has created enough suffering. It’s time to change the rules.
Randomino:
No, of course, if they are themselves theives, they do NOT hava a better claim to it than others–including the owner, who can use their ownerhsip claim to oust them. this is in fact the problem with occupancy-based property theories: it boils down to a bare right to maintain possession. Maybe there is a right to regain possession if you are physically ousted, but tha’ts thin gruel. You need a full-fledged property right so that the victim or his heirs can still eject the current possessor if he is a thief or got his title from the thief.
Anyone who owns a resource knows it’s not infinite free profit. In any case, if you own something, you are entitled to exclude others from using it. If thye are willing to pay you for permission to use it, this is a use of your libertarina property rights.
Wiht labor, you are entitled also to charge whatever you can get away with. I suppose if you keep working forever you can keep charging for it.
But the basic reason is freedom of contract: whatever people agree to. People wiht the hangups about labor as you seem to have usually are willing to use some crankish inalienabilit-of-labor/exploitation nonsense to trump sanctity of contract, to say that contracts should be abrogated, for some paternalistic reasons.
Uh, okay. thanks for helping to discredit your “side”, making my “side” look better in comparison. Keep it up.
Title has nothing to do with a piece of paper. Title just means the identification of who the owner of a thing is. Ownerhsip is a relationship–the right to control or exclude.
First, this is not true of “anarchists” but only of some anarchists. Standard anarcho-librtarians do not.
But let me not that even if you imposed such a rule, this only applies to unused property. You are saying it’s abandoned. I don’t quite agree but I appreciate this reasoning.
The problme is you guys go beyond this. You have a similar rule even when the property is still being used: being used by an agent of the owner on his behalf, according to a private contract between them: such as an employer-employee, or a landlord-tenant. In both cases the land is still used. It’s used by the owner, by his agent. Or it’s used by the agent, on behalf of the owner. They have a contract abou this.
as to the rest of the wordl, the factory being used by employees–they have the better claim than any third part. As between the employees and the employer-owner, he has the better claim because of their contract. Yet again, your hoary Marxoid and paternalistic views require you to abrogate contract to get the results you want. Gotta break a few eggs to make an omelet.
If I loan you my car, I suppose you get to keep it. It’s all or nothing with you people. This is moronic. Your views really belong on another planet. Really. I’d love to see a commune of you yurt-lovers try this hippie crap in the real world.
It is leftism and Marxism that has killed hundreds of millions. Shame on you.
Brad,
makes sense to me.
to be honest, i think a truly free market with free acess to land and free currency would take care of the situation real quick. any monopoly without force is short lived and monopolies require great cost to maintain once the state is removed. they just aren’t competitve.
Stephan Kinsella wrote: "I don’t agree with that [a counter-example based on the feudal system during the European Middle Ages] for obvious reasons".
Could you clarify? Since the feudal system was everything I described, and its defects were emergent from a non-state, decentralised approach that had asymmetric initial conditions (in fact the approach formed during the Dark Ages when state mechanisms had collapsed), it does seem obvious that there were indeed later injustices but that they would be accepted under the Kinsella standard of "a current property holding is just, even if there were injustices in the past, so long as the current holder is private, not partof [sic] the state, and did not collaborate with the state to steal it". Note that most feudal holdings weren't even stolen but given up under distress conditions to obtain protection against raiders, bandits and the like; conquest was not the usual initial case.
The only reason I can see for rejecting the counter-example is that using it as a test case makes the criterion give an undesired result – special pleading, so to speak. However obvious that might seem, it is not so obvious that Stephan Kinsella would reason that way even though he does appear to use special pleading in other matters (e.g. the often repeated but never yet substantiated assertion that limited liability corporations could readily be formed without a state framework). It would be an empty tautology and/or a circular argument to claim that, if there were later enduring injustices, that means that the emergent stuff is a state or that what emerged later must actually have been in place already to create the situation.
No philosophy has the capability of committing crimes. Only humans.
I think Marc hits on the root of the disagreement. Descriptions of what would or would not happen according to "Libertarianism 101" are beside the point if the main features of "actually existing capitalism" are defined by statism. IMO Gene is generally correct in describing the functional operation of corporate capitalism as we know it, and specifically its chronic tendency to overaccumulation and the generation of a surplus for which no profitable outlet exists. But I would add the caveat, which I think Gene hints at in saying that wages were suppressed below market value, that wages are not naturally governed by the cost of reproduction as Marx believed. The difference between the value of labor-power and the value of labor's product is not inherent in the market, but in the sale of wage labor as it takes place in a capitalist-distorted market.
Thanks, Kevin.
I apologize that I wasn’t able to explain the topic as I would have liked as it was my first “feature article” and I mistook the goal of a limited word count that applies to “commentary” articles and not so much to feature articles. Brad has updated me since.
again, the main point was simple, in a controlled economy where the goal is to drive down labor costs and control minimum product [the product being consumer rather than specialty items] prices, the challenge will be to find someone to buy the product. In that way [and many ways IMO] Capitalism as it is, is inherently contradictory.
