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Marx's theory of "surplus value" suggests that labor is responsible for the difference in value of a finished good.

Just so everyone is on the same page, the theory is that the surplus value is the revenue made from a selling a product minus the cost of paying people to make it. If a worker gets paid $10 to make a widget and the widget sells for $15, there is $5 in surplus value (simplified, ignoring material costs, etc...). In JR's view, that surplus value rightfully belongs to Capital, while in tand's view that is theft from labor. 

This past week the stock market barfed because workers wages jumped up to 2.9% year over year. It's pretty comical that the Capital holders crapped their pants because worker's wages inched up a bit when the S&P500 earnings are up ~10-20% in the past year, stock prices comparably, and S&P500 margins (i.e. profit) at a historical high of 11%.  But rising wages threaten the huge returns of Capital.
As I've been saying many times before there is a extreme imbalance in power between labor and capital. Labor has seen near stagnant wages for 30 yrs while Capital has seen tremendous growth. It's pretty clear that this is a fundamental characteristic to unregulated Capitalism. Reviewing economic history shows that worker's do poorly in unregulated Capitalism.
There are many examples of Gov policy tilting in the favor of Capital & business owners, particularly since Reagan (i.e.  tax policy, destruction of organized labor, reduction of worker's rights.)


This does not make the wealthy evil, but the outcome is undesirable. Rich people don't try to make other people poor, it is just an unintended  consequence of making themselves very rich inviting the comparison.
I think it is pretty clear that business leaders and "business friendly" politicians do try to suppress the cost of labor. Maximizing profit requires suppressing labor costs. Chasing lower price labor, reducing dependency on particular workers, destroying organization of labor (unions) has been intentional and effective. When 90% of people are workers, suppressing labor costs DOES make people poor.

There is no simple answer for this (IMO), despite what some think. Punishing the wealthy will not make the poor, not poor. We need to make it easier for creative people to acquire skills and start their own businesses so they can create some real wealth for themselves. There will always be a lumpy distribution of wealth but government can not fix this by mandate.  If government manages outcomes they typically make everybody poor. The best we can do is provide a safety net for the poorest among us but individual outcomes will always depend on talent and effort (when opportunity is available like here in the US).

Reminds me of the saying: it is only a class way when the poor fight back. The rich (Capital owners) have been fighting a class work for a century.
To me this is a familiar screed repeated by Republicans while they make structural policy changes to hurt worker's wages and benefit business profit margins.  It ignores the great period in American from 1950-1980 when workers shared in the success of the economy and were paid fairly for their work. Before the Republican 'trickle down' revolution, attack on organized labor, etc that has destroyed the middle class.
 
dmp said:
Just so everyone is on the same page, the theory is that the surplus value is the revenue made from a selling a product minus the cost of paying people to make it. If a worker gets paid $10 to make a widget and the widget sells for $15, there is $5 in surplus value (simplified, ignoring material costs, etc...). In JR's view, that surplus value rightfully belongs to Capital, while in tand's view that is theft from labor. 
I really hate it when people put words in my mouth, without cleaning them first.  ::)

Characterizing this as a simple labor vs. capital conflict is more class warfare.

In case I wasn't clear enough. I value the IP or technology content in a design as a separate thing from capital (that is also useful) but does not automatically create value by itself. If capital had that ability I could earn some interest on my savings that haven't paid worth the trouble for a decade or more.  Maybe that's why I was in the market buying stocks today (event thought the canned advice is that at my age I should own mostly bonds.)
This past week the stock market barfed because workers wages jumped up to 2.9% year over year. It's pretty comical that the Capital holders crapped their pants because worker's wages inched up a bit when the S&P500 earnings are up ~10-20% in the past year, stock prices comparably, and S&P500 margins (i.e. profit) at a historical high of 11%.  But rising wages threaten the huge returns of Capital.
Wow, you are smarter than me... It looks to me like a typical market correction that was way way way past due...  Of course to all the dumb money that recently tried to enter the market (after bitcoin puked) had never seen a correction for years so were caught off guard when the market didn't keep going up to the sky.  ::)

The media is trying to make this sound scarier than it us by citing how many points dropped. If you look at it in percentage terms is is no big deal historically.
As I've been saying many times before there is a extreme imbalance in power between labor and capital. Labor has seen near stagnant wages for 30 yrs while Capital has seen tremendous growth. It's pretty clear that this is a fundamental characteristic to unregulated Capitalism. Reviewing economic history shows that worker's do poorly in unregulated Capitalism.
There are many examples of Gov policy tilting in the favor of Capital & business owners, particularly since Reagan (i.e.  tax policy, destruction of organized labor, reduction of worker's rights.)
phew I would be repeating myself so I won't.

