Brexit

[tands]

Productivity soars!

My goodness that sounds so nice. For capital.

 

[mattiasNYC]

That is not the problem. The problem is that the commonly used framework that creates the wealth is itself divisive. It stops both  the owners (investors is a more accurate word) and the labour getting as wealthy as they could. The reason is the framework tends not to allow the labour to gain ownership of part of the investment. This disincentives them, reduces productivity and creates the well known them and us syndrome. There are plenty of examples of very successful companies where this framework has been discarded and replaced by one where the labour gains not only wages, but shares in exchange for its labour. A point is soon reached where a large proportion, and often a majority, of shares are owned by the labour. Labour is incentivised, productivity soars and a lot more wealth is created for all.

It is not capitalism that is wrong, it is the implementation.

Cheers

Ian

Well, I didn't mean to say that what I mentioned was the cause for something, just that what John said wasn't correct.

As for what you end the above with I don't entirely agree. I think at some point we're really approaching the people owning/controlling the means of production, in this case through ownership in a capitalist system, and that in turn turns us awfully close to socialist principles.  The more of the profits we share the less capitalism we have in a sense.

 

[mattiasNYC]

How would the worker owned business deal with automation and layoffs?

Why would there be layoffs due to automation if it's all shared? Just cut down on hours worked and keep sharing the profit.

Wealth is not created just by labor, or capital, but there also must be some creative input that combines the capital and labor in such a way to make something more valuable than the input cost (AKA profit).  (The drum tuners I sell are worth more than the parts cost because it does something of value).

Creation as well as management are both types of labor as far as I'm concerned. I wouldn't call you a "worker" solely because you'd churn out a  tuner in a machine, but I'd include the time you'd take to design it. Owning shares in a company on the other hand isn't labor or wealth creation, it's more akin to usury.

 

[ruffrecords]

Productivity soars!

My goodness that sounds so nice. For capital.

Except that capital and Labour are now one and the same.

Cheers

Ian

 

[ruffrecords]

Owning shares in a company on the other hand isn't labor or wealth creation, it's more akin to usury.

So my next door neighbour and his two sons who each own one third of the shares in their 3 man painting and decorating company are userers?

Cheers

Ian

 

[mattiasNYC]

So my next door neighbour and his two sons who each own one third of the shares in their 3 man painting and decorating company are userers?

Cheers

Ian

Sorry for the simplified statement (which I guess I'm not the only one accused of making.... ;-)

My point is this:

Wealth is essentially stuff. People who create stuff are doing labor. And if you're performing labor in my view you are a 'worker'. Therefore the only ones that create wealth are the ones that actually do labor.

On top of this in a capitalist system you have ownership. Owning something doesn't create wealth, it just means you own it and have the rights (and duties) to whatever you own.

In your example your neighbors aren't userers (only) if they're also the ones performing the labor. Most of my distinction is entirely irrelevant on a tiny section of society, meaning your neighbors isolated by themselves. The issue is what happens when all of this scales in a large society. So,

if you have a person who inherits the ownership of a set of corporations, and then accumulates wealth due to that ownership, then as far as I'm concerned that isn't a person who is creating wealth. That person is accumulating the wealth that others have created, and the ability of that person to do so is the ownership of the means of production.

Going back to your neighbors it essentially becomes a non-issue practically speaking if the people who do the labor are the people who own the means of production. They all get a say in how the profits are shared. But the wealth discrepancy we see today in general in society is because workers don't generally own/control the means of production (as well as natural resources) and the ownership allows a group of people to benefit from the labor of others, without their own labor being even remotely proportional  to the amount of wealth they accumulate.

Generally speaking anti-capitalists that use their brain have no problem with people accumulating wealth, they have a problem with how it's done systematically. So if you want to work hard and your accumulation = your produced goods then fine. But capitalists generally don't want that because if that's the case then there's a limit to every man's amount of wealth. You and I both share a maximum amount of hands and fingers, hours in a day, days in a week etc, so at the end of a year while you may produce a fair amount more than me it would dwarf in comparison to the difference between me and Warren Buffet. Yet we still work close to the same amount of hours probably with a similar amount of effort.