Excellent article!
If I am by myself living off the land where I need to farm vs. be a hunter-gatherer, then if I consume all that I produce, I die. The capitalist system does not require consumers to consume all that is produced. The is the Keynesian lie. Samuelson's circular flow diagram overlooks both savings and intermediate goods.
When capital and management expertise is scarce, then line workers get a smaller share of the wealth. When capital accumulates, labor gets a larger share of the wealth. This is right out of Adam Smith's little treatise.
Our modern government creates artificial scarcities of capital in many ways:
* It runs huge deficits.
* It provides retirement income based on pay-as-you-go
* It encourages people to keep their homes mortgaged instead of paying off their mortgages to build equity.
* It places a bewildering array of regulations between investors and entrepeneurs.
Moreover, government imposes extra management requirements by
* Anti-discrimination laws
* Corporation as nanny laws and tax subsidies
* A host of other labor and other regulations
Until the Left wakes up and realizes how they are screwing over Labor, these practices will continue.
http://anarchistnews.org/?q=node/11937
Carl said; "If I am by myself living off the land where I need to farm vs. be a hunter-gatherer, then if I consume all that I produce, I die"
Could you explain this one a bit more? I'm unsure of what you mean.
@Dave
Marx grounds his entire hate for capitalists and the class war on the fallacy that only labour is creating value. Thus only the worker creates value, but the capitalist and the entrepreneur get paid too! Since they don't create value, they must be stealing from the worker, who doesn't get his full share.
This is completely wrong, see the Austrians subjective value theory.
@Dave again
Rephrased: If Carl lives on a farm and produces 10 sacks of grain and 5 chickens, then eats 10 sacks of grain and 5 chickens, he'll starve the next year because he didn't save anything. If he saves 1 sack of grains and 2 chickens as capital goods, an investment, he'll be able to grow grains and raise chickens the next year too.
This is to show that the capitalist system is based on NOT consuming 100% of what is produced, as the author had claimed. Indeed, a system where 100% of production is consumed couldn't be called capitalist since no capital would be produced.
By the way, great first article Gene
@Dave
It seems we're dealing with different definitions in both cases. If say that everything involved in making something of value is labour, then by your definition, the capitalist is a labourer too. Because he writes the checks, opens the accounts, pays the bills, whatever. You define labour as "human action", which is certainly correct on some level, but I think it isn't what Marx meant by labour.
On the second point our definitions of consumption differ. I have the understanding that consumption is the use of a good not as investment, that is without any positive return (other than meeting a need). In my understanding there is a general categorization in economics between goods that are used to invest (capital goods) and those that are not (consumer goods). This is the definition I know. If you say that capital goods are "productive consumption" then yes, you're right that everything needs to be consumed. But again this is not a very useful or common definition as far as I know. Now I'm not an economist, just a guy who read some Mises and Rothbard. Maybe these definitions are used differently elsewhere.
I agree with you fully on the point that the current system is not a free market and distorts almost everything in the economy, including the role of labourers. I'm guessing too that in a free market, it would be more difficult to force people into wage labour if they didn't enjoy it, though that's just a speculation of course.
I disagree with what the original article said (as I understood it): that capital per se is bad or evil or capitalists are or that the free market is bound to collapse. I think in the current system, many kinds of capitalists and entrepreneurs are actually as much at disadvantage as many labourers. Consider the small businessman or even the labourer who wants to open up his own shop. Sure, big business has huge advantages. But not everyone who uses capital is evil or at an unfair advantage. I think in a free market, many more people would be capitalists and entrepreneurs. Capital gains are an alternative to wage labour that is made extremely hard to enter by the state. If it were easier to enter the capital market (and I don't just mean getting cheap credit), wage labour would become a lot less attractive.
Thanks for the compliments jeremy and dave!
Bleicke, the article never said capita was "bad"! the article was written to point out that the capital monopoly, which is in place at present is self contradictory in that those that produce cannot purchase the aggregrate product due to the imbalance in the flow of capital which is due to the lack of a free market, not the presence of one as you seem to suggest.
of course, all labor is labor. but the capitalist who simply tranfers capital from his account to whoever needs it is not a laborer. he is using capital to receive interest. if he manages, then he takes part in labor and also receives a wage along with interest.
capital also is consumed. if it is not used, it has no value except for future use. when it is used up it is gone, consumed, just like a piece of fruit. if it was used well, it is productive. .
to be honest, your last two lines of your last comment show that you do understand and seem to agree with the article. keep in mind that monopoly capital has little to do with the natural flow of capital or even its original configuration.
Bleicke said; “Das Kapital has grave errors on the first pages that disqualify it completely.”
Whilst I agree that there are a number of things that Marx definitely got wrong, Im just interested to know what it is exactly on the first few pages of Capital that makes you dismiss the next few thousand.
