Exploitation cannot be obscured in time

In my recent travels in the Anarchist reddit, more and more I stumble on Anarcho-Capitalists who insist on pointing to articles in their classic haven, Mises.org. Apparently, the place to be is you’re a progressive capitalist. Due to the quantity of such links I obviously cannot read all of them (indeed I still have quite a lot of Marxist material to go through) but now and then I’m pointed to an article that just challenges.

So I have decided to start a little series which will contain all the refutations I write on mises.org articles. I hope to eventually have a nice collection of posts I can instantly post as counters to such links.

Today I was pointed to a rebutal from some guy called Hans-Hermann Hoppe on why the Marxian concept of exploitation is wrong and how the consequences of movements based on marxism are also wrong and disastrous. I will not attempt to refute the whole analysis but rather I will try to attack the central small core concept it is all based.

After a few paragraphs providing a short introduction of “the hard-core of the Marxist belief system”, and then a brief explanation of the Marxian exploitation theory, Hoppe finally goes to the offensive

Now what is wrong with this analysis? The answer becomes obvious once it is asked why the laborer would possibly agree to such a deal. He agrees because his wage-payment represents present goods, while his own labor services represent only future goods, and he values present goods more highly. After all, he could also decide not to sell his labor services to the capitalist and then reap the full value of his output himself. But this would of course imply that he would have to wait longer for any consumption goods to become available to him. In selling his labor services, he demonstrates that he prefers a smaller amount of consumption goods now, over a possibly larger one at some future date.

On the other hand, why would the capitalist want to strike a deal with the laborer? Why would he want to advance present goods — that is, present money — to the laborer in exchange for services that bear fruit only later? Obviously he would not want to pay out for instance $100 now, if he were to receive the same amount in one year’s time. In that case, why not simply hold on to it one year, and receive the extra benefit of having actual command over it during the entire time? Instead, he must expect to receive a larger sum than $100 in the future, in order to give up $100 now in the form of wages paid to the laborer. He must expect to be able to earn a profit — or more correctly, an interest return.

Now this immediately falls afoul of an assumption: That the worker does indeed value present goods more than future goods. This however is begging the question: “Why is the worker valuing present goods more?”. The answer is of course need. The only reason a person would prefer to have less money now rather than more later (and that “later” can be as short as 1 hour from now) is because they have an urgent need that they cannot ignore until later. That urgent need can only ever be food or shelter.

If the worker has the capability to feed and shelter himself until he could reap the future value of his product, he would certainly do so. Indeed, when people have enough money to survive, very often they invest their money as well or start their own business. The problem however is that not everyone has this luxury. The vast majority of humans can never leave the working class and move to the capitalist or petty-bourgeois because they start at the condition where their basic needs are not fulfilled and because they do not own any means of production.

This is not an voluntary choice. This is a choice based on passive coercion. It is beneficial for the Capitalist who can select a low wage for the starving worker, but it is not beneficial for the worker who might only get a present value enough to simply sustain himself until the next day.

But lets look at this another way. Hoppe claims that a worker benefits because he receives present goods which he values more, in return to losing future value goods. There is another function in society which does the same however: Credit.

With credit, I can receive current goods in return of losing goods in the future. The difference of goods I lose is not too large usually but is enough to put me back a bit, making me poorer in the long run. True, I only get credit when I have such a need where current goods are more valuable in utility.

Now consider a hypothetical human who enters adulthood without any wealth. The only way for him to survive to the next day is to take 10$ credit for the food he will eat and the place he will live. That does not give him any real value other than his continued existence to the next day, where he will be actively poorer by the 2$ interest he was charged. So once again he has to get 10$ credit for the next day and so on, yet becoming more indebted as his debt increases by about 2$ per day.

Notice that I said, that this is the only way he can survive as well. That means that he has no choice but to fall more and more in debt daily until eventually it’s time to pay the piper. This situation should immediately strike us as wrong. Is it fair that our sample human’s only choice is to put himself more and more into debt without a way out? Of course not.

Lets take this example and apply to a worker’s position. The worker comes out to the society and has no other way to survive but to get a job from a Capitalist. The capitalist will, as Hoppe claims, provide him with 10$ upfront in order to create for him a widget he sells for 12$. The worker uses his money to survive until the next day, where he again has to make another widget, enriching the capitalist by another 2$, and so on.

What is the difference between our hypothetical human and the worker? In both cases, they only get to survive from day to day, while the creditor or capitalists becomes richer, without doing anything, by 2$ per day. The only difference between them is that the workers settles his debt daily by producing a 12$ widget and giving it to the capitalist, while the hypothetical human accumulates debt. But the end result is the same. At the end of 10 days, the human will have to come up with 20$ (the creditor does not care how. Perhaps sell his organs) to pay back. The end result is a 20$ richer debtor/capitalist.

But like the situation we put our hypothetical human was unfair, so is the situation we are putting workers every day. The scenarios were simple but the basic premises remain no matter the wage. Time-shifted or not, Capitalism is exploiting the worker by putting them in the unfair situation where they have to take the “credit” or starve. This “mutually beneficial” relationship assures that the worker will always remain poor while the Capitalist will enrich himself without doing anything. Indeed, this continued exploitation, will only ensure the Capitalist will be able to put more future workers in the same exploitative situation by taking control of the means of production so that they have no choice but to work for him.

Hoppe also asks why would the Capitalist borrow his money to the worker if he’s not going to become richer in a year? Why indeed. By himself the capitalist would not become any wealthier than his original 100$ and  as time passed, if he did not labour himself, his 100$ would decrease as he fed and sheltered himself. But the capitalist is not content to work like everyone else, he wants to become richer and not work at all, a societal parasite. He will look towards the immoral way of exploitation.

The “clean capitalist” who is mentioned in the article, does not escape this moral stigma simply because he didn’t get to inherit his fortune like most capitalists. Once you have capital, you always have 3 options.

  • Do nothing. Use the money that you saved to retire or have a luxurious life
  • Become a capitalist and exploit workers.
  • Bring other workers to your business without exploitation. As long as they work with you, they own what they make and they get an equal share of the surplus value. This is the only mutually beneficial way.

Hoppe continues:

Now what is wrong with Marx’s theory of exploitation, then, is that he does not understand the phenomenon of time-preference as a universal category of human action. That the laborer does not receive his “full worth”, so to speak, has nothing to do with exploitation, but merely reflects the fact that it impossible for man to exchange future goods against present ones except at a discount.

And this is simply untrue. First of all, the capitalist does not give the worker present goods. How many times have you been paid on your first day of work for what you’re going to do in the coming month? Never of course. The wage always comes at the end of the working period where the surplus value has already been created, even many times over. But yet, you do not gain the full value of your work even though you gave the capitalist “present goods” each day in the previous month in exchange for “future goods” at the end of the month.

But this has nothing to do with present of future goods nonsense. It’s all about who controls the means of production and who is starving. The only reason the worker cannot make surplus value for himself is because the Capitalist controls the way to make it and will not let him use it unless he agrees to be exploited. And the more people that are exploited, the wealthier the Capitalist becomes and the more means of production he gets to control, turning yet more people to exploitation and concentrating the wealth to the few.

I will not bother to counter the rest of the speech as it basically rests on the assumption that it has demolished Marx’s theory of exploitation. I hope I have adequately shown you how it has simply tried to obscure exploitation behind concepts of time and avoid the hard moral questions that undermine capitalism.

