I feel like the capital/labor thing is being taken a bit too far to an extreme.
Robison Crusoe was in employment before he subjectively decided to create capital and increase his productivity.
First, I never made that assumption: I stated that it is merely a common cause of the lowering of the infimum value. It can lower for other reasons, and savings can drop without the infimum changing.
Furthermore the only way your scenario can happen is if a worker can’t find a job anywhere before their savings depletes, and that this happens to everyone at once. Why does a lack of capital stop someone from working for someone who does?
Not so long ago it was common sense things that are heavier fall faster. There’s no such thing as wisdom of the commons.
Obviously you don’t understand my argument at all: Street beggars exist because they have not found any acceptable employments whose supremum value is greater than that of begging. No need to necessarily blame charities or welfare, though both can certainly contribute by raising the infimum.
Azure wrote the following post at Sat, Sep 11 2010 1:18 AM:
First, I never made that assumption: I stated that it is merely a common cause of the lowering of the infimum value. It can lower for other reasons, and savings can drop without the infimum changing.
Furthermore the only way your scenario can happen is if a worker can’t find a job anywhere before their savings depletes, and that this happens to everyone at once. Why does a lack of capital stop someone from working for someone who does?
You’ve misunderstood me. The lack of capital is not personal, it is global across the economy. If all capital goods are fully employed, and the unemployed cannot produce their own capital because their savings have been depleted, then unemployment, involuntary, exists. Why would there ever be a situation where all capital goods are fully employed? What we have now: a boom/bust cycle has led to a malinvestment of capital, rendering much of the capital stock worthless and unemployable. For political reasons, capitalists won’t invest to produce more capital, as the total cost remains too high no matter how low wages of laborers who will employ this capital fall. Without capital to be employed with, some laborers must remain unemployed.
I covered this. What creates opportunity for cooperation is the difference in opportunity cost, not the level of capital. A person is always employable for some activity.
Azure wrote the following post at Sat, Sep 11 2010 2:48 AM:
I covered this. What creates opportunity for cooperation is the difference in opportunity cost, not the level of capital. A person is always employable for some activity.
You covered this by defining begging as an employable activity.
Stranger,
Aren’t your two hands and the head between your shoulders capital? Aren’t there lawns to be mowed? Fences to be painted? Gardens to be weeded? Shoes to be polished? Pots to be scrubbed? Computer code to be written? Massages to be given? Are all demands on this planet ever completely met, and is there not one $0.01 left out there ready to be exchanged for what the “unemployed” could possibly offer? Such situation is theoretically and practically impossible.
Z.
You would need at least one of these things:
- A lawnmower
- A fence, a paintbrush, paint
- A garden, garden tools
- Shoe polish
- Pots, a scrubbing brush, a kitchen
- A computer
- A massage chair
Who will pay for these?
Good point on the head being capital. You cannot simply employ someone to do any job, you have to pay for their training as human capital, and that requires investment and time that the laborer cannot act upon by lowering his wage.
You covered this by defining begging as an employable activity.
Why isn’t it?
I already have them but would gladly pay you $4/hour if you worked with them instead of me around my house. If I’m already busy satisfying market demand at $120/hr, my hour is much better spent doing what I do instead of mowing my lawn, painting my fence, or polishing my shoes. If you too used to make $120/hr and got fired, you may decide that spending your hour looking for another $100+/hr job may be a more effective use of your time than mowing my lawn for $4/hr but please don’t call that “involuntary unemployment”.
You misunderstood what I meant by your head being capital. A job is not an entitlement, a right handed to humans by God. A job is something each of us must find by using our heads to anticipate other people’s needs and offer to satisfy them in exchange for something we need (money, food, shelter, capital). It’s as simple as that, and yet so easily garbled by diversionary semantics (laborer, employer, job, work, employment, capital, investments, etc.).
I often hear excuses that not everyone can be an entrepreneur. I say bull. A gargling hungry stomach quickly changes the incentives equation, and magically awakens the entrepreneur in all of us. All of a sudden the idea pops out that perhaps I could knock on this house’s door and propose to the owner to paint his house and mend his fence for a fraction of the amount by which the value of his house would increase during the Open House next week.
Z.
Epicurus Ibn Kalhoun wrote the following post at Sat, Sep 11 2010 3:52 AM:
You covered this by defining begging as an employable activity.
Why isn’t it?
Common sense.
If you’re being serious then I can understand your reputation around here.
z1235 wrote the following post at Sat, Sep 11 2010 4:14 AM:
I already have them but would gladly pay you $4/hour if you worked with them instead of me around my house.
You insist on looking at the problem narrowly. It costs more than 4$ an hour and a paintable fence to employ workers. You also need to transport them back and forth to the work site and other fixed costs. This is why other potential employers are going to simply place a bid on the most productive laborer for higher-than-minimum-wage prices, and thus minimize their other costs. This is also why, as per the original question, skilled laborers in markets where the pay is well above the minimum wage, thus free markets, can be unemployed. Employers will not bid down the labor prices unless they can profitably add more capital.
Why is it so hard to accept that people can be unemployed? It fits perfectly well in the Austrian economic model. There’s something puritanical about unemployment denial that goes beyond ideology.
Azure wrote the following post at Sat, Sep 11 2010 5:45 AM:
If you’re being serious then I can understand your reputation around here.
I’m being serious when I say that it is against common sense to define begging as employment.
If that earns me some kind of infamous reputation, that sadly just confirms these forums being overrun by feral children. Things around here just keep deteriorating. I don’t think I can return anymore.
Labor comes before capital, not the other way around.
Also, I believe that Strangers points ignore other factors that cause of involuntary un-employment, it’s not always a business cycle.
Finally, Strangers position mischaracterizes the effects of business cycles. Both labor and capital are heterogenous, and take time to be re-allocated. One is not in all cases necessarily dependent on the other.
I am not denying unemployment. I am confirming the existence of employment opportunities. The reason why people are unemployed is because they don’t know what the profitable relationships are, not because the profitable relationships don’t exist.
who is denying unemployment?
I think you’re the one looking at the problem too narrowly as you insist on separating the market into two distinct (and permanent) classes: (1) entrepreneurial employers and (2) non-entