Actual "Risk" in Capitalism

[Havet]

The following is a post from the website Division By Zer0 which I found very interesting and intellectually stimulating. Perhaps some of the resident ancaps and cappies want to comment on it? For everyone else, it's a fine resource of arguments.

The most common argument I hear when arguing for the exploitation theory with Anarcho-Capitalists is the concept of Risk which supports the idea that the Capitalist deserves a share of the profits, even though he is not putting any labour in, himself. The argument usually goes somehow like this.


Me: ‘The Worker is being exploited because he’s not receiving the full results of his labour’
AnCap: ‘The Capitalist deserves part of the profit because he took the risk with his capital to start the company. If the company fails, the Capitalist has lost his money.If the company does well, he deserves to be rewarded for taking such a risk’

As I have to deal with this a lot, I think it might be worth writing my objections to the concept and how it does not counter the exploitation theory.
Risk does not exist once the Return of Investment has been made

We start on the situation where the Capitalist has wealth but not yet bought any means of production. He decides on a venture that he assumes will be able to make a profit and builds a factory to produce the product. At this point, we assume that his risk is that he might have judged wrongly and there might actually not be any margin for profit so he will end up not making up his investment on the factory.

Lets assume however that he was right and the new company does make a profit. This profit of course comes from taking part of the surplus value created by the workers and our Capitalist would claim that this is warranted since he deserves to make back his investment.

But the Capitalist will not stop there. When ROI has been made, and all his investment has been returned to him in the form of profit over time, the capitalist will continue to exploit the workers in order to continue making more money, over his initial investment. At this point, this exploitation cannot be claimed to be justified because of the risk, as there is no more “risk” to speak of. Even if the company were to go under, the Capitalist will leave with as much wealth as he came in.

You may claim that the Capitalist is worse off because he has not grown any richer from this venture and because present wealth is of more value than future wealth, then he has come out at a loss. Fine, I say, how much money does the capitalist deserves before the factory passes over to the workers? Two times his investment? Five? Ten? Of course for the Capitalist, the answer is that it is never enough. Any wealth the company makes is deserved because of the initial “risk”.

But any worker can see how absurd this is. The profit the capitalist has taken over the years from all the workers of the factory has paid the initial investment many times over, but the worker still does not own anything. Even though the workers have done all the work to make this company productive, they do not deserve to own it at any point simply because the capitalist was the one who had the money at the start.

The worker is taking a risk as well

Apologists of risk like to point out that the worker is not taking any risk at all, and this is why his wage is reduced. If the company fails, only the capitalist has lost any money (which as I pointed out above, will not be true after a while) while the worker can simply go out and find another job, keeping all the money he made from wages.

But how true is that? Does the worker really not take any risk? Of course he does. First of all, the worker is usually paid at the end of the month for the work he put during. If a company is facing financial troubles then it’s quite probable that wages might be pushed back one or more months during which the workers must use their savings to survive. They will be pressured to do this “for the good of the company”.If the company ends up failing after all, the workers have now lost their wage(s). That is a risk. The AnCap will claim that this is illegal and so on but the worker will not get paid either if the capitalist goes to jail. This very real and practical risk of the worker is never rewarded like the risk the Capitalist takes.

But that’s not the only loss the worker has. He might have moved areas simply because he wanted to get this job. He might have left a more secure job in favour of the new one which failed, and any number of other risk factors. None of these are worth reward by AnCap thiking however, as the only thing that counts is the chance of the capitalist losing his investment.

The reward is big, the risk is low.

The AnCap will claim that the Capitalist deserves huge rewards simply because he’s the one taking the huge risks. But if these risks are so large why doesn’t the capitalist share them in order to avoid stressing himself? Why does he not allow the workers to share the risk (which they already do anyway). The answer of course is because the rewards are much much higher than the risk which is generally low. We’re not talking about gambling here where you have, say, 1 in 36 chances to make 36 times your money. We’re talking about a situation where “market research” allows you to foresee where the ball will go to (and you have something like 1 in 10 chance to judge that incorrectly) and where the reward has no upper limit.
It is no wonder then that the Capitalist takes “risks” and doesn’t want to share those “risks” with anyone. If I am in a casino and I have 1 in 10 chance to not make 10 times my bet, then we’re not talking about risk anymore, especially not when I can simply put 10 different bets and assure that whatever happens, I’ll get out much 90 times wealthier.

Of course, the real risk in this situation does not fall on the capitalist, it falls on the system as a whole. Because when such a chance opens, every capitalist jumps onto the table and bets. And since only 1 in 10 can ever lose money, the casino soon runs out of money and goes bust. Replace “casino” with economy and you basically have the reality of a capitalist crisis.

“If the risk was low, then the workers would take it themselves."

The AnCap of course will counter my above point as such: ‘Well, if the risk is so low, why don’t you take it yourself then? The fact that the workers don’t band together to pool the resources and take the risk is proof that they do not want it and that it’s not as low as you claim.’