Bleicke: "If Carl lives on a farm and produces 10 sacks of grain and 5 chickens, then eats 10 sacks of grain and 5 chickens, he’ll starve the next year because he didn’t save anything. If he saves 1 sack of grains and 2 chickens as capital goods, an investment, he’ll be able to grow grains and raise chickens the next year too."
You're forgetting about last year's 1 sack of grain and 2 chickens that were necessary to produce this year's 10 sacks of grain and 5 chickens. I'm learning as a result of this discussion that it seems that libertarian capitalists have a blind spot for the origin of the current ownership of property… how can stolen capital be legitimately owned? If I steal your printing press, and then go on to open a printing business, it sounds like some of you think there's no problem here. Maybe you think the statement "Behind every great fortune is a great theft" is just a figure of speech!
@Gene
I just think it sounds very capitalist-bashing. You don't mention Monopoly Capital before the 3rd paragraph or so, before that it's all anti-capitalist. And capitalism is a very vague term. I use it to mean free market, you seem to mean state capitalism. That's why I usually declare what I mean by those vague terms before I use them.
@Ran
Why are you assuming that the farmer has stolen the capital goods last year? Maybe he purchased them with his wages and opened up the farm to enter capital business.
I'm learning that a lot of socialist-libertarians seem to imply property is theft. Which it isn't. Theft is theft. Until theft is proven, property isn't theft.
@Bleicke — Where property is a result of state granted privilege, subsidies and so forth — consider it proven. That is, property qua property is not theft, but much that is *called* property is actually stolen loot.
“The capitalist system does not require consumers to consume all that is produced”
what is produced and not consumed is a loss [cost]. a lot of loss and the enterprise dies or you get a bailout.
‘When capital and management expertise is scarce, then line workers get a smaller share of the wealth. When capital accumulates, labor gets a larger share of the wealth. This is right out of Adam Smith’s little treatise.’
not so much adam smith, more the “monopoly capital” playbook. doesn’t a free market connotate competiiton for absolutely everything? yet, “capital and management expertise’ can be scarce? but labor [line worker] is at the whim of capital accumlation?
according to that assumption, labor can never cross the line and compete for either a management position or capital itself. you really have done more in a few lines than I could in an entire artice to define “monopoly capital”.
This article seems to exactly make my point:
http://www.thefreemanonline.org/columns/tgif/aust…
“Marx grounds his entire hate for capitalists and the class war on the fallacy that only labour is creating value”
Actually this is an incorrect understanding of Marx’s value theory. A more accurate way to put it is that labour is necessary but not sufficient for creating value. The other side of the coin is use-value, i.e. a product has to be useful (and therefore in demand) before it can become a commodity with an exchange value.
Unlike in the subjective theory (or at least my understanding of it), use-value does not create exchange value alone since someone needs to bring that product to market (which is in itself a form of labouring). In other words, labour-value and use-value are bound together synchronously in the formation of exchange-value.
Extending this further, the exchange-value (price) is seen by Marx only as a mere representation of ‘value’ that tends towards (but never settles on) a shifting equilibrium (the equilibrium being ultimately determined by ‘socially necessary’ labour time – i.e. the average amount of time in a given society that it takes to produce the commodity).
I agree with you that entrepreneur’s, office workers, advertisers etc etc should all get paid as they are producing value indirectly. My only quibble with you is over your understanding of the source of that value. I maintain that it is ultimately labour for the simple fact that exchange value can never come about for even the most useful of objects until it is brought to market via some exertion of human effort. Sitting in a field undiscovered, a diamond the size of your head is just a fancy rock.
On the issue of whether or not the labourer is being stolen from, I think I can speak for everyone of a mutualist leaning in saying that the current corporatist economy keeps remuneration for labour well below what it would be on a genuine free market. This is the crux of my position – that the free market is the mechanism by which the full abstracted value of labour’s product can be returned to the labourer. Certain state interferences in the economy however stop this mechanism from operating.
On your second point about consuming all that is produced in an economy, I would disagree that reinvestment does not count as consumption. Investment in capital is productive consumption, and a higher return for the sale of labor-power does not imply that saving and investment would not take place. All that is claimed by under-consumption/general glut theories is that the distribution between different types of consumption (productive-consumption vs consumption) is out of phase and that this leads to crises of over-production.
bleicke:
therein lies the problem.
the capitalistic system or any system has little to do with "free market".
the capital system is simply private owner ship of property and/or the means of production and the resulting production and distribution of capital.already you have an antagonism within the definition in reference to common application, since much property today is publicly or collectively owned. corporations, which are the primary institution of the state capitalism we have, are collectively owned in theory, anyway.
the "free market" concerns only open and free consensual transactions between economic actors with the absense of agressive force from in or out. capital has nothing to do with the definition and/or the existense of a free market, even money isn't necessary.
you will be continually confused by the events around us if you insist on linking "free market" with the capitalism out there.
monopoly capital has nothing to do with your local small business, other than mon cap is the mortal enemy of anything small. if you see no seperation between a free market and the capitalism that is out there in full force, then this article and any remotely like it will mean nothing to you. benjamin tucker would help, but keep in mind he is also not referring to the little guy.