What is this "power" you are talking about.that labor needs more of?  I will not put words in your mouth, because I know how unpleasant it is. 
I think it is pretty clear that business leaders and "business friendly" politicians do try to suppress the cost of labor.
yes, that is one half of the conflicted immigration argument... One side wants friendly new voters, the other side wants cheap labor... Neither side is doing the right thing for a right reason.

drain the F'n swamp.
Maximizing profit requires suppressing labor costs.
or creating new wealth...

unfortunately for labor they are quickly becoming obsolete. Even white collar employment is at risk from AI.
Chasing lower price labor, reducing dependency on particular workers, destroying organization of labor (unions) has been intentional and effective. When 90% of people are workers, suppressing labor costs DOES make people poor.
actually that was capital pursuing higher return, which in recent decades comes from locating in cheaper labor markets, but to repeat myself this will fade as low cost labor is replaced by automation. (have you ever been inside a modern factory? I have. More machines than workers.)
Reminds me of the saying: it is only a class way when the poor fight back. The rich (Capital owners) have been fighting a class work for a century.
??
To me this is a familiar screed repeated by Republicans while they make structural policy changes to hurt worker's wages and benefit business profit margins.  It ignores the great period in American from 1950-1980 when workers shared in the success of the economy and were paid fairly for their work. Before the Republican 'trickle down' revolution, attack on organized labor, etc that has destroyed the middle class.
The 850 page economic text I am now reading (slowly) mentioned that... the lower wealth gap during that time period is true, your conclusion that it was because of "fairness" is more than a little simplistic.  The world has changed since then and not better for unskilled labor. Skilled labor need to go back to school  too, no time to rest.

JR

PS: I am really getting worried about the market (but I'm old). Bonds look dicey for future store of wealth, and alternate asset classes look risky. At least one obscure leveraged ETF blew up yesterday because it was incapable of delivering what it promised (an effective hedge against market declines).. no I wouldn't buy that poop with all your money).  I have expressed this before but I am growing concerned about how much money is flowing into broad index funds. This indiscriminately puts a bid under all stocks even the weak sisters. This could end badly if all that fast money pulls out at the same time, causing everything to fall in sync, leading to even more withdrawals. ::) IMO it was more disciplined when the individual bad companies collapsed all by themselves.
 
JohnRoberts said:
I really hate it when people put words in my mouth, without cleaning them first.  ::)
Characterizing this as a simple labor vs. capital conflict is more class warfare.
In case I wasn't clear enough. I value the IP or technology content in a design as a separate thing from capital (that is also useful) but does not automatically create value by itself. If capital had that ability I could earn some interest on my savings that haven't paid worth the trouble for a decade or more. 
From an economic's perspective, there are workers and there is capital.
It isn't class warfare to state the obvious  ;D 
The surplus value is owned by Capital. That's a fact from economic analysis.
I'm trying to find some common ground by seeing what we can agree on.

IP and technology content are owned by capital. For instance Apple has patents and technology expertise that add to the value of the business. That belongs to Apple. A user base with brand affinity is also something of value that adds value to capital. The robots and automation you mention are also owned by capital. Worker's do work and get paid a wage for it. If a worker makes a tremendous invention, that IP belongs to his/her employer.
Statistically, 90% of people are employed (workers), 3% are business owners, and 7% are independent contractors (based on what I've read recently). Of course some workers own stocks and participate as a capital owner.

What is this "power" you are talking about.that labor needs more of?  I will not put words in your mouth, because I know how unpleasant it is.  yes, that is one half of the conflicted immigration argument... One side wants friendly new voters, the other side wants cheap labor... Neither side is doing the right thing for a right reason.