So then the objection usually is "well, what about non-goods, i.e. services, what about them?" and my reply is reiterating what I said earlier which is that services too are labor. The only thing left to figure out is how to evaluate them so we can remunerate. Well, if we pick a system where ownership of the means of production is the way it is today, with a financial system which is the way it is today, it's all bonkers. Instead we could, hypothetically, pick a system where labor is remunerated far more fairly.

I think the ownership of the means of production is at the heart of this and as I said it's really an issue that becomes a problem at large scales. A family owned business operating in a vacuum is no problem.

You know what I mean?

 

[JohnRoberts]

Well, I didn't mean to say that what I mentioned was the cause for something, just that what John said wasn't correct.

As for what you end the above with I don't entirely agree. I think at some point we're really approaching the people owning/controlling the means of production, in this case through ownership in a capitalist system, and that in turn turns us awfully close to socialist principles.  The more of the profits we share the less capitalism we have in a sense.

I guess it's appropriate on Mayday to revisit historic socioeconomic screed (workers of the world unite).  :

The stock markets around the world allow citizens to purchase shares of fractional ownership in corporations. These share holders "share" in profit via dividends from profits that are issued directly to shareholders, and they also share in the long term appreciation of the businesses value, if that corporation is successful, when they sell those shares later for more than they paid.  Of course not every company succeeds, so some stocks become worthless. Without "risk" capital, there would be less risks taken. Risk in capitalism is a good thing (IMO profit incentive drives economic growth that benefits us all). Good and bad investments reveal themselves over time. Over the decades I have participated in business start-ups, and purchased a number of stocks  that ultimately became worthless, but I learned from that over the years too.

Note: the IRS always gets paid, so limited liability does not insulate business operators from their tax liability. You can ask some of my former business partners about that.  They crashed and burned within a couple years  after I resigned over disagreements (I was president but only 25% owner so I couldn't make them follow my advice). I am confident I was correct, they clearly were proved wrong by the outcome (I might have been wrong too but we'll never know).

The heart of the capitalistic system is limited liability corporations where businesspeople can raise risk capital without being personally liable for business losses (as a fraction of all businesses do fail). I read a statistic this morning about the major fraction of new restaurants that fail (60% close or change ownership in the first year, 80% fail over 5 years. Perhaps this is why food service franchises are popular. Hint, don't invest in small bars or restaurants (especially now with everybody cocooning). 

At the risk of sounding even more arrogant after decades of managing employees in large and small businesses at higher and lower levels of employment, few that I encountered shared much empathy for the owners (I don't feel much love here in that regard either). I think one of my values to Peavey was because I owned my own business before going to work there so I understood the dynamic of signing the bottom of the paycheck and not just the back.

A business wholly owned by the workers, with every decision decided democratically seems to be perpetually in conflict between individual self interest and group interest. I am not aware of good examples, while I'm sure a few may exist. That said my one man company seems to lack internal conflict, while my boss can be an A_hole. he wants me to get back to work.  8)

JR

 

[mattiasNYC]

I guess it's appropriate on Mayday to revisit historic socioeconomic screed (workers of the world unite).  :

The stock markets around the world allow citizens to purchase shares of fractional ownership in corporations. These share holders "share" in profit via dividends from profits that are issued directly to shareholders, and they also share in the long term appreciation of the businesses value, if that corporation is successful, when they sell those shares later for more than they paid.  Of course not every company succeeds, so some stocks become worthless. Without "risk" capital, there would be less risks taken. Risk in capitalism is a good thing (IMO profit incentive drives economic growth that benefits us all). Good and bad investments reveal themselves over time. Over the decades I have participated in business start-ups, and purchased a number of stocks  that ultimately became worthless, but I learned from that over the years too.

Note: the IRS always gets paid, so limited liability does not insulate business operators from their tax liability. You can ask some of my former business partners about that.  They crashed and burned within a couple years  after I resigned over disagreements (I was president but only 25% owner so I couldn't make them follow my advice). I am confident I was correct, they clearly were proved wrong by the outcome (I might have been wrong too but we'll never know).