@Gene
Therein lies the problem: I don't think that what we see out there is capitalism. Capitalism for me means a free market with private ownership. Out there is statism. You call that out there capitalism – which is why we need to define our terms, as I've said.
From Bleicke's link- "But how can they be paid before their products have been sold? Their employers pay them out of money accumulated previously. Thus wages are in effect a loan, which like all loans is repaid with interest. … The interest payment is my reward for abstention."
That is insane! Interest is the sheer idea that HAVING money somehow gives the right to MORE money! Again the question is sidestepped of whether or not the current owner actually is the legitimate owner.
As for the legitimacy of current property- If, as I think it should't be hard to show, the vast majority of the means of production are owned due in no small part to the interference of the State, then what should we do? Throw up our hands and say, "oh well"? Or should we correct the error?
Yes, of course we say "Property is Theft". Was that sarcasm, or have you never heard of Proudhon?
@Brad
I agree completely. But it is seldom small businesses or entrepreneurs that profit from state granted privileges, subsidies and so forth. It is mostly big corporations, mostly.
Is there a work showing where all the money is coming from and where it is going? Like, unemployed workers received X amount, agra subsidies Y amount, a complete picture. Then we could see who really profits and who loses.
@Ran
Urm. Interest isn't the right to more money. It's the right to more money if you lend it to someone. That is a service, after all.
The question is not sidestepped at all. First he describes how a free market would work, then he says we don't have one and what the differences might be.
I'm all for correcting errors. That's why we're here, right? To educate people. So that some day (soon) we'll be able to correct errors.
I have never heard of Proudhon. What makes you think property in itself was theft?
The simple act of lending money isn't a "service". Bookkeeping is a service. If the justification of the discrepancy between productivity and wages is that it's a loan, then capitalists make our argument for us.
By "correcting errors" I wasn't referring to knowledge but ownership. If someone possesses something through theft, it should be given to its proper owner(s). That's a rectification.
Great! So you're in favor of taking the ill-gotten property of the bourgeoisie and turning it into worker cooperatives, then? After all, what else can you mean by "I'm all for rectification" and "[workers] get all the profit"?
Then all that would be necessary is eliminating mandatory taxation (which I'm sure everyone here is in favor of) and we'll have Anarchy in no time as the community-minded workers gradually revert to the gift economics that is rooted in human nature.
@Ran
Am I in favour of taking ill-gotten (meaning through state subsidies, eminent domain, etc.) property and turning it over to other people? Yes. I wouldn't take only from the bourgeoisie and I wouldn't insist on workers cooperatives. If people want to form cooperatives, that is fine. The exact method of taking property, determining how much of it is stolen and how to redistribute it isn't so easy. There's the syndicalist approach (the people who use it get to keep it), but that has huge problems: the people who work at the white house, for example, don't exactly deserve it. I like Jim Davies' idea from his Liberty series best so far: if it's more than 50% state-owned/subsidized, it becomes ownerless property. People who want to take control of it can do so. If someone has previously worked in a property that's been disowned in this way, he can't take it. So the police can't take the police station, but they could take the fire station. Etc.
Where did I say workers get all the profit? I think that ludicrous. Workers get as much as they agreed upon with the company/cooperative/whoever. If they want more, they can renegotiate. I think there's no right to a certain amount of money.
I'm for eliminating all taxation (taxation is always mandatory). I don't think everyone everywhere would use gift economics, though. Up to a certain point it may be useful, but if you want to trade with people in other areas or just run a big business, it seems very impractical. I think there is a very legitimate role for money in a free society.
Why bother splitting hairs about who gets to own exactly what buildings? If the billionaires are suddenly reduced to the same level as the rest of us, close enough. They could even keep their mansions (not that they could maintain them without whole armies of servants).
That's not enough, though; I also want to ensure that this never happens again. To do that we must destroy capitalism entirely, because capitalism leads to concentration of wealth (and therefore power) in the hands of those who are best at exploitation, fraud, coercion, etc. Those people will always exist; but we shouldn't assist them by propogating the lie that everyone is like them.
Also I think it's funny that you criticize the difficulty of trade in a gift economy. If there was trade, it wouldn't be a gift… if by 'trade' you just meant long-distance shipment of goods, I don't see what would be so hard about it. If people have good reason to send something somewhere, they would do it.
I like capitalism (as in free markets). I'm greedy. I want to be rich. Why would I deny that or tell other people it was untrue? I think you confuse wealth with power. And you confuse capitalism with state-"capitalism" as we know it.
If we convince enough people that the state is immoral and leads to bad things, I suspect it won't ever grow again.