If the dynamic is only dictated by supply / demand, then labor has power ONLY in a tight labor market ( I think I just posted about this).
A single worker can negotiate a high wage only up to the point where he/she can be replaced with a comparable worker for less money.
Labor had more power when it was able to organize and negotiate as a group instead of individually. Labor also is granted power by government regulation requiring things like minimum wage, FMLA, etc...  but much of that has been neutered by inflation and Republican opposition.


 
Nobody (honestly) denies that Marks' theory of surplus value is in fact accurate.

Are you suggesting I must be dishonest? As I have said his theory is flawed and more of a political rallying call than valid economic theory (while economics is not a hard science so opinions vary).

Marx's theory accurately describes the conflict of capital and worker (classes) over power and money under capitalism. You can call it names reflecting your viewpoint, but that isn't much of a critique of the theory. The claim is that the theory of surplus value is an accurate description of the working of capitalism. Attack that claim.

Otherwise it just looks like you can't, but you don't want to concede Marx's construction is correct, so you get all general and turn to sophistry to cover it up, or start talking about something else. Maybe no one will notice and you'll be off the hook.
 
tands said:
Marx's theory accurately describes the conflict of capital and worker (classes) over power and money under capitalism. You can call it names reflecting your viewpoint, but that isn't much of a critique of the theory. The claim is that the theory of surplus value is an accurate description of the working of capitalism. Attack that claim.
I clearly explained that the difference between selling price and cost (aka "gross profit") is not solely from the labor contribution, but a number of factors (i didn't detail them all).  Marx made a political argument to inflame the proletariat.  (BTW the Russian revolution was almost exactly a century ago.... even before my time).
Otherwise it just looks like you can't, but you don't want to concede Marx's construction is correct, so you get all general and turn to sophistry to cover it up, or start talking about something else. Maybe no one will notice and you'll be off the hook.
Saying something is so doesn't make it so, but keep trying. This strategy might work in debate club.

I talk about other stuff because Marx is old news and has long been discredited. Income inequality is a real thing but revolution which is where that road leads is not an answer.

JR
 
JohnRoberts said:
Marx made a political argument to inflame the proletariat. 
Saying something is so doesn't make it so, but keep trying.

I haven't read all of Capital (a 800 page economic tomb), but it's a pretty significant work to dismiss as merely political. I've read enough to know it is a substantial work in economics. Almost everything you hear about it is political though, I'll give you that.

 
dmp said:
I haven't read all of Capital (a 800 page economic tomb), but it's a pretty significant work to dismiss as merely political. I've read enough to know it is a substantial work in economics. Almost everything you hear about it is political though, I'll give you that.
das kapital....

Agreed I should not dismiss it so casually, but it has been out there long enough (1867) to be digested by informed thinkers.

The modern attention is no doubt driven by modern politics, and not to be repetitive (class warfare).

I think we need to figure out how to make the poor people less poor, and in the world poverty has been reduced dramatically over recent years and is still shrinking.  What people consider poor in the US are so wealthy that people enter the US illegally to get some. 

There are no easy answers and first we need to agree about what to attempt... Using government force to redistribute wealth has been done before and doesn't end well. We need to expand opportunity, but outcomes will always be uneven do to different talent and effort.

JR
 
JohnRoberts said:
das kapital....
Agreed I should not dismiss it so casually, but it has been out there long enough (1867) to be digested by informed thinkers.
The modern attention is no doubt driven by modern politics, and not to be repetitive (class warfare).
I think we need to figure out how to make the poor people less poor, and in the world poverty has been reduced dramatically over recent years and is still shrinking.  What people consider poor in the US are so wealthy that people enter the US illegally to get some. 

There are no easy answers and first we need to agree about what to attempt... Using government force to redistribute wealth has been done before and doesn't end well. We need to expand opportunity, but outcomes will always be uneven do to different talent and effort.
JR
People who have read Marx and understood his economic observations would observe he is being proven correct for the second time now. The first being the great wealth inequality that developed in the early 1900s in the USA by the robber barrons culminating in the great depression. The use of government force after the depression DID redistribute wealth to an incredible extent and led to half of century of prosperity and stability in America, with a strong middle class. It was the reversal of those principles in the 1980s that has led us down the same road of high wealth inequality, and this in fact is what will not end well. 
 