The heart of the capitalistic system is limited liability corporations where businesspeople can raise risk capital without being personally liable for business losses (as a fraction of all businesses do fail). I read a statistic this morning about the major fraction of new restaurants that fail (60% close or change ownership in the first year, 80% fail over 5 years. Perhaps this is why food service franchises are popular. Hint, don't invest in small bars or restaurants (especially now with everybody cocooning). 

At the risk of sounding even more arrogant after decades of managing employees in large and small businesses at higher and lower levels of employment, few that I encountered shared much empathy for the owners (I don't feel much love here in that regard either). I think one of my values to Peavey was because I owned my own business before going to work there so I understood the dynamic of signing the bottom of the paycheck and not just the back.

Ok... I don't disagree with any of that.

A business wholly owned by the workers, with every decision decided democratically seems to be perpetually in conflict between individual self interest and group interest.

Well, most anti-capitalists with a bit of sense will agree that it's a bad idea for all decisions to be made democratically. I actually don't think anyone proposes that so it seems like a bit of a false dichotomy to me, or strawman, red herring, whatever.

I am not aware of good examples, while I'm sure a few may exist. That said my one man company seems to lack internal conflict, while my boss can be an A_hole. he wants me to get back to work.  8)

JR

You're both wise men

 

[ruffrecords]

You know what I mean?

I think you just said what I said earlier. it is not capitalism per se that is wrong, it's the implementation.

Cheers

Ian

 

[mattiasNYC]

I think you just said what I said earlier. it is not capitalism per se that is wrong, it's the implementation.

Cheers

Ian

No, there's a difference.

 

[ruffrecords]

No, there's a difference.

Which is?

Cheers

Ian

 

[Script]

The difference is that your neighbours have succumbed to the devil called capital -- sorry, just kidding, but I couldn't resist Keep on discussing, please, cos I'm also interested to hear why your neighbours should live in a vacuum.

On a different note: There are numbers out there that more than a certain amount of yearly income (US$70,000 ??) is, if not detrimental to personal happiness, at least does not contribute much to it any more. Another number I think I remember is 15,000  or whatever of national GDP. (Most likely I don't remember these numbers correctly.)

 

[mattiasNYC]

Which is?

Cheers

Ian

Unless you're saying that there should be limitations on what one can own in a capitalist system - and thus exclude owning the labor or fruits of labor of others, as well as natural resources - there is a difference.

In pretty much any capitalist system I can think of in the west we can own pretty much what we want. We can own natural resources, and if a business decides to offer shares it can do so to the public. It can also be privately held without the owners actually performing any labor at all for the business. You can own something and profit from the work other people are doing. Capitalism is really promoting this, because we can see that its mechanisms keep driving people to maximize profit using ownership as a means to do so.

Even in your example one could come up with a hypothetical example where there'd be a 'problem': Suppose the three each own a third in this family business, and they all work in the company, putting in equal hours. They all get paid a salary for the hours they work, and they then share the profits after salary and other costs are deducted. Then one of the three decides to stop working.  He just doesn't show up to work any longer. He loses his salary, because he no longer performs any labor, but the business survives because the other two just hire someone else to perform the labor. Now the third person still makes money by just sitting on his ass all day, because he makes a third of the profit the company makes. That's the problem I'm getting at.

(I actually think "usury" is the wrong term to use - sorry about that, what I mean should be clear by now though)

So capitalism really promotes that behavior simply because it's profitable. There's just no way in any universe the wealth accumulated by those at the top is reasonably proportional to the actual wealth they create, if they create any wealth at all.

 

[mattiasNYC]

The difference is that your neighbours have succumbed to the devil called capital -- sorry, just kidding, but I couldn't resist Keep on discussing, please, cos I'm also interested to hear why your neighbours should live in a vacuum.

I know you're being facetious, but I never said they should live in a vacuum. My point was that what Ian said was true only when thinking about the principles of their situation as if it was in a vacuum.

 

[Script]

I know you're being facetious...

Yeah, that's pretty much me, sometimes

The problem I see is that anyone will have a more than hard time to convince Ian's neighbours that they better turned away from their business to make this world a better place.

Maybe the numbers I gave (although probably wrong) are worth a comment?

 

[mattiasNYC]

Yeah, that's pretty much me, sometimes

I like facetiousness.....

