What I'm arguing is that wage labor is not fair. A person sells his labor power for a certain amount of time, during which the capitalist can use his labor power as he choses in exchange for wages(a predetermined amount of money).
The worker proceeds to work. Say the worker's wages is $10 per hour, and he works for 10 hours. Each hour his work yields $20 worth of profits for the capitalist, of which he pays the worker $10.
This is unfair because the worker is not paid for the value he creates, but rather for his labor power. In this case he is cut short by half, which the capitalist takes for himself.
In a more fair situation the worker would be paid based on his work and how much value it yields, instead of a predetermined amount. This would increase the standard of living of the worker.
Now of course the reason the worker doesn't get paid the full amount of the profits he makes is because he does not own the factory or the tools that make up the finished product. In socialism he would own the factory and the tools, along with all the other workers at that factory, which makse them all eligable to make the full amount of value that he creates.
Less luxury cars and villas for the capitalist, and twice the material wealth to the workers.
See Bohm Bawerk's ''time preference'' argument.
And go read a refutation of the LTV.
Why don't we see wokers massively owning factories, then? Seems like the logical thing to do.
(I'm ignoring the obvious economic flaw in your argument)
What is it? I just want to know how capitalism is not exploitative if the capitalist makes so much off the labour of his workers, yet they get much less in comparison.
Why isn't that possible? One of the biggest companies in Spain is co-operative.
What's the flaw in my argument? Can you explain, please?
so much? what does that mean? how much should the owner of a business make?
Everyone should make according to their labour
Let's assume that capitalists only care about making money.
Rutherford the capitalist makes widgets. He pays his laborers $10 to make a widget he sells for $25 (non-labor resources cost $5). Hence, he pockets $10 himself (assuming he leaves none invested in the company).
Is this a stable situation? Not at all. Why? Because capitalists only care about making money. If they could make more money, they would.
What happens, then?
Well, capitalist Rockfeller notices that Rutherford is making a lot of money. He sees that there is an opportunity for him to get some of it. He then offers the workers $11 in wages and only pockets $9. Notice that he has every incentive to do this - he is $9 better off for each widget!
Rutherford, now without laborers, is pissed. He wants money. He then offers $12 to the workers. Why? Because he prefers a profit of $8 over a profit of nothing.
This process goes on until the wages of the employees are almost the same as the price of the products.
MissMapleLeaf:What I'm arguing is that wage labor is not fair. A person sells his labor power for a certain amount of time, during which the capitalist can use his labor power as he choses in exchange for wages(a predetermined amount of money).
An employer-employee agreement involves what kind(s) of labor the employee is going to perform. So no, the employee is not like a slave in the sense of having to be unconditionally obedient to his employer.
MissMapleLeaf:The worker proceeds to work. Say the worker's wages is $10 per hour, and he works for 10 hours. Each hour his work yields $20 worth of profits for the capitalist, of which he pays the worker $10. This is unfair because the worker is not paid for the value he creates, but rather for his labor power. In this case he is cut short by half, which the capitalist takes for himself.
HIs labor, let alone his "labor power", is hardly the only thing needed to produce what his employer then sells. For example, how were the machines and raw materials obtained?
MissMapleLeaf:In a more fair situation the worker would be paid based on his work and how much value it yields, instead of a predetermined amount. This would increase the standard of living of the worker. Now of course the reason the worker doesn't get paid the full amount of the profits he makes is because he does not own the factory or the tools that make up the finished product. In socialism he would own the factory and the tools, along with all the other workers at that factory, which makse them all eligable to make the full amount of value that he creates. Less luxury cars and villas for the capitalist, and twice the material wealth to the workers.
By all means, let him and others who can do the same kind of work pool their resources together and establish their own factory that they can then operate collectively. I have no problem with this whatsoever. Such joint or collective ownership would be completely legitimate within anarcho-capitalism/voluntaryism.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
MML,
I have a lot to say about what you have written here, but first I must ask: What do you mean by "Socialism"?
This is paramount to answering your question. Please give me a criteria (I find the standard answer of "public ownership of the means of production" exceedingly vague and unhelpful no matter who it comes from) or just list off answers to these questions in relation to socialism:
1. Does money exist?
2. Does the government control all productive ventures and determine what is produced?
3. If the answer to 1 is no and 2 is yes, then how does the government determine what to produce and who receives what?
4. If, as you indicate in your OP, that productive concerns would be worker run, then would this be based upon principles of democracy by workers?
