3 ms·

A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce. It's not the person who us

A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce. It's not the person who uses the machine that multiplies their effort that make ridiculous amounts of money, it's the the owners of the machines that do. And as time passes, the set of people who own the machines and the set of people who built the machines will presumably only continue to diverge. Taken to the extreme, you reach a point at which machines can run entire businesses. Profits will go straight to the owners of the machines. To look at it another way - labor is not priced based on productivity of labor, but rather, supply and demand. As we continue to become more productive there's little reason to think that those who are becoming more productive are those who are earning more. Indeed, looking at a graph of real wages versus productivity over time (quick googling yields http://thecurrentmoment.wordpress.com/2011/08/18/productivity-inequality-poverty/ http://thecurrentmoment.wordpress.com/2011/08/18/productivit... ) it's hard to imagine that labor's share of wealth isn't decreasing. This is not a surprising result; as it's supply and demand that sets the price of labor, the impact of replacing people with machines is that there's greater supply on the job market (everyone who is out of a job) combined with less demand (as most industries aren't constrained on number of people they can hire).

pdonis 13y ago
It's not the person who uses the machine that multiplies their effort that make ridiculous amounts of money, it's the the owners of the machines that do. The obvious solution to this is that the person who uses the machine should also own it. Which means that people who think of themselves as "labor" should be looking for industries where they can own the technology that multiplies their productivity. Such as, just an example off the top of my head, programming. :-)
- dannypgh 13y ago
  I don't know about you, but my employer owns my work product via an intellectual property assignment agreement, that I signed as a condition of employment. In addition, our operation requires very expensive datacenters, which they clearly own, not any of the employees. Or even all of the employees, taken together. So, I write programs, but I neither own them nor the systems that are required to run them. Taken collectively, the employees at my job have created a very profitable machine, in that it brings in revenue that greatly exceeds the market cost of building the machine. This profit goes to shareholders, not employees, and an employee by virtue of an employee will not receive any share of the revenue created by their work after they leave their company. Yes, I am partially paid in stock, and this means I am at times part-owner. But this can be seen as a coincidence and doesn't really significantly alter the power dynamic. I say this because it is ultimately part of our compensation, and the fact that they choose to pay us some shares (and correspondingly less cash) is more of an accounting trick then a fundamental shift in the employee-employer relation.
  - pdonis 13y ago
    I should have specified free-lance programming or programming in a startup, where you're a founder or an early employee. You're right that programming in a lot of companies doesn't have the same ownership structure. I also agree with your remarks about being "paid" in stock instead of cash. I worked for a company (not an IT company) that "paid" us in stock options, and insisted that the "cash value" was equivalent, which was of course their excuse for not just giving us the cash. Of course, those options turned out to be worthless when the company's stock tanked. So yes, it was just an accounting trick.
  - stretchwithme 13y ago
    That doesn't keep ypu from buying the means of production, a computer and doing programming on your own. And the what you produce will be yours if you protect it the way your employer protected the work that he paid you to produce for him.
jes 13y ago
"A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce." What about the worker that is employed and doesn't spend more than he earns? That which he accumulates is his profit.
- dannypgh 13y ago
  We're talking about the profits generated by the business. The worker sells their labor. There's no reasonable way of valuing what their labor "costs" to them, as it's ultimately the opportunity cost of being able to do anything else, so it's not really sensible to talk about selling your time as "profit" or not. You can approximate what it's worth to them by the market, in which case the only people who clearly can be said to profit from their labor are those who are being paid above market rate. I suggest to you, that's relatively rare (note if you're outsourcing out your work at market and then doing some sort of QA, the delta between market and what you're paid is probably around market for the QA, else the employer would have outsourced the work themselves). The profit I'm referring to is revenue minus costs for the corporation. All wages and salaries here fall under operating costs. The profit goes to the corporation, which is owned by the shareholders, not the employees. It's misleading to re-characterize wages as profits, because the wages are what's purchasing the labor which is used to create the revenue. If I charge someone $10 (assume that's market rate) for a car wash and in turn pay someone $10 to wash the car, I have paid $10 in wages, have $10 in revenue, and have no profit. The person who washed the car sold a service worth $10 for $10, so they have broken even. Note that if what I'm doing is finding customers, I am adding my labor as well, and can and should earn a wage for that. If I'm doing nothing but letting the business run itself, I am not selling any of my labor, but I am still legally entitled to the delta between revenue and costs.
argonaut 13y ago
It's also the people who create the means of production.
adharmad 13y ago
And typically such people are also the ones who take the risk and invest in the machines. Every such investment is a risk and there is no saying which turn the economy will take (someone else may make a cheaper/better machine).