The problem I see is that anyone will have a more than hard time to convince Ian's neighbours that they better turned away from their business to make this world a better place.

But that's a different issue. What we have, what we want, the path to what we want; three different things. They're obviously related, but they should be discussed keeping in mind that they're not addressing the same problem(s).

I don't think the west will switch from Capitalism anytime soon, and I think even nations like Sweden would have an incredibly hard time nationalizing parts of industry. One of the biggest mistakes Sweden has ever made was in my opinion succumbing to the trend of privatization and in turn privatizing previously state-owned/operated industries. Huge mistake. That can't be easily undone or reversed. So I don't think there's an easy and likely path towards a different system.

However, there is a theoretically easy solution. It's easy in the sense that theoretically it isn't all that complicated, but it is of course incredibly difficult in practice unless all agree on it.

So that theoretical solution is basically just based on the fundamental principle of ownership in our current system. It relies on us all agreeing to ownership, right? So that's why if I take your car you can go to the police and get them to get your car back and arrest me for theft (theoretically). That's an obvious example, but it extends to everything else that can be owned from land to buildings to intellectual property to whatever. It is all ultimately based on an agreement to that being the case. So the wealth of for example Warren Buffet relies almost exclusively on this tacit agreement. But what could be done is simply make the system opt-in, and not by default tacitly agree. Buffet can claim he's worth whatever, but if nobody else agrees that the pieces of paper that say he owns X,Y,Z are valid then he's not really as 'wealthy' as he says he is. Because we don't acknowledge that.

So these hypothetical neighbors of Ian's; if they branch out so to speak and invest in a different business, say real estate, and own a bunch of properties that they don't live in - if we simply say we no longer agree with owning real estate one doesn't live in or work in then they aren't really giving anything up other than that profit. They can keep their own business, and they can keep their own home, but they can't just profit from other people's labor by owning things others need (like housing in this case).

Maybe the numbers I gave (although probably wrong) are worth a comment?

Yeah, sorry, I didn't see them at first. I think it's true. I don't think you're happier beyond a certain point of 'wealth'. And the sad part is that the opposite is pretty much what we're being told all the time in the US, and is what perpetuates the system that the super-wealthy profit from so much.

 

[ruffrecords]

Unless you're saying that there should be limitations on what one can own in a capitalist system - and thus exclude owning the labor or fruits of labor of others, as well as natural resources - there is a difference.

I think you are missing some esential elements. Apart from the fact that now slavery has been abolished you cannot 'own' labour or the fruits of labour, there is nothing inherently wrong with benefiting from the fruits of someone else's labour. My wife and kid's did benefit and still do benefit from the fruits of my labour. They don't 'own', the fruits of my labour.

The same is true in a factory. The employer buys the labour and benefits from it and so does the labour. They share the benefits.

The other important factor you are ignoring is risk. The guy who invests in a business is risking his capital. There is no guarantee he will get his money back let alone make a profit. It does not matter what the scale is, the principle is the same. Even my neighbours had to invest some cash to get the business started. To use your example, all three benefit from a wage and all three benefit from a risk payment called a dividend. The risk payment is a reward for taking the risk not for labour. If one of them withdraws his labour he loses the wage but he is still risking his capital so he should still receive a dividend. If they take on an employee he just gets a wage because he takes no risk.

You also seem to have a problem with success and inheritance. We all work hard to make a better life for ourselves and our families and we like to pass that on to them when we die so they possibly don't have to work as hard as we did. Some people are more successful at this than others. Those that manage to be successful for several generations can become quite wealthy. Others leave fortunes to children who fritter it away.

Cheers

Ian

 

[mattiasNYC]

I think you are missing some esential elements. Apart from the fact that now slavery has been abolished you cannot 'own' labour or the fruits of labour,

Well, I hope... actually I can already tell that you have great patience with me and I appreciate it... just a bit more please, because I admit that I'm not expressing all of this as clearly as I wish I could....

When I talk about owning labor and the fruits of it I'm not talking about owning humans but about owning the work they do. It probably looked odd because I really said the same thing twice, one can own someone else's fruits of labor, regardless of whether that's goods or services. You essentially say that below yourself.

there is nothing inherently wrong with benefiting from the fruits of someone else's labour. My wife and kid's did benefit and still do benefit from the fruits of my labour. They don't 'own', the fruits of my labour.

