Where Do The Profits Go?
(1) You work at a company and help produce a product whether a good or a service.
(2) The product generates profit (price - cost).
(3) Where do the profits go?
In my experience having discussions with workers, this question is rarely asked. So its no surprise the following question is asked even less:
(4) Why should I have no input in deciding where the profits that I helped generate are allocated and how theyre distributed?
Yet this strikes me as an essential stepping stone to changing the anti-democratic, plutocratic way we currently structure our economic system.
In any case, (3) isnt rhetorical: where do the profits go?
Armchair speculations and hunches are welcome.
(2) The product generates profit (price - cost).
(3) Where do the profits go?
In my experience having discussions with workers, this question is rarely asked. So its no surprise the following question is asked even less:
(4) Why should I have no input in deciding where the profits that I helped generate are allocated and how theyre distributed?
Yet this strikes me as an essential stepping stone to changing the anti-democratic, plutocratic way we currently structure our economic system.
In any case, (3) isnt rhetorical: where do the profits go?
Armchair speculations and hunches are welcome.
Comments (98)
1. To fuel growth (use money to make more money)
2. For conspicuous consumption (splurge on expensive services/stuff)
3. To pay off debts (bank loans)
4. To make a name for themselves (foundations/trusts/grants)
5. To gain/consolidate/expand/increase influence (donations to political parties)
6. To patronize (artists/craftsmen/scientists/mathematicians)
Yes, it can be used to pay off debts or fuel investments for growth.
But it belongs to the company, which in turn belongs to the owners of the company.
An employee is not an owner, so should have no input in this. If you are an owner (you own any stock say), then you very much do have input in this, if only to vote for the guy you want making these sorts of decisions for you. The actual decisions are not made by the stockholders any more than laws are made by the average citizen.
Per Agent Smith they go for various purposes.
What people do with their share of the profits depends on how big a share of the profits they get. Pension funds which own a lot of stock get a lot of profits which they distribute to pensioners. Very small stakeholders (like... $20,000 worth of stock total) could supplement whatever other income they have, but not by. lot. Insurance companies, which own a large share of stocks, use the profits they receive to defray payouts and to reinvest. Mutual funds, which own a lot of stocks, pay out benefits and reinvest.
Sometimes there are no profits.
People who get a lot of income from their investments tend to spend it on lavish living expenses. Cars, houses, travel, education, boats, planes, gambling, high quality drugs, expensive home furnishings, expensive clothing, etc. require substantial income.
If people have more money than they know what to do with, they can sock their excess money away in various instruments. They might give some of it away, though a lot of big gift-giving is in the name of a corpse.
The amount of money that the richest 1% (or 1/10th of 1%, or even 1/100th of 1%) have a lot of one which in itself keeps growing --earning profits. Thus, the rich keep getting richer.
Quoting Xtrix
The simplest way to change the undemocratic, plutocratic system is to take their property away from them without compensation. (Well, let's say the compensation is that after we strip their assets, we don't shoot them.)
In the first half of this you use "should" and the next part use "are not". Which are you talking about, the way things are or the way things ought to be?
I meant them both the way I said. The 'should' part is a statement of how things ought to be. The latter statement was one about how things (correctly) are.
The statement were about different groups, the former being employees and the latter about stockholders.
Neither statement was one about where the profits actually go, which was a part of the post to which you didn't respond.
I see. I'm struggling to see the moral imperative for a non-owner to have no input deciding where the profits are allocated. Is there some harm you foresee arising from such an input? Or is there some virtue being neglected if a non-owner has an input?
In a perfect world (re ), owners are benevolent, and profits are plowed back into the economy and benefit society. And sometimes, they are. Usually however, profits are used to gain more power.
What if we were a species who found working for another individual (or small group) anathema? We just would not do it (I mean right from the get-go, right from the moment our species achieved consciousness). This could either be from the purest form of greed (Perfect Libertarianism) or from the purest form of communalism (Perfect Communism). What kind of society might emerge? Would progress be possible for such a species? Would institutions form?
(Hey, I'm a big lefty. I think the citizens of the US are hopelessly right-wing. US citizens, almost universally, dislike thinking for themselves and are far too trusting of the oligarchs. But, of course, that's a problem for all of humanity, and the US is no better. We have two parties in this country : the far-right R's and the center-right D's. Neither speaks to me. I'd emigrate if it was easy to do - although, I'm not sure where I'd go. If Trump gets back into power, I've taught my children to goose-step and salute and finally turn the old man in as a hopeless lefty to prove their loyalty.)
They wouldn't be profits if they did. They remain owned by the company, and said owners only get money in their pockets if they sell their portion of the company. Any money the CEO (and other employees) takes home is part of the cost of running a business, and is not profit.
Quoting Isaac
I suppose that depends on the moral standard under which the company operates, which is often set by the country in which it operates. It would likely destroy the company if the employees were allowed to just run off with any excess cash, but there is in most instances an involuntary tax on the profits which go to social programs which benefit everybody, not just the company, and not just their employees. This tax seems for the most part to serve the moral imperative which you suggest.
No doubt there is research on this sort of thing.
I thought the definition of profit was revenue - cost, when revenue > cost. I didn't realize the definition of profit was what you did with it! My bad!
The CEO is unlike other "employees" in that they are over-compensated for their input. They pocket profit created by the labor of others.
Hey, I'm not against capitalism. But it should be tempered, via regulation if necessary.
But I'm not going to get into a debate with a die-hard laissez-faire capitalist. I'm too busy these days - I only look in on TPF sporadically. The floor is yours, sir.
One can argue either side of that point, but that's certainly the way it looks from the sweat-shop employee view. Still, the company wants to maximize said profits, and overcompensating a CEO is not going to do that, so there must be a reason they're willing to shell all that out to him.
Totally agree. The system as it is now seems to be designed to widen the gap between the haves and have-nots. I've found it to be an interesting exercise to attempt the design of a better way to go about it. 'Taint easy. Ditto with designing a government from scratch.
Not my topic.
On the subject of direct payment to owners, the only way I know to do this is via dividends, and despite a direct negative impact to profits, many companies do this.
In my opinion, one of the biggest mistakes our human race ever made.
When enough people with power and influence fully recognise the mistake and want to change things then maybe humans will learn to nurture life and all living things and not something as destructive as the nurture of profit. Can humans create a stable, progressive, fair society? We have not been able to so far, or at least all attempts to do so have failed due to a corrupt few from the inside or due to an outside, already established plutocratic force, controlled by a few.
BUT, the struggle to succeed continues.
They should have input, considering without them there is no company and no profits.
Unless of course were in favor of tyranny and slavery. But Im in favor of democracy whether in government or in a company.
Quoting noAxioms
Says who?
Why is this simpler than having workers have a few board seats? I think thats at least less extreme.
Quoting Real Gone Cat
I think we already are that species its just been beaten out of our heads in many countries.
Who owns the shares? No surprise: the top 10%, 1%, 0.1%.
The profits should be distributed better and that means giving workers a place in decision making. The current system is undemocratic and unjust.
Ideally the profits should go back into the business in R&D and positioning for future growth. That kind of thing declined in the 1980s as corporations came to be seen as objects of raiding as opposed to essential features of communities.
You can give the workers a few board seats if you want to, I don't care.
The thing is, though, the drive for profit for the few--regardless of consequences--is leading (and has led) to fatal consequences for the many, Making money is the corporate raison d'être. There's no end-point to it.
There's no easy way to convert the system from manufacture for profit to manufacture for need.
Agreed.
So this is just a special case of the failure of democracy in general. Ideally, a democratic society would naturally evolve to minimize the plutocratic influence. Instead, what we see everywhere and without exception is the ever-increasing corruption of democratic ideals through the infiltration of plutocratic influences. The gap between the rich and the poor has been steadily increasing as long as it has been measured. So clearly technological knowledge is socially and morally meaningless (or worse, socially and morally damaging). Handing out a few board seats is only going to create a few more martyrs. Or a few new plutocrats.
If we turn to those restrictions that only apply to certain classes of society, we encounter a state of things which is glaringly obvious and has always been recognized. It is to be expected that the neglected classes will grudge the favoured ones their privileges and that they will do everything in their to power to rid themselves of their own surplus of privation. Where this is not possible a lasting measure of discontent will obtain within this culture, and this may lead to dangerous outbreaks. But if a culture has not got beyond the stage in which the satisfaction of one group of its members necessarily involves the suppression of another, perhaps the majority---and this is the case in all modern cultures,---it is intelligible that these suppressed classes should develop an intense hostility to the culture; a culture, whose existence they make possible by their labour, but in whose resources they have too small a share. In such conditions one must not expect to find an internalization of the cultural prohibitions among the suppressed classes; indeed they are not even prepared to acknowledge these prohibitions, intent, as they are, on the destruction of the culture itself and perhaps even of the assumptions on which it rests. These classes are so manifestly hostile to culture that on that account the more latent hostility of the better provided social strata has been overlooked. It need not be said that a culture which leaves unsatisfied and drives to rebelliousness so large a number of its members neither has a prospect of continued existence, nor deserves it.
~Freud, The Future of an Illusion
None of this is really of any use or benefit to anyone except the rich playing their game of buying shares from one another.
It is a little like asking where do your personal earnings go?. There is no ONE answer to this question. I think the only consistent theme is we, and companies, generally try and meet the minimum means of sustaining ourselves then venture, store, save or invest in future schemes.
I have a feeling there is a punchline to this OP?
That's true. Nevertheless, we have to accept (unconditionally?) that a considerable percentage of our earnings go directly to taxes or other kinds of expenditure.
Edit: Another question. Does the gov own the fiat currency? Gov faces are on it and in USA free masonic symbols. I'd think whose faces and symbols are on money should indicate something about who controls it.