JohnRoberts said:
I clearly explained that the difference between selling price and cost (aka "gross profit") is not solely from the labor contribution, but a number of factors (i didn't detail them all). 

That doesn't change Mark's construction, you're just saying the capitalist is justified in appropriating x percentage of the surplus value because of their part in production. Debatable, but beside the point of whether Mark's contruction is accurate. You're quibbling over the amounts, not claiming the capitalist and worker aren't in conflict over who gets how much of that surplus value, or denying that this is the definition of class war, and we're in it.

Saying something is so doesn't make it so, but keep trying. This strategy might work in debate club.

I've never been in a debate club, but my understanding is that you lose if you resort to digressions such as yours above.

The institutional inequality existing on the labour market (masked for liberal economists, sociologists and moral philosophers alike by juridical equality) arises from the very fact that the capitalist mode of production is based upon generalised commodity production, generalised market economy. This implies that a propertyless labourer, who owns no capital, who has no reserves of larger sums of money but who has to buy his food and clothes, pay his rent and even elementary public transportation for journeying between home and workplace, in a continuous way in exchange of money, is under the economic compulsion to sell the only commodity he possesses, to wit his labour power, also on a continuous basis. He cannot withdraw from the labour market until the wages go up. He cannot wait.

But the capitalist, who has money reserves, can temporarily withdraw from the labour market. He can lay his workers off, can even close or sell his enterprise and wait a couple of years before starting again in business. The institutional differences makes price determination of the labour market a game with loaded dice, heavily biased against the working class. One just has to imagine a social set-up in which each citizen would be guaranteed an annual minimum income by the community, irrespective of whether he is employed or not, to understand that ‘wage determination’ under these circumstances would be quite different from what it is under capitalism. In such a set-up the individual would really have the economic choice whether to sell his labour power to another person (or a firm) or not. Under capitalism, he has no choice. His is forced by economic compulsion to go through that sale, practically at any price.

https://www.ernestmandel.org/en/works/txt/1990/karlmarx/7.htm
 
Artifact of the Day: Parts of the Holy Bible, Selected for the Use of the Negro Slaves (AKA "Slave Bible") 1808. Though called "Holy," it is deeply manipulative. Based on the KJV, it omits all entries that express themes of freedom.

https://twitter.com/museumofBible/status/960681711804837888
 

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dmp said:
People who have read Marx and understood his economic observations would observe he is being proven correct for the second time now.
oh..oh
The first being the great wealth inequality that developed in the early 1900s in the USA by the robber barrons culminating in the great depression.
(Barons?)..  The cause(s) of the great depression is still being debated, Bernanke actually studied that making him a good candidate for dealing with the great recession. Proximate cause was a banking collapse (9,000 banks)  and massive deflation that collapsed economic activity. Deflation is a bad thing. Arguably the government/central bank mismanaged (contracted) the money supply immediately after the original market collapse making matters worse. 
The use of government force after the depression DID redistribute wealth to an incredible extent and led to half of century of prosperity and stability in America, with a strong middle class. It was the reversal of those principles in the 1980s that has led us down the same road of high wealth inequality, and this in fact is what will not end well.
I am unsure about too simple answers for complex problems.  Some of the programs introduced in the 1930s have been blamed for later problems. As usual with economics there are are always conflicting factors that conflate simple analysis.

I am open to discussing solutions short of revolution, and penalizing success. I am repeating myself but we need to figure out how to give more people the opportunity to create their own wealth, not just give them somebody else's.

JR

PS: A tidbit in the new tax law limits the maximum salary of non-profit organization administrators to something like $1M. I'm not sure they should make that much.  Getting wealthy running a charity seems worse than getting wealthy being a legislator.
 
tands said:
That doesn't change Mark's construction, you're just saying the capitalist is justified in appropriating x percentage of the surplus value because of their part in production. Debatable, but beside the point of whether Mark's contruction is accurate.
We are all shaped by our own life experience... Have you ever tried to run a company without access to enough capital? I have and that shapes my viewpoint about the contribution and relationship between capital and enterprise.  In the '80s I was president of a company growing sales at 50% a year, with a 5-10% profit margin, which was not enough to self fund the working capital required by that much growth. I know what it feels like to be turned down by banks, and even rejected by the SBA.