The reason why workers do not take the risk themselves is that the capital that is required to have such a low risk is far beyond their capabilities to save. The known low risk investments have already been claimed and the Capitalist who owns them will request far more than the workers can ever accumulate through labour. The not so well known investments require money to simply discover them. Without this market research, your chances in the capitalist roulette are not 10 in 1 anymore but 1 in 10, and unlike the capitalist, you only ever have one chance to bet.

The only chance the worker or a cooperative then is left with, is to stumble upon an opportunity which has not been tapped already and thus the cost to enter it is low enough. This is how almost all recent self-made capitalists achieved it (http://www.guardian.co.uk/books/2008/nov/15/malcolm-gladwell-outliers-extract), from Bill Gates, to Steve Jobs to Larry Page. But this is about as practical for the majority of workers as is playing the lottery.

To get back to our casino example. Imagine a casino where the minimum chip costs as much as a well-off worker can make in a lifetime. Not only that, but if you have enough money, you may be able to bribe the croupier to tell you where the ball will land. When you win, you get paid with the money of people who are not playing. A well-off worker would be hard pressed to simply afford the minimum bet and even then he will still not have enough to bribe the croupier.

Epilogue

I hope I have provided you some arguments on why the candy of “risk” that the Capitalist will use at every opportunity is flawed. For me, this does not even begin to defeat the theory of exploitation as the the risks of capitalism are negatively proportional to the Capital one has.

I will leave you finally, with one quote from the Barefoot Bum (http://barefootbum.blogspot.com/) who helped me round out this piece
If risk is all-important, why can’t the people get together and spread out the risk, instead of concentrating the risk in some capitalists, and allowing them to have tremendous power as a reward for taking risks?
That’s basically what socialism does: Take all of these differentials — risk, surplus value, political power, etc. — and spread them out to all the people, instead of concentrating them.
If it was a good thing to take political power concentrated in the king or the oligarchy and spread it out among the people in a democracy, why shouldn’t it be a good thing to take economic power concentrated in the capitalist oligarchy and spread it out to the people?
Original Article (http://dbzer0.com/blog/the-risk-in-capitalism-is-nothing-more-than-a-scare-tactic)

[Skooma Addict]

To start off, the Author did not address one very important point; that the capitalist/worker relationship is almost always voluntary. The author also failed to address the fact that workers are paid before their product is completed and sold. This, even if there was no risk involved (however, there is), would justify capitalist profits.



Me: ‘The Worker is being exploited because he’s not receiving the full results of his labour’
AnCap: ‘The Capitalist deserves part of the profit because he took the risk with his capital to start the company. If the company fails, the Capitalist has lost his money.If the company does well, he deserves to be rewarded for taking such a risk’


And if it takes 3 years for the product to be comlpleted and sold? Would workers rather wait until then to recieve the full value of their labor? No. Nowadays, the capitalist also performs entrepreneurial functions. Investing in undervalued factors is profitable and very helpful for society at large.



As I have to deal with this a lot, I think it might be worth writing my objections to the concept and how it does not counter the exploitation theory.
Risk does not exist once the Return of Investment has been made


It should be quite obvious that this is false.



But the Capitalist will not stop there. When ROI has been made, and all his investment has been returned to him in the form of profit over time, the capitalist will continue to exploit the workers in order to continue making more money, over his initial investment. At this point, this exploitation cannot be claimed to be justified because of the risk, as there is no more “risk” to speak of. Even if the company were to go under, the Capitalist will leave with as much wealth as he came in.

That is not the point. The point is that there are still risks that the capitalist must face at all times which provides incentives to keep producing in accordance with comsumer desires.



Apologists of risk like to point out that the worker is not taking any risk at all, and this is why his wage is reduced. If the company fails, only the capitalist has lost any money (which as I pointed out above, will not be true after a while) while the worker can simply go out and find another job, keeping all the money he made from wages.

But how true is that? Does the worker really not take any risk? Of course he does. First of all, the worker is usually paid at the end of the month for the work he put during. If a company is facing financial troubles then it’s quite probable that wages might be pushed back one or more months during which the workers must use their savings to survive. They will be pressured to do this “for the good of the company”.If the company ends up failing after all, the workers have now lost their wage(s). That is a risk. The AnCap will claim that this is illegal and so on but the worker will not get paid either if the capitalist goes to jail. This very real and practical risk of the worker is never rewarded like the risk the Capitalist takes.

But that’s not the only loss the worker has. He might have moved areas simply because he wanted to get this job. He might have left a more secure job in favour of the new one which failed, and any number of other risk factors. None of these are worth reward by AnCap thiking however, as the only thing that counts is the chance of the capitalist losing his investment.


Workers are taking risks, but they are not entrepreneurial risks. Nobody thinks that workers do not take any risk at all.


The AnCap will claim that the Capitalist deserves huge rewards simply because he’s the one taking the huge risks.

Nobody thinks this. Nobody thinks that you deserve rewards merely for taking risks. The reward comes after you fulfill consumer desires.


The AnCap of course will counter my above point as such: ‘Well, if the risk is so low, why don’t you take it yourself then? The fact that the workers don’t band together to pool the resources and take the risk is proof that they do not want it and that it’s not as low as you claim.’

