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> Why shouldn't workers seek to capture as much of their labor as possible? That is not a fair framing. Labor is not the sole cause of profit. Imagine a compan

> Why shouldn't workers seek to capture as much of their labor as possible? That is not a fair framing. Labor is not the sole cause of profit. Imagine a company that spent billions to automate every process requiring only a single human to push a button every 10 minutes to produce its output. This company would be making "billions per employee", but it wouldn't make sense to pay that employee billions for that job.

flamble 6y ago
All of that capital was produced by labor, except what fraction of the value derives from raw natural resources pre-extraction. So it is absolutely a fair framing to state "why shouldn't workers seek to capture as much of their labor as possible?". If their labor produces capital which produces profits, why are those profits not fair game to bargain over? In your example, it wouldn't make sense to pay the one remaining employee all of the profits, but it would have made perfect sense for all the employees who produced the perfectly automated factory to negotiate for a share of the profits.
- chii 6y ago
  > all the employees who produced the perfectly automated factory to negotiate for a share of the profits. if they were employees, they would've been paid compensation for making such automation. Unless they are a shareholder (either by investing initial capital, or by negotiated compensation in the form of equity), they are absolutely not entitled to any profit from their output.
  - GavinMcG 6y ago
    That's the water we swim in, but can you actually make an argument for why things should be that way? We allow infinite returns to "shareholders" long after their risk has been reasonably rewarded. Why should we?
    - _-o-_ 6y ago
      That was the deal made when those shares were created and sold. Compared to all other parties they seem to be more deserving - at some point shareholders took a financial risk.
    - chii 6y ago
      > can you actually make an argument for why things should be that way? yes - because it didn't work any other way. Look at how communism fared? Tell me a way to incentivize people to invest their capital any other way?
      - GavinMcG 6y ago
        You're saying the possibility of unlimited returns from others' labor is the only incentive people have to invest capital?
- ChrisLomont 6y ago
  >All of that capital was produced by labor Not all capital is the result of labor. Economists put around a third of modern capital to be the result of labor, around a third from leveraging capital, and around a third created by technology. Labor, investment, and technology all drive new capital creation.
  - adamsea 6y ago
    Where does technology come from? Labor. The labor of knowledge workers, which is what software engineers are called by economists ...
    - ChrisLomont 6y ago
      Yes, labor is a component. So is capital. And, recursively, so is technology. That is why economists don't claim all value is created solely by labor, and why econometrics measures the contribution of various components. Where does Labor come from? From being taught skills - and that took capital to train someone before their labor could add value. All pieces are interrelated, and modern economies cannot work by ignoring that all pieces are needed. >The labor of knowledge workers, which is what software engineers are called by economists And those knowledge workers did their labor with zero capital investment before by an employer (or themselves)? Computers, tools, infrastructure all were provided so the knowledge worker could work, and those pieces required capital before the knowledge worker could produce labor. I have hard time understanding why so many people cannot accept that capital is a valid and necessary input to creating things, including creating more capital, which can then be invested in yet further productive pursuits.
      - sudosysgen 6y ago
        Technology can be reduced to labour, capital, and previous technology. Capital can be reduced to labour, capital, and land. The first unit of technology was the product of labour and capital. The first unit of capital was the product of land and labour. If you operate recursively until the first unit of capital and the first unit of technology you end up finding that all value is the product of land and labour. There are certainly a great many economists that agree with this definition. Actually, a famous economist gave a talk at Google that made this exact point!
Raidion 6y ago
In this somewhat reductionist approach, would it be fair that CEO overseeing that process be paid billions of dollars? I think this is a decent thought experiment for ownership of an AI sufficiently good at a hard and profitable problem. Should that company be able to collect those billions forever even if they no longer have to do any work?
jfim 6y ago
I'd argue that most of their capital comes from their employees, not their hardware. Any company can buy hardware that's functionally equivalent to Google's. Even with a massive pile of cash and being able to buy the same amount of hardware that Google has, it would be useless without the software that makes it run, and that software is made by their employees. There are definitely sectors of the industry (such as manufacturing or insurance) where capital and automation drives value generation, but Google is in the business of writing software, which isn't really automatable.
- tanilama 6y ago
  But software can be written anywhere. I do think Google has good engineers, but they are really not that indispensable
