profits are not a surplus for the sake of preserving a company

[Lowtech]

yesterday, i had a conversation with a good friend of mine. we were discussing a very common topic among us regarding how a business/corporation functions.

his argument against paying workers more is that it limits profits, which as he contends is necessary funds or buffer (capital) for responding to varying operating costs.

to which i immediately countered with "well, the monies given to stock holders and paid to executives isn't a necessary surplus. the company can't in the event of a crisis go knocking on the doors of stock holders and executives and say 'we need that money back,' therefore profits are not a surplus for the sake of preserving a company"

his only response was "you're referring to something else"

i know, something else as in; the truth haha!

[PigmerikanMao]

There are these things called cooperatives- they stay in business AND pay their workers decent wages. Who'd've thought 35 workers with an equal share in a company could violate the laws of economics? :rolleyes:

[TheOneWhoKnocks]

Marx analyzes this question in "Wages, Prices, and Profit." Holding all else equal, if the wages of workers at a firm receive higher wages, profits will decrease for that individual firm because a larger share of the surplus is going to labor. However, increases in wages can lead to an increase in profitability for capital as a whole because the higher wages may be used to increase consumption. Of course, there are a lot of possible outcomes that depend on what goes on within the firm. It the price of the firm's commodities increases faster than the wages, then profits will increase even if wages rise as well. And if the increased wages become general throughout the economy, inflation could largely eliminate the real gains. So there are simply too many contingencies to say that higher wages will cut profits. Wage increases can decrease profits, increase profits, or have little influence at profits at all.

[Lowtech]

Marx analyzes this question in "Wages, Prices, and Profit." Holding all else equal, if the wages of workers at a firm receive higher wages, profits will decrease for that individual firm because a larger share of the surplus is going to labor. However, increases in wages can lead to an increase in profitability for capital as a whole because the higher wages may be used to increase consumption. Of course, there are a lot of possible outcomes that depend on what goes on within the firm. It the price of the firm's commodities increases faster than the wages, then profits will increase even if wages rise as well. And if the increased wages become general throughout the economy, inflation could largely eliminate the real gains. So there are simply too many contingencies to say that higher wages will cut profits. Wage increases can decrease profits, increase profits, or have little influence at profits at all.

Fascinating. I would like to note however, that issues of price, profit, capital etc only exist within the market paradigm. essentially, profit isn't necissary. One.might counter that profit is necissary because how else do you acquire capital? In a marketless economy (nationalized) system, capital isn't necissary for two reasons, one in a marketless economy, resources are allocated as needed collectively, not based on the subjective interests of individuals, secondly there is no artificial scarcity (i.e. no concentration of wealth in a plutocratic class); real abundance is realized by everyone.

[TheOneWhoKnocks]

I would like to note however, that issues of price, profit, capital etc only exist within the market paradigm. essentially, profit isn't necissary.
Of course. They are inevitable results of the development of exchange relations and only make sense within those relations, just as serfdom was only relevant within feudal social relations.


One.might counter that profit is necissary because how else do you acquire capital?
I'm not sure I understand what you mean here. Profit is capital, as long as it is reinvested in the process of Money -> Labor Power/Means of Production -> Commodity -> Money + surplus (M-LP/MP-C-M'). Capital isn't a thing as much as it is a process.

[Lowtech]

Of course. They are inevitable results of the development of exchange relations and only make sense within those relations, just as serfdom was only relevant within feudal social relations. right, and my position is that social relations do not dictate the physical process of economics. However social constructs do serve to distort our ability to utilize resources, allowing for mass ignorance of exploitation.

I'm not sure I understand what you mean here. Profit is capital, as long as it is reinvested in the process of Money -> Labor Power/Means of Production -> Commodity -> Money + surplus (M-LP/MP-C-M'). Capital isn't a thing as much as it is a process.it isn't my position, simply a possible counter argument to my own.

Capital doesn't exist. Rather it is artificial scarcity manifested as "need" for the money to satisfy inflated production cost.