I’m not an economist expert or even a Marxist scholar so it’s quite possible that I am missing some fine point or argument from either side. However if this is indeed the only argument they have to declare Marx’s theories obsolete, then it’s no surprise that their system sounds so hollow.

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125 thoughts on “Exploitation cannot be obscured in time

  1. "The reason people link to other material is to support their arguments. It's the same reason why academics use footnotes."

    Where in your original post did you make an argument? What argument are you supporting? That db0 needs to take economics?

  2. Ignoring the fact that capitalist only invest in low risk ventures and they they generally get their ROI soon. The capitalist also does not have to invest in a new enterprise. Nobody is putting a gun to his head and telling him to "make more money". This is a consious decision of the Capitalist, which I admit he does because he does not see the worker as being exploited.
    The choice of the Capitalist-wannabe is not: "Take a risk or die". The choices are: Retire, Live Luxuriously, Exploit, Help others.

  3. I am not sure how you can determine that last statement. In critiquing the Austrian school it is important to remember that they use a subjective theory of value where people's values are demonstrated, or revealed, through their actions, i.e., it is impossible to read people's thoughts or desires. It is based on their actions in reality.

    A psychologist may come to the conclusion you have ("the only reason the worker does not . . . ") but an (Austrian) economist does not pretend to read people's thoughts or motives, or that it is "all about money." There are many reasons one may not engage in striving for more money in the future (i.e., a higher return on their investment) through following a capitalist. The most important may be that the money is not guaranteed in the future, whereas the present is "more sure"–there is less risk involved. The farther into the future, the more risk and uncertainty that have to be accounted for. Not everyone is comfortable with risk. People's time preferences are different, and not solely based on money.

  4. I am not sure how you can determine that last statement. In critiquing the Austrian school it is important to remember that they use a subjective theory of value where people's values are demonstrated, or revealed, through their actions, i.e., it is impossible to read people's thoughts or desires. It is based on their actions in reality.

  5. Of course I do not concede the point. As to "complex items" you mean reality. Please clarify what you mean by "the worker provides increased value in the present for decreased value in the future." Or maybe explain what you mean by "value."

  6. Hm, to me money itself has no value. It is paper and round metal coins. The value of it is determined ONLY by what I can get for it. It does not affect the IS state. And having no/less/more paper and coins now or later makes no difference to me as long as I am not willing to give some of the bills n coins to trade it for something I want. And since noone can trade time or health (I do not talk about services or healthcare here) I am only bothered if my will is set to aquire something I consider useful, be it luxury or not. Maybe it is not "profitable" in our society of capitalism to have this point of view but I like it. It depends more on what I want (I would say "what is my will") than on other factors. I can decide not to need. And this is what I see many other people can not and are not tought. Sad.

    Just crossed my mind..

  7. Hm, to me money itself has no value. It is paper and round metal coins. The value of it is determined ONLY by what I can get for it. It does not affect the IS state. And having no/less/more paper and coins now or later makes no difference to me as long as I am not willing to give some of the bills n coins to trade it for something I want. And since noone can trade time or health (I do not talk about services or healthcare here) I am only bothered if my will is set to aquire something I consider useful, be it luxury or not. Maybe it is not "profitable" in our society of capitalism to have this point of view but I like it. It depends more on what I want (I would say "what is my will") than on other factors. I may use it but I am not much part of it I would say. And I do not care to be. I can decide not to need. And this is what I see many other people can not and are not tought. Sad.

    Just crossed my mind..

  8. You think like a free man and that's good for you! But a lot of people don't and won't even if they can. At least that's my belief and it explains why a lot of people like me support capitalism.

  9. Apologies to all if comments seem not to be updated. Something broke in the comment system and you cannot expand to see "more replies". I've contacted the devs.

    EDIT: Seems to be ok now. Let me know if you can't expand comments

  10. Of course reality is complex, but it is a fact that we have either simple or complex items. The author of the original article used a simplified example so I believe I am allowed to do the same.

    Please clarify what you mean by "the worker provides increased value in the present for decreased value in the future."

    The worker provides value now, by producing a simple good or supplying a service himself. Say, mining coal or fixing a computer. His labour obviously creates value (the extracted ore, or the fixed computer) which is given to the capitalist immediately. Thus he has provided present value to the Capitalist.
    The capitalist, at the end of the month, week, day, will pay the worker less than the market worth of the value he created with his labour in the previous month.

    So the worker, provides present value in exchange for lower future value.

  11. Of course reality is complex, but it is a fact that we have either simple or complex items. The author of the original article used a simplified example so I believe I am allowed to do the same.

    Please clarify what you mean by "the worker provides increased value in the present for decreased value in the future."

    The worker provides value now, by producing a simple good or supplying a service himself. Say, mining coal or fixing a computer. His labour obviously creates value (the extracted ore, or the fixed computer) which is given to the capitalist immediately. Thus he has provided present value to the Capitalist.
    The capitalist, at the end of the month/week/day, will pay the worker less than the market worth of the value he created with his labour in the previous month.

    So the worker, provides present value in exchange for lower future value.

  12. Straw man, Austrian economics isn't empirical economcis, hence "db0, you really do need to learn a bit of economics before you can even argue sensibly"

  13. One major point I believe you have not addressed is the effect of government intervention, carefully crafted over the years to eliminate competition. I feel this is a crucial point, as this is what makes it so difficult for individuals to own the means of production. In a true free market, employers must compete with each other in the labor market for quality workers. Real wages would be naturally higher at companies that desired the best, most productive employees. If all that was needed was a kitchen, some food and a few tables to open a restaurant, there would be a lot more restaurants. If all one needed to start a beauty salon was a chair, some scissors, and a box of hair care products, many more individuals would own their own beauty shop. There are many people who do run businesses with very low overhead that are probably in some violation of the law. Vendors at flea markets come to mind, but I am sure there are many, many others. As long as they stay under the government's radar, they provide an income, but they are at risk of "getting caught". If they grow too large, they will attract the attention of the state's jack-booted thugs, and will be jailed, fined, or at least forced out of business. The government has created laws that prevent entry to the market, requiring expensive and onerous licensing restrictions, building standards that go far beyond common sense requirements, inspection procedures that are often politically motivated, and a tax system that creates a huge administrative burden on any small entrepreneur, and a host of other barriers that have been erected by the state. The deck has been stacked against anyone who would desire to own the means of production. The present system we have is far removed from free market capitalism, both in the US and globally. It is closer to mercantilism or "crony capitalism", where many of the the most successful businesses are those which have the best political connections, rather than those which provide the best goods and services or most innovative products. Most individuals choose to work for someone else because that is the way we have been taught in government run schools from a young age, and anyone who desires to start their own business finds it to be too difficult when they start to run into these barriers to competition.

  14. Is this the point-by-point elaborate response you were referring to @ mises.org? In that case, I guess the concept of lying is beyond you as well.

  15. What? If Austian economics is not empirical then it's just random theories with no basis.
    Furthermore, how does that even follow?

  16. "The author of the original article used a simplified example so I believe I am allowed to do the same."

    HHH used a simplified example that isn't at odds with the mechanisms at works in reality. Your description is at odds with logic as well as reality.

    The fact that a worker isn't instantly paid does not mean that the amount paid somewhat later is less than if he were paid instantly.