There is a difference between a broad desire for more stuff and the destructive greed of the sociopathic ur-capitalists. Of course wealth is power (although there are more kinds of power than wealth… except to neoliberals, who equate all things to money); if I have money I can pay people to do things that advance my goals. And stop equating "capitalism" and "free markets"; you'll give Kevin Carson a headache.
The “simple act” of lending money is a favour. You don’t have a right that someone lend you money. They saved it up, foregoing consumption of their own. It’s their money. If you want to lend it, you’ll have to make a deal with them – like interest.
I’m all for rectification, but I’m not doing it until there are a few people behind me. I don’t want to go to jail for that. So until we have a critical mass, we won’t be able to do much.
And the discrepancy between productivity and wages isn’t just loan, as you’d know if you’d actually read the article I linked to. That’s just one of the aspects. Others are: capital the workers need is being bought by the capitalist, risk is being taken. And foremost: It’s in the contract. If you want to work for someone and get all the profit, find someone who’s willing to sign that contract.
It’s kind of in the word.. \capitalism\ suggests nothing like coercion or a state, just a system that is somehow based on capital (=savings).
Without the state, greed isn’t destructive. You can only get money if other people give it to you, that means that without coercion, you’ll have to provide some sort of value for them in surplus of what you want (else they would not trade).
You can pay people to do things you want with wealth, but you can’t force them. The government forces you to do things, they don’t pay you. You profit from being paid, and it’s a voluntary agreement.
"Can," "voluntary"… these are just words. If people are made dependant on job and money, then the scumbags who have no qualms using threats, violence, etc, will do so if it helps them gain power. They can be stopped by organized communities… but then that would be communist, wouldn't it? Capitalists assume that everyone is an atomized individual, which causes us to be divided and conquered. So either we give up on capitalism in all forms, or we concede to the tyrants.
I think capitalism in any form is in fact incompatible with anarchist-communism. It would not recognize communal ownership- for us, a person is either accepted into a community or not; they do not exactly gain ownership over 'its' property. It would not accept the concept that use = ownership. It chafes at the concept of a gift economy. Without the State, it may be possible for a 'free market' capitalist economy and an anarchist-communist gift economy to co-exist, but only until new capitalist tyrants leverage ill-gotten power (like mobsters, essentially) to attack and destroy the free society.
Of course political force and wealth (in a capitalist system) go hand in hand. If I have money, I can hire mentally-unbalanced thugs to threaten you into doing my bidding. Unless you are organized to defeat those thugs (unlikely, since that's the sort of activity that would get you murdered by them), then it doesn't matter if the thugs are outnumbered 100-to-1; if they're the only organized ones, then they only have to face anyone who resists one at a time. To prevent warlordism requires organization, or else a new State will reconstitute like the liquid metal robot in "Terminator 2".
In practical terms, defeating the State and 'monopoly capitalism' (a redundancy if I've ever heard one) REQUIRES building that communitarian and post-capitalist society. "anarcho-capitalists" always get to this point in the argument and mention (in an offhand way, as if it is unimportant) that people would be free to organize & etc, but for Anarchists that organizing is the MOST important thing! I've never heard a capitalist explain another way of avoiding warlordism in a stateless society, other than a police force (which Anarchists consider the FIRST aspect of the State that needs to be tossed!).
As for starvation- Again, don't blame Anarchism for the disaster of Marxism-Leninism; how would you like it if we blamed on free-market capitalism the ongoing starvation and poverty in the third world caused by imperialism?
That is a completely false dichotomy. Organized communities (like unions) are not forbidden in a free market. If you want, build your own commune – just don’t force anyone to take part in it.
You still confuse political force with wealth. And how could “we” ever give up capitalism in all forms? That would require that there is somehow a complete agreement with every single person on the planet to never freely trade with anyone else ever again. Good luck with that. Try not to let 60 million of your own people starve this time.
@RanDomino
Read “Chaos Theory” by Robert Murphy. It explains the whole AnCap warlords thing.
I think AnCap and AnSoc societies could co-exist. The fear I have is that one day, a socialist will take my car and say “It’s not really your car, see, I’m obviously using it!”.
The concept of use=>ownership seems bizarre. Ownership is the right to decide about the use of something. If use made me an owner, I could just go around, eat peoples food, sleep in their beds, fuck their wives and say – it’s clearly mine, I’m using it!
you miss the whole point there.
your car is already in use by you.
the food or beds you mention are already in use by others.
and last time I checked, even in our world, wives are not considered property. so it would be their decision, but based on your other actions, I would guess they would decline the offer.
you also have completely missed the huge chasm between produced property and that which cannot be produced. property that cannot be produced, land, resources, etc. are looked upon differently than property produced by labor.
I also don’t believe Murphy solved the warlords issue for anyone. he used circular logic in that he trusted that somehow the agencies would not become warlords because they would respect the laws of free economics, which is absurd.
Murphy doesn’t “trust” that agencies respect the laws. He just explains how economic laws work. If supply goes up and demand goes down the customers don’t “respect the economic law” when they pay less. That’s just how it works.