*A fiat money is a type of currency that is declared legal tender by a government but has no intrinsic or fixed value and is not backed by any tangible asset, such as gold or silver.
Fiat currency is debt based pyramid scheme.
It does. I kind of threw it in there without much fanfare, but it's here: https://thephilosophyforum.com/discussion/comment/742619
90% of profits go back to shareholders in the form of dividends and stock buybacks. That's really the answer.
The rest is reinvested in the company through increased wages, new equipment, new research/development, etc. A sorry state of affairs. In the 50s and 60s and most of the 70s, this wasn't the case.
A major change was 1982, when the SEC created rule 10(b)-18, which provides a "safe harbor" for share repurchases -- meaning that it won't be investigated as manipulation. This was overseen by John Shad, himself a product of Wall Street.
Your near-sighted, biassed and communist (in the bad sense, not in the good sense) way of looking at things is shown very clearly in this post of yours.
You are quite wrong that workers have no say where the pofits go. Or part of the profits.
You are wrong because you clearly haven't followed through your own line of thinking. You stopped at a spot where you shouldn't have stopped, and declared that workers have no say in where the profits (or parts of it) go.
This following explains how workers have a say in it. It is not a straightforward, but a rather convoluted way; but the end result is that workers have very much of a say where part of the profits should go.
Part of the profits go into taxes.
Taxes are dished out to other places but to the owners of the company.
Most political representatives in their candidacy state what they will do with the tax money.
The workers have a way of influencing where the tax money goes by voting for those political candidates to represent them who have the promise to put the taxed profit where the worker wants them to put it.
That's how the worker HAS A SAY ON HOW TO DISTRUBUTE THE PROFIT. Or rather, a part of it.
Only near-sighted, non-thinking people who jump into conclusions to prove their biassed and wrong views can not see this and will deny this when it's presented to them.
Do you get tired of being embarrassingly silly?
Try thinking before you write.
(For others: If it still isnt clear: were talking about net earnings i.e., whats left after cost/expenses, including taxes. But even if taxes arent included, workers have no say where their taxes go except in the very indirect sense of being able to vote for a congressman. When it comes to net earnings in their company, unless theyre a major shareholder they have even less say than this which is the point of the thread.)
You probably have to define profits here. Do we mean accounting profits (i.e. recorded costs are less than price) or economic profits (i.e. the firm is making more money doing X than it could doing anything else, that is, including opportunity costs when calculating profits). Economic theory suggest that many firms shouldn't make long term economic profits. Established industries tend to have fairly flat rates of return, which is why everyone chases higher investment yields by pouring into new technology sectors, even if old ones such as agriculture are still money makers. Economic profits accrue to owners, since the opportunity costs of workers aren't included in calculating it. You could include implicit costs for workers, but it gets much more complicated than doing it for firms; firms don't substitute leisure for earnings, which is a big wrinkle.
In general, profits go to:
Investments in capital to grow the business.
Payments on debt service for money borrowed to grow or operate the business (you could include these under costs more generally, but sometimes the debt service is for unrelated operations or even activity in markets the firm has since existed, so it's helpful to break it out)
Retained earnings, basically savings the business can draw down upon instead of relying on credit.
Payments out to owners, either dividends if stock has been issued, or profit sharing for partnerships. With sole proprietors, this just goes to one person.
I think what you are getting might be if profits are paid out to workers? This happens regularly in cooperatives, worker owners firms. Dividends go out to the workers. Or sometimes it is a hybrid where all workers get stock, but there are also public shareholders, so workers just get a share of the dividends based on their pay and/or years of service.
Profits can also be used to pay performance bonuses to workers. This isn't that uncommon in small firms, but in accounting terms we would say these are operational costs, and thus count against profits as costs, even if functionally they works very similarly to paying workers dividends. A benefit of incentive bonuses is that they can be targeted at the people who most contributed to the creation of the profit after a period has passed, where as dividends are based on earlier choices and the amount of stock someone has.
My wife's firm was a three member partnership and they would split profits each year into fourths, after deciding what to keep as retained earnings. The extra portion would go to the non-partner employees, and since there were only a handful, this would still be a meaningful amount. Profit sharing is a good way to get people to stick around until the end of the sharing period, but the problem is that then you can end up with a wave of retirements and resignations after the payout.
In many countries (e.g. Germany), labor representatives are on the corporate board, so there you have union workers getting input into how profits are used.
The logic behind workers not being entitled to profit necessarily is that they might not have a very good idea what the interests of the firm are. Managers are managers for a reason. Not everyone can read a balance sheet or revenue report competently. The other reason is that they have much less risk than the owner(s). If the form closes from misuse of profits, they might lose their job, but they won't be dealing with all the debts for the firm. When there are losses, workers still expect to be paid the same, while an owner will take a hit, this is a trade-off of stability for higher potential earnings that come with more risk. Owners have to always be on the ball too, there is a lot of unpredictability in owning a small firm, and sudden work can come up.
I think I probably generate about 50% more profit at my job than I earn, but I absolutely do not want to have to deal with more work in tending to company affairs. I took a pay cut to work less. I also don't want the risk. I know owners who have plowed a substantial amount of their personal savings into their company and pay themselves pretty poorly in lean times to keep it afloat.
But obviously the rationale for owner control gets less and less compelling as the company gets larger and the owners less involved in operations. At a certain size, labor should have a say in profit use.
This falsely assumes the interests of the firm are contained in a proper reading of a balance sheet. Firms may have social interests. There's no reason at all why those social interests might not trump the financial ones.
Quoting Count Timothy von Icarus
So would you hold that when, for example, Lehman Brothers went bankrupt in 2008 the major shareholders lost more than the employees or customers, who got away relatively unscathed?
You have a point. That's why I mentioned economic profits, which include implicit costs, not just what goes on the balance sheet. A statement of net position obviously doesn't tell you everything you need to make business decisions, but it does tell you things you need to know to keep a business from running long term loses and thus having to close.
As for Lehman Brothers, yes stockholders absolutely lost more financially in direct relation to the bankruptcy. Bondholders and other creditors get paid first in a liquidation, which if I recall did not meet all liabilities, so shareholders got wiped out.
In the larger context employees might have lost more because they ended up losing their jobs right has the economy went south for an extended period. But had Lehman gone bankrupt in a bubble, their financial losses would have less, since finding similar work would have been much easier.
This doesn't get into the fact that there are non-financial costs related to losing your job like stress, or social costs if you really liked your job and coworkers. It doesn't get at the larger point that, for a large firm like Lehman Brothers, the major shareholders are all extremely wealthy, and can thus absorb losses better. However, in general owners lose more when a company goes belly up because an asset they have invested in becomes worthless, while workers lose only a stream of income, which might be replaced fairly easily depending on the industry.
But the Lehman example is why I said labor should likely have more of a say in larger firms. It's quite a different situation from an experienced lawyer or plumber starting their own business, having to invest in all the tools and overhead, and hiring half a dozen or so assistants. Mandating the the owners of firms turn over control of their firm as soon as they higher any help would create a powerful incentive for businesses not to expand, which isn't what you want.
Net earnings. The bottom line.
Quoting Count Timothy von Icarus
Or buybacks, which are gargantuan. Together with dividends they account for 90% of where the profits go. Wasnt always that way, but in the neoliberal era it is. We see the results.
Quoting Count Timothy von Icarus
I would argue they should have a say at any size. But yes, Im mostly talking about multinational corporations S&P 500, etc. Not small businesses.
Beat me to it, but looking at bailouts especially in 2009 shows that the wealthy really have no risks theyre fine no matter what. Theyre too big to fail.
It does, but what does that matter to the owners? They own a varied portfolio of stock and will often make as much running a company into the ground and fleecing its assets as they would making it super profitable. Very rarely do the owners own only that company so their interests are likely to extend well beyond that particular company's long term profitability.
Quoting Count Timothy von Icarus
Did they though? Can you point to major shareholders who were poverty stricken by the bankruptcy?
Again, owners have broad portfolios. Workers can't have a broad portfolio of jobs. Homeowners can't have a broad portfolio of mortgages. So the latter two lose out from any bankruptcy more than the first. So for a worker, to invest their labour in the success of a company is a far greater risk than for an owner to invest a small portion of their share portfolio. You say...
Quoting Count Timothy von Icarus
...but I see no evidence of this. I mean, generally owners are the rich and workers are the poor. So either owners are just better people or something about their position yields a greater net gain than net loss. It's not like 50% of bankers are rich and 50% poor at any one time. They're all rich. So how's that work if they're genuinely taking the bigger risk?
Quoting Count Timothy von Icarus
Why? What's the mechanism you see happening here? If the owner is normally taking such a big risk, then there'd be as much incentive to cautiously share that risk as there would be to recklessly bet the house on it. Worker-owners would spread the risks. And again, presumably for the lawyer, the plumber, the company means more than just a high stakes bet, so it's objectives are more than just return on investment.
Bankruptcy laws protect owners/investors to a far greater extent than unemployment benefit protects workers.
Quoting Xtrix
Exactly. No matter the mechanism (though it's interesting nonetheless to talk about what that mechanism is) we can see that owners disproportionately get richer relative to workers. If they were taking a genuine risk they would (on average) be about the same, only more heterogeneous.
This is just equating owners with shareholders. It's obviously not the case for small businesses, partnerships and such.
Quoting Isaac
I think you can grant the claim that owners may lose more in absolute terms, but less as a portion of their total wealth. Why not just say that? It's a solid point.