I understand that, but I'm not using the term in that context. Considering that I mentioned for example owning shares in a corporation it should be obvious that the issue isn't a son benefiting from daddy's work once daddy gives him $20 for his first lapdance (or whatever). Instead the issue is the broader one of having a class of people that don't actually produce much wealth the way I've defined it, yet own a tremendous amount of it, which in turn by definition means they've benefited greatly from the labor of others through ownership.

Society doesn't need them to be as wealthy as they are. At the very most society needs the type of labor they actually perform - and that's only maybe the case, depending on what type of labor they do. We need natural resources and labor to create wealth, nothing else. A person managing production is arguably valuable, but a person playing the stock market isn't with the exception of the finacial sector in a capitalist system, in which case it only serves itself (which is to say that derivatives and the like is just serving capitalism, it isn't inherently serving society, as opposed to being a farmer for example).

The same is true in a factory. The employer buys the labour and benefits from it and so does the labour. They share the benefits.

The other important factor you are ignoring is risk. The guy who invests in a business is risking his capital. There is no guarantee he will get his money back let alone make a profit. It does not matter what the scale is, the principle is the same. Even my neighbours had to invest some cash to get the business started. To use your example, all three benefit from a wage and all three benefit from a risk payment called a dividend. The risk payment is a reward for taking the risk not for labour. If one of them withdraws his labour he loses the wage but he is still risking his capital so he should still receive a dividend. If they take on an employee he just gets a wage because he takes no risk.

I'm not ignoring risk, and I understand how capitalism works. Risk works as a motivator etc in capitalism (to an extent) because of what capitalism is, but it's an irrelevant issue in (presumably) several other systems. In a system where the means of production are shared there will by definition be no need for a return on (risk) investment, because you won't have those means to wager in the first place (the means exist, but you can't own them).

All I was really saying was that capitalism drives certain behavior, and what you implied (where our opinions seemed to you to converge whereas I said there was a difference) was that one could override that behavior or processes and still have capitalism. I don't think that's the case. I think capitalism by its essence will drive wealth inequality, and always encourage that to grow. It's inherent in what capitalism is. So while we agree on how it actually works, and what the justification for it is, we disagree on whether or not the results can be other than what we see, and if they're good or bad.

You also seem to have a problem with success and inheritance. We all work hard to make a better life for ourselves and our families and we like to pass that on to them when we die so they possibly don't have to work as hard as we did. Some people are more successful at this than others. Those that manage to be successful for several generations can become quite wealthy. Others leave fortunes to children who fritter it away.

But since people don't have equal opportunity many (me) will argue that the system is unfair. Two people working equally hard ending up with vastly different amounts of wealth is not a good system in my opinion. The fundmental flaw of it is that it isn't optional. Your vote for a capitalist society boxes me in. If someone would thrive better under a different system you have by definition chosen for them to thrive less in favor of a system that works better for you and your family.

Some greater minds than me (shouldn't be hard) have phrased it roughly as follows: Any force applied to anyone needs to be justified, not the opposite. In other words, it should never be the job of the person advocating freedom to justify freedom, the burden of justification should always be on the person wanting to infringe upon said freedom. And ownership the way it currently is in the west - along with the means to perpetuate that ownership - is a de facto infringement on liberties and that then needs to be justified.

I think the backlash against capitalism has already begun, but a lot of groups are too indoctrinated to understand what the problem is. That's why you see poorer Trump voters complain about the establishment, yet vote for a rich person to help them out. They're not going to get help. Capitalism is what got them where they are. Some other Trump and HIllary opposers already know what's what and wish for true change.

My bet; As John says we'll reach a point where we can produce so much so cheaply that it will be a problem. He can't get himself to saying that we need a different system, but I can. Once we reach pretty much ubiquity we need a different system, or the people will overthrow the wealthy leaders as they always do when the discrepancy is too large. Usually it won't happen peacefully.


PS: I've been working long hours, it's late, I haven't had dinner, and I need coffee.... so there's a fair chance some of the above isn't well explained.