    The present value the worker provided and which you are referring to is subjective and object of uncertainty and risk. The fact that the workers doesn't stand to lose anything other than his invested time (when for example he is not payed, which would be a crime) is reason the worker isn't paid the share of the market value of the final product. There is time, uncertainty and risk between the worker's contribution and the final product. And that makes all the difference. When the time-preference and uncertainty factor is taken into account, one has explained the gap and can objectively state that the worker actually is being paid his share of the market value of the final product.

    If the workers wants the payment of the capitalist, he can accumulate his wages paid and save and start his own enterprise, with all the uncertainty bearing that is accompanied with it.

  17. A quote from his article: "What is the difference between our hypothetical human and the worker? In both cases, they only get to survive from day to day, while the creditor or capitalists becomes richer, without doing anything, by 2$ per day."

    Fatally flawed – he said by "without doing anything" – who then, is providing for the material to build the widget, who is investing capital into the plant to make the widget – who is paying the energy costs associated in making the widget? WHO IS TAKING THE FINANCIAL RISK REGARDING THE PRODUCTION OF THE WIDGET? What don't you understand about risk/reward relationships? The $2 difference between the labor and selling price must be able to sustain the company and make it worthwhile for the "creditor" (poor termIMO)to live – or he shuts down. In fact one may argue that the labor costs of 83% of revenue is a bit excessive – buy only the creditor can determine that – is it worth it? Remember that the worker entered into this job as an agreement to perform a function in return for a pay – he may accept or decline – depending on what he may garner elsewhere – if he can't do better – he may take it to have a job and be grateful — will he want paid more – of course — that is human nature — just like when workers can demand more when there services are in huge demand…..remember the obscene monies companies paid programmers during Y2K? On comes back to supply and demand…all this w/o one word of a government bailout.

  18. I noticed that mistake only after he replied so I couldn't edit. But the difference in the meaning is minimum

  19. Okay listen, if the worker wanted to he could simply provide the service directly and get the full value. Nothing is stopping him from doing so. Why does he work for the 'capitalist'? Because the capitalist provides him with certain things of value, and the capitalist in turn takes a cut for this provision. Such things might be the so called 'means of production,' like perhaps diagnostic tools the worker cannot afford himself. Another value the 'capitalist' provides is connecting the worker to clientelle so the worker doesn't have to work as hard at finding and keeping clients, and can focus on what he does well, the repairs! Funny thing is, the worker himself is a capitalist because he's cooperating the the very most basic premise of capitalism, specialization. He's specializing in the repair, someone else is specializing in providing the tools, and someone else in the maintenance of clientelle.

  20. "What is the difference between our hypothetical human and the worker? In both cases, they only get to survive from day to day, while the creditor or capitalists becomes richer, without doing anything, by 2$ per day."

    This statement is downright offensive. I have an aunt and uncle that run a saw shop. They are currently and have been for the past three years under heavy burden of risk and debt. They work very hard to keep the business going, to bay the bills and the taxes, to keep the customers happy and the books balanced, the worker paid (of which I am one) and God knows what else. I simply go there 10 hours a week and sharpen stuff. The rate charged for sharpening is $65/hour. I get $12 of it. My uncle has many times asked me to contribute and be partner with him, in which case I would get a much larger share than 12/65, but I would also share a much larger part of the burden, such as risk should the business fail, I would share in the bills and the debts, I would share in a lot more than I really care to at this point since my primary concern right now is to get through school. So I get the money I need right now to get through school, and I let them stress about all the risks and bills. To say that my aunt and uncle are lazy and become richer "without doing anything," and that they exploit my labour is simply disgusting.

  21. Hello, a friendly visitor from mises.org here. I have finals to study for so I stopped when I saw (what seems to me) a big fallacy, and thought maybe you'd give it a look and see it also. On arguing versus Hoppe, you explain people would only be "exploited" if they need food or shelter, otherwise they would hold on to what would be more valuable in the future. From mere experience I see the opposite, people decide to work for money now even though they don't need more food or shelter, and even though their labor would be more valuable in the future. Hoppe seemed to be arguing that because they agreed to the deal, both parties value the result more than the cause, or they wouldn't be dealing with eachother. You however, immediately said people would only give up future benefits for necessities of life, and that is a huge and false assumption of mankind, from what I've seen. 20 million dollars can go a long way in the future, but people decide to work for it and then blow it on pointless items like Yachts and Mansions. I have poor friends who should be saving but would rather waste their whole life on fast food and restaurants than have a future. People's actions are not based on need, they are based on desire. People sometimes desire what they need, but sometimes don't. Some people want to play all day instead of study, others want to be successful just to be better than others. To change this, you would have to warp humanity itself, and I think the goal of society must be to nurture humanity, not twist it into something we think it should be.

  22. Hello, a friendly visitor from mises.org here. I have finals to study for so I stopped when I saw (what seems to me) a big fallacy, and thought maybe you'd give it a look and see it also. On arguing versus Hoppe, you explain people would only be "exploited" if they need food or shelter, otherwise they would hold on to what would be more valuable in the future. From mere experience I see the opposite, people decide to work for money now even though they don't need more food or shelter, and even though their labor would be more valuable in the future. Hoppe seemed to be arguing that because they agreed to the deal, both parties value the result more than the cause, or they wouldn't be dealing with eachother. You however, immediately said people would only give up future benefits for necessities of life, and that is a huge and false assumption of mankind, from what I've seen. 20 million dollars can go a long way in the future, but people decide to work for it and then blow it on pointless items like Yachts and Mansions. I have poor friends who should be saving but would rather waste their whole life on fast food and restaurants than have a future. People's actions are not based on need, they are based on desire. People sometimes desire what they need, but sometimes don't. Some people want to play all day instead of study, others want to be successful just to be better than others. To change this, you would have to warp humanity itself, and I think the goal of society must be to nurture humanity, not twist it into something we think it should be.

  23. After posting, it took me to see the other comments, and I'm arguing what Jakobsson is arguing, but more in depth. You say need doesn't equal luxury, but this is irrelevant to why people make deals with eachother, because as I said, people don't always make decisions on need. People give up future value all the time for things they desire more, regardless of what they need.

    You seem to view "exploitation" in the mainstream sense of the word, where it means a bad deal that must be done anyways. If people didn't need things so much, they wouldn't make these "mistakes" of working for what they need at the moment. But people only work for what they want at that time. If I'd rather work for King X than be shot, it's because I want to be alive rather than find other sources of income. If I'd rather work for a car than study for school, then I'm being "exploited" into getting what I want. A voluntary agreement cannot be parasitic, only destructively symbiotic.

    And please stop thinking needs are the biggest barriers of mankind! Time and again we have found ways to supply what we think are needs in such quantities beyond previous imagination, and yet later on in time we have stifled all our opportunity with laziness, greed, or power, and yet have had more comforts than even kings of earlier eras. Kings themselves live in great abundance, and do little for mankind.

  24. Your conception of credit ignores the possibility of increasing income. Say a young couple in an undistorted mortgage market want to buy a house. Both of them are early in their careers and cannot accumulate the cash for the property, but can secure credit for it. So they take the loan for the house and a few more for furnishings and start paying it off. As the the two get older and advance in their professions the interest becomes more affordable, and eventually it's paid off and they have and have had the house to enjoy for many years. This probably yields them more utility than simply saving to buy a house and furnishings in cash, which would probably have landed them in a smaller house with fewer amenities.