Quoting Isaac
Also an interesting point. Presumably part of the issue here is access to capital to start the firm. You have to take on risk before hiring anyone. So what risk gets shared? Under the usual scheme, I don't ask you to take on some of the risk I accepted before you came along. If the firm fails, or even if you just quit, you walk away without that burden. While you're employed, I do indeed use your labor to pay off the debt I accrued without your input. If, instead, part of the package of my hiring you is that you accept some small part of the firm's pre-existing obligations, that's quite different, more like a (weighted?) partnership occurring over time. Sounds like a reasonable idea for the owner, as you suggest, but you'll compete for workers with firms just offering burden-free salary. If the rewards are potentially great enough, people may be willing to enter into this more risky sort of employment arrangement.
Yeah, that's true. I think the 'small business' model is a bit different. It still seems that bankruptcy laws protect the small business owner from risk in the same way though. It's not like they're putting their homes up as collateral. The difference is that if the business fails they too probably lose their job. But that still gives them equal risk to their employees, but higher gains. Do bankruptcy laws work differently in the US? There seems to be a lot of presumption about personal financial risk for the small business owner, but that's just not really the case here.
Quoting Srap Tasmaner
I don't think it's that easy to quantify. If we're talking about shareholders, say the price of a share drops dramatically, have they actually lost money, in absolute terms? They've lost an opportunity to make money, but all that's happened is their investment isn't worth what they thought it was. If they're an actual investor (loan stock or similar) they'll be paid back preferentially by the receivers. I can certainly see some outlier cases where owner/investors might actually lose wealth, but they seem rare. Mostly its a loss in value rather than absolute wealth.
I'm no economist, but we simply don't see any significant number of owner/investors on their uppers. If the risk were genuinely matched to the reward they'd be, on average no better off as a group than they started. Yet the rich get consistently richer. They're not just lucky with the horses. They invest. They own more stuff, including businesses. So ownership must, on average, yield more than the risk.
Quoting Srap Tasmaner
I don't see it in terms of reward, I see it in terms of dignity. Workers deserve a say since their contribution to the enterprise is as vital as any. A corporation is a group of people collaborating to achieve a goal. The default should be that each member of that group gets an equal say in how it's run.
Dunno. But it cannot be the case that starting a business is guaranteed by law to be risk-free, can it? But I really don't know. Maybe in some no-blood-from-stones sense it is, but there's opportunity cost (yay! I get to walk away with nothing after 15 years, might as well have just had a job) and for an individual maybe a risk to their notional creditworthiness.
Quoting Isaac
Yeah, you said that before, although I think before it was that we should expect them to be no better off than workers.
Are you sure about this argument?
You're basically claiming that the wealthy class aren't really risking much of anything, and there's clearly some truth to that, but there are counterexamples too, aren't there?
Try walking through the example with gambling, one rich gambler and one poor, and see how it works out.
In our current society, yes. But we're the blind leading the blind here. I think the term I should be using is actually 'insolvency' since we're talking about corporations, but a quick glance at UK law doesn't seem to entail any personal risk https://www.gov.uk/government/publications/options-when-a-company-is-insolvent/options-when-a-company-is-insolvent.
Quoting Srap Tasmaner
Isn't gambling notoriously a bad idea, house always wins and all that?
I've never even met an economist.
Quoting Isaac
As I said before, part of the point here is that the absolute amount risked can be greater, while still being a far smaller portion of the total wealth, when you compare the wagers of the wealthy and the poor. I haven't had time to run through the math, but if you assume that a wealthy and a poor gambler have the same rate of success (win as often) but the wealthy gambler is betting more, then their payoffs are also going to be bigger. When the poor gambler wins, they win less, right? My thought was simply that everything can be scaled up, the risks and rewards, but needn't be scaled up by the ratio of total wealth to total wealth. See how that works? I can bet more and win more, without risking my entire advantage relative to you, and the ratio of my wealth to yours will just keep growing.
I see, yes. So to get at what I was thinking it would be more like...
Split the population of gamblers into two groups {the poor} and {the rich}. If gambling had an equal payoff:risk ratio for each group then the sum gain for each group as a proportion of their investment, would be the same. So each group would, in sum, get x% richer. But that's not what we see, because the gap between the two groups even in relative terms, is getting bigger.
The only way I can see that happening is if the risk:return ratio for the wealthy is actually better than for the poor.
We can see it reflected economically in savings. If I invest £100 in a bank, not only do I get a lower return (because it's only £100), I get a lower rate of return (I'd be lucky to get 1%). If I invest £100,000 I not only get a higher return (because I put more in) I get a higher rate of return, maybe 5%.
So with a simple bank investment, the return on £100,000 isn't just higher by proportion (1% of 100,000 is bigger than 1% of 100), but it's bigger proportionally. Does that make sense?
Quoting Isaac
The debt of the corporation theoretically will not pass to the owner, but the risk to the owner remains substantially higher than then the employee because the owner had a capital investment in the corporation the employee did not. That the owners risk is limited to his initial investment amount doesn't mean he has minimal risk. Often owners invest their life savings into their businesses.
I said "theoretically" above because gaining access to capital is often going to require you offer a personal guarantee backed by your assets. It's not like a bank is going to loan your 5 day old corporation with no credit history or assets any money, even if federal regulations permitted it.
In your example above, it's not the bankruptcy laws offering the limitations on liabilities, but it's the corporate structure that creates the business as a separate entity and that shields the investors.
If we could arrive at a way to regulate access to game time, we'd cure this disparity.
Of course that access to game time might have to do with player quality and not just random unfairness.
Why would I increase access to money (or play time) for those who can't play the game very well?
Say I'm worth x and you're worth 1000x. I wager x/10 and win earning say 5/4 my wager, so my wealth becomes 9x/8. You wager 10x and win, earning 50x/4, so your wealth is now 1012.5x. The ratio of your wealth is to mine is now 900:1, instead of 1000:1. So my hunch about how this would work is *wrong*. By wagering 10 times as much in absolute terms, but one tenth in relative terms, you allowed me to close the ratio gap. On the other hand, you used to have only 999 more dollars than I; now you have 1011.375 more. I've closed the ratio gap, but am further behind absolutely. Interesting. What happens when we go again? ****
I suspect, as you note, part of it is that there are just better rates of return for high rollers. I also suspect that high rollers needn't limit how much they risk, as I surmised here. My initial post in this thread suggested that the principal use of profits (once they reach individuals, I wasn't thinking about the firm) was to create new debt. When you have great wealth and an impressive stream of income, you don't need to spend much of any of it; people lend you money. So as a wealthy gambler, I'll have the opportunity to bet with Monopoly money, perhaps placing bets that altogether are many times my at-the-moment wealth. Then I can easily outrun the poor gambler, who has no future value to mortgage.
****
Oops, that was weird.
I also neglected to consider that your ratio to my initial wealth is now 1012.5:1, but mine is 1.125:1. Mine has grown faster but much less, and I had to risk a percentage of my wealth ten times greater than you did.
Pretty spot-on. Three months later, COVID lockdowns would start and the debt picture wasn't pretty -- especially among the shadow banks. So another massive bailout was needed...again.
So much for free market capitalist fantasies.
Regarding the OP:
Harvard Business Review
So why is this happening?
This answers the question of the thread: the profits are being shipped to shareholders at the rate of about 90%.
That's where the profits go. At the expense of everyone else.
Thanks. I thought I'd got that wrong.
Quoting Hanover
So the narrative I'm pushing back against is the idea that owners deserve the profits because the risk they take is higher. To satisfy this narrative the facts need to be a) relatively universal - we can't justify the majority by the circumstances of a minority, and b) proportionate - we're relating profit to risk, not just any reward, but the full profits of the company. I still contest both.
For the former - There's no class of down-and-out former business owner. A survey of homeless with the question "how did you get here" won't reveal a significant category of "I used to own a bank but it failed and I lost my initial investment".
For the latter - The bank's not going to lend with the mortgaged portion of a house as collateral, so whatever the owner's personal stake, it's part of their free capital, not their tied-up capital, so the risk in putting it up is manifestly different to the risk involved in an employee committing their labour to a company (in the hopes that it's successful enough to continue employing them). An employee's labour is an investment that's tied-up, they need the return on that investment to live. An owner's capital investment is capital that's not tied-up (we know this because the bank wouldn't allow it if it was) so their investment is less of a risk. Then there's the fact that the owner can hedge their risk, they can split their free capital between many investments. The worker cannot split their labour between many investments, so again the manifest risk of their investment is higher.
I think too much focus is on what happens when the business fails (employee walks away vs owner goes bankrupt) but that's not a proper assessment of risk, the proper assessment of risk needs to include a measure of likelihood. It's a not a sufficient comparison of the risks of walking the dog vs flying in a plane to say the plane is the higher risk because if it crashes everyone dies. It's not likely to crash, so the harms from walking the dog might be smaller but more likely to happen. Likewise with risk in investment it's not sufficient to say that because the owner potentially looses most if the business fails they take the higher risk.
Firstly, a business has to survive only a few years for the returns to cover the owner's original investment, so they quickly come out even. It has to continually thrive just for the employee to continue to come out even. Their investment of labour is only ever rewarded with an even cover of how much that labour is worth.
Secondly, when a business is failing the first thing that happens is that it lays off staff. That may be enough to turn it around, or for the owner to recover their costs. For the employee, however, their investment in labour has proven to be a loss early on.
Quoting Hanover
If access to profit were distributed according to talent in investing it then you'd have a good comparison. The several financial crises of the last few decades has made it abundantly clear that this is not the case. Corporations are protected against the fallout from high risk strategies so it inflates the apparent success of taking them (they reap the reward but the risk is taken on by the state). If we were all given £100,000 at birth and told to invest it wisely, I'd happily go along with your meritocracy where the wisest investors got the most returns to re-invest. But that isn't what happens.
This is really interesting. Can we actually manipulate income disparity by fixing rates of return for investments (assuming a rational actor would always invest some fixed portion of any free capital)? I'll defer to your superior maths, but it looks as if the return on investment could potentially determine the direction of disparity?