simias 6y ago
>Imagine a company that spent billions to automate every process requiring only a single human to push a button every 10 minutes to produce its output. This company would be making "billions per employee", but it wouldn't make sense to pay that employee billions for that job. Why not? Why should it go into the shareholder's pockets instead of the people who actually do the work and create the value? What if the people actually working were to, I dunno, seize the means of production or something? To be clear while I understand that there are many reasonable objections to socialism it bothers me that your comment presents capitalism as self-evident. Even if you believe that it's the best (or at least least worst) system, you should always question it. If a company generates billions in profit the question of how this profit is divided among the owners and the workers should forever remain an open question I think.
- jfim 6y ago
  > Why should it go into the shareholder's pockets instead of the people who actually do the work and create the value? Proponents of the shareholder value model would argue that the point of a business is to maximize that value, and that it's better to return that value to shareholders instead of giving it to employees. In the case of the button pressing employee, if they can find someone that would press the same button for minimum wage instead of billions per year, with functionally equivalent output, then from that perspective it would make sense to replace that expensive employee with a cheaper one, as that would maximize shareholder value. In practice, things aren't as simple, since value maximization can have all kinds of perverse effects (eg. in that model, dumping sewage into a lake is a great idea if the fine is smaller than the resulting shareholder value) and shareholder value is kind of detached nowadays with profitless companies and many companies not electing to pay dividends.
  - simias 6y ago
    Well the original example was obviously flawed because if all that's left for the employee to do is literally just press a button, then it would've been automated as well. In a company like Google the argument that the workforce is effectively just a commodity that could be replaced easily and at will is obviously not applicable. Most of Google engineers are not button pushers.
ddingus 6y ago
The only source of capital is labor. All that money spent on automation paid for labor, who has an interest in the fruits of said labor. Collective labor is one way to secure an equitable share of that fruit. Also, someone has to pay for that output. How exactly does that happen when people lack income? Fact is that company so automated needs sales, maintenance, innovation and all the stuff needed to endure and compete over time. If they are not paying labor, their product would be devalued quickly, and or they would experience increasing trouble over time. The ones who know how to deal with that have awesome position and would expect to be compensated handsomely.
- chii 6y ago
  > their product would be devalued quickly which means more people can afford said product. Automation is increasing productivity and output efficiency.
  - ddingus 6y ago
    Maybe. A lot depends on personal cost / risk exposure relative to income. And that devaluation does mean NOT making billions per employee too.
  - ddingus 6y ago
    Automation may also improve consistency, or quality. There are two basic outcomes regarding labor: One is to reduce labor and ride on productivity / efficiency. The other is to work differently, better. Head count may or may not change. In terms of which is better, there are strong arguments either way. Everything costs something. The first scenario is easy. Margins go up, labor costs go down. However, cost of change, maintenance, quality, business expansion may carry much higher costs and risks too. In the second scenario, margins likely increase, but not as dramatically. People are free for other work, training, to innovate, etc... Lots of ways this can all play out.
TheOtherHobbes 6y ago
Imagine something that doesn't exist and then claim it's "fair framing" to argue as if it does? One of the most depressing things about the US is the corporate authoritarianism that many employees seem to suffer from. Of course shareholders should have priority over workers because... that's just the "natural" order of things? If a company fails, shareholders risk some small percentage of capital they can mostly afford to lose, while workers risk poverty and homelessness? It makes no sense at all to me. Not just from the point of view of comp, but from the point of view of democracy. Because you can't have a functioning democracy when you have huge power differentials between different castes. Unions - including board representation for unions - are one way to shrink those power differentials. They're not the only way and they're not infallible, but when they do work they're guaranteed to better than nothing. They not only redistribute income, but they also give individuals collective pushback against corporate bullying and abuse. Or perhaps you'd rather continue to grumble that HR is always there to take the company's side, but do nothing about it?
- mempko 6y ago
  Really sad you are being downvoted.
jellicle 6y ago
Why not? They're doing the labor. You're just assuming your conclusion here. Your premise is that "having capital" deserves a reward and "doing work" doesn't, and so your conclusion is that having capital should be rewarded and doing labor should not be. But if you change your premise, the results can change too.