    Secondly, interest can be used for capital goods that allows emerging market actors without resources already to compete with entrenched rivals. Say you want to set up a new bar, and you want to complete with a large well established one. Now with straight cash you could get a wretched dive, but you have enough credit access to get a good sized, well equiped, clean facility. You take the loan, and after getting some customers, can compete with the established bar and mabye overtake it. Your profits will be eaten up a bit at first by the interest, but if your business grows you can pay it off and make good money and even take over the market.

    What you describe is closer to loansharking to gamblers and shopping addicts. This is a much more personal ethical issue, and I believe that the people involved are the ones responsible for their own behavior, because its never the job of the bank to ask questions, I certainly hope mine never does of me…

  25. The Labor Theory of Value:
    From my limited understanding of it, it states that things acquire value through the amount of man-power applied in its creation (therefore a plane is valuable because of the man-power invested in it) but to me that does not make any sense: the plane is valuable no matter the amount of time invested on it. To me the plane is valuable because it is rare and very useful to someone.Therefore the creation of this plane in the future (with all the resouces and man-powere spent on it) is justified. It is the original value of the object to be created that justifies the investment of time and labour on it, not the other way around. The true value of the plane is therefore determined by the market were supply and demand (rarity and usefullness) tells us if the creation of it was justified after all. But since market values are constantly shifting and by themselves dont assure us if the plane is ever going to be sold, then the "anarcho-capitalists" here have a point: a risk is being taken by the capitalist and not by the workers who earn a
    fixed wage.

  26. If things had earned a value just based on the amount of work spent on them, theoretically I could spend my whole life creating glow-in-the-dark sunglasses and earn profit. But since in reality none will buy my stupid invention as there is no demand for it, I conclude that the The Labor Theory of Value is wrong. If I spent my whole life creating a single brick and its price would be reflected only by the amount of labor I spent in the creation of that brick (my whole life in this case) I could sell it for millons. But since bricks are common (ample supply), in real life I cant do that, therefore I conclude that The Labor Theory of Value is wrong. I am sorry to offer such simplistic examples, but this is how I see it.

  27. I just want to state upfront that I am an anarcho-capitalist through and through and discovered your blog through Mises (how ironic). With that said, I have always enjoyed studying views which differ from my own and while you and I will probably never agree I have subscribed to your blog and I am looking forward to reading your future postings.

  28. "The capitalist, at the end of the month/week/day, will pay the worker less than the MARKET WORTH OF THE VALUE…"

    That is where your argument is flawed and fails, your inability to understand "market value". The fair market value in your example is whatever amount the laborer agrees to be paid in exchange for his/her labor. The "capitalist" cannot then pay less than market worth of the value, as the laborer set the market by agreeing to the value. If the capitalist pays less, then he/she has reneged on the contract. That is why we have courts; surrogate decision-makers are unnecessary.

  29. The point is not that the capitalist will take the risk, but that the capitalist will not allow the worker to take his own risk if he so wishes. Once the wealth has been concentrated into the hands of the few Capitalists, the workers are forced into a situation of continuously losing money from which he cannot escape, similar to the one of the hypothetical borrower.

  30. The present value the worker provided and which you are referring to is subjective and object of uncertainty and risk. […] When the time-preference and uncertainty factor is taken into account, one has explained the gap and can objectively state that the worker actually is being paid his share of the market value of the final product.
    .

    And yet, the worker does indeed suffer the risk because when the company fails, the worker is the one who is left on the street while not being any more wealthy.
    Once the Capitalist makes his ROI, there is no more risk to speak of. His assets are secured and he is simply becoming more wealthy at no risk. The worse that can happen is for the company to close down but he has lost nothing.

    This "risk" candy is simply a way to convince workers that they are better being exploited than taking control of production. It is a scare tactic and nothing more.

  31. If the workers wants the payment of the capitalist, he can accumulate his wages paid and save and start his own enterprise, with all the uncertainty bearing that is accompanied with it.

    I have already shown how the exploited worker canbe in the position where he does not make enough to save. This was the situation a 100 years ago and the situation in most 3rd world countries now.
    Even if the worker is capable of saving, the capitalist accumulates much more quickly than him, since not only is he skimming the surplus value of this worker, but also of many other workers and plus, he also has his own labour. The capitalist through this wealth is able to invest much more than the worker ever could and then outcompete him.
    This is why concentration of wealth happens.

  32. Nothing is stopping him from doing so.

    Immedaitely false. The worker does not control the means of production so he cannot do anything. Especially in your dream world where even the air is private, the worker cannot even setup his own store without capital. Capital he cannot accumulate while being exploited.

  33. Why does he work for the 'capitalist'? Because the capitalist provides him with certain things of value, and the capitalist in turn takes a cut for this provision.

    Why should the Capitalist get a cut from something he wouldn't be able to use himself? Without the worker, the capitalist wouldn't be able to become any wealthier. Without the capitalist, the worker would become even more wealthy.

    So the answer to "why does he work for the capitalist", is because he is forced to.

  34. I do not understand how you can conclude from that example that the capitalist has "lost nothing". Investment in a business is an ongoing function, it does not end once you buy a building or a machine, or whatever capital is necessary to conduct the business. There are material and energy costs, taxes on property and income, costs associated with marketing and distribution, and a host of other expenses that are not being considered in your argument. If the company closes, the assets are liquidated, usually to pay creditors and other bills, and the capitalist is left with nothing. The accumulation of capital requires some time and work on the part of the capitalist, industrial production often requires multi-million dollar machines. These assets are seldom "secured", I am at a loss as to what mechanism you believe secures them, other than a long history of good service and quality product being delivered to his customers, in which case, he has earned his place in the market through sound management. The worker discounts his labor in order to receive a fixed amount on an ongoing basis, and the capitalist may or may not be able to sell the finished goods quickly, there is no guarantee of a payoff. Again, the problem is not capitalism, it is government intervention which creates barriers to true competition. With true competition, companies must compete both in the market for the sale of their product, and in the labor market for quality employees. Without government intervention, we would see a much greater number of potential employers, and we could choose among them more judiciously. The companies that paid poorly would find themselves forced out of the market.

  35. There are at least three errors in your analysis worth mentioning briefly.

    The first is your (flawed) analogy of the creditor and the capitalist. While, yes, the creditor will receive $2 as an interest payment–due to the time value of money–there is no guarantee that the capitalist will receive the $2. In other words, the capitalist assumes the risk–they may make a loss of not $2 but the full $10 they paid the worker if the product doesn't sell! In other words, they assume the risk with no guarantee of a return.

    Second error: You are downplaying the role of time in your analysis–it is crucial. The present value of money is worth more than the future value (regardless of a wage-earner/capitalist relationship), hence there is interest charged from the present to future date. It works the same with the capitalist and worker's wage. The capitalist does not sell the product immediately (typically) but at some point in the future. Thus there is a higher price charged (the $2 margin from selling price minus the wage) in the future due to the time value of money.

    Third error: Just because a worker may not get paid immediately does not mean the product will be sold at the date they get paid, i.e., even the so-called "surplus value" would not be within the first pay date. You can imagine workers investing in capital-intensive, long-term projects such as digging for oil, who will not see a return for possibly years, possibly never.

    I look forward to your response.