Quoting Srap Tasmaner
I think that's another important point. Especially if returns on larger investments are higher (even proportionately) than returns on lower investments. One could see it as a membership criteria fro the higher return games. Only those with a higher stake are going to be allowed in to the higher return games, which means the return doesn't entirely reflect the absolute risk, but partly reflects the market value of the size of the risk (bigger risks are just worth more because they're more sought after).
Of course, then we need to translate all this economics into desert, because the matter at hand was wether the higher returns investments the owner gets we justified by their increased risk...
Quoting Xtrix
Of course it's easy to call someone else silly when you give self-contradicting definitions to terms. People accept your first definition, and then when you want to prove them silly, you simply change your own definition of the term. That's beyond silly. That's pithy, that's irritating, and shows your lack of spine.
Who looks silly now?You, of course. If you keep to your usual nonsensical habits that degrade your reliability and credibility as a philosopher, such as defining terms wholly differently during the conversation, then of course don't be surprised when you appear to be silly.
I'd push back on any narrative that suggests that implementing fairness is preferable without computing out the consequences of your plan. That is, just because it would be "fair" under a system that prizes equitable distribution of resources does not mean the system would be successful in terms of producing the actual thing you wish to produce. For example, if I want for there to be plenty of eggs for all our citizens, it does not follow that the best way to assure that is to pay the egg collectors the same as the chicken owners just because they both assume the same risk.
You also overlook the ethical value of property ownership, or perhaps you don't, but you just don't think it has any value. I would argue that it does, which means that a large part of the reason I reap larger rewards for the profits gained in my business is precisely because it's mine. That is, they are my eggs because they are my chickens.
I also don't follow why greater risk must (as a matter of ethical imperative) precede reward in order for it to be justified. The fact that I have been able to reduce my risk by being prudent and cautious and by implementing all sorts of hazard controls shouldn't result in my having to share more of my profits with others. To suggest otherwise would incentivize recklessness.
Quoting Isaac
The homeless (if we're going to look that far down on the societal ladder) are filled with those suffering from mental illness and drug addiction. The best risk reduction measure anyone can have is an education and a strong work ethic because that will enable you to get a job. Since I would suspect most prior business owners had those qualities to some degree, the reason they are not in the soup line is because they were able to go out and get a job. But that they lost their life savings but were able to find a new job doesn't mean they didn't suffer negative consequences.
Quoting Isaac
You are referencing two things here: equity and opportunity cost. Regarding equity: If you apply for a loan, the amount of equity you have is important, as is your current debt, as is your income potential as proved by historical earnings, as is your cash on hand, as is your credit rating, as are other other things depending upon their underwriting standards. If you take someone who has worked the majority of their lives, paid their bills, saved some money, and paid down their mortgage, and then they went to the bank and figured out the maximum amount they could cash out in terms of getting loans, liquidating assets, and whatever they tried to do to get money, and then they lost that in a business venture, that would be financially devastating.
In terms of opportunity cost, sure, taking one job and not another will have a computable price. That does not impose any risk because there's no ongoing obligation. If you don't like your job or find a better one, you quit and take the new one. That's not the same as having the strings attached to a financial obligation, which is what I take risk to be.Quoting Isaac
This strikes me as a naive view of business, as if most succeed, as if most business owners make more than employees in other business, as if responding to downturns entails simple solutions, as if losing employees doesn't have profound consequences on sustainability, as if employees are not understood by businesses to be their life force, and so much else. I think if you stepped into the typical corner restaurant and saw how they were struggling to keep things afloat, I don't know you'd terribly want to be the owner and might find being a server a better gig.
I'm not trying to evoke sympathy for the business owner, but I do see their investment in the economy a very positive thing, and incentivizing them is what we want to do, which means offering them the opportunity to make larger profits and the possibility of making nothing or even losing money. No employee goes into a job with the understanding they may owe their employer at the end of the shift, yet that is exactly what an employer signs up knowing could well happen and he could be indebted to the employee, among others.
:kiss:
Understood, but the status quo has no reason to take default position here. If worker-ownersip were to be championed as the norm, I agree it need be judged on more then just equitably, but so must the current arrangements.
Quoting Hanover
This, I think, is the key point. There's nothing to own except by the fiat of government. There's no such thing as 'a business' it's a legal fiction. The question we're addressing here is 'ought there be?' I think that question precedes any question about whose property the entity then is, once reified.
As a business owner, what you own is a piece of paper saying the profits are yours. So to make a property argument that one is entitled to those profits is circular.
Quoting Hanover
Possibly, but that's an aside from the argument raised here that owners deserve, or need, the profits because of the risk.
Quoting Hanover
No, but the point is, as a class, they're better off than workers. If their risk was the same there would be the full range of businesses owners from the destitute (business has failed), through the poor (business is on the way out) to the rich) business is doing well. There isn't. There's just the rich (in the majority). So either they're all extremely lucky, or something is tipping the scales in their favour.
Quoting Hanover
This is true, but far from the norm, which is why I made reference to yhd idea that we can't justify the status of the majority on the risk/benefit of a minority.
The overwhelming majority of the work force are desperate for a job and would be devastated if they lost the one they had. Few are lucky enough to be shopping around for jobs.
The overwhelming majority of corporation owners are extremely wealthy and hold their investments as part of well-hedged portfolio with little to no personal collateral tied to it. Yes, you can pick extreme examples to the contrary, but these cannot really be used to justify a status quo that benefits a very different cohort.
Quoting Hanover
Maybe, but again, in terms of share of the employment pool these are fringe cases, so in terms of just treatment of workers, they're hardly a fair target. Furthermore, as I said to Srap, if there's so much risk and so little gain, then sharing that exposure should be welcomed.
Quoting Hanover
I agree with the first half, but I don't see why high stakes gambling is the only incentive we could offer. What about low risk low reward options?
Quoting Hanover
How's that a loss to the owner? You're basically saying that when there's a mismatch between work done and pay due, its the worker who walks away with nothing (being owed money doesn't put food on the table). I'm sure the owner will be weeping into their leather upholstery at the shame of owing money, but seeing as it'll be the corporation which owes it, their lobster is not so much at risk that evening.
The business isn't an abstraction anymore than any term is a conglomerate of various parts. I get that the business isn't simply desks, computers, people, software and the like, but that it's a bunch of stuff holistically, but it's actually a physical thing as much as a university is, a government is, or even an apple is. You can point to the stem, the peel, the seed, whatever, but where is the apple? It's the whole thing.
You can also have a business without it being a recognized legal entity. A sole proprietorship or a partnership has no special legal status. Whether it has corporate structure doesn't impact the tangibility of the entity.
Quoting Isaac
The unemployment rate is 3.7%, which is effectively zero when you discount those who don't want to work and those who are temporarily between jobs. Businesses are closing because of lack of workers. I'm not sure what economy you're looking at. Quoting Isaac
I can go online right now, go to the Secretary of State website, and create for me a corporation or an LLC in a matter of minutes. That will not suddenly propel me to great wealth. According to one site, the average small business owner earns between $30,000 and $146,000 per year, with a median of $64,650. When someone tells me they're self employed, that doesn't cause me to think they must be wealthy.
Quoting Isaac
You want to incentivize business creation so people can find jobs. It's just not the case that everyone wants to start up a business, but most go looking for a job when they need work. The reason I suspect that most mechanics, for example, don't run out and find a shop to rent and secure loans and whatnot is because they fear going broke, and they probably will. It's a safer option to go find a job, much riskier to go at it on your own.
Quoting Isaac
There are plenty of those. You can put all your earnings in a CD and watch the 1.5% compound annually, fully backed by the government. You can start a lawn care business comprised of a lawnmower and rake and walk around cutting grass. Your investment was minimal and you'll make money, but won't get rich. You can also learn a trade and secure yourself a decent income, or choose a profession and make more. There are all sorts of low risk ways to make money.Quoting Isaac
This makes very little sense. If the owner works 100 hours in a week and doesn't sell his product, he earns nothing. That's not a theoretical construct. That occurs all the time. The owner get the profits, and profits are defined as what is left over after expenses. An employee is an expense. What this means is that the owner is paid last with the remainder. That remainder may be zero, it may be debt, it may be riches, and it may be anything in between. If he decides just not to pay his workers, he loses his employees, his business goes under, and he gets sued very quickly. He likely even gets hit with a wage and hour violation.
A corporation does not have debt immunity. It has to pay its bills just like you do. But just as I don't have to pay your debts because I am a different person than you, I (personally) don't have to pay the debts of the corporation unless I personally guaranteed it. Just like if I have no money at all, it will do you no good to sue me because I can't pay what I don't have, but if I do have assets, you will be able to collect. What that means is that my million dollar corporation stiffs you, you sue it, and you can garnish its accounts and seize its assets just as if it were a person.
It's not the wealthy corporation that dodges its debts. It's the shell corporations that start up a company, rip you off, close the corporation, open a new one, and so on. That's not a corporate law problem. That's a fraud problem, and it's really not the types of multi-national corporations you've been worrying about.
I think it's valuable to explore the logic of risk and reward, owner and employer, and you've raised some interesting questions, but your analysis is throughout colored by an image of the likes of the board of directors of Exxon Mobil, on the one hand, and the guys and gals working on the oil rig, on the other. Google small business employment statistics and you'll find there are many other stories to tell. Something like half of employed Americans work for a company with more than 500 employees, and something like 45% work for a company with fewer than 20, and the bulk of the latter are self-financed businesses. So I gleaned from a very quick scan, but there are loads of statistics out there. It's really not just fat cats vs. working stiffs.
But all those parts belong to the corporation, not the owner. You can't have it both ways. Later on you want to distance the 'bricks and mortar' from the owner when you say...