5. If 4 is yes and 1 is no, then how are goods and services exchanged within the economy?
Forgive me if this is at all confusing, and thank you for answering my questions.
1. Yes
2. No it doesn't have to
4. Yeah
5. Freely I guess
MissMapleLeaf:Everyone should make according to their labour
All well and good, if you ask me - but the question is, what exactly is a person's labor?
But the employer in most cases will have had to take on additional costs in order to create the opportunity for the employee to get paid $10 an hour. The employer in most cases will be not be making the full $10 but less due to costs.
But who then should calculate what the employee should be owed? surely not the employee as the employee would always want the maximum he is able to get, the full amount. Then why would the employer have any incentive in associating with this individual. Unless you are suggesting that people will voluntarily set each other up for jobs at no benefit to themselves and even in some cases at a loss ?
I can agree with OP in that I do no like getting underpaid and that workers should be paid better for the value that they end up creating. But I do not want government to come in and force my employer to increase my salary. I work for a law firm in IT and earn a very low salary in relation to the amount of revenue the organisation makes. Even though IT is depended on and sometimes plays a big role in generating the revenue IT don't see any of it. Another example would be someone who works in a factory and producers an item that makes the company $ billion but is paid very little in spite of the high earnings. This is due to the amount of people that are willing and able to do that job and this mechanism is what leads to the low wages. The value of labour can not be directly attributed to the market value of the end product or service. How could you possibly come to a conclusion what my salary should be based on the revenue of the larger organisation. Would you just say more than I get now, should it be divided up equally regardless of the input that was required by the different individuals that participated in generating the product or service that resulted in the profit?
This is why I try to encourage people that work in IT on the rare occasions that this subject comes up to value their services at a higher rate. I would not join a union about it as I would not like to lose my own ability to deal with my employer.
MissMapleLeaf:In socialism he would own the factory and the tools, along with all the other workers at that factory, which makse them all eligable to make the full amount of value that he creates.
But who is going to sell the item; that is, who is going to operate the cash register? The laborer himself?
If someone who is not a laborer is going to operate the cash register, then how much will that person be paid? If the widget sells for $10, then, under your system, the laborer must be paid $10. So, how much is the operator of the cash register going to be paid?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
Alright then, let's get started.
Now first of all, let's leave the situation of the workers and focus instead upon the consumer. Now good X, which is what is being produced, is so much more valuable to the people who will buy the good that they are willing to pay double the cost of put into producing good X to obtain good X. This means that whatever productive process the entrepreneur (which is what we will call the capitalist for reasons that will become clear) stumbled upon was so amazingly productive and new, or efficient, that he is able to reap this amazing process. This means one of the following:
1. A new product has been produced which consumers value far more highly than whatever other things that the inputs needed to produce good X could be used to produce, and this includes labor.
2. The process which he has developed in making a pre-existing type of good is so much more efficient in its utilization of non-labor factors that he is now making a massive profit. The inputs that he would be using to produce Y quantity of X goods are now either being used to produce other things in the economy or they are being used to make Z (a much greater) quantity of good X, or some combination of these two things. In either case more is produced and a greater number of people see their wants satisfied through the productive process.
It should be noted here that the entrepreneur in endeavoring to build the factory and engage in the new process is, above all else, a bringer of progress, since he was able to satisfy the wants of other individuals better than anyone else in his society was able to. Anyone else could have opened that factory if they had either accumulated or borrowed the funds, but no one did. Had the endeavor failed miserably then he would have been massively insolvent and probably lived the rest of his life in a state of debtorhood. As it is, however, he has made the lives of many of his consumer's, and/or anyone consuming goods which use the same inputs in their production, since now more of those goods will now be produced because the cost of producing them has gone down.
However, the entrepreneurs' actions have not only benefited him and a wide variety of other people, but they have also benefited his workers. The only reason why you would work someplace is because you can't work anywhere better, in some combination of pay and working conditions. This means that even if the capitalist's actions are "unfair" they would nonetheless be mutually beneficial and the best alternative for the laborers without utilizing force.