flamble 6y ago

All of that capital was produced by labor, except what fraction of the value derives from raw natural resources pre-extraction. So it is absolutely a fair framing to state "why shouldn't workers seek to capture as much of their labor as possible?". If their labor produces capital which produces profits, why are those profits not fair game to bargain over? In your example, it wouldn't make sense to pay the one remaining employee all of the profits, but it would have made perfect sense for all the employees who produced the perfectly automated factory to negotiate for a share of the profits.

chii 6y ago
> all the employees who produced the perfectly automated factory to negotiate for a share of the profits. if they were employees, they would've been paid compensation for making such automation. Unless they are a shareholder (either by investing initial capital, or by negotiated compensation in the form of equity), they are absolutely not entitled to any profit from their output.
- GavinMcG 6y ago
  That's the water we swim in, but can you actually make an argument for why things should be that way? We allow infinite returns to "shareholders" long after their risk has been reasonably rewarded. Why should we?
  - _-o-_ 6y ago
    That was the deal made when those shares were created and sold. Compared to all other parties they seem to be more deserving - at some point shareholders took a financial risk.
  - chii 6y ago
    > can you actually make an argument for why things should be that way? yes - because it didn't work any other way. Look at how communism fared? Tell me a way to incentivize people to invest their capital any other way?
    - GavinMcG 6y ago
      You're saying the possibility of unlimited returns from others' labor is the only incentive people have to invest capital?
ChrisLomont 6y ago
>All of that capital was produced by labor Not all capital is the result of labor. Economists put around a third of modern capital to be the result of labor, around a third from leveraging capital, and around a third created by technology. Labor, investment, and technology all drive new capital creation.
- adamsea 6y ago
  Where does technology come from? Labor. The labor of knowledge workers, which is what software engineers are called by economists ...
  - ChrisLomont 6y ago
    Yes, labor is a component. So is capital. And, recursively, so is technology. That is why economists don't claim all value is created solely by labor, and why econometrics measures the contribution of various components. Where does Labor come from? From being taught skills - and that took capital to train someone before their labor could add value. All pieces are interrelated, and modern economies cannot work by ignoring that all pieces are needed. >The labor of knowledge workers, which is what software engineers are called by economists And those knowledge workers did their labor with zero capital investment before by an employer (or themselves)? Computers, tools, infrastructure all were provided so the knowledge worker could work, and those pieces required capital before the knowledge worker could produce labor. I have hard time understanding why so many people cannot accept that capital is a valid and necessary input to creating things, including creating more capital, which can then be invested in yet further productive pursuits.
    - sudosysgen 6y ago
      Technology can be reduced to labour, capital, and previous technology. Capital can be reduced to labour, capital, and land. The first unit of technology was the product of labour and capital. The first unit of capital was the product of land and labour. If you operate recursively until the first unit of capital and the first unit of technology you end up finding that all value is the product of land and labour. There are certainly a great many economists that agree with this definition. Actually, a famous economist gave a talk at Google that made this exact point!

Raidion 6y ago

In this somewhat reductionist approach, would it be fair that CEO overseeing that process be paid billions of dollars? I think this is a decent thought experiment for ownership of an AI sufficiently good at a hard and profitable problem. Should that company be able to collect those billions forever even if they no longer have to do any work?

jfim 6y ago

I'd argue that most of their capital comes from their employees, not their hardware. Any company can buy hardware that's functionally equivalent to Google's. Even with a massive pile of cash and being able to buy the same amount of hardware that Google has, it would be useless without the software that makes it run, and that software is made by their employees. There are definitely sectors of the industry (such as manufacturing or insurance) where capital and automation drives value generation, but Google is in the business of writing software, which isn't really automatable.

