Is anyone here familiar with the Marxist argument that workers are entitled to a share of the employers' profits because they are being exploited, i.e. are not being properly compensated for their contribution?
The Marxist argument follows from the primacy-of-wages doctrine, or that entrepreneurial profits are taken out of wages, not vice versa.
Its all based on the LTV, the entrepreneur pays the "labor force" of the worker but the profit is created through the apropiation of the "labor value" that the worker has materialized into an economic good, or at least that's what I remember.
His argument is basically
1. Where is the profit coming from? Obviously, from the worker who did the work.
2. Therefore he should get all the fruits of his work. It is unfair for him to get less than 100% of the profits, since nobody else did anything productive to create those profits.
Plenty of sources here why this is wrong. Whole books written about it. Bottom line, the worker gets paid less than the full profits coming from his labor for three reasons:
He gets paid in advance, before the product he makes is sold. This is known as gimme the money now, even if it's a little less.
He gets paid risk free, meaning even if the product never gets sold, he has already collected his salary. This is known as bird in the hand is worth two in the bush.
The owner of the factory gets paid his cut for making it possible for the worker to use his factory. This is known as you want to rent my movie DVDs, pay a fee.
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It's easy to refute an argument if you first misrepresent it. William Keizer
The following argument is almost right, but Im going to change it a tad to bring it more in line with socialist thinking. Im no marxist per se so It may not be an orthodox marxist approach, but nevertheless....
His argument is basically 1. Where is the profit coming from? Obviously, from the worker(s) who did the work. 2. Therefore (t)he(y) should get all the fruits of (their) work. It is unfair for (them) to get less than 100% of the profits, since nobody else did anything productive to create those profits.
1. Where is the profit coming from? Obviously, from the worker(s) who did the work.
2. Therefore (t)he(y) should get all the fruits of (their) work. It is unfair for (them) to get less than 100% of the profits, since nobody else did anything productive to create those profits.
This definition includes management and the entrepreneur in their productive capacity.:
He gets paid in advance, before the product he makes is sold regardless of whether or not he would prefer to get paid later. This is known as gimme the money now, even if it's a little less because I have no say over another person's private productive property. He gets paid risk free (sic), meaning even if the product never gets sold, he has already collected his salary. This is known as bird in the hand is worth two in the bush. (Just as a side note, this is the same thing as the last reasoning; and it is subject to the same critique) The owner of the factory gets paid his cut for making it possible for the worker to use his factory. This is known as you want to rent my movie DVDs, pay a fee.
He gets paid in advance, before the product he makes is sold regardless of whether or not he would prefer to get paid later. This is known as gimme the money now, even if it's a little less because I have no say over another person's private productive property.
He gets paid risk free (sic), meaning even if the product never gets sold, he has already collected his salary. This is known as bird in the hand is worth two in the bush. (Just as a side note, this is the same thing as the last reasoning; and it is subject to the same critique)
In States a fresh law is looked upon as a remedy for evil. Instead of themselves altering what is bad, people begin by demanding a law to alter it. ... In short, a law everywhere and for everything!
~Peter Kropotkin
Kalhoun,
1. "He gets paid in advance, before the product he makes is sold regardless of whether or not he would prefer to get paid later. This is known as gimme the money now, even if it's a little less because I have no say over another person's private productive property."
First, did he not sign a contract, meaning voluntarily? [And I hope we agree the old "What should the poor worker do? Starve?" argument is fallacious. Symbiotic relationship is the way to look at it] Second, do not most people prefer it that way?
2. Whats the sic about?
3. "(Just as a side note, this is the same thing as the last reasoning; and it is subject to the same critique)"
There is a subtlety.
i. Playing a game of chance with immediate payoff involves risk, but not getting paid earlier than one should. Meaning we have a case of the second concept [bird in the hand] and not the first [gimme now].
So that the worker, if he is in an industry that sells its product the moment it is produced, or not at all, has benefit the second even if he doesn't have the first. He gets paid win or lose.
ii. If the worker is in an industry that is almost certain of selling all its wares, but it takes a long time make them and to sell them, the worker has advantage the first [but not the second]. He gets paid way before the money is there for what he did.
iii. Bird in the hand worth two in the bush is indeed a bit vague. It may mean now is better than later. But I used it in what I think is the more usual sense of a small sure thing is better than a risky large thing.