  36. but it is fair to say that the clean capitalist does take risks that workers don't.

    No, not "won't". Can't.

  37. Thanks Ron. You're welcome to stay and contribute and I hope you will manage to raise my opinion of AnCaps in the meantime as well.

  38. The first is your (flawed) analogy of the creditor and the capitalist.[…]they assume the risk with no guarantee of a return.

    And indeed, you are wrong. The creditor also has the risk that the borrower will default.

  39. The capitalist secures his assets once he makes his ROI. Once his investment has been returned, then even if the company is liquidated, he has lost nothing.

    All the rest of the ongoing functions that you mention are already included before we calculate profit. Profit is what remains once all workers and raw material have been paid and all maintenance has been done.Once the accumulated profit equals the initial investment, the Capitalist is in the black and only becomes richer. There is no more risk, only more wealth.

    And while the Capitalist becomes wealthier and wealthier through continuous worker exploitation, the workers who provide all the value and have the most to lose if the company closes, have no say in it and are as comparatively wealthy when they leave as the day they started.

    These workers do not "discount their labour" because they do not want to care about the risk. They do it because they have to do that or starve. Any worker would be more than happy to take his share of the company risk in return for the equal share of profits and control.

  40. The fair market value in your example is whatever amount the laborer agrees to be paid in exchange for his/her labor.

    Er, no. The market value of the workers labour is equal to the surplus value of his labour. Simply it is the value of whatever the market assigns to his products minus maintenance and raw material costs.

  41. The fair market value in your example is whatever amount the laborer agrees to be paid in exchange for his/her labor.

    Er, no. The market value of the worker is equal to the surplus value he creates through labour. Simply it is the value of whatever the market assigns to his products minus maintenance and raw material costs.

  42. Just because a worker may not get paid immediately does not mean the product will be sold at the date they get paid, i.e., even the so-called "surplus value" would not be within the first pay date
    Even beyond that, the fact that the worker gets paid at the end of the week/month doesn't mean he isn't getting paid immediately for his work.

    db0, you really do need to learn a bit of economics before you can even argue sensibly. Start with Man, Economy, and State, which you can download for free (http://www.mises.org/rothbard/mes.asp)– it's a big book, but it covers everything in very accessible terms.

  43. "The only reason a person would prefer to have less money now rather than more later (and that “later” can be as short as 1 hour from now) is because they have an urgent need that they cannot ignore until later. That urgent need can only ever be food or shelter."

    This is wrong. Why? Becuase I, fully clothed, sheltered and fed, still prefer present consumption of 100 chocolate-bars this year instead of 105 next year. Or in other words, I spend a lot – a whole lot – on luxury-consumption (like chocolate) today, when I could've invested the money instead. So "that urgent need" doesn't have to be food or shelter.

  44. Just because a worker may not get paid immediately does not mean the product will be sold at the date they get paid, i.e., even the so-called "surplus value" would not be within the first pay date

    Unless you claim that the Capitalist manually goes and distributes the goods himself, then your argument fails. The capitalist sells the goods to the distributor immediately after they are produced, so yes, the surplus values would be within the first pay date, or more likely before that.

  45. Just because a worker may not get paid immediately does not mean the product will be sold at the date they get paid, i.e., even the so-called "surplus value" would not be within the first pay date

    Unless you claim that the Capitalist manually goes and distributes the goods himself, then your argument fails. The capitalist sells the goods to the distributor immediately after they are produced, so yes, the surplus values would be available within the first pay date, or more likely before that.

  46. db0, you really do need to learn a bit of economics before you can even argue sensibly

    I suggest you read the comment policy.
    I can easily claim that you need to learn Marxism before you can argue sensibly but that wouldn't be of much help would it?

    1. Need =/= objectively definable. There are only more and less urgent wants. Nothing else.

      1. Need is objectively definable: Food, Shelter and Friendship. Anything else is not needed for our continued survival, thus is a luxury

        1. Animals do not need shelter and friendship, and people technically don’t need them as well.

  47. it is impossible to read people's thoughts or desires. It is based on their actions in reality.

    I consider this a flaw however. This is the main reason why the theorists of the Austrian school continuously conflate correlation with causation. You assume that because one person does something, that person wants to do that something. But you disregard concepts such as passive coercion in order to get to this result. This is why absurdities appear like Rothbard's claim that women were not politically active in the past because they didn't want to be politically active.

  48. The idea of risk is indeed essential and that's why the capitalist is being rewarded for it (in therory). I'm not a hard-core austrian myself, but it is fair to say that the clean capitalist does take risks that workers don't. We're not speaking about so called capitalists, who are only benefiting from an alreday existing situation (i.e inheriting a well developped business) because these are not capitalists.

    But:

    " Bring other workers to your business without exploitation. As long as they work with you, they own what they make and they get an equal share of the surplus value. This is the only mutually beneficial way. "

    Well only Father Christmas would do that!

    I mean it would be a fabulous present that you are giving to your workers. What have they contributed to the capital in the first place?

    You probably forget about all the hard work that the capitalist had delivered BEFORE being able to build up his capital. So workers would benefit from this capital without having first contributed to constitute it?

    It's an open debate. It triggers another question: is the world fair and should it be fair?

  49. The most important may be that the money is not guaranteed in the future, whereas the present is "more sure"–there is less risk involved

    Given the same ROI as a capitalist, why would the worker and the capitalist choose different? Something must be changing their time-preference and that something is inequality. The capitalist can choose to invest a 1000 now in order to get 2000 in one month because he already has 100.000 in the bank. The worker who's total savings are 1000 however does not have this option as he wouldn't survive the month. If the worker would have had the same wealth for one month as a capitalist, they would both choose to invest.
    The only reason then for anyone to choose the suboptimal choice, is not because he wants to, but because he does not really have a choice. And this enforcement of no-choice, this passive coercion into permanent suboptimal choices which benefit the capitalists is what we call exploitation.

  50. "The present value of money is worth more than the future value."

    I need this comment to be expounded upon. It may prove to be true, but I just need further explanation.

  51. Does nobody bother to read comment policies anymore?

    As for economics not being an ideology, well I beg to disagree. The type of economics preached at Mises most certainly crosses to ideological threshold

  52. I think this "chocolate bar" idea falls short when you realize that capitalism is curretly the worldwide system. I doubt people in the third world are giving up their land's natural resources to the tune of chocolate bars or luxury SUVs for that matter.

  53. You probably forget about all the hard work that the capitalist had delivered BEFORE being able to build up his capital. So workers would benefit from this capital without having first contributed to constitute it?

    You're forgetting that the Capitalist does not HAVE to exploit workers. He is free to enjoy the fruits of his labour. The problem exists when the Capitalist buys means of production which could have been used by others and then leases them to exploited workers.

  54. It's an open debate. It triggers another question: is the world fair and should it be fair?

    No it's not. Yes it should be.

  55. ou are downplaying the role of time in your analysis–it is crucial.

    I did not downplay it. It was the main focus that the concept of time does not dismantile the inherent exploitation.

    If the more future money is of more value than less current money (or esle the capitalist would not seek it) then the only reason the worker does not follow the same path is because he cannot due to the situation he finds himself in.

  56. This is not an internet based pissing contest to see who has read the most material supporting their ideas. This is a discussion offering you the chance to provide a compelling argument in defense of those ideas. A hyperlink is not an argument (unless you are linking to your own words written somewhere else) reguardless of how informative it may be.