Quoting Hanover
... So when it's debt is all "Oh, the corporation is a separate person and the owner's didn't ought to be any more liable than your or I", when it's profits is all "Oh there's definitely a real thing the owners own, it's all the assets, the buildings, the activities..."
Basically, the owners own the profits, but relieve themselves of the debts.
Quoting Hanover
According to the latest YouGov poll, just 17% of British workers are very happy with their job and over half report being unhappy at work. So why aren't they all just picking another one off the shelf?
Quoting Hanover
As I've said repeatedly, the fact that you can point to counterexamples doesn't have any bearing on whether this minority can be used to justify the status of the majority.
Quoting Hanover
What it may be is neither here nor there, we're talking about risk. That means the relevant metric is what it's likely to be, not what it may be. My point is that the distribution of wealth between business owners and worker in general indicates that what it's likely to be, is far greater on average, meaning the risk is far lower than the risk the worker takes.
Funny how a left wing ideology is always 'colouring' someone's interpretations, but more centrist views are apparently transparent. Our ideology 'colours' our narratives. Every single one of us. There's no un-coloured version. Yes, I'm far more concerned about the disparity between the Exxon CEO and his workers then the local restaurant owner and his staff. That my bag. It doesn't on it's own make the narrative any less viable.
Quoting Srap Tasmaner
Right. So a minority.
As I've said to @Hanover a few times now, the issue here is whether the 'increased risk' narrative can be used tout court as a justification for the fact that owners reap all the profits from a corporation (with very little of the risks). Your statistics seem to confirm the theory that it cannot. Only in a minority of cases are the owners taking a comparable risk to the workers. The majority of cases they're not, so the justification based on the increased burden of risk is not sound.
Absolutely.
Quoting Isaac
It's a large-ish minority, but even that 45% is actually too big, because about 20 million Americans are sole proprietors, self-employed and self-financed.
Anyway, yes, I take your point, and it's absolutely fair. There is, ahem, a narrative about risk that is used to justify the allocation of profit to owners rather than employees, but that risk is, in most cases, highly indirect and mediated; it's nothing like what one side is putting up versus the other side. Most days of the year, risk is a technical matter, numbers on paper, and doesn't *personally* touch the stockholder. (But of course every once in a while it does.)
But this sort of thing goes both ways: just as risk taken on is not quite a universal description of the difference between owners and workers, so profits taken isn't either. It's the rule, but not universal, and while the great bulk of profits taken en masse go to dividends and stock buybacks, that's not essential to the relation of owner and employee.
Maybe look at it this way: there's a reason "conservative" politicians justify corporate giveaways in the name of the corner store, because that business structure is not suspect. A small number of employees, razor-thin profits, this is not what's ruining the world. If we focus on that fundamental structure, we're sort of playing on the conservative's turf. I'm suggesting this is not where the trouble is, but in the financialization of business and in other rent-seeking (rather than just profit-taking) behavior. Insofar as those enable scales of employment (for a single firm) unimaginable in the past, there's distortion of that relation. (The corner store is more dependent on each employee than, you know, Exxon Mobil.)
Does that make any sense? I think we absolutely can and should demonize rent-seeking as not only not productive but actively harmful, and dangerous to long-term prosperity. But I also think there's an empirical case that business formation, with institutions to support it, raises the standard of living of a community. Look at the success of micro-lending programs, for example. So I need room to consider the corner store blameless, rather than exploitative just because it includes an owner and a few employees. (Of course if the corner store mainly sells booze and lottery tickets, we have a different problem.)
Yes, I see what you're saying. I'm going to sneak in another leftist dig here though and say that this is why the corner shop is used. Its why @Hanover reached straight for the restaurant owner. Because it's a non-suspect, honest, down-to-earth arrangement which can be used to justify the gross immorality of corporate profiteering.
But anyway...
Quoting Srap Tasmaner
Yes. I think you're right. As so often happens when systems grow somewhat chaotically, we get emergent features we wouldn't necessarily have planned if we'd have designed the system from scratch. One of the emergent properties of the corporate model is the ability to leverage complex financial instruments (using the corporation's assets) which yield a truly unholy amount of disproportionate income.
If such instruments (rent-seeking being only one such) could be banned then I think we'd have something like a solution, but what concerns me is the extent to which such behaviour only emerges because of the immunity this legal fiction of the corporation gives its owners. Can we keep the corner shop without also allowing subprime mortgage-backed securities and collateralized debt obligations (like I know what they are!)...? Maybe. I hope so.
Quoting Srap Tasmaner
Yes. That's fair. I think that possibly the rot at the heart of the whole thing is this risk/reward model of business in the first place. If communities really do need the corner store is it a sensible strategy to encourage someone to gamble on one at 20:1 odds with the incentive being a high payout. Maybe we ought to just build the corner store ourselves as a community?
Exactly my point, and I am more or less granting that such arrangements really are good and bad, respectively.
Quoting Isaac
No matter what we might wish to be the case, this does not appear to be a live option most of the time. I don't know why. (And my speculations are not so well-informed as to be interesting.)
What does appear to be the case, is that societies describable as "capitalist," in whatever sense, appear to have higher standards of living across the board compared to societies that aren't. I mean that to sound like a minimal reading of the record, not a simplistic one. I'm an adult, so I've heard of colonialism. I also understand how the last few hundred years have been a sort of experiment in turning fossil fuels into civilization not a great plan, as it turns out. So I'm open to arguments that there is something else underwriting the disparity, but the starting point has to be admitting that there is such a disparity and putting the obvious label on it.
Reading the first half or so of Why Nations Fail (before I got bored) convinced me that the data is not really ambiguous here. My son's conclusion was that we ought to treat capitalism like nuclear power yeah it works, and maybe nothing else works nearly as well so it's our best option, but it's super dangerous and we should carefully contain it.
The problem with a significant part of your analysis is that you use the term "corporate" to mean "evil," but there's nothing particularly evil about the corporate entity. It's just a way to allow the business to operate as a separate entity and to spare the individual owners direct liability.
If we eliminated the corporate structure, while it would greatly impact the way business operates, solutions would be devised to accomplish the same goal. Loan documents could be created to allow investors to take a share in your personally owned business and indemnity agreements could be devised either through insurance policies or investors to accept liability if it should arise.
Limiting liability isn't something that is only accomplished by corporate structure and investment opportunities can be created without corporate structure. You can as much invest in my lemonade stand and have an agreed upon return structure as you can buy corporate stocks, and I can protect my personal assets should I sell poison lemonade by buying an insurance policy or paying someone to post a bond.
You can also have completely ruthless non-corporate employers who treat their employees like shit, corporations that provide their employees all sorts of benefits, and you can even have corporations that do much for the common the good, like the Cancer Society or entities like that. It's not like I become a dick manager because my boss is a corporation but I'd be wonderful if I worked for a non-corporate entity.
The point here is that you're complaining about bad business practices, not corporate structures.
Let's say I want to start a lemonade stand, but I don't have any money, so you agree to lend me $1,000 on the condition that I pay you 5% of the profits of the business in perpetuity. The business is not incorporated. I then buy a bunch of supplies on personal credit and stiff my suppliers. They come after you for the debt I accrued under the theory that you own 5% of the business.
Might you tell them that you don't own any percent of the business, that there is no "business" as a separate entity to own, that your profit share agreement is a personal arrangement between you and me, and that they had no expectation that you would be personally liable because the transaction didn't involve you and all credit was extended under the expectation that only I would be liable?
That seems a reasonable response to their nonsense claim against you, right?
The point here is that those who transact with corporations do so freely and voluntarily and if they want liability to attach to another entity (whether another corporation or individual), they can work that into their agreement.
And let's keep in mind that typically you want to deal with the corporation and not an individual because they are often more creditworthy. I would rather sign a contract with the Coca-Cola Corporation than Bob in accounting, solely in his individual capacity,
Interesting. I think the balance is about the extent to which those caveat that you admit (colonialism - both old and new), and ecological abuse, are responsible for the rise. It's possible, is it not, that the reason capitalist countries are rich is nothing more than that they stole resources from other counties and didn't pay their ecological 'bills'? If so, then there's no need to be cautious with economic arrangements which create monstrous disparity on the grounds that they might also have a part to play in this prosperity. We've already accounted for the prosperity - we stole it.
This sounds like the "there's no point making it illegal, they'll just find another way round" argument. Trotted out regularly to avoid any legislation limiting corporate excess. The same is true of drugs, abortion, prostitution, and a whole host of other matters which people have no trouble nonetheless making illegal (and continuing to mop up all the 'ways round' people find). If there are other ways to limit liability but offload the risk elsewhere, then they need to be cleared up too.
Quoting Hanover
No. Not to me. If I'm making 5% return because of the success of a lemonade stand (I knew what I was really investing in at the start, I knew how the interest was really going to be paid off) then I'm profiting from the success of that lemonade stand. It's only fair I should shoulder the share of harms if it fails.
I'm not suggesting that doing away with limited liability is the only option. There are there ways of doing it. We could set corporation tax high enough to cover a decent welfare program and have laws guaranteeing a decent wage and working conditions. Those two measures would be an alternative means of tying the profits back to the risks, you reap the profits, but you pay a tax to cover the social consequences of the risk. Unfortunately we have neither.
I think there's actually research showing that states with higher minimum wages do not have higher unemployment, but there may be confounding factors, so that may not simply refute the inevitable conservative argument that raising the minimum wage will cost jobs. But what's the conservative answer to this: what kind of business model did you have, if you have to pay people so little even to keep the business afloat? Maybe that's a business that doesn't really work.
The pain which will be real in particular sectors, no question is corrective, and we should both raise the minimum wage and provide support for employers and employees to get through the transition to a better way of doing things. To say, it will hurt to change, is not an argument that where you're at is good.