The reason why workers do not take the risk themselves is that the capital that is required to have such a low risk is far beyond their capabilities to save. The known low risk investments have already been claimed and the Capitalist who owns them will request far more than the workers can ever accumulate through labour. The not so well known investments require money to simply discover them. Without this market research, your chances in the capitalist roulette are not 10 in 1 anymore but 1 in 10, and unlike the capitalist, you only ever have one chance to bet.

The only chance the worker or a cooperative then is left with, is to stumble upon an opportunity which has not been tapped already and thus the cost to enter it is low enough. This is how almost all recent self-made capitalists achieved it (http://www.guardian.co.uk/books/2008/nov/15/malcolm-gladwell-outliers-extract), from Bill Gates, to Steve Jobs to Larry Page. But this is about as practical for the majority of workers as is playing the lottery.

To get back to our casino example. Imagine a casino where the minimum chip costs as much as a well-off worker can make in a lifetime. Not only that, but if you have enough money, you may be able to bribe the croupier to tell you where the ball will land. When you win, you get paid with the money of people who are not playing. A well-off worker would be hard pressed to simply afford the minimum bet and even then he will still not have enough to bribe the croupier.

Some workers do band together, and have done so successfully. But this whole portion doesn't even make sense. Workers who band together might have the required capital. You don't need to be a mulltimillionare as the author implies. Just becasue something has not been tappd into, that doesn't mean the cost of entry won't be low.

[Havet]

To start off, the Author did not address one very important point; that the capitalist/worker relationship is almost always voluntary.

Sure...if there was complete equality of opportunity (http://bradspangler.com/blog/archives/522).


The author also failed to address the fact that workers are paid before their product is completed and sold. This, even if there was no risk involved (however, there is), would justify capitalist profits.

Good point, though i'm unsure how it could justify ad infinitum profits.


And if it takes 3 years for the product to be comlpleted and sold? Would workers rather wait until then to recieve the full value of their labor? No. Nowadays, the capitalist also performs entrepreneurial functions. Investing in undervalued factors is profitable and very helpful for society at large.

Another good point.


That is not the point. The point is that there are still risks that the capitalist must face at all times which provides incentives to keep producing in accordance with comsumer desires.

What kind of risks? Isn't it always one risk: making a product that is in demand?


Workers are taking risks, but they are not entrepreneurial risks. Nobody thinks that workers do not take any risk at all.

How would you define an enterpreneurial risk?


Nobody thinks this. Nobody thinks that you deserve rewards merely for taking risks. The reward comes after you fulfill consumer desires.

I bet that somewhere along the interwebs there is someone arguing that which you consider impossible. Its kind of one of the rules of internet: every single asinine thought is expressed, no matter how irrational.


Some workers do band together, and have done so successfully. But this whole portion doesn't even make sense. Workers who band together might have the required capital. You don't need to be a mulltimillionare as the author implies. Just becasue something has not been tappd into, that doesn't mean the cost of entry won't be low.

How do you explain the low historical amount of cooperatively organized enterprises?

[IcarusAngel]

John Stuart Mill showed there was no right way to distribute wealth; that obviously means that there is no way to calculate what the worker should truly be earning. Also, you cannot show that the worker is being paid for a product only before it is completed.

Obviously, many people working on contract are paid after a product is completed. Presumably, in the "contract" society advocated by anarcho-capitalists, there would be more of such contracts. As usual Olaf's and hayenmill's statements suffer from a lack of common sense, not just mathematicial reasoning.

[Skooma Addict]

Sure...if there was complete equality of opportunity (http://bradspangler.com/blog/archives/522).

There never was, nor will there ever be complete equality of opportunity. But anyways, as long as the worker agrees with the concept of private property (and most do), then the relationship is voluntary. It gets more complicated with a socialist worker. In a sense, the relationship is still voluntary. But at the same time, the socialist does not believe in private property, which changes things.



Good point, though i'm unsure how it could justify ad infinitum profits.


What are ad infinitum profits?


What kind of risks? Isn't it always one risk: making a product that is in demand?


If my company brings in more money than I used to start up the company, that does not mean that I am no longer taking risks. I am still risking my money, time, and effort. All of these things could be put to different uses, which means I can still suffer (sometimes devastating) losses. This is especially true if I reinvest my personal income in the business.



How would you define an entrepreneurial risk?

When you invest in a factor in hopes that you can gain a higher return from that factor in the future. It may turn out that the value of the factor will decline, in which case you suffer a loss. This is the entrepreneurial function. It can theoretically be fulfilled by a worker run firm. It does not require a single capitalist or entrepreneur.


I bet that somewhere along the interwebs there is someone arguing that which you consider impossible. Its kind of one of the rules of internet: every single asinine thought is expressed, no matter how irrational.

Lol, yea that is true.


How do you explain the low historical amount of cooperatively organized enterprises?

Generally, I don't think they are as efficient as a "hierarchical" firm. There are always exceptions though. There might be some other reasons that have to do with government intervention.