My car is my property because I bought it, not because I used it. And I don’t see how there is a huge chasm between property that you think cannot be produced and others. We can produce land (Dubai), we can produce resources (smelt metal). I don’t see how even if your claim was true, this would have anything to do with the argument.
okay, I'm done here.
Force is in direct opposition to free economics. that is by definition. anyone who doesn’t think free economics has a problem with the presence of force of any kind is naive. if that wasn’t the case, then we would have been free eons ago. Whatever anyone says about the control of force without greater force is all guesswork. Believe who you want, that is what faith is about.
If you “believe” that we have “produced” land and produce resources, then there is absolutely nothing I can tell you that would convince you otherwise. But really, the way you have been debating, you would be better off starting a religion rather than trying to engage in any kind of fruitful discussion.
While you are at it, why don’t you produce another planet.
Thanks for playing.
Rolleyes! I’m saying that out loud.
Do you have any arguments or just further Marxist bullcrap slogans? What you say about force has been covered by Murphy.
And what the eff is up with “belief” and “religion” all of the sudden? I didn’t even use that word.
Let me rephrase it:
If you “believe” that you “own” my stuff just because you use it, I’ll shoot you in self-defense. But really, the way you’ve been “debating”, you would be better of taking some government by force and killing 60 million farmers in the process. Oh wait, been there, done that, haven’t you. But it needed to be done to protect those poor farmers from evil capitalists who were engaging in voluntary trade and providing jobs.
While you’re at it, why don’t you produce a meaningful argument?
@gene
Adam Smith had a chapter on the rate of profit — Chapter IX. Here is a bit I underlined back as an undergrad a quater century ago:
Today, the cost of capital is largely due to repayment risk, inflation risk, government subsidies of capital (deficit spanding, social security), and legal overhead (huge). We are a rich society so capital should be plentiful; the risk adjusted return would be naturally low if we didn't have a bloated Keynesian regulatory state. For poor nations making the transition to capitalism, the rate of return is higher because capital is more scarce.
Worker ownership of capital happens often enough right now. The independent trucker generally owns is truck. Many auto mechanics own their own tools. (Or is that most?) Every self employed person either owns or leases his tools of production.
Karl Marx (and Adam Smith) saw enormous economies of scale squeezing out the independent producers. This was due to scarcity of capital compared to the rate of technological change. They had centralized cloth mills because steam powered home looms were too expensive. This is a transient phenomenon. You could weave cloth, grind flour, etc. in a home shop today without much disadvantage because electric motors are cheap. More relevant example: back in my grad school days I worked on large shared supercomputers. Today, I can get such power on a home office machine.
While my employer does own the machines I work on, this is more for accounting and tax purposes than inherent economic need. Plentitude of capital means I could own the means of my production.
the interesting thing about the conversion to steam was the short period between the steam and electric motor promoted what we have come to call "economy of scale". industry used that time period to fortify itself against a return to "cottage" industry, even tho the electric motor again made the cottage output more efficient.
you are right in that freely available capital would push things the other way, but that is the whole point of having restricted capital, the ability to control rather than allow free exchange.
one thing tho, your employer owns the "means" for the same reason you would, to profit. he does have an "economic" need to profit or he [or it] would be off doing something else.
Employers provide the following:
* Sets up the business plan
* Coordinate specialized workers into a clump which reduces transaction costs
* Provides branding
* Handles paperwork
* Acquires capital to purchase tools, lease a workspace, etc.
* Pays workers for there time before the business as a whole reaches positive cash flow
If you want to go back towards more worker ownership of the means of production, you need to address all these factors. Even then, we will still have employers. For many, it is worth paying someone else to handle overhead headaches. The arrangement is mutually beneficial. For example, a skilled left tackle "exploits" the NFL owners more than the converse. Ditto for many high paid musicians and Hollywood stars.
@RanDomino: um, current Third World starvation is perhaps more due to tribalism. Not too much imperialism going on any more. Some would argue that many primitive countries were better off under imperialism, especially as the European powers became more wealthy and civilized. See unqualifiedreservations.blogspot.com for in depth discussion of the matter.
I'm not as big a fan of imperialism as they are, but I am a believer is squashing bad sloganeering. Imperialism is what Africa had before its countries became independent. What they have now is attempted democracy with countries deeply divided along tribal lines. Blame bad borders, blame democracy, or blame 20th century ideologies. Call it post-imperialism if you must use the i word.
Somalia has reverted all the way back to pre-imperial tribalism. This has some advantages over dysfunctional democracy, but I don't want to live there.
re: "current Third World starvation is perhaps more due to tribalism."
Plenty of areas that have been tribal basically since, well, ALWAYS only started suffering massive starvation, apart from the occasional drought related famine or similar, in the modern era. What's new is imperialism. One need not resort to either bad economic theory or narrow-minded chauvinism to explain hunger.