Quoting Isaac
Yes, that's what I was saying; I mean to leave open that explanation, at least because I don't know any better. Acemoglu and Robinson use their own scheme for classifying societies as having inclusive or extractive institutions. It's obvious that capitalist arrangements can land on either side.
Here, I'll give an example I think is okay: during the great boom in the American economy, large American corporations had endless layers of middle management. One result was that there were always promotions to be had, so there was considerable upward mobility, people bought houses in the suburbs, all that. Then management consultants convinced big corporations this was all terribly inefficient, that they could cut the number of layers between the C-suite and the workers on the line from 17 down to 4 or 5, and incidentally they could just pocket the savings. (IBM, for instance, reduced their workforce for the first time ever in like 1981 or something. Until then, so long as you did your job, a job at IBM was a job for life.) I submit there's a transition there from a business arrangement that is in some sense inclusive to one that is extractive, but not a shift from socialist to capitalist. It used to be normal for the fortunes of employees to rise with the fortunes of their employer, but then this way of doing business came to be seen as leaving money on the table. No one noticed that building in this sort of indirect profit sharing was precisely what built the American middle class and ensured the growth and prosperity of these great corporations.
Yeah, I think too little attention is paid to this and I suppose what I'm trying to say about corporate structures is that I think they might be partially responsible. The problem is the offloading of true costs (and risks). By true costs I mean things like social impacts of policies (say the impact of a non-living wage), or environmental impacts ('hey, that's our air you're using to store your waste!'). By true risks I mean the social consequences of taking big risks which too often the government pick up the pieces of. If people are relying on your business for their income, then risking new venture into some experimental product line isn't just risking your investment (as the model would have it) but it's risking their jobs too. One way of handling that it to pay for the full risk (and get the full benefit) but abetter way, I think, is to share both. If everyone's on board with the risk, then go for it, and everyone who took the risk gets some of the benefit if it works. The wider this network can be (business, community, country...) the more acceptable the risks are, since everyone took part in agreeing to them.
Quoting Srap Tasmaner
Yes, absolutely, and I think the argument you gave is the one to use to justify this. If you're not paying your worker enough to keep themselves alive, available, and healthy enough to do the job you require of them, then you're not paying the true cost, you're being subsidised by the government (or the employee's family, friends, etc) and the savings you make from that subsidy are going straight into your pocket. There's a rather cliched expression us tankies* are wont to use about capitalism being a system for extracting value from the masses and concentrating in the hands of the few.
* I'm apparently officially one now.
Quoting Srap Tasmaner
Yes, I can see where you're coming from, but I'm not yet sure how it works on a global scale. Are the old IBM inclusive nationally but extractive internationally? Did their subsidising of middle management jobs come out of profits, or out of exploitation elsewhere (cheaper costs of living from cheap goods, low environmental restrictions, 'slave' labour in the third world, etc). I don't know, I'm inclined to think it was, but only because I'm wired that way from decades in the Trotskyist pit that was the pre-millennial British university social sciences departments.
Hmmmm.
Quoting Isaac
We're neither of us economists or historians, so I'll not be answering that, but I'm going to ask you to question what someone else might be able to explain to us. That true-believer asshole who took both econ 101 and econ 102, so now he knows everything there is to know (for example, Ben Shapiro) is going to say this, and he's right: the amount of wealth in the world is not fixed.
IBM was not a middleman between consumers and third-world rare metals miners, buying predatorially cheap and selling predatorially high. Much of the value of an IBM product or service was generated by IBM employees at IBM. Some large portion of the wealth that they captured in the course of doing business was wealth that they created out of thin air.
It is a further step, and a good one, to ask under what conditions IBM could do such a thing, freedom from want, political stability, research universities, on and on. And then you may ask how those things were possible, and so on, and we all know that colonialism is out there in the explanation somewhere, at some level.
But what's not going on is IBM taking, for itself, some fixed amount of wealth from some third-world society. Colonialism is an important part of the story, but it's not a simple matter of theft (as you put it earlier). What about exploitation? Yes, of course, but we have to start with an analysis that doesn't treat exploitation as simple theft.
OK, so I suppose we'd have to be clear what we mean by theft. Can one steal opportunity (future resources)? Can one steal labour? I think these are the kinds of notions by which the whole 'theft' narrative is held up.
As to whether there's a fixed pot of wealth... well. What was it you said earlier about turning fossil fuels into civilisation? I'm not so convinced there isn't such a fixed pot. The earth can only sustain a fixed rate of resource extraction (efficiency improvements, yes, but not infinite ones). Since 'wealth' is really only the ability to purchase 'stuff', then the limited rate at which the earth can sustain having the resources to make that stuff extracted presents a fixed limit on that wealth (as measured by purchasing power) does it not?
Since we're talking about rates here, we don't have to be about to run out to consider us having breached that limit. It's the sustainable rate that matters, otherwise we're stealing from future generations.
Likewise with labour. We're biological machines. The reason that a ten hour work day is cruel is because it breaches a limit our biology places on us. Plus we have other calls on our attention - family, recreation, idle drifting off... Another set of limits. Another rate of use that can be breached.
So since wealth (in terms of purchasing power) comes from a combination of resources and labour, both of which have limits on their rate of use, I'd say wealth must be limited.
I think that the impression it isn't comes from the fact that as technology develops we've grown (the rising tide, boats and all that). But this confuses maxima with rates. The fact that the maxima might change over time doesn't mean that the rate at which it changes isn't itself a limit.
So I guess I'd say to Ben that he's wrong. The limit on wealth is the current maximum resources that can sustainably be extracted from the earth using our current technology and the maximum labour effort that can sustainably be expected from the current population. If you've got more than your fair share of that, there's a strong chance you nicked it.
While interesting, that's all about the max. Not what I was talking about, and really it's probably clearer too use a word like "value" instead of wealth. And it's important not to think just in terms of stuff, but to keep in mind services and intellectual property. My point was that IBM created a lot of value, meaning stuff, services, and intellectual property, that did not exist before, and their customers handed over wealth to get it. I'm not sure there's an argument about whether the earth could sustain high-level programming languages, which Jim Backus and his team invented at IBM, but if there is, it is a very long way around. In there meantime, there is an increase in the *amount* of value in the world, whatever the max. That's why the concept of theft is of somewhat limited use here.
Incidentally, if I recall correctly, Pierro Sraffa (Wittgenstein's friend at Cambridge) builds an economic theory from the ground up along vaguely the lines you describe. Interesting little book I read many decades ago, and the focus was on stability, or so my memory tells me.
OK, so ideas don't have a maxima, not even in rates. That makes sense (I might quibble about limits to the bandwidth of the working memory, or remind you that the brain is a calorie consuming organ and doesn't work for free...but I won't).
How is that value translated to wealth without theft? As a value in its own right its all fine and dandy, the world can now programme in a way it never could and IBM ought, quite rightly to be thanked wholeheartedly for that. But if there's a limited pot of wealth, then what material form could that thanks take other than a bigger than before share of that pot. And, let's face it, in America, the share they had before was probably grossly unjust.
So how can we cash out this growth in value that we've plucked from the jaws of entropy? Can we cash it in for anything in terms of wealth without theft, or must the reward be informational too, like the product. Gratitude, satisfaction...
But is there a limited pot of wealth? I buy my IBM mainframe on credit backed not even by how much fiat currency is attached to my name within the banking system, but on how much the bank expects me to have available to me over the coming five or ten years. There's a lot of something going on here, but it doesn't look much like one doubloon being passed around and bits getting snipped off it.
Truth is, I assume you're right. If we could cash out all the social systems in play, we would eventually get down to rocks and plants and water and animals, and it's inconceivable that anything else actually sustains us you can't eat notional value. (Now we've wandered into schop's thread!) So I'm arguing against myself here along with you, but in part because an idea like theft well that's social right? How far would you want to take the claim that British colonists stole North America from its inhabitants at the time? Did they own it? These were societies too. Some of them famously said no one owns the land, but there were a lot of wars over territory, so a lot obviously believed they could at least defend claims to exclusive use. Were their claims to ownership "natural" somehow? Or stronger than our later claims because earlier? Is that how we divvy up the earth whoever gets there first?
I believe in the material basis of culture and society; I'm just wary of analyses of that basis in cultural or social terms, as if the basis of society was a certain amount of wealth, wealth that could be stolen.
Maybe 'wealth' isn't the right term either. There's definitely a limited pot of stuff and labour, and at the end of the day, that's what things like wealth and value are for.
I have thought of a caveat though. Savings. It's possible we could point to savings, call it wealth, but not treat it as a 'slice of the pie' because it's not being converted into pie, its just waiting. I mean, it's going to be converted into pie, and it would be valueless without being converted, but... Maybe savings is different if only in a small way?
Quoting Srap Tasmaner
Mmm. 'Theft' is for rhetorical purposes, it's just to waive a red rag against the notion that the rich deserve their wealth. I think the British did steal land from natives because I think they held it in common. Ownership is always about power. I own my phone here because I have the power to do what I want with it uncontested and you don't. That means that with something like land there can be multiple types of ownership because there's many things one might of might not have the power to do (incidentally why no ownership makes any sense without enforcement).
It may well have been the case that no other tribe could hunt or camp there, although unlikely (on my limited knowledge) that they couldn't even be there (in peacetime of course). Nor was it the case that the tribe which could hunt and camp there could do so with impunity. So in taking a European-type possession, the British stole something because they took away power.
Quoting Srap Tasmaner
I think this is where power is the more useful metric. With warring tribes, they may well have to have put up with first-come-first-served type of claims, having nothing better (might-makes-right, maybe?). But non-warring tribes need not have had any kind of notion because, being egalitarian within themselves, there's just no power to divvy up, each is free to do whatever. There's no much point in saying "we own this" - the label confers nothing more than just "this". "I own this", however, confers that you can't do what you like with it, I can. So there seems to be some necessary denial of some out-group for ownership to mean anything at all.