  57. Goods in production still take time and production is in stages. In other words, it is not a one-stage process to arrive at consumer goods. Even the production of a pencil takes many different workers and materials, i.e., most production is in stages where the work-in-progress passes through many "hands" before completion. Capitalists do not always sell goods to distributors (nor are they not necessarily the distributors) immediately after production. Some goods are warehoused for periods of time, perhaps for the next season. Without taking into account the time aspect and that production occurs in stages, the argument does not hold up.

  58. You can imagine workers investing in capital-intensive, long-term projects such as digging for oil, who will not see a return for possibly years, possibly never.

    Sure I can. As long as the workers had their basic needs of food and shelter met why wouldn't they? When they have the choice to get a miniscule part of the future profits now or the full value later, the choice is obvious. Indeed many "clean capitalist" started that way before they became capitalists so obviously the incentive is there.
    The problem is that the capitalists withold the means of production (land, oil fields etc) from other who would do the same, had they had the opportunity, in order to force them into the choice of starvation or wage-slavery.

  59. Why don't you read a peer-reviewed economics textbook that is prescribed at Harvard University then, if you don't trust Mises? It would give you the tools to understand why your argument in your post is wrong.

  60. You're trying to move the goalpost. If you're willing to fall back on arguing only for complex items we can do that, but I will take that as a concension that simply goods that are produced immediately (like raw materials) or who provide value immediately (like services) are indeed exploitation since the worker provides increased value in the present for decreased value in the future.

    Do you concede this point?

  61. You cannot seriously expect people to write pages of argument just for the sake of an online debate. I don't know about you, but my time is more valuable than that.

    The reason people link to other material is to support their arguments. It's the same reason why academics use footnotes.

  62. My error. I meant "You can imagine capitalists investing in . . . "–not workers, meaning capitalists may not see a return on their investment and the product will not be sold immediately, if it sells at all.

  63. I can and do expect it if that's what it takes. I find it interesting that you claim to not have enough time to actively refute db0's ideas, but you do have plenty of time to surf the internet in hopes of posting a few hyperlinks to any and all people who happen to disagree with you and call it an argument.

  64. db0,
    I would have replied directly to your response to me, however it seems that you are still having some issues with the "See more replies" function. So let me recap, you said:

    "Er, no. The market value of the workers labour is equal to the surplus value of his labour. Simply it is the value of whatever the market assigns to his products minus maintenance and raw material costs. "

  65. I hope you realize that you are just arguing yourself in circles. "[T]he value of whatever the market assigns to his products minus maintenance and raw material costs…" is the value of the product! That does not belong to the laborer, that belongs to the person or persons who bear those costs. Your collectivist mentality is obscuring from you the fact that the "capitalist", as you put it, is the one who bears the raw material cost, the "capitalist" bears the cost of maintaining the means of production for the said product, the "capitalist" is the one who bore the price of years of savings to be able to make the investment which birthed the idea that gave the laborer the opportunity to exchange his/her labor for compensation…

  66. …Yes, labor has a value, however it is absurd to think that the remuneration owed to the laborer should be equal to that of which is owed the "capitalist". The "surplus value" created through the innovativeness of the product which is realized on the market belongs to the person/persons who, by their creation, enabled the product to be made. So then, if we accept your flawed ideology, is the laborer responsible for the negative value incurred if the market rejects the product?

  67. You most likely believe that because you have never read, nor heard of, the principles of sound money. The fiat paper currency that we have now, and I'm sure that you know exactly what that means, is in no way money of value. For a person who rips into capitalists and anarchocapitalists (I read your snide little comments on the other thread), you sure don't know very much about our "ideology".

  68. Since you were insisting on simplistic examples, I used a simplistic one myself. Fixing computers. I need NO capital, no means of production, to go fix a computer (at least one with software values). The only thing I need is my own knowledge and expertise. Absolutely nothing would stop me from knocking on doors and fixing broken computers. Yet I might find it beneficial to partner with someone else so that they can manage advertising and clientelle, then I can spend more time fixing (and collecting payments) and less time knocking on fruitless doors. I have to share a little with my advertising partner, of course, else why would he ever help me in this way?? In the end though I either continue the partnership because I _am_ better off, or I don't because I did better on my own. If I do continue then I am making more than I otherwise would, and so is my partner, he's making more than he would be using his advertising prowess to advertise nothing. This is the miracle of specialization, of capitalism.

  69. Without the capitalist, the worker would have to find another job. And how do you even know the worker isn't getting an exactly equal share of the profits? Say the employer (I'm getting really tired of calling capitalist only a very small part of what is capitalism) has to pay $2 for widget supplies, and then pays the worker $10 for one hour to make one widget. The employer then sells the widget for $12. How does this in any way benefit the employer? Is the employer supposed to just hand over his "means of production" to the workers so they can reap the full profits of their labors, even when they had NOTHING TO DO with purchasing the widget making machines??

  70. He said _Austrian_ economics isn't empirical. That doesn't mean _all_ economics aren't empirical. Hence the "straw man" argument he (rightly) called you on.

  71. You have a terrible grasp of U.S. history. The federal minimum wage law, as well as the 8 hour work day law, were first put into place 70 years ago (Fair Labor Standards Act), and not by "exploited workers band[ing] together and threaten[ing] to topple the Government". They were lobbied for by labor unions to corrupt government officials in the ubersocialist FDR administration. As a matter of fact, your fellow communists were responsible for the passing of the 8hr work day law, when they organized what was to become the inaugural MayDay parade and subsequently set off a bomb in Chicago. I wouldn't call that toppling a government though. I would just call it being bloodthirsty animals.

    1. Ahahaha, you consider the 1st of may, the day that the whole fucking world recognises as extremely important like that? The people who fought and died on the streets of Chicago for a normal day's work are bloodthirsty animals? And then you wonder why people find AnCaps to have a bankrupt ideology…

  72. Maybe he does have time to read books and learn and expand his mind. Maybe he even reads marxist books. Just because he has time to read a book doesn't mean he has to take the same time _again_ to regurgitate the book to you. Unless of course you feel you're entitled to all the knowledge everyone else has without ever turning a page yourself. That would explain your lack of knowledge, though… And maybe, just maybe, the book actually _is_ relevant and that is precisely why he is linking it? Just a thought.

  73. db0 actually does make a good point about time value of money (or anything else). If the worker has a choice between 5 dollars and a meal now, or 10 dollars later when he has already starved, then no, that doesn't leave the worker much choice. However I don't know where in truly capitalist country this is ever the case for more than a short time. Sure, maybe someone is out of a job and just lost all his money. He then would probably take the first job offered him. He would then feed himself, take care of his basic needs, and start looking for more profitable employment. Heck, he might even work the minimum hours he needs to to feed and shelter himself, and then use all that spare time to use his own labor to "make so much more." Ah, but that's so hard. He would rather just put in a good days work and have extra money to go to disneyland this year instead of disney world next year.

    1. You're using the no true scotsman fallacy. In Capitalist countries like India, China or other 3rd world or developing, this is very much the case. This not the case only in the bourgeois nations which are exploiting everyone else to have such opportunity.

      And if you're going to claim that anything other than Anarcho-Capitalism is not true Capitalism and this wouldn't happen there, my answer is that you don't know that. If you admit that noone is a "True Capitalist", you cannot point to developed countries as empirical evidence.