 

[DaveP]

But since people don't have equal opportunity many (me) will argue that the system is unfair. Two people working equally hard ending up with vastly different amounts of wealth is not a good system in my opinion. The fundmental flaw of it is that it isn't optional. Your vote for a capitalist society boxes me in. If someone would thrive better under a different system you have by definition chosen for them to thrive less in favor of a system that works better for you and your family.

You think the system is flawed, we think the Implementation is flawed because human nature is involved.
You can have an altruistic employer like John Cadbury or a slave driver like many others paying zero hours contracts etc.etc.

It's interesting that both capitalism and communism are described in the Bible with no judgement made between the two.
Capitalism in the parable of the talents Matt:25: 14-30 and Communism  Acts 4: 32-37.  The latter was because they thought the world was coming to an end though.

So although the Bible accepts capitalism as a legitimate way for society to run, many forget that the implementation is the elephant in the room, "the love of money (instead of people) is the root of all evil".  "It is easier for a camel to enter the eye of a needle than it is for a rich man to enter heaven".

Like it or not, these were the principles that shaped the western world we have today.  I agree with Ian that there are far too few successful implementations of  Capitalism and far too many bad implementations in which I agree with you.  It used to be possible for Christian conscience to guide employers and capitalists on how to behave toward their fellow men, but that has all been discarded nowadays so government has partially filled the vacuum.  Bill Gates using his wealth to eradicate malaria is one of the few good examples around today.

DaveP

 

[ruffrecords]

I'm not ignoring risk, and I understand how capitalism works. Risk works as a motivator etc in capitalism (to an extent) because of what capitalism is, but it's an irrelevant issue in (presumably) several other systems. In a system where the means of production are shared there will by definition be no need for a return on (risk) investment, because you won't have those means to wager in the first place (the means exist, but you can't own them).

And because other systems do not have risk you lose the motivation aspect which simply leads to stagnation and everyone gets poorer.

All I was really saying was that capitalism drives certain behaviour, and what you implied (where our opinions seemed to you to converge whereas I said there was a difference) was that one could override that behavior or processes and still have capitalism. I don't think that's the case. I think capitalism by its essence will drive wealth inequality, and always encourage that to grow. It's inherent in what capitalism is. So while we agree on how it actually works, and what the justification for it is, we disagree on whether or not the results can be other than what we see, and if they're good or bad.

Wealth inequality occurs in all systems. It is not a unique feature of capitalism. In fact all kinds of inequality exist in most systems. Again, it is the implementation  not the system that is at fault. A lot depends on how you measure wealth inequality and really whether it is an important measure at all. If, say, capitalism leads to 80% of the wealth in the hands of 20% of people, the real question is just how well off are the 80% of people with just 20% of the wealth. If they are better off with capitalism than they would be under any other system then capitalism is the better system. It is not perfect or optimum but it is better The problem with all other systems is they fail to beat capitalism in this respect. So i would argue that the absolute wealth of the vast majority of people is the real measure of a system, not its wealth inequality.

But since people don't have equal opportunity many (me) will argue that the system is unfair. Two people working equally hard ending up with vastly different amounts of wealth is not a good system in my opinion. The fundamental flaw of it is that it isn't optional. Your vote for a capitalist society boxes me in. If someone would thrive better under a different system you have by definition chosen for them to thrive less in favor of a system that works better for you and your family.

I disagree. The system is unfair if it makes me poorer than another sytem.

Phrases like 'two people working equally hard' are not helpful because it is impossible to define hard work absolutely. In addition, people's talents differ and, if hardness of work could be defined, two differently talented people working equally hard would produce different amounts of wealth.

I don't see how my vote for capitalism boxes you in. Other systems are available  to you in other parts of the world. Capitalism works best for the majority. No other sytem does this.

Some greater minds than me (shouldn't be hard) have phrased it roughly as follows: Any force applied to anyone needs to be justified, not the opposite. In other words, it should never be the job of the person advocating freedom to justify freedom, the burden of justification should always be on the person wanting to infringe upon said freedom. And ownership the way it currently is in the west - along with the means to perpetuate that ownership - is a de facto infringement on liberties and that then needs to be justified.

As I said, capitalism is not perfect but it is a whole lot better for the majority than any other system.

Cheers

Ian