Maybe the extent to which wealth is the basis of a society is the extent to which that society defines itself by in-groups/out-group distinctions, such that "I own..." has real meaning, whereas for societies where out-groups are rarely even encountered, wealth might be less relevant as there's not much meaning to "we own..." if there's no-one that excludes from those rights.
In the abstract, maybe? But practically there are two issues: first, it's not the total at a given moment that matters, but what's available, what's controllable, and that changes; second, we have credit, and the future is a long time, even at a discount.
Quoting Isaac
There's an old Carl Sandburg poem: guy tells a tramp to get off his land, the tramp asks what makes it his, guy says he got it from his father where'd he get it? Got it from his father. Where'd he get it? Well, he fought for it. Alright then, I'll fight you for it.
Quoting Isaac
Hmmm. That sounds like right not power, but power is ever so slippery, and we don't want to confuse it with capacity or force. We both have the capacity to doom scroll on your phone, but only you have the right to, and I'm obliged to respect that right. You're saying further that there is some entity (perhaps yourself and some of your friends who work out, perhaps cops and courts, perhaps just the vocal disapproval of surrounding citizens) with the capacity to force me to respect your right, so rights come down to power in that sense, and thus property as well.
That's as may be, but how does it help us?
Quoting Isaac
I mean, I'm getting the rhetorical effect there, but you've talked yourself into a circle: now power the guarantor of property is itself a possession that can be stolen. What would underwrite possession of power, since it can't be power? Is it going to be right after all?
(I hope it doesn't seem like I'm nitpicking here I think this is the most productive disagreement we've ever had. You take care of the forest, and I'll look after the trees.)
Quoting Isaac
I think that tracks. No anthropologist here, but we tend to name isolated societies for the word in their language that just means "people" right? But from my studies in college (wonderful lefty anthropologist who taught us from a book called Europe and the People Without History) and my son sharing what he's learned from Graeber and Wengrow's The Dawn of Everything, population contact goes back as far as you want to go. The isolated tribe in a state of nature is mostly myth.
So the story of property is the story of power is the story of in-group/out-group. The first use of power is the denial of some land use by an out-group. With such a social technology available, a group within a group could deny the rest of the group use of something, claiming ownership the other members of the group are bound at spear-point to respect.
Now if that's the story, then the Europeans are just another out-group, and rather than being denied use of land and resources, they have the capacity to deny those already here such use. Seems like more of the same, not a break with history. The difference may be qualitative though, if the Europeans have a much more comprehensive conception of use and what exclusive rights they're inclined to enforce.
This starts to look a bit Hobbesian, or Trumpian, or even Hitlerian it's always the struggle for power, everyone's a crook it's just that Europeans were better at it.
That's not where we want to end up is it?
Would be nice to cast a fond glance back toward where we started, with the nature of employment, the connection between risk and profit, all that. It's not that far at all, if it's all power struggle all the time, but I'm not convinced. I think there are genuine changes between the deep past and the present, and those changes include new forms of political economy that don't just amount to gang warfare. Economics may be the science of decision-making under scarcity, but that scarcity is relative, defined by opportunity, and not necessarily some definite depletable amount, but a pool we can grow and shrink by our actions.
This first I think we can dispense with because even if the total changes, the rate at which is changes if still fixed. If I triple my share of a pot which I have only doubled the size of then I've still taken more than my fair share. If we extract at a rate faster than we increase, then we're exploiting.
Quoting Srap Tasmaner
This I find harder to avoid. Measuring wealth in terms of how much it could buy us in the future when than amount of stuff happens to become our fair share (when the pot has grown big enough) - well, that seems fair and reasonable.
If a billionaire had £10 billion in the banks, but we had sufficient laws against exploitation (either of people or the environment) then he might not be able to actually spend that (there wouldn't be enough stuff or labour in the world at the time for him to purchase), but he could spend it if technological innovation ever got to a point where that amount of stuff could be extracted without exploitation.
Would that rescue capitalism?
Quoting Srap Tasmaner
Yes, that's the sense in which I meant it. MY power to use my phone how I like (and not you) comes from the government, their police force, etc. The community who backs my use not yours. Might-makes-right in a sense, although in this case I've had to persuade them to agree to my use, not yours. If we live in a community of rational actors we can assume I didn't manage to do that by any ferocious display of strength! But we don't. And more likely they were strong-armed into accepting my claim not yours. Of course, now we're all civilised an' that, we've stopped all the shenanigans, but only by cementing the injustices of the past into money and saying "from now on, no more strong-arming".
So yes, power as in ability to make others act some way, is what I was meaning.
Quoting Srap Tasmaner
I suppose the aim was to eliminate the seemingly 'supernatural' elements of ownership and pin them down to something real. I mean nothing real can just get bigger without cost, it defies several laws of physics, surely? So to help with that I want to find a proper 'conversion' for ownership into something physical. It's not just labelling (like putting a name tag on) because, we seem to be able to merely reify categories of ownership out of thin air (like we do when we claim to "own" aboriginal land but they don't even think land is the sort of thing anyone can own). Power seemed like a good candidate.
Quoting Srap Tasmaner
Not at all. Yes, it looks circular. Let's say instead that stealing is the removal of power to act over some material object (whether that's a phone or a country), then one cannot steal power, but one can steal a country, and, most importantly for our aboriginal example, you can steal a country by removing a freedom the others used to have, even if those others never would have placed such a restriction on you.
We can (should we want to) have our noble savage not care two hoots about who walks about in the forest he lives in, but along come the British and take away his power to walk here and there (by force of arms), then they have stolen something from him, even though he didn't consider himself to own it in the first place.
Quoting Srap Tasmaner
I think that's right (limited expertise here too though), but that doesn't tell us much about the status of the 'other' in that tribe's language and culture. From what I understand (various pop-sci anthropology books) it varies depending on terrain - mountainous, hard to traverse terrain like Papua New Guinea tend to lead to very negative views of the out-group, lots of wars etc. Flatter more easy to traverse terrain tends to lead to more positive views, fewer wars.
I ought to disclose my biases - I only donate to a single charity and that charity is Survival International. I'm not an impartial contributor to the discussion about Tribal rights.
Quoting Srap Tasmaner
I think that's right, but for the first part you hint at "With such a social technology available" - the point made by people like Peter Gray, or Jared Diamond is that the 'social technology' you need for that kind of action is a combination of sedentary lifestyles and systematic excess of resources (ie in most cases - agriculture). As such It may not be a break from the history of say, the Incas or the African pastoralists, but it may well be a significant break from the history of say the Amazonian tribes or the Australian aborigines.
Quoting Srap Tasmaner
I agree in theory with the notion that opportunity is expandable by our actions. I just think that it's merely a theory. We have not expanded the wealth of the world by expanding opportunity, we've done so by stealing opportunity from future generations via over-exploitation of non-renewable resources. We've not expanded opportunities for services by creating new services we didn't even know we wanted, we've done so by constraining others' freedoms sufficiently to force them to do jobs they wouldn't otherwise do if they were free.
So 'yes', in theory, 'no' in practice. Maybe there's a rosy future out there, and I'm probably ignoring many exceptions to the rule I've just outlined, but if we're talking about justification (as we were) then I don't see much in what we currently have, maybe though in what we could have?
I'm broadly in agreement, of course, but there are still some interesting puzzles here. The non-renewable resources are finite (but may not be finite in a way that matters to us if in a hundred years we're mining asteroids with robots), so that fits your story that there is a fixed amount of wealth. But part of my point was that what has value depends on what you can do with it. Rare metals don't have inherent value; they have value once you invent electronics that need rare metals for components. (There is a cobalt mine re-opening in the US because cobalt is needed for the batteries of electric vehicles and wind turbines. Cobalt is precious again.)
Leaving that aside, what is the fair way of handling finite resources across all future generations? They will run out, unless we go extinct or leave the planet. Do we calculate how much fossil fuel we can burn per year working backwards from the sun going supernova? Every lump of coal we burn is a lump of coal countless future generations have a claim on. I don't think there's any plausible solution to that sort of double-bind without the invention of new possibilities. And I think we can do that.
Humans being kinda dumb, and greedy, even that doesn't always work. I think of the example of Norman Borlog and the green revolution. It's a tragic story, because he only intended his work to provide a stopgap, a way to relieve starvation and buy humanity 20 or 30 years to get its shit together. Instead, it was rolled out everywhere at terrible cost, and integrated into the new world system to enable even more population growth and the ever faster consumption of resources. In some ways, he's more to blame than anyone else for our current climate catastrophe, but it's not what he wanted at all.
Interesting how this links to power though? What you can do with it is not only a question of technical know-how, but of power. Even here the country which can secure the more resources (see I used the word 'secure' there, I think I've grown), gets the bonus win of now being able to extract 'value' from a whole tone of resources it didn't even have a use for before. The poor country that cannot afford batteries might be lousy with cobalt but find it of no use whatsoever. There's trade, of course, but like sustainability and labour respect, trade (to be fair) would need also to be legally protected from exploitation.
Quoting Srap Tasmaner
Yes, a conundrum. Impossible to resolve in terms of resource use perhaps. I mean, I've got no clever answer. Using no no-renewables at all seems a bit silly ("if we can't all have them no one can!"), yet it's undeniable that any use means some generation in the future will run out. But I think the sort-of-solution lies with rates again. We're going to run out of fossil fuels in 50 years. Are we going to be mining asteroids by then under any realistic prediction at all?
It sounds complicated (all about growth predictions etc) but it's not the accuracy of the prediction at stake - we're talking here about moral justification. There's no moral justification for using a shit ton of fossil fuels without giving a fuck about the future generations. There is a moral justification fo using some fossil fuels (to improve the lives of peoepl now) if one has a reasonable, and well-informed, view that technology is moving at a sufficient pace as to give an equitable replacement by the time our current fuels source has run out. One is theft, the other diligence.
