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This is the answer and why the labor theory of value tends to fall flat without due consideration to the labor of managers and the cumulative returns of labor.

by tjs8rj 4y ago

This is the answer and why the labor theory of value tends to fall flat without due consideration to the labor of managers and the cumulative returns of labor. If your work earns $100k/y in revenue for a company, that doesn't mean your work created it entirely. The continued dividends of organization of the company, customer acquisition, legal apparatus, support of your entire organization made that revenue possible and are entitled to a share of it too. It took a village to make that revenue, unless it didn't, in which case: quit and do it yourself to keep all that money. This is a self-correcting system that ensures everyone gets paid approximately what they contributed.

tsimionescu 4y ago
While you're right that you have to account for the entire organization, not just the engineers (obviously), the gap between what the owners earn compared to all other employees combined is still wildly disproportionate. It's of course hard to precisely quantify these things, but the worsening gap between worker and owner incomes is quite obviously not proportional to any change in how much value owners add to a corporation compared to workers (if anything, workers' contribution has been increasing, not decreasing, as productivity tools and techniques have been advancing).
- philwelch 4y ago
  You're not taking risk premium into account. Owners run the risk of working for several years and getting absolutely nothing in return. Sometimes they put their own money into the company and never get it back.
- tjs8rj 4y ago
  This same argument also applies to owners. If the org makes $100k in revenue and the owners take $10k of that, why don't you just leave to start your own firm and keep it all? It's because there ARE contributions from the owner, even a passive owner has what I called "dividends from stored labor": they took on the risk, created a functioning company solving a problem, did the work of organizing the systems/structure that run the thing, and so they are entitled to a piece of the revenue as well (as that revenue couldn't have been earned without their contributions either).
  - tsimionescu 4y ago
    No one says that owners are not entitled to a piece of the revenue, obviously they are, and doubly so when they are also doing their own work for the company. My point was that owners currently get a disproportionately large piece, and that the gap between what owners get vs what workers get has been widening with time. And not only is it widening, but it is doing so while the relative contributions to the business' success are often narrowing (give the huge increases in worker productivity in most domains).

by tjs8rj 4y ago

tsimionescu 4y ago

While you're right that you have to account for the entire organization, not just the engineers (obviously), the gap between what the owners earn compared to all other employees combined is still wildly disproportionate. It's of course hard to precisely quantify these things, but the worsening gap between worker and owner incomes is quite obviously not proportional to any change in how much value owners add to a corporation compared to workers (if anything, workers' contribution has been increasing, not decreasing, as productivity tools and techniques have been advancing).

philwelch 4y ago
You're not taking risk premium into account. Owners run the risk of working for several years and getting absolutely nothing in return. Sometimes they put their own money into the company and never get it back.
tjs8rj 4y ago
This same argument also applies to owners. If the org makes $100k in revenue and the owners take $10k of that, why don't you just leave to start your own firm and keep it all? It's because there ARE contributions from the owner, even a passive owner has what I called "dividends from stored labor": they took on the risk, created a functioning company solving a problem, did the work of organizing the systems/structure that run the thing, and so they are entitled to a piece of the revenue as well (as that revenue couldn't have been earned without their contributions either).
- tsimionescu 4y ago
  No one says that owners are not entitled to a piece of the revenue, obviously they are, and doubly so when they are also doing their own work for the company. My point was that owners currently get a disproportionately large piece, and that the gap between what owners get vs what workers get has been widening with time. And not only is it widening, but it is doing so while the relative contributions to the business' success are often narrowing (give the huge increases in worker productivity in most domains).