tanilama 6y ago
But software can be written anywhere. I do think Google has good engineers, but they are really not that indispensable

simias 6y ago

>Imagine a company that spent billions to automate every process requiring only a single human to push a button every 10 minutes to produce its output. This company would be making "billions per employee", but it wouldn't make sense to pay that employee billions for that job. Why not? Why should it go into the shareholder's pockets instead of the people who actually do the work and create the value? What if the people actually working were to, I dunno, seize the means of production or something? To be clear while I understand that there are many reasonable objections to socialism it bothers me that your comment presents capitalism as self-evident. Even if you believe that it's the best (or at least least worst) system, you should always question it. If a company generates billions in profit the question of how this profit is divided among the owners and the workers should forever remain an open question I think.

jfim 6y ago
> Why should it go into the shareholder's pockets instead of the people who actually do the work and create the value? Proponents of the shareholder value model would argue that the point of a business is to maximize that value, and that it's better to return that value to shareholders instead of giving it to employees. In the case of the button pressing employee, if they can find someone that would press the same button for minimum wage instead of billions per year, with functionally equivalent output, then from that perspective it would make sense to replace that expensive employee with a cheaper one, as that would maximize shareholder value. In practice, things aren't as simple, since value maximization can have all kinds of perverse effects (eg. in that model, dumping sewage into a lake is a great idea if the fine is smaller than the resulting shareholder value) and shareholder value is kind of detached nowadays with profitless companies and many companies not electing to pay dividends.
- simias 6y ago
  Well the original example was obviously flawed because if all that's left for the employee to do is literally just press a button, then it would've been automated as well. In a company like Google the argument that the workforce is effectively just a commodity that could be replaced easily and at will is obviously not applicable. Most of Google engineers are not button pushers.

ddingus 6y ago

The only source of capital is labor. All that money spent on automation paid for labor, who has an interest in the fruits of said labor. Collective labor is one way to secure an equitable share of that fruit. Also, someone has to pay for that output. How exactly does that happen when people lack income? Fact is that company so automated needs sales, maintenance, innovation and all the stuff needed to endure and compete over time. If they are not paying labor, their product would be devalued quickly, and or they would experience increasing trouble over time. The ones who know how to deal with that have awesome position and would expect to be compensated handsomely.

chii 6y ago
> their product would be devalued quickly which means more people can afford said product. Automation is increasing productivity and output efficiency.
- ddingus 6y ago
  Maybe. A lot depends on personal cost / risk exposure relative to income. And that devaluation does mean NOT making billions per employee too.
- ddingus 6y ago
  Automation may also improve consistency, or quality. There are two basic outcomes regarding labor: One is to reduce labor and ride on productivity / efficiency. The other is to work differently, better. Head count may or may not change. In terms of which is better, there are strong arguments either way. Everything costs something. The first scenario is easy. Margins go up, labor costs go down. However, cost of change, maintenance, quality, business expansion may carry much higher costs and risks too. In the second scenario, margins likely increase, but not as dramatically. People are free for other work, training, to innovate, etc... Lots of ways this can all play out.

TheOtherHobbes 6y ago

Imagine something that doesn't exist and then claim it's "fair framing" to argue as if it does? One of the most depressing things about the US is the corporate authoritarianism that many employees seem to suffer from. Of course shareholders should have priority over workers because... that's just the "natural" order of things? If a company fails, shareholders risk some small percentage of capital they can mostly afford to lose, while workers risk poverty and homelessness? It makes no sense at all to me. Not just from the point of view of comp, but from the point of view of democracy. Because you can't have a functioning democracy when you have huge power differentials between different castes. Unions - including board representation for unions - are one way to shrink those power differentials. They're not the only way and they're not infallible, but when they do work they're guaranteed to better than nothing. They not only redistribute income, but they also give individuals collective pushback against corporate bullying and abuse. Or perhaps you'd rather continue to grumble that HR is always there to take the company's side, but do nothing about it?

mempko 6y ago
Really sad you are being downvoted.

jellicle 6y ago

Why not? They're doing the labor. You're just assuming your conclusion here. Your premise is that "having capital" deserves a reward and "doing work" doesn't, and so your conclusion is that having capital should be rewarded and doing labor should not be. But if you change your premise, the results can change too.