After a promising meeting with some investment bankers I called a meeting with my other equal partners (I only owned 25% of the company). I proposed bringing in another round of capital investment, of course the investment bankers would expect and deserve some equity ownership in return. My three partners rejected the idea of further diluting their ownership, and my VP who was running the day to day operations, said he could bootstrap the growth from the checking account float... ::) 

I knew that wouldn't work so tendered my resignation as president. I worked as an employee continuing to do design and technical support for about another year.  I never got my 3 years of sweat equity back, but sold them my 25% stock interest for my actual out of pocket cash contribution. Of course they didn't even have the cash to do that, so they paid me with inventory.  I sold Loftech TS-1 to end users (at full list price) to get my cash out.

After less than a year they stopped paying me as an employee so I literally left town as vendors were calling me personally about "their" growing debt. They went belly up within another year and I was the only one to escape with any skin at all. I regret this outcome because I predict we would have continued to grow and could have become a major brand (with adequate working capital to support that growth).

I do not expect any sympathy. This wasn't my first or last business start-up but the most important lesson for me, was to never own less than 51% of a company's voting stock, or fully embrace being a employee (like I did at Peavey for 15 years). 
You're quibbling over the amounts, not claiming the capitalist and worker aren't in conflict over who gets how much of that surplus value, or denying that this is the definition of class war, and we're in it.
there has always been conflict and many well documented abuses and remedies, even now there is a class action lawsuit raised by au pairs who feel underpaid-abused (and I suspect some have been).

I repeat this is a losing argument for labor because automation is quickly making unskilled labor obsolete, with many skilled positions at risk too.
I've never been in a debate club, but my understanding is that you lose if you resort to digressions such as yours above.

https://www.ernestmandel.org/en/works/txt/1990/karlmarx/7.htm
I do not expect to change your mind, do not expect to change mine.

There is a real economic trend here and I do not hear any constructive solutions, just finger pointing, and too simple to work political remedies.

JR

PS: PWIW the government passed legislation making it easier for start-ups to go public (raising operating capital from the public). So far the several companies who went public using this program are selling for less than their IPO price... I do not draw any conclusions from this but applaud the general concept, but as usual caveat emptor when buying any securities.  I am thinking of supporting owner-operator business on even a smaller scale, but don't know how to accomplish that effectively yet. This is almost something Amazon could do through their web portal for order fulfillment, but giving Amazon even more profit share scares me some.
 
JohnRoberts said:
I am open to discussing solutions short of revolution, and penalizing success. I am repeating myself but we need to figure out how to give more people the opportunity to create their own wealth, not just give them somebody else's.
So what does 'penalizing success' mean exactly?  There isn't a single person on the planet who would turn down 5 million dollars after being taxed at 50%, simply for the reason that it could have been higher had taxes been less.
 
Matador said:
So what does 'penalizing success' mean exactly?  There isn't a single person on the planet who would turn down 5 million dollars after being taxed at 50%, simply for the reason that it could have been higher had taxes been less.
I am getting weary of this but I'll see your implausible hypothetical and raise you with this one.

Back in 1944/45 the top US marginal tax rate in the US was 94%... So let me rephrase your hypothetical into would you work extra overtime to only take home 3.6 minutes of pay per extra hour worked?  ::)

The top marginal rate in the US is currently 39%, so we aren't there again (yet) but this ebbs and flows (marginal rate had been increasing lately).

Even if we take a bunch more from the high income workers the rise in entitlement spending will consume all that too.  At some point this spending problem will come to a head but it is the nature of politicians in the swamp to kick things like this down the road for future congresses to deal with (allowing sovereign debt to pile up higher. $20T+ now ).

