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This case is a microcosm of a fundamental tension. Namely: how should we divide the pie between capital and labor, if baking the biggest pie requires devaluing
by stmaarten 9y ago
This case is a microcosm of a fundamental tension. Namely: how should we divide the pie between capital and labor, if baking the biggest pie requires devaluing labor? There are explicitly positive and normative components to that question. Positive analysis can’t resolve normative questions, and vice versa.
Personally, I’m not interested in questions such as whether the OP has been dishonest, or what the status-quo legal regime would prescribe. I am interested in the underlying economic reality. The OP has developed a technology with real and quantifiable value. He created wealth. So: who should keep it?
At the macro level, I think it’s pretty clear that the existing economic and legal regime would have these gains accrue to capital owners. After all, markets (when they function) do a good job of allocating resources according to value signals. But that's just a default allocation; that doesn't tell us "who should keep it".