  74. Even better, I could spend one hour widdling a stick into a spear and then trade it for a gold ring that a jeweler spent one hour crafting! I like this idea of Labor Theory of Value!

  75. You seem to be making broad generalizations about businesses that may not be grounded in reality. Most entrepreneurs do not set up shop with 10 million of their own money in cash, buy a widget machine and a building, and get an instant return on that investment. It may take many years to recoup the initial investment, and these years are when the risk exists. IF he survives in the market long enough to recoup that investment, then he may begin to accumulate some wealth. Why would you begrudge him that? He may have shareholders who have invested their money who must be paid from the profits, or bank loans, or most likely, some combination of the two. Even for a small business, such as a restaurant or retail store, it is generally accepted that it will take at least 5 years before a net profit is realized, and that is only if the owner contributes with his own labor. If "any worker would be more than happy to take his share of the company risk", as you posit, then we would see a host of employee owned businesses in today's market. Why do we not see several employees pool their resources and start their own business? It does happen, but at that point it seems you would view them as "switching sides", when in fact they are accomplishing what you wished for them, by taking control of the means of production themselves. I see this happen fairly often in the construction and computer industries. It is always nice when you get to keep all the money, but sometimes there is no "money to keep", especially in the early stages of a business, when customers are too few and far between. I repair computers myself, but I also do contract work for several other companies. When I am working for these other companies, my hourly rate is considerably less, but I am able to utilize their resources, both in the form of tools and equipment as well as their established base of clients. I do, in fact, discount my labor to utilize these advantages. Eventually I hope to become more of a competitor to them, but that takes time and money to accumulate my own capital. There are also a number of government hurdles in the form of licensing, fees and other protectionist barriers which must be overcome. It is even more difficult to enter the market in an industry that is dominated by labor unions, such as a plumber or electrician. In my state, you can not even apply for a plumber's license unless you have been employed by another state licensed, card-carrying plumber for the previous 5 years. Not everyone wants to be an entrepreneur, it does require a lot of work, unless you were born in a very wealthy family. Many employees are perfectly content to be "exploited" for the guaranteed weekly check, and do not wish to assume the risk. The conflict is caused by the state, not capitalism.

  76. If a greedy capitalist invests in the wrong 'means of production'/capital at the wrong time, he loses money. He can't simply liquidate his assets for his original investment. If his products don't sell, he can't ask labor for their pay back. If you can't admit the simple fact that capital losses not only exist, but persist, why bother writing economic arguments.

    What about the video game industry? How do they pay labor per paycheck by selling their output? Film? Music? Construction? There are countless other industries whose product development lasts far longer than the schedule at which laborers demand to be paid.

    And need cannot explain away wage payments. They persist in industries that pay labor far more than they need. They persist in welfare nations that subsidize housing and food for the poor. For Heaven's sake, CEO's, GM's, and football players earn wages. And if you want to mention that football franchise ownership is quite an exclusive thing, you should ask why it is exempt from anti-trust law, and subsidized by public stadiums.

    Finally, your analysis of time preference is flawed. By your analysis, all disposable income would be put into interest bearing savings accounts, or other investments, rather than spent on non-essential goods. Consequently, all investment would be in essentials, being the only consumption spending. This doesn't happen. If investment returns are low, more people spend today rather than invest for the future. The price at which people will supply credit varies from individual to individual. Aggregate time preference creates aggregate interest rates (although artificial-credit-creating institutions like the Federal Reserve can lower interest rates while time preference shifts to present consumption).

  77. This is a joke. If the creditor assumes risk, it will be factored in to the interest rate to account for an uncreditworthy borrower. Do you know nothing about how markets work? It doesn't even undercut his reply!

  78. This is ridiculously inaccurate. Real wages rose at all income levels in the long-term until the 1970's, moreso in the 1800's. This makes sense as the 1900's were plagued with two world wars, an artificial credit created bust and a government intervention prolonged depression, as well as increased "progressivism", or central planning. Since 71 the artificial credit has been flowing much more freely, and we have had constant market crises alongside slumping wages. Neither the honest (non-governmentally aligned) capitalists or laborers benefit from the "benevolence" of central planning.

    Here's Mises himself on your myth:
    http://mises.org/EFANDI/CH26.ASP

    Lack of technology does not imply economic inefficiency. I am supposing your next critique will argue that capitalism failed to produce computers in the 1800's. Just because the average worker's standard of living is better today doesn't mean he is better off economically today. Without government intervention in both capital and labor markets, productive workers would be far better off, as well as laborers who were aspiring capitalists. Mr. Capitalist himself, John Rockefeller, came from virtually nothing in the heart of the period you describe as complete labor exploitation.

  79. Only if capital is correctly aligned to consumer demand… you do not know of what you speak.

    Re workers, they certainly do discount the marginal value product of their efforts, if they accept payment now. The "work or starve" nonsense has nothing to do with a free market. If workers really do not have high TP, on the market they are free to form cooperatives or whatever other arrangements they wish, and undertake the related risks. Nothing will stop them. Many workers have ample opportunity to do it now, even. Yet they don't. Please stop presuming to speak for an entire bunch of people, subsuming them under some fictional class of your own imagination.

  80. "Nothing is stopping the worker from providing the service directly", unless, like for most of the economy, such service requires resources, access to which is prohibited for most. No one is claiming the capitalist is providing any less than the slave-master or feudal lord. Inasmuch as a monarch is correct in his claim of dominion over X, the capitalist is correct in his claim of dominion over Y, and in either case the lucky heir is "providing". From the perspective of share-croppers, and their masters turned employers, the additional ownership of the people themselves was a mere formality. The great "providing" of resources by lucky heirs is precisely what anti-capitalists hope to remedy by less oppressive and more merit-oriented wealth distribution.

  81. Great response. Keep up the good work educating this dolt. He seems incurably dumb. Enough time wasted on here.

  82. In your talk of specialization, you failed to mention those who specialize in the collection of profits. "Providing", by your definition, includes most significantly expertise in what any rock could do: not preventing an actual producer from utilizing the means of production. But the rock, to be fair, has the humility not to demand profit in return for his pacifism. Nor do I think it much of an accomplishment to be a successful businessman: those are Schumpeter's entrepeneurs, but they're at least as much Proudhon's absents, Marx's primitive accumulators, Veblen's saboteurs, and Klein's disaster capitalists.

  83. I've posted a response on my blog, (and this is actually my first post). I have recently started reading various Austrian works, and have read a bit on Marx, although my natural sympathies are with free markets.

    I found your post through the Mises.org blog, and it got me thinking. However, I then continued thinking, specifically about your example, and extrapolated it a bit to see how various scenarios would end up. It ain't pretty.

    Any discussion is good discussion in my opinion, and I'm glad that you are considering opposing theories. Marx's view of a true communist society is frighteningly similar to some libertarian models in that people willfully form agreements with each other (contracts in a libertarian society, collectives in Marx). A major difference is that communism calls for guys with guns to guarantee that everybody makes these willful choices, where in libertarianism the market plays this role. Which would you prefer?