[IcarusAngel]

I'd like to see you two idiots prove that relations in a free-market are voluntary. People do not support exploitative property, and regularly vote in politicians who promise to curb the wealth of the rich and distribute property more fairly, all around the world. In that sense the state is more voluntary than the business, since you get to participate in a more meaningful way.

In reality, free-markets are no more voluntary than what is provided to you in prison by the warden.

Obviously, common sense tells you that you will take what is provided to you by the prisoner system.

http://www.jstor.org/pss/2130588

[Skooma Addict]

I'd like to see you two idiots prove that relations in a free-market are voluntary. People do not support exploitative property, and regularly vote in politicians who promise to curb the wealth of the rich and distribute property more fairly, all around the world. In that sense the state is more voluntary than the business, since you get to participate in a more meaningful way.

In reality, free-markets are no more voluntary than what is provided to you in prison by the warden.

Obviously, common sense tells you that you will take what is provided to you by the prisoner system.

Most people agree with the concept of private property. They just also favor some policy of redistribution.

[Havet]

I'd like to see you two idiots prove that relations in a free-market are voluntary.

I'm not talking to you when you begin sentences in such polite manner

[IcarusAngel]

The professor's point is valid, then. 70% of people also believe corporations have too much power, too much influence over the government. This indicates that not only do people want "distirbution" but that they think that wealth comes from unfair advantages through monopolies and other negative results of the free-market. It also indicates that they would like to participate in decisions more at work.

Furthermore, people take what is provided from them. In this case it is by large institutions who control most of the resources, just as in a prisoner's scenario you take the resources provided to you by an authority. This system is resistant to change, except through government.

This is where game theory comes in.

The "voluntary" argument then is refuted.

This combined with John Stuart Mill's proof that there is no way to rightly distirbute resources shows that you could have a democratic means of production or some other ethical means of production that would be more effective.

[Havet]

There never was, nor will there ever be complete equality of opportunity. But anyways, as long as the worker agrees with the concept of private property (and most do), then the relationship is voluntary. It gets more complicated with a socialist worker. In a sense, the relationship is still voluntary. But at the same time, the socialist does not believe in private property, which changes things.

Perhaps not, but we can have substantially higher levels of equality of opportunity than the ones we experience today.


What are ad infinitum profits?

Basically the idea that the capitalist will continue to get profits because of the initial risk. But we already discussed that.


If my company brings in more money than I used to start up the company, that does not mean that I am no longer taking risks. I am still risking my money, time, and effort. All of these things could be put to different uses, which means I can still suffer (sometimes devastating) losses. This is especially true if I reinvest my personal income in the business.

Technically, you are no longer risking your money, unless you spend ALL of the Return of Investment after the first investment.


When you invest in a factor in hopes that you can gain a higher return from that factor in the future. It may turn out that the value of the factor will decline, in which case you suffer a loss. This is the entrepreneurial function. It can theoretically be fulfilled by a worker run firm. It does not require a single capitalist or entrepreneur.

Agreed


Generally, I don't think they are as efficient as a "hierarchical" firm. There are always exceptions though. There might be some other reasons that have to do with government intervention.

I agree with those "other reasons".

[IcarusAngel]

By the way I can send a copy of that full essay to anybody who wants it (The Market as Prison by Lindblom) - it's a good refutation of markets for the modern man.

It also appears in "The Political Economy" by Ferguson & Rogers. (Yes, THAT Thomas Ferguson:

E4RN2x_7Xoc

He's becoming more of a leftist all the time, although he dismisses syndicalism.)

[ComradeMan]

Well, I think the whole problem is the market itself. You can argue from a cap point of view- and they do have some matter of fact, albeit cynical, points or you can argue from a Marxist point of view which is very idealistic and "just"- despite having failed in every society in which it was implemented.

The problem is the whole damn structure and nature of society and industry is corrupt and until that changes it's just tinkering with the same old engine that's doomed to fail.
:cool:

[IcarusAngel]

^^Sounds like you'd enjoy Market as Prison.

[Zanthorus]

By the way I can send a copy of that full essay to anybody who wants it (The Market as Prison by Lindblom) - it's a good refutation of markets for the modern man.

Yes please, that'd be awesome :)


Most people agree with the concept of private property.

Do they agree with what communists mean by private property though?

[Skooma Addict]

The professor's point is valid, then. 70% of people also believe corporations have too much power, too much influence over the government. This indicates that not only do people want "distirbution" but that they think that wealth comes from unfair advantages through monopolies and other negative results of the free-market. It also indicates that they would like to participate in decisions more at work.

Well, no. The belief that corporations have too much power indicates no such thing.


Furthermore, people take what is provided from them. In this case it is by large institutions who control most of the resources, just as in a prisoner's scenario you take the resources provided to you by an authority. This system is resistant to change, except through government.

More often than not, these "large institutions" should be thanking the government.



This is where game theory comes in.

The "voluntary" argument then is refuted.

This combined with John Stuart Mill's proof that there is no way to rightly distirbute resources shows that you could have a democratic means of production or some other ethical means of production that would be more effective.