But on top of that, there's lots of other aspects of the non-renewability of Western growth that don't suffer from that problem - exploitation of labourers, pollution, habitat loss... These are all direct 'thefts' which don't have the problem of simple finite resources. We could just leave all the potential value from labour exploitation, pollution, and habitat loss untapped. We could just say it's not worth it.
Quoting Srap Tasmaner
Yeah, I feel the same way about Borlog. It's one of those emergent properties. I think this is one of the fascinating insights of some of the early social psychologists (and probably economists too, but I wouldn't know) that when you but a bunch of people together and set them all to try an achieve one thing, they end up achieving something else, something none of them intended, nor would have rationally wanted - like the murmuration of starlings. Much of the negatives we see from society aren't because humans are dumb, or greedy. I think humans can be quite nice really (once you get to know them). It's just that they systems we set up have emergent properties which none of us would rationally want individually.
It's, in my opinion, the biggest problem we face.
Yes, good point.
Quoting Isaac
I think this is where we started.
Let's suppose there is a way of using the earth's resources that is largely sustainable perhaps only up to a certain total population, whatever constraints we end up with something more than using no resources but less than what we've been doing so recklessly. Can there be some similar happy medium with labor? Is employment inherently exploitation, or can we imagine an arrangement with safe working conditions, reasonable work/life balance, compensation above some level we'd see as fair?
I am somewhat attracted to universal basic income schemes, because I think the idea of at least partly detaching livelihood from employment could be very powerful. If you could be an adult with a secure, let's say "lower middle-class" lifestyle, and working only part-time, that would allow you more time for pursuits that could be of value to other people as well as yourself volunteering for a charity, at your church if that's your thing, political activism, even the sort of civil society institutions like bowling leagues that have famously dwindled because people lack the time and energy. (It's what you do in retirement now.) Even civil service: maybe we should all be a garbage man once a month for our community, or help mind a kindergarten.
Anyway, question there, before waxing rhapsodic, was: as there might be an amount the earth can give sustainably with ruining her, might the same be true of people? Is it inevitable that employment be onerous? (God, feels like we're starting one of schop's threads.)
Quoting Isaac
Oh yes, and by "dumb" I really meant not noticing that. Some of this is well-known to game theory. Schelling's segregation model, for instance. I've never had a close look, but I believe Robert Thaler's choice architecture stuff would be one way of attempting to address this sort of thing.
To the owners to do with as they please.
The reason employees do not have a say in where the profits go is because they are not owners.
I think so. For me it would be around autonomy and egalitarianism. For a labour arrangement to be fair, the labourer has to have a genuine other choice. I too am a fan of UBI, but in a sense see it as only a replacement for the 'theft' of property held in common to private ownership. This is the comeback to another common conservative talking point - the 'sweat of your own brow' rugged individualism. I'd be equally happy with each person having their acre (or return to common land) and then if you don't want a job, you can grow your own food, build your own house etc. It's the theft of that opportunity that I see UBI as appropriate compensation for.
As to measure of labour 'extracted'. I think this is where choice is paramount. All things being equal, we have two limits.
Firstly, you can't survive on no labour at all, if you choose 0 labour, you become a drag on others, or you die - so we have a lower limit of global labour. This isn't a problem in a dog-eat-dog, hyper-individualist world, but the moment we introduce welfare (as we ought) those choosing to supply 0 labour are 'stealing' labour from others.
Secondly, it's probably the case, on average, that more labour yields more stuff, so there's another potential 'theft' if someone chooses a labour rate which yields little beyond survival, but expects to benefit from the 'stuff' generated by those who worked harder.
These are both typical conservative responses to UBI, of course, but need to be addressed.
The answer to the first, I think could simply be "well give us the land back then". UBI is an imperfect sticking plaster over the injustice of private property, so it's no-one's fault but the land-owning classes if it's got flaws. But in a less confrontational bent, I don't see any reason why UBI shouldn't be linked to a choice of community work, so long as the work yielded no private benefit and had a wide enough range to suit most people.
The answer to the second is more complicated, I think there's a strong egalitarian argument that if one is putting in work to yield some technological advance solely to benefit oneself, then it is you, not the eponymous sponger who have lost your way morally. I'd challenge the notion that it's normal, or morally neutral to expect a reward commensurate with the effort one puts in. It's all too individualistic, If you're not working for the betterment of your community, then you don't deserve the reward.
As I think we may have discussed before, I raised both my children with complete autonomy - no rules, no chores, no school etc. We had to (difficult at times) face the choice when confronted with what seemed like lazy 'sponging' - either we put up with and hope they'll better themselves by example, or we impose our will on them. The latter hardly seemed an improvement, morally, on the behaviour we would be trying to prevent, so we opt for the former. Generally it worked. I believe we're in the same boat with communities and welfare (UBI would come into this category). We either accept that it's possible to thus 'sponge' off others and simply hope that people don't, or we force them to not by imposing our will on them. I can't see how the latter morally improves on the former.
Quoting Srap Tasmaner
Yes, definitely (I assume you meant Richard Thaler, yes?). Returning to the autonomy argument, I think it's ideas like the choice architecture which are crucial to the success of autonomous collectives too. We turn the 'emergent properties' problem on its head by deliberately creating a system where autonomous individuals would naturally, on average, choose paths which promote community well-being. After all, not to go all evolutionary-psychology on us, but that is what we're designed for. Humans don't have a random set of objectives and desires.
But ought they be? The system by which owners own what they own isn't some law of physics, we made it up, it's written on paper under our respective countries' property laws. We're asking here if we ought change those laws.
Terrible idea. Not all land is equal. Nor is human capability. I'd prefer a capabale individual tending to valuable land over the state issued bum, in all cases.
Quoting Isaac
Except those that do. They are the trailblazers of human progress. And they are usually hated by the norm.
It was rhetorical. The point is that the wealthy who might complain about the loss of their exploit-ready labour force are in that position because of a past theft of common land depriving those workers of their ability to make their own living.
But let's address the issue on its face. Firstly, if you take all the viable farmland in the world and divide it by the population the average family of four gets about 2 and a half hectares, so we don't even need to think about poorer quality land. Secondly, if the unequal-ness of human capacity is your concern then you need a welfare system. You need that either way, so I don't see how this fact has any bearing on the choice of system. Thirdly, I don't see any reason at all why increased efficiency should be a target at all. Do you?
I personally believe that employee owned companies are better frameworks for a variety of reasons. However, not all people make good business owners. I think also that a big problem arises when a company's loyalties are conflicts of interest between shareholders' financial statements and employees' livelihoods.
I suspect we may be in agreement regarding what's best for a country's citizens when it comes to how the country sets up and creates its own socio-economic landscape.
https://stocks.apple.com/AjVpCcZ1LTbKD5qK2teiaIA
Glad the SEC is making some minor changes to this blatant wealth transfer from the workers to the owners.
The problem I see with any economic discussion is that we pretend like people have no agency.
"I don't like capitalism" is a value.
I am born into a society that has capitalism, is a descriptive statement.
The value as compared with the "throwness" or "situatedness" of the societal context I am brought into is at odds. The harm is entailed with not with the system, but with being brought into the system at all.
Humans are not like other animals. A chimp, gorilla, elephant, dolphin doesn't say, "I am born into this system of survival, and I don't like it".
Where do the profits go? Why am I being exploited? This is unfair. It's already in the equation from the start- prior to even being a part of capitalism or any political economic system.
Is capitalism itself though, or is it something else?
It doesnt have to be.
Also, there are many forms of what we call capitalism. Im not arguing about that. The answer to my question isnt simply caked into the system. Its a very specific and fairly recent way of transferring wealth to shareholders, and its worth understanding.
Sure, it's not mutually exclusive. It could be worth understanding, but my point is all systems are unfair to an extent that (unlike other animals) we are self-reflecting creatures that can dislike (and yet still must be a part of) any X system. Your version of a good system, might be different than mine. I might not like any system, in fact. And, it may be unfair that we are self-reflecting animals that are put into any system at all. That is indeed caked in. This is unlike any othe animals, where this isn't even a problem.
Thats great. I want to say Marx, Nietzsche, Foucault. I cant place it.
Hookers and blow? /shrugs
Being wealthy is stressful. You can't just go anywhere and do anything anymore, despite most believing the opposite. Unless you're an idiot, your life as a normal citizen is over, including that of anyone you care about.
I know of people who have been held for ransom for as little as a few thousand dollars. Imagine making twice that in the time it takes to take a breath. It's scary.
The answer is the same of what any person anywhere would spend their money (or even in an a society devoid of money, time) on. Maintaining and improving their livelihood (in this case the business) and keeping oneself sane enough to actually wish to continue doing so (leisure).
:up: Indeed. We are all thrown into something given, not of our own.
My interests lie in this intractable injustice of the unwanted given. No ones interested in that one because the change needed for it is not causing a major preference that people hold.
We can be revolutionary, but not too revolutionary.
Its like that only if that situation is brought about, no? Im not a fan of is making a contingency into an inevitability. Cant one both provide the minor solutions to alleviate the problems that occur from the decision and call for not creating the problem in the first place? Why not the latter?
Somewhere between 1 and 2.
Also, mind you, to not throw stones in glass houses. Many people are pretty disgusted with views like Marxism. I've written pretty extensively about the ad populum fallacy, and I know you know this fallacy is pervasive with a lot of ideas that people are knee-jerk hostile towards.
And it's not so simple as "this view is ultra violent" (it's not). Or that it is ultra-difficult (it's not). Or that it targets a particular group (it doesn't, it's universal). It's simply against people's conventional preferences. It's like eating meat, etc. But I am done with this tangent. Just needed that on the record.