    Marx himself saw capitalism as a necessary evil that would bring about the means for a peaceful communist society. The way I understood this was that these particular circumstances would involve robots doing every job imaginable and running on a free and limitless energy source. In more formal terms, scarcity of all kinds would have to be eliminated through the results of capitalistic progress. Is this realistic? Possibly. Is it relevant? Probably not in my lifetime. Until then I will rely on the free market to continue providing me with cheaper goods at a rate faster than governments can inflate the money supply.

    Apologies in advance for the jab about your blog title!

  84. I don't think it's at all clear that specialization is superior. The Japanese bureaucracy has outperformed the American bureaucracy precisely by avoiding such. Kropotkin argues, convincingly I think, that specialization is in a sense the mother of class oppression. The clearest examples are the warrior, with his special means and ability to fight (hence his special incentive to prevent others from obtaining such, and his special incentive to foment fear of–preferably exaggerated or invented–enemies); the priest, with his special ability to communicate with spirits and read scriptures(hence his special incentive to encourage such superstition, not to mention illiteracy); and the salesman, with his special ability to satisfy your wants (hence, his special incentive to convince you of them).

  85. You are making a distinction between capitalists and workers that reflects a collectivist viewpoint. All individuals have a choice of starting a business or seeking employment with an existing one. You cannot lump them into one group or another and say one is the exploiter and the other is being exploited. Humans have free will, they are not forced to work for a particular business (not yet, at any rate).
    The belief that government regulation was started to protect workers is largely a myth that has been marketed for decades.

    "Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite." This is from a particularly good essay by Roderick Long over at Cato unbound http://www.cato-unbound.org/2008/11/10/roderick-l…(although I am not a big fan of the Cato Institute, this article is well worth the read)

  86. I'd like to point out to a new comment that was posted to the original article which I think deserves attention. Seeing at it was posted yesterday, I consider it fair to say that it was probably as a result of this post

    Quoth Tomb Like Bomb

    The implication is that we cannot test capitalism in the world because there is no pure capitalism at present. So let's test capitalism by pure reason. If we assume a Gini coefficient of 1 (the simplest inequality), surely the socio-economic constraints are there: in addition to being a constant trespassor, each non-owner must come to the onwer for all manner of sustenance. Clearly, initial distribution is critical to the true "freedom" of contract. The Austrian is then faced with the obvious question, at what point of initial equality does capitalism open itself up to the promised "optimal distribution"? This is where the Austrian should consider opening his concept of "freedom" to relativity and begin to see it as directly related to equality.

    The individually rational human has been disproven empirically. This the Austrians get around by calling one human only to the extent that he is individually rational. But what does a capitalist care if he commands animals as opposed to humans? An actor would have to be quite irrational not to encourage others to be irrational, not human, wherever such irrationality would be profitable to the first (See: the marketing industry). Capitalism is then, far from proliferating humanness, disruptive of humanness.

    Will the other employers outbid the first? They will if their bounded rationality incites them to ally with the worker. If, as is at least as likely, employers ally with eachother, they can instead split a huge profit that would have been marginal–after the "bidding war"–for the one. If, on the other hand, the employers are more inclined to compete against eachother than the workers, the latter need only wait for natural monopoly to have their wages reduced to subsistence.

    Homesteading is available only in the obsolete world of frontiers. Locke's proviso has been broken. His admirers don't seem to mind.

    Charity, family…many people have access to neither. Even if these were universally available, why should one have to grovel before any? The paradise you describe is nothing so happy as what's available currently, and much less than the natural state of free access.

  87. Capitalists? no. Human beings, yes.

    But that is only because a Capitalist is only interested in making money. There is a reason why I do not consider that Capitalism is a good system, and it is that it forces people to act like this.

  88. You ignore the part that society was like this 150 years ago in the US. The reason why more control was enforced on the Capital is not because the government decided that way, but because the exploited workers banded together and threatened to topple the Government is they did not enforce rules such as minimum wage and 8-hour shifts.

    The government intervention that you talk about is the direct result of capitalism failing to get "naturally higher wages" and so on. Indeed Capitalism cannot achieve that. The competition between capitalists will always push wages down, not up. And there's far more unemployed workers than there are positions open so they cannot realistically pull the wages up either.

    But even if we were to minimize or remove the government, Capitalist would still own the means of production and enforce their rights through either the minimized state or force of arms. The worker would still not be able to own those means of production and would have to remain exploited.

  89. who then, is providing for the material to build the widget, who is investing capital into the plant to make the widget – who is paying the energy costs associated in making the widget?

    This is all included in the cost of the widget. If you feel better I can increase the value of the widget to 15$ and still show that the Capitalist makes 2$ without doing anything. The worker is the one creating surplus value with his labour. Unless you meant that the Capitalist personally extracts the raw materials and creates the electricity, then he is not exerting any labour and thus, he literally "does nothing"

  90. I'm sorry, but that doesn't make any sense to me. If I saved my money to buy the sewing machine and make more money later, then I most certainly worked for the money that I earned with my sewing machine investment

    You earned the sewing machine and you earned the right to use the sewing machine to produce more surplus value with your labour. You did not earn the right to exploit.

    This is the crucial part you need to understand, that getting paid a salary is exploitation. You seem to be arguing from the point of not knowing what the Marxist theory of exploitation is, if that is the case, then you need to learn about that before we can continue discussing.

  91. Sorry I assumed that we all understood that exploitation was something morally wrong. Hoppe went into great lengths to prove that exploitation as Marx defined it does not exist.

    Do you now claim that exploitation is not wrong?

  92. Coercion is an act (an action performed by someone). So if it isn't "active coercion", then it's not coercion.
    "Passive coercion" is an oxy-moron.

    Where are all of the ads on Monster.com that are threatening people if they don't come to work for abc business?

  93. And btw, as an empirical illustration of why you are wrong, i am a worker who earns a wage from a capitalist. Yet I am able to acquire capital by savings. Yet if the capitalist is exploitating me, this should be impossible. So something in your theory has to give because it is a mess.

  94. Here is something I typed up for posting on YouTube:
    We all know SOMETHING is coming and that the worst may be yet to come…
    If you're wondering how to PREPARE FOR it and GAIN FROM it check out:
    3w.prepareforandgainfrom {dot} [com]

  95. I'm confused. So if I build a house. I fell the trees and split the wood and build a house. A two bedroom house that I only currently use one bedroom but I plan on having a family or having company someday that may use the bedroom in the house that I built with my own hands, than it's not my property??? Do I not own the house and do I not have the FREEDOM to use or not use the second bedroom if I choose??? Do I not have the FREEDOM to sell that house at a profit???? So if I set the selling price, on the 2 bedroom house that I built, high enough so that i can now build two houses. And I find a young couple that have a child and find the extra bedroom to be of use and are willing to pay for my labor. (see if you communist thinking can follow this) Now I can't build two houses by myself because I'm not as young and as strong as I was when I built the first house, so I hire a person to help me. We agree on a wage and we build two houses. (I believe that has some of the elements of the FREE MARKET/CAPITALIST system) than what your saying is it is a bad thingy????

  96. Can you make a post/recommendation about good sources of empirical analyses of capitalism/communism? For example I know about this book from the AFAQ but their bibliography is huge and I'm just starting to sort through it:

    Balogh, Thomas, The Irrelevance of Conventional Economics, Weidenfield and Nicolson, London, 1982.

    You can go to bea.gov to get statistics on the US economic situation, but I don't know much else about main books/websites that offer actual empirical studies that are "scientific" for want of a better word.

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