I don't see where the voluntary argument is refuted. Also, how does the claim that there is no right way to distribute resources mean that a democratic means of production is the right way to distribute resources? Anyways, there are ways at distributing resources that are better at improving the material conditions of the masses and increasing capital accumulation. That is what I favor. I don't think it is "right" in any sense beyond my subjective preferences.

[Havet]

By the way I can send a copy of that full essay to anybody who wants it (The Market as Prison by Lindblom) - it's a good refutation of markets for the modern man.

Send it to me if you are willing and able.

[IcarusAngel]

Yes please, that'd be awesome :)


Send it to me if you are willing and able.

Sent. I had to get it again (I swear I had it on my computer) so it took me a minute . I also sent one to comrademan. It's kind of interesting.

Basically, it does indeed argue that the market is a prison - so you're essentially doing time in markets.


He also did the "privileged position of business" theory (google it) and helped popularize the term "polyarchy" (along with Dahl, who had great criticisms of Reagan).

Chomsky has cited the polyarchy theory, and Lindblom cited Edward Herman in the market as prison article I believe.

[mikelepore]

Workers are taking risks, but they are not entrepreneurial risks. Nobody thinks that workers do not take any risk at all.

I'm glad you realize that workers take risks, but the fact is, some of those risks are also financial.

You are given a job in another location, so you buy a house in that location. You're out the closing costs and moving expenses. If you were in a hurry, you may have had to sell your previous house at a loss. Before you may have been walking to work or taking a train, but for the new job you will need a car. In your old job you could wear casual clothes, but the new job requires expensive clothes. You may get laid off before you earn back these initial losses.

There are job search expenses. In my case, I've been to four universities, so every time I apply for a job that's $20 to have transcript mailed. I had a year in which I spent $3000 to have transcripts sent to 150 potential employers. That search resulted in me getting a three-month temporary job.

The cost of education is a gamble. Maybe you get a master's degree in chemical engineering, and then there are no job offers, so after six months of searching, in order to survive, you take a job in hamburger shop. No sooner do you take the job in the hamburger shop when someone finally does offers you a chemical engineering job, provided that you can start immediately, but you can't start immediately because you're required to give the hamburger shop a period of notice, so the offer of the chemical engineering job is withdrawn.

The worker is mentally, physically, and also financially, jerked around. The capitalist stays home or goes on vacation the entire time, and merely writes a check to a stock broker.

[Drace]

The risk factor is ultimately useless when faced with the socialist alternative. Its argument only has a leg to stand on if its applied only to the capitalist means of production. Thus, it becomes completely useless as an argument.

It completely disregards the better alternative. Why is it that only the capitalist can start a business? Only because they have the access to capital! In a socialist society workers themselves could collectively start up the means to produce.
Though even in this capitalist economy.
Couldn't 10 workers be able to themselves to put their money together and buy a factory and themselves work it? And thus that way earn the full fruits of their labor?

The capitalist is portrayed as the great inventor, the great innovator, the great businessman, ultimately the means to anything! He is essentially the essence of life under a capitalist mode of production. He is God without the socialist alternative! While this may be true, this fact itself cannot be used as an argument.

You can keep arguing about how the world is nothing without capitalists, but the same arguments could be applied to preserving the feudalistic system.

[Green Dragon]

The risk factor is ultimately useless when faced with the socialist alternative. Its argument only has a leg to stand on if its applied only to the capitalist means of production. Thus, it becomes completely useless as an argument.

It completely disregards the better alternative. Why is it that only the capitalist can start a business? Only because they have the access to capital! In a socialist society workers themselves could collectively start up the means to produce.
Though even in this capitalist economy.
Couldn't 10 workers be able to themselves to put their money together and buy a factory and themselves work it? And thus that way earn the full fruits of their labor?

The capitalist is portrayed as the great inventor, the great innovator, the great businessman, ultimately the means to anything! He is essentially the essence of life under a capitalist mode of production. He is God without the socialist alternative! While this may be true, this fact itself cannot be used as an argument.

You can keep arguing about how the world is nothing without capitalists, but the same arguments could be applied to preserving the feudalistic system.


When the ten workers do this, they become the capitalists.

[Drace]

When the ten workers do this, they become the capitalists. "Couldn't 10 workers be able to themselves to put their money together and buy a factory and themselves work it"

We call it workers owning the means of production.

[Robert]

"Couldn't 10 workers be able to themselves to put their money together and buy a factory and themselves work it"

Any risk of loss here?

[Drace]

Any risk of loss here?

Irrelevant. The point is the capitalist is useless in the production process. Workers themselves could do the work and enjoy their own products of their labor.

Can we stop spewing out useless 1 sentence responses?

[Robert]

If you honestly can't see the risk that comes along with assumption of the means of production, then my droning on about it for 30 lines isn't going to help much.

[Green Dragon]

"Couldn't 10 workers be able to themselves to put their money together and buy a factory and themselves work it"

We call it workers owning the means of production.

There is nothing uncapitalist about the workers owning the factory.

[Robert]

There is nothing uncapitalist about the workers owning the factory.

Well, no, unless it's in a wonderland where risk of loss is deemed "irrelevant!"