According to modern economic theory, workers are not paid a share of the factories profits at all. Wages are paid according to supply and demand, capitalists are paid according to supply and demand; there is no 'sharing' going on. I find that even some economic literates have a hard time understanding this. They make arguments about why capitalists would deserve some of the profits, such as the time preference argument, but they are missing the obvious economic fact that workers are not paid a share of the profits at all. Capitalists bid for labor, that's what determines wages, not the factories profits. Workers don't produce a factories output, they only produce their labor. It's reasonable to make some counterfactual arguments about who should get how much compared to whom, but suggesting that profits are actually shared between workers and capitalists would be a fundamental misunderstanding about the way a market economy works.
Oh reallyl!!!!! this again!!!!??
It has already been refuted. It's all LTV non-sense. Sounds good in imagination, but when it comes to actually putting it into practice you encounter all sorts of road blocks.
None of the anarcho-syndicalists have any arguments that aren't based on semantics or sob stories.
Here have fun, http://mises.org/Community/forums/p/22547/396621.aspx#396621
Interesting point, Nero.
A link perhaps to more about this idea?
In the market, wages are determined by marginal revenue product (mrp). Lets use an example where a business has 2 empoyees and the business is deciding to hire a third employee. Lets find out what the third emoployee's wage should be...
MRP of the 3rd worker = Total Revenue Product(TRP) of 3 workers – TRP of 2 workers. In other words, if the TRP of 2 workers = $1,000, TRP of 3 workers = $1,010, then the MRP for the 3rd worker is $10. So basically, The total revenue productivity for two workers is $1,000 (They can make $1,000 work of stuff), the total revenue productivity for three workers is $1,010. If you subtract them, you get the marginal revenue productivity, or the extra revenue productivity by hiring a third worker. Therefore the maximum wage for the 3rd worker is $10/hr. Now, there has to be compromise between the employer and employee because the $10 is the maximum. The employer would offer a lower wage than $10, while the employee would want the maximum. Of course the employer isn’t going to offer the employee a higher wage than $10, he would lose money ( $10(MRP)- $12(wage) = $-2(profit)), the employer is more than likely not going to offer $10, since he would not make profit from the third employee ( $10(MRP)- $10(wage) = $0(profit)). So lets say the employee and employer compromise to a wage of $5 ($ 10(MRP)- $5(wage) = $5(profit)). The employee receives $5 in wages and the business gets $5 in profit. Of course, in reality, employers and employees do not necessarily know the MRP of workers but those employers that better predict the market are better to survive in the market.
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ITGF: Is anyone here familiar with the Marxist argument that workers are entitled to a share of the employers' profits because they are being exploited, i.e. are not being properly compensated for their contribution?
Something to think about. While it's certainly true that workers are not entitled to a share of profits, as they are only entitled to what they have agreed to. On the other hand workers do in a way recieve their share of profits. The difference is the "profits" are paid to them in advance in the form of regularly scheduled installments commonly called wages. They are paid before the final product has matured and rendered the business fruit. In accepting payments in this fashion your installments are paid in the now rather then in lump sum later. Your cuts are paid to you prior to the effects of originary interest, or in other words, before the business had made a profit as stated.
If the laborer wants to share in the interest(profits) that the capitalist recieves he would have to postpone his regularly scheduled payments untill the point of maturity. And obviously he would need permission from the capitalist(Which many are willing to accept) before making such an arrangement. It is likely that in this agreement the laborer would be asked to share in some of the risk. Ofcoarse at this point the laborer stops being a laborer and is acting the roll of capitalist, even if he is still on assembly line giving hard labor.
In reality it usually doesn't work this way. Laborers(I hate using the term as I hate creating such a silly taxonomy) prefer to recieve regularly scheduled wages in order to cover their montly expenses. It is true however that many companies offer stock options to their employees. In addition many "laborers" on their own play the roll of capitalist by investing and saving outside of their regular employment. So the mechanics to deal with these concerns have long since been provided on the market. It's up to the laborer whether he chooses to participate or not.
In the market, wages are determined by marginal revenue product
That's how a business can determine whether to hire someone at the current market rate. The price of labor is not determined by businesses, but by supply and demand.
On the other hand workers do in a way recieve their share of profits.
No, they are not. Saying that labor is paid a share of the profits is like saying that raw materials are paid a share of the factories profits. Obviously that doesn't make sense. Iron or wheat costs what the market determines that it costs, that has nothing to do with how much profit the factory that buys it makes.
I would argue that Nero, one can determine wages by MRP...
Anything based on the Labor Theory of Value is utter bullshit and can be dismissed immediately.
Wage Slavery (by Stargazer5781)