I am glad I am old... If I was a younger person, (or had kids) I'd be a lot angrier.  :mad: :mad:

JR

PS: There had been a move by global elite to coordinate top marginal tax rates internationally so high earners can not escape to different tax haven countries. This seems optimistic as there will always be small countries that will to beggar their neighbors to attract the wealthy (and their wealth).
 
JohnRoberts said:
Back in 1944/45 the top US marginal tax rate in the US was 94%... So let me rephrase your hypothetical into would you work extra overtime to only take home 3.6 minutes of pay per extra hour worked?  ::)
I wouldn't in your scenario - however if I had already booked a million dollars in income, then overtime wouldn't be very meaningful to me either.  There are companies in the semiconductor industry that would kill for 5% margin, so 50% is not exactly a ludicrous rate either.  The economy didn't exactly collapse in the intervening years after 1945.

JohnRoberts said:
Even if we take a bunch more from the high income workers the rise in entitlement spending will consume all that too.  At some point this spending problem will come to a head but it is the nature of politicians in the swamp to kick things like this down the road for future congresses to deal with (allowing sovereign debt to pile up higher. $20T+ now ).
This problem is imminently solvable, it is a matter of priorities.  We just handed out 1.5T over 10 years tax cut, and increased the federal budget for aircraft carriers and fighter jets by almost 100 billion dollars (and that's just one line item of thousands).  The private health insurance industry billed us (and our employers) nearly 900B in 2016 alone.  Cutting our military spending down to the level of our next closest competitor (China) would save nearly 400B yearly.  The total cost of the Iraq and Afghanistan wars could have funded Medicare for All, provided Free College Tuition, and increased the education budgets in every state for the past 10 years.
 
The trade deficit with China last year was 375 billion .  That almost pays for their defense spending.  I agree 900 billion  Is crazy money for defense. 
 
fazer said:
The trade deficit with China last year was 375 billion .  That almost pays for their defense spending.  I agree 900 billion  Is crazy money for defense.
To be clear, the 900B figure was for private insurance revenue, but both points still stand. ;)
 
Yes, we spend a huge amount on defense. It would be nice if we didn't have to but nature abhors a vacuum and China and Russia have extended their influence into areas where we have softened our presence over recent years.  Does anybody think China or Russia will be better shepherds than us? Assad now sheltered under Putin's wing has reportedly used poison gas against his own citizens in Syria again (remember Pres Obama's red line?  ::) ).

In recent years the "sequester" has limited defense spending. When the sequester was passed (2013) it was considered so onerous that it wouldn't last but now years later it is still in place. The sequester reduces spending in only a few categories (like defense) while allowing entitlement spending to continue expanding (there are cuts to social security). The CBO analysis attributes a 0.6% lower GDP growth (and 750,000 jobs)  for 2013 attributed to sequester spending cuts. 

I do not advocate limitless and mindless spending, and repeat IMO defense spending is not our biggest problem (while a popular political talking point).

The constantly expanding entitlement spending is a like a budgetary Sword of Damocles hanging over taxpayer's heads.

JR

PS: another good thing about living in nowhere MS is that N Korea's nukes probably can't reach this far, and if they could they wouldn't target Hickory.  ;D  (hopefully our anti-missile technology can protect SF).  8)
 
JohnRoberts said:
Assad now sheltered under Putin's wing has reportedly used poison gas against his own citizens in Syria again).

Nonsense. Are you talking about the false flag the syrian rebels fighting assad (ISIS the people Obama armed) tried a year and a half ago, or is this Some Other Made Up Story? Link it.

JohnRoberts said:
Yes, we spend a huge amount on defense. It would be nice if we didn't have to but nature abhors a vacuum and China and Russia have extended their influence into areas where we have softened our presence over recent years.

Well, I sure don't want my 'presence' softened.  :-*

JohnRoberts said:
I do not advocate limitless and mindless spending, and repeat IMO defense spending is not our biggest problem (while a popular political talking point).

The constantly expanding entitlement spending is a like a budgetary Sword of Damocles hanging over taxpayer's heads.

Except Constantly Expanding Entitlement Spending isn't intended to kill, but to improve the lives of the people of this country, not the lives of the rich who benefit from the killing.

Eat the rich. No war but class war. These are not just slogans, but also policies that make good sense.
 

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