[Skooma Addict]

I'm glad you realize that workers take risks, but the fact is, some of those risks are also financial.

You are given a job in another location, so you buy a house in that location. You're out the closing costs and moving expenses. If you were in a hurry, you may have had to sell your previous house at a loss. Before you may have been walking to work or taking a train, but for the new job you will need a car. In your old job you could wear casual clothes, but the new job requires expensive clothes. You may get laid off before you earn back these initial losses.

There are job search expenses. In my case, I've been to four universities, so every time I apply for a job that's $20 to have transcript mailed. I had a year in which I spent $3000 to have transcripts sent to 150 potential employers. That search resulted in me getting a three-month temporary job.

The cost of education is a gamble. Maybe you get a master's degree in chemical engineering, and then there are no job offers, so after six months of searching, in order to survive, you take a job in hamburger shop. No sooner do you take the job in the hamburger shop when someone finally does offers you a chemical engineering job, provided that you can start immediately, but you can't start immediately because you're required to give the hamburger shop a period of notice, so the offer of the chemical engineering job is withdrawn.

The worker is mentally, physically, and also financially, jerked around. The capitalist stays home or goes on vacation the entire time, and merely writes a check to a stock broker.

Yes, workers take financial risks. Whats your point? Their has nothing to do with whether or not capitalists play a useful role in the production process. If you want to improve the lot of the worker, the most important thing is capital accumulation. An increased productivity of labor will increase wage rates. What is not needed is socialism.

[Drace]

There is nothing uncapitalist about the workers owning the factory. It was a hypothetical situation to show that EVEN in a capitalist economy, the workers could ultimately keep a factory running without a capitalist exploiting them.


An increased productivity of labor will increase wage rates.Including a raise in profits of the capitalist. Ultimately, if workers productivity increase, only a fraction of that increase in production will been seen in the worker's paycheck.

Though I don't see why a capitalist would even raise wages because of increased production? Workers overwork already to begin with.

[Green Dragon]

It was a hypocritical situation to show that EVEN in a capitalist economy, the workers could ultimately keep a factory running without a capitalist exploiting them.

Sure... the workers would be the the capitalists, running the factory within such systems.

[Robert]

It was a hypocritical situation to show that EVEN in a capitalist economy, the workers could ultimately keep a factory running without a capitalist exploiting them.

Oh, the irony!:lol:

[Skooma Addict]

Including a raise in profits of the capitalist. Ultimately, if workers productivity increase, only a fraction of that increase in production will been seen in the worker's paycheck.

Though I don't see why a capitalist would even raise wages because of increased production? Workers overwork already to begin with.

It is not necessarily true that a capitalist will earn more. It may be that his increased earning must go to the workers. Some capitalists will earn more, and some will earn less depending on what the specific changes are. Overall, wages of the workers will increase because it now pays to bid higher prices for labor.

[Drace]

It is not necessarily true that a capitalist will earn more.If the workers start producing 50 extra cars a day, the capitalist now has a greater amount of commodities he can sell. Thus the capitalist profits off increased labor productivity. I still don't understand how a capitalist will suffer from a increase in productivity.

Capitalists have a tendency to offer wages as low as possible as well. So the workers increase in wages, if it were to even take place, would be only a small part of the amount of the total surplus value created by the raise in productivity.

Explain this

wages of the workers will increase because it now pays to bid higher prices for labor.


Oh, the irony!Can you for once stop blabbing nonsense and say something constructive?
http://www.revleft.com/vb/../revleft/smilies2/laugh.gif

[Skooma Addict]

If the workers start producing 50 extra cars a day, the capitalist now has a greater amount of commodities he can sell. Thus the capitalist profits off increased labor productivity.

Capitalists have a tendency to offer wages as low as possible.
I still don't understand how a capitalist will suffer from a increase in productivity. Most capitalists will see an increase in profits, as will most workers. However, workers can earn higher wages while at the same time their boss earns less of a profit. A capitalist must pay his workers a higher wage when the productivity of labor goes up, or else he risks losing his employees. But the future price of the goods that the workers are producing is unknown.


Explain thisAn increase in capital accumulation leads to an increased productivity of labor. When I have a tractor, I can farm faster than when I plow. When workers are more productive, it pays to offer them higher wages. If you do not, then it pays for someone to outbid you an make a better offer. Capital accumulation is also what causes increases in peoples living standards. Unfortunately, when there is no private property, the incentives to accumulate and save plummet.

[Drace]

A capitalist must pay his workers a higher wage when the productivity of labor goes up, or else he risks losing his employees. I suppose, though that depends on whether the worker has an alternative to quitting. Finding another job isn't always easy and certainly not something a worker would look up to.


An increase in capital accumulation leads to an increased productivity of labor. When I have a tractor, I can farm faster than when I plow. When workers are more productive, it pays to offer them higher wages. If you do not, then it pays for someone to outbid you an make a better offer. The capitalist still earns the greater share of the profit from the increase in productivity.