pdonis 13y ago

It's not the person who uses the machine that multiplies their effort that make ridiculous amounts of money, it's the the owners of the machines that do. The obvious solution to this is that the person who uses the machine should also own it. Which means that people who think of themselves as "labor" should be looking for industries where they can own the technology that multiplies their productivity. Such as, just an example off the top of my head, programming. :-)

dannypgh 13y ago
I don't know about you, but my employer owns my work product via an intellectual property assignment agreement, that I signed as a condition of employment. In addition, our operation requires very expensive datacenters, which they clearly own, not any of the employees. Or even all of the employees, taken together. So, I write programs, but I neither own them nor the systems that are required to run them. Taken collectively, the employees at my job have created a very profitable machine, in that it brings in revenue that greatly exceeds the market cost of building the machine. This profit goes to shareholders, not employees, and an employee by virtue of an employee will not receive any share of the revenue created by their work after they leave their company. Yes, I am partially paid in stock, and this means I am at times part-owner. But this can be seen as a coincidence and doesn't really significantly alter the power dynamic. I say this because it is ultimately part of our compensation, and the fact that they choose to pay us some shares (and correspondingly less cash) is more of an accounting trick then a fundamental shift in the employee-employer relation.
- pdonis 13y ago
  I should have specified free-lance programming or programming in a startup, where you're a founder or an early employee. You're right that programming in a lot of companies doesn't have the same ownership structure. I also agree with your remarks about being "paid" in stock instead of cash. I worked for a company (not an IT company) that "paid" us in stock options, and insisted that the "cash value" was equivalent, which was of course their excuse for not just giving us the cash. Of course, those options turned out to be worthless when the company's stock tanked. So yes, it was just an accounting trick.
- stretchwithme 13y ago
  That doesn't keep ypu from buying the means of production, a computer and doing programming on your own. And the what you produce will be yours if you protect it the way your employer protected the work that he paid you to produce for him.

jes 13y ago

"A defining characteristic of capitalism is that profits go to the owners of the means of production, not those who actually produce." What about the worker that is employed and doesn't spend more than he earns? That which he accumulates is his profit.

dannypgh 13y ago
We're talking about the profits generated by the business. The worker sells their labor. There's no reasonable way of valuing what their labor "costs" to them, as it's ultimately the opportunity cost of being able to do anything else, so it's not really sensible to talk about selling your time as "profit" or not. You can approximate what it's worth to them by the market, in which case the only people who clearly can be said to profit from their labor are those who are being paid above market rate. I suggest to you, that's relatively rare (note if you're outsourcing out your work at market and then doing some sort of QA, the delta between market and what you're paid is probably around market for the QA, else the employer would have outsourced the work themselves). The profit I'm referring to is revenue minus costs for the corporation. All wages and salaries here fall under operating costs. The profit goes to the corporation, which is owned by the shareholders, not the employees. It's misleading to re-characterize wages as profits, because the wages are what's purchasing the labor which is used to create the revenue. If I charge someone $10 (assume that's market rate) for a car wash and in turn pay someone $10 to wash the car, I have paid $10 in wages, have $10 in revenue, and have no profit. The person who washed the car sold a service worth $10 for $10, so they have broken even. Note that if what I'm doing is finding customers, I am adding my labor as well, and can and should earn a wage for that. If I'm doing nothing but letting the business run itself, I am not selling any of my labor, but I am still legally entitled to the delta between revenue and costs.

argonaut 13y ago

It's also the people who create the means of production.

adharmad 13y ago

And typically such people are also the ones who take the risk and invest in the machines. Every such investment is a risk and there is no saying which turn the economy will take (someone else may make a cheaper/better machine).