Was there no starvation prior to the imperial era? Do we have any record? And to what degree did tribal areas avoid starvation by using warfare as a population control?
There is nothing narrow minded or chauvanistic in my observation. It is mere empiricism.
Tribalism has a history of working — at least for those not killed in battle or sold into slavery. Empire also has a history of working. The Roman Empire lasted a rather long time.
Multi-tribal democracy is problematic, whether you are talking Africa, Yugoslavia or Northern Ireland. Tribal confederations have been successful at time, but that's not the same as one human/one vote popular democracy over multiple tribes. Had the European powers left their colonies in the hands of tribal confederations; i.e., representation more like the U.S. Senate than the U.S. House, then those colonies might have avoided several decades of bloodshed and misrule.
Demogogues thrive by persecuting minorities. Many early stage empires are as bad or worse. Longer lived empires tend to appreciate their minorities. Minority groups make very useful underlings for an emperor. A minority prime minister has no chance at being emperor himself, so the emperor can trust him. This is why Roman emperors had German guards and Chinese emperors had Turkish guards. It explains Marco Polos high position in Ghengis Khan's court.
—–
Maybe a better form of democracy than the parliamentary systems left behind by the European powers could work in a divided tribal society. The U.S. Senate might have been a better model. Range voting might elect uniters over demogogues. I certainly favor giving Range Voting a shot. Range voting does have a successful history within tribes; it was the form used by Vikings and ancient Germans. Whether it works in a multi-tribal country is TBD.
—–
In summary, I am quibbling. I am calling for honest categorization and comparison of three (or more) systems:
* Imperialism
* Divided democracy
* Reversion to tribalism
* ???
Plenty of bloodiness and restrictions on individual freedom under all three systems. Most tribal societies had the equivalent of universal military service for all heterosexual males. Custom can be more oppressive than civilized law. Slave raids are commonplace. The Americas and the Arabs got some cheap deals on domestic help because warring tribes did the capturing part. Factor that in your calculations. A welfare state with a 50% marginal tax rate on the rich compares favorably with anarchy with slavery in my book.
carl,
I will stay out of your imperialism discussion.
you seem to confuse employer with capital in relation to the article. whether a worker decides to work for himself or someone else is his choosing and not my concern. an employer does not equal capital.
the point of the article was the inherent tendency of monopoly capital to basically monopolize itself, to remove so much capital from the system and to produce so much based on so little labor that in the end, the consumer becomes a rarity. I think our present conditions are a decent example of that.
as far as going "back" to a point where the laborer owned the means of production, that isn't even necessary. all that is necessary is that capital is allowed to freely circulate and freely compete with itself. at that point, it would naturally gravitate to the most efficient position which would also be most efficient position for labor. free economics dictate that.
control of capital is exhibited for one purpose: directing it from those who produce to those who don't. the setting can change, the means and result are the same.
Gene: I pointed out ways that capital gets concentrated. Worker ownership of capital is the ultimate disperson.
We do not have Monopoly Capital. We do have a high concentration amongst certain institutions, including pension funds, investment banks, hedge funds.
Personification of Capital results in conspiracy theory thinking minus the termite charts. Better to look at the actual mechanisms.
Here’s some active mechanisms:
How is money created?
Who are the “Selected Traders”?
What do legal tender laws prohibit and protect?
What is the role of the FDIC [and other socialized capital gaurantees] in the economy?
What effect does the firm and high wage tax rate have on redistribution of capital as opposed to the tax breaks and lower rates given to capital?
free state franchised limited liability for corporations?
What role does social welfare have on allowing industry to return profits to itself?
What role does the IMF and World Bank have in indebting third world countries in order to prepare infrastructure for the multinationals?
What role does subsidized american infrastructure have on advantaging centralized production as opposed to localized?
what role does regulation have on eliminating price competition and minimum safety competition from smaller firms?
government coerced repayment of “loan” types contracts as opposed to classification of “investment” contract and “risk of marketplace?
BAILOUTS?
What role does taxing the land of dwellings and exempting business, and large acreages devoted to timber or largescale agribusiness have on redistribution?
What role did the large scale giveaway of 10% of our continental land mass to the railroads have on the present role and capital concentration of the resource corporations?
present discounted federal giveaway of resources [by the way, reference 1995 deepwater relief act if you want to know why bp was deep in the gulf]?
the cost of capital is due to the control of capital. free capital would have no value other than use value.
some of the countless mechanisms are listed above.
the industries you mention have concentration of capital in the form of money. capital takes many forms and it would be worthwhile to study that.
do you not think microsoft has concentrated capital due to state IP laws regardless of their cash reserves? Nike, BP, Citibank, etc, etc, etc, ad infinitum?
@Gene. Now you are on the right track.
Mr Kinsella:
"Gene, the trader produces profit. He does it by helping to arbitrage, hedge or provide hedges/insurance, and to allocate capital to more efficient uses. Or not. Who cares. If you make a profit by voluntary action, it’s fine."