Capital accumulation is also what causes increases in peoples living standards. Unfortunately, when there is no private property, the incentives to accumulate and save plummet.So because the rich get richer through making their workers work harder, workers enjoy a higher living standards?
You also have to realize that this supposedly increased wage due to "capital accumulation, comes due to the fact that the workers are working harder. So essentially, the workers don't get a free wage increase. They have to increase their productivity to only see a minimal increase in their paycheck.

Yea I'm sure this private property and this incentive of capital accumulation worked just great for the American colonists, the slaves, and the servants.
The only incentive is to exploit - to gain a higher profit. Your statement is completely contradictory. You praise the profit motive yet deny that capitalists seek to exploit workers -- to reduce their wages as much as possible and increase productivity as much as possible.

Capital accumulation is what causes the standards of living for the ruling class to increase.

[Lynx]

And if it takes 3 years for the product to be comlpleted and sold? Would workers rather wait until then to recieve the full value of their labor?
If the workers expenses could be deferred for 3 years, then I don't see why not. Buy now, pay later.
If business ventures requiring capital could be deferred, then the capitalist would not require capital. Build now, pay later.

In a perpetually deferred payment economy, nobody would require money from anyone until "later". To a certain extent, the current credit system performs this function, for a fee.

[Robert]

Drace stop insulting me and go fix this post:

"It was a hypocritical situation to show that EVEN in a capitalist economy, the workers could ultimately keep a factory running without a capitalist exploiting them."

Surely you mean "hypothetical."

[Drace]

hypothetical

Ahh! My bad!
And I wasn't insulting you.

[Green Dragon]

capitalists seek to exploit workers -- to reduce their wages as much as possible and increase productivity as much as possible.


One would wonder of the sense in seeking to raise workers wages as much as possible, while (and?) reduce productivity as much as possible.

The reality is that the socialist sytem will also seek to lower the salaries of labor (costs) while seeking to increase their productivity as much as possible. It has to. Anything else makes no sense.

[Drace]

The reality is that the socialist sytem will also seek to lower the salaries of labor (costs) while seeking to increase their productivity as much as possible. It has to. Anything else makes no sense.

A socialist society would seek to benefit the workers by whatever means the workers themselves find necessary.

[Kwisatz Haderach]

One small point:


The author also failed to address the fact that workers are paid before their product is completed and sold.
Really? I don't know about you, but I get paid after I do the work, not before.

Does anyone here get a paycheck in advance, before they do the work for which they are paid? No? Didn't think so.

[Bud Struggle]

One small point:


Really? I don't know about you, but I get paid after I do the work, not before.

Does anyone here get a paycheck in advance, before they do the work for which they are paid? No? Didn't think so.

No there's a difference here. You get paid after you do the work--but not necessarily before the product is sold by the "factory owner" to a buyer. The factory owner buys the raw materials, pays the rent, pays the taxes, and pays the worker before the product ever gets put on the market and sold--and there is no guarantee that the factory owner will ever sell the product to a buyer.

Sorry. Didn't mean to interrupt.:unsure:

[Kwisatz Haderach]

No there's a difference here. You get paid after you do the work--but not necessarily before the product is sold by the "factory owner" to a buyer. The factory owner buys the raw materials, pays the rent, pays the taxes, and pays the worker before the product ever gets put on the market and sold--and there is no guarantee that the factory owner will ever sell the product to a buyer.

Sorry. Didn't mean to interrupt.:unsure:
I get paid once every two weeks. So, for instance, I will do some work tomorrow - Monday, February 1 - for which I will get paid on Friday, February 12. There is good reason to believe that, by the time February 12 comes along, the bosses have already sold the stuff made by workers on February 1.

[Robert]

There is good reason to believe that, by the time February 12 comes along, the bosses have already sold the stuff made by workers on February 1.

Depends on the industry, but if they have not sold it come February 12, they still have to pay you, right?

What if they never sell it?

[Skooma Addict]

There is good reason to believe that, by the time February 12 comes along, the bosses have already sold the stuff made by workers on February 1.

It is possible. But you are also not being paid just for the work you did on February 1st. You are being paid for the work you did February 1st-12th. Then there is the fact that the risk factor is greatly reduced.

[Drace]

What if they never sell it?

Thats a very minor risk. And if they don't. They cash out with the millions they made and buy a fuckin yacht.

[Kwisatz Haderach]

Here is something that just occurred to me:

If capitalists had an equal probability to succeed or fail, then their long-term expected profits would be zero (since, in the long term, they would lose as much as they gained - for the same reason why flipping a coin over and over again will cause the heads/tails ratio to converge to 1/1). But, if that were the case, no one would ever want to remain a capitalist for any lengthy period of time. If capitalists expected that, in the long term, their losses would be as big as their gains, then they would be trying to make a quick profit and get out of business before they start losing.

This is not what we observe. Capitalists do not behave as if they expect their long-term profits to be zero. Capitalists behave as if they expect their long-term profits to be positive. They stay in business, which shows that they expect to keep winning.

So, if the behavior of real capitalists is a good indicator, there isn't that much risk involved in business after all - your chances of success are higher than your chances of failure.