Now let's briefly breeze over what would happen if we had the government outlaw all profit by stating that any discrepancy between price and cost are to be distributed equally among the workers. I realize that this isn't directly your question, but it goes far in showing how this system might be considered fair. Well first we would see that the entrepreneur would never had made the factory to begin with. There was almost certainly some reason to believe that the factory would not succeed and that it would run at a loss. If the entrepreneur had to worry about this, and had no profit incentive, then why would he have taken the risk in the first place? A world without profits makes no sense unless you are also creating a world without losses, and a world in which firms didn't have to worry about losses... Well I should hope that the failings of that would be perfectly obvious. Would it have been more fair to the people who preferred to work at the factory more than anyplace else they could have worked at to instead be unemployed or take a job which they do not prefer? Of course not, that isn't fair at all, and it really isn't fair for someone to go around saying what other people's wages should be.
It might be one thing if you could point a magic wand and have a world with both the new factory and full wages, but this is not possible for reasons just shown. If entrepreneurs, the risk takers and innovators of our society, believe that their profits will be reduced to nothing then they will not take risks.
There is a reason why the capitalist system takes the shape that it does with entrepreneurs, capitalists, and laborers, and this is because each one of these groups plays a very important societal function in production.
Now, we will look at whether or not the situation you outlined is even really sustainable, something which Wheylous mostly tackled. From what you have said the capitalist (we will call him the entrepreneur for reasons which will become clear) is making a 50% profit on everything which he sells. That is A LOT of money and, as they say in mainstream economics, money left on the table is never left there for long. The fact that he is making this much money will encourage new entrepreneurs to enter into the industry in order to try to emulate his success. Since the process has proven possible and indeed incredibly successful, the risk goes way down, so new competitors enter into the market. This has two affects, for starters we see that the price of labor and other inputs are bid upwards since now multiple entrepreneurs are bidding for a limited number of resources. Secondly an increasing quantity of good X will appear on the market, causing the price to fall (if you do not understand why then look up the law of marginal utility) until profits are either gone or they are very small. At this point the market is very "saturated". For instance you don't see a huge amount of profit (to my knowledge) in farming because you're doing something very tried and true, not something new which is at all likely to bring about windfall profits.
Thusly we see that generally any discrepancies, like the one which you have outlined, are probably unsustainable in most cases. In those cases which it is sustainable to any capacity it is usually warranted, but that's the whole monopoly discussion which is only semi-related to what we are talking about. Now let's move on to your preferred mode of socialism
We would expect a democratically run concern to function very badly. This is in the very nature of democracy. Not everyone is fit to work at a managerial decision making capacity. This requires a certain set of skills which most people do not have. This is in the nature of the division of labor. I am good at certain things and you are good at other things. The painter does not tell the cheese maker what the best method of cheese making is because it is out of his line of expertise. Similarly we don't expect the factory worker to necessarily understand what the market looks like in the future, or what other people's jobs entail. This is why we have entrepreneurs and mangers. The manager/engineer's role, their job in the division of labor is specifically to determine the best way that all other productive inputs can be combined, and the entrepreneur's role is to what extent they should be combined given what they believe the future state of the market will look like. In this way the democratic system of management is a perversion of the division of labor itself. It puts the untrained in charge of the productive process which they likely do not understand. If the traits of entrepreneurship were really so common that practically every single laborer had them then profit would be a very rare phenomenon indeed because every Joe Shmoe could enter into business and have a successful firm.
We also see that a democratically run firm, apart from likely being horribly mismanaged, would likely have no innovative capacity. If a new endeavor were to be proposed, then what would everyone have to gain by it? While perhaps in our situation above it is understandable that they would do it, but for a much smaller profit margin I would have a hard time seeing someone put their job on the line for a 10% pay raise (what would be a 10% profit margin). If the endeavor fails then not only do they lose their jobs, then they have also lose whatever pay they would have had which would have had to put into the factory. For this reason most innovation would probably cease, and everyone would be worse off in the socialist world because of the massive loss of productive potential.
End.
Damn it felt good to do some really good economics.
I'm sorry that this is so long, but it is a very intricate and very important question which you have raised, and so it should not be taken lightly. I should also remind you of your agreement for a really open exchange of ideas.