I would prefer to read an explanation that isn't chasing its own tail and relying on its own internal meanings and/or "secret handshake" translations of rather broad concepts like:
profit
arbitrage
hedge
insure
efficient
capital
trade
I can't see the point of my accepting that "profit" is a value. Why should I accept that? What compels me to value "profit"?
Absent the high value of profit — making it its own value, making it a goal — there is no point to arbitrage, hedging, insuring. These all are premised on profit being its own value.
If you can't see the inherent problem in hypothecating a value where none exists in concrete, I wonder how you can hope to follow Mr DeNardo's argument.
It’s really not that hard. If you make profit (in the absence of coercion), you helped someone. That’s why he gave you money. For example a trader might have knowledge that others don’t have: A has too much wheat while B is hungry. The trader can help reallocate the wheat so A gets paid and B gets food. They both profit by his action, even though there is no physical work involved on his part. They recognize his help and pay him.
Bleicke,
you haven’t defined profit, you have simply shown an example of fee for service. the work of the trader is to get the wheat from A to B. his fee is his wage.
@Gene
Yes, that was my goal. No worries, communication is often misunderstood
I'm pretty sure we can tell if a person making "profit" (my definition) is better off than before. If everything else stays the same, a person making profit on a transaction has more of something than before. More of which is not trivial to define, since he might lose wheat and gain money. We need a currency to be able to calculate profit, and currencies are very problematic at the moment, but if the person makes a profit in the trade he has more than he did before. Thus, when everyone makes profit on their transactions, everyone benefits. And nobody would voluntarily make transactions in which he doesn't make a profit – it would be a waste of resources and money. Exceptions are gifts, charity, etc. in which people gain a very-hard-to-measure or even immeasurable resource.
I'm curious how someone who makes a profit could lose his shirt in the process, unless he is selling it for the profit (in which he could buy the same shirt again and have money left).
@Kevin
Return on investment is just one kind of profit and fine per se, in my opinion. Of course the whole financial sector is heavily influenced by coercion and has always been.
Am I saying profit (even on capital gains) is good? Yes.
Am I saying Goldman Sachs management profiting from stolen bailout money is good? No.
I think that even the loss of a monopoly on money would completely even the battlefield on the whole financial front. And the internet is the best chance ever to accomplish this in an anarchistic way. Just like in A Lodging for Wayfaring Men (though I haven't finished it yet).
I didn’t say I would define profit. But if you’re asking for a definition:
If you provide a service or product and get more in return than you spent providing/producing, that difference is profit.
So if you’re doing anything in life and not making a profit, you’re losing (money, wheat, whatever you’re dealing with) or staying at the same level. To rise to our current standard of living and even to rise to living in caves, we needed profit.
Profit is good. It means you made a smart decision.
Bleike,
under the definition that you are referring to, a firm that sells all its equipment may earn a huge profit during a period while the firm that makes a large capital investment that will benefit them in the future may show a loss.
by the same definition, the wage earner always shows a profit, yet if he is working far under his capacity or ability he is constantly losing. or if his labor is making someone else a ton of money, he is losing. or if his rent or interest is forced above competitive rates, he could "profit" 100k a year and still perpetually fall into greater debt.
a person could sell a 100k house for 80k [for whatever reason] and "make" a profit [if he bought it for less than that] , but it is actually the buyer who gained even tho he "spent" money or incurred a loss [of money]. the seller, who profited can't even repurchase the same house, so he is worse off than he was before in that sense..
you are 100% right about currency which distorts value.
personally, i don't think profit could exist without force. but, I would define profit as that which exists above free competitive wage, rent and interest. so, if your trader got 12 cents a pound for his wheat instead of the competitive price of 10 cents, he profited 2 cents, if not, he just made a competitve wage.
that's why while I can't argue with your definition, I don't think we can use it to tell us much about what profit really is or if those involved actually benefitted. I suppose you could broaden your definition to include "all" costs through all time or something to that effect.
reading what you said again, were you trying to assess a “value” to profit instead of defining it?
i won’t argue with your definition, which is basically the difference between costs and revenue, the standard finance definition. but, I don’t see it telling us anything about profit or whether a person is actually benefiting from profit or if anyone else around them is benefiting. In fact, people can make a “profit” and lose their shirt or the people working for them can lose everything even though they may be considered “employed”. others can break even and do great or even “lose” and do something that makes everyone better off in the future.
that definition doesn’t define the word and that is a problem. we know no more about profit than before, maybe less using that definition. i think because of that definition people incessantly argue about profit, whether it is good or bad,
Bleicke, you seem to be basing your definition on the Austrian usage (entrepreneurial profit, as opposed to originary rate of interest). That’s fine, but you’re talking at cross-purposes with those who use “profit” in the sense of return on capital investment. Entrepreneurial profit is fine (although it always tends toward zero in a competitive market), but the return on investment is heavily influenced by the historic distribution of property and by state-enforced monopolies in the supply of credit.