[Green Dragon]

Here is something that just occurred to me:

If capitalists had an equal probability to succeed or fail, then their long-term expected profits would be zero (since, in the long term, they would lose as much as they gained - for the same reason why flipping a coin over and over again will cause the heads/tails ratio to converge to 1/1). But, if that were the case, no one would ever want to remain a capitalist for any lengthy period of time. If capitalists expected that, in the long term, their losses would be as big as their gains, then they would be trying to make a quick profit and get out of business before they start losing.

This is not what we observe. Capitalists do not behave as if they expect their long-term profits to be zero. Capitalists behave as if they expect their long-term profits to be positive. They stay in business, which shows that they expect to keep winning.

So, if the behavior of real capitalists is a good indicator, there isn't that much risk involved in business after all - your chances of success are higher than your chances of failure.

Decisions are made after assesment of risk--- Is the risk worth it.

[Drace]

I guess being king had a risk of being assassinated too. That makes it okay.

[Demogorgon]

The question that is never addressed by the apologists for capitalism here is why the capitalists should get to be the ones to take the risk in the first place. That is why should the privilege to take risk (and bare the rewards thereof) be reserved to a few?

Why shouldn't resource allocation (which is what is being referred to here) be carried out democratically by the entirety of society. Collectivising the risk is logical on the face of it anyway as there is almost always more success than failure so society can easily afford to make mistakes without severe consequences.

[Drace]

The question that is never addressed by the apologists for capitalism here is why the capitalists should get to be the ones to take the risk in the first place. That is why should the privilege to take risk (and bare the rewards thereof) be reserved to a few?

Why shouldn't resource allocation (which is what is being referred to here) be carried out democratically by the entirety of society. Collectivising the risk is logical on the face of it anyway as there is almost always more success than failure so society can easily afford to make mistakes without severe consequences.

Right, the rich are privileged with the capital to risk in the first place. I also fail to see a connection between risk being taken and deserving the wealth accumulated through exploitation.

Also, since much of the businesses are already established and pass on through family, the argument becomes pretty useless.

[Robert]

The question that is never addressed by the apologists for capitalism here is why the capitalists should get to be the ones to take the risk in the first place. That is why should the privilege to take risk (and bare the rewards thereof) be reserved to a few?<bear>

There is something circular about that question, but I can't put my finger on it. I think it is this: those who have capital are the only ones in position to risk capital in the first place. If that triggers the question "why do they get to have capital and I don't," there are lots of possible explanations, which the revolution will render moot. In the meantime, there are far more owners of capital (http://wiki.answers.com/Q/What_percentage_of_Americans_own_stock), albeit in small amounts, than most realize. Many others have liquid savings and they choose not to own equities at the moment, but there are more of them that want the option to decide whether to invest in the means of production than there are those who want to take away that option.

If you want democracy, you gotta live with the results.


Why shouldn't resource allocation (which is what is being referred to here) be carried out democratically by the entirety of society.As we have discussed ad nauseam (http://en.wikipedia.org/wiki/Ad_Nauseum), there are very few people who genuinely want the responsibility that comes with either controlling the means of production, and even fewer who want to "carry out" (easy to say, isn't it?) resource allocation.

[Green Dragon]

The question that is never addressed by the apologists for capitalism here is why the capitalists should get to be the ones to take the risk in the first place. That is why should the privilege to take risk (and bare the rewards thereof) be reserved to a few?

Why shouldn't resource allocation (which is what is being referred to here) be carried out democratically by the entirety of society. Collectivising the risk is logical on the face of it anyway as there is almost always more success than failure so society can easily afford to make mistakes without severe consequences.

It is difficult to see the "entirety of society" carrying out such operations. Most likely the socialist community would elect/appoint people to do so.

The reason why why there is more success than failure is because the risk was assessed prior to the act. Under terms of capitalism. Those terms would be unavailable to the elected/appointed people.

[RGacky3]

Thats a very minor risk. And if they don't. They cash out with the millions they made and buy a fuckin yacht.


I guess being king had a risk of being assassinated too. That makes it okay.

2 of the best posts I've seen in a long time, sometimes you can debunk paragraphs of intelectual wankery, with one common sense line.


In the meantime, there are far more owners of capital (http://wiki.answers.com/Q/What_percentage_of_Americans_own_stock), albeit in small amounts, than most realize. Many others have liquid savings and they choose not to own equities at the moment, but there are more of them that want the option to decide whether to invest in the means of production than there are those who want to take away that option.

If you want democracy, you gotta live with the results.


Being an "owner of capital" is not whats important, whats important is who controls what, who has control over hte economy, who controls the capital. To have control over the economy, and the capital, you have to have lots and lots of disposible cash, so those arguements don't work, if I have a company I would have absolutely no problem giving up 49% of the shares as long as I still have 100% control over where the cash goes and how the company is run, so your arguement dose'nt work at all.


As we have discussed ad nauseam (http://en.wikipedia.org/wiki/Ad_Nauseum), there are very few people who genuinely want the responsibility that comes with either controlling the means of production, and even fewer who want to "carry out" (easy to say, isn't it?) resource allocation.

Yeah, because everyone just loves being told what to do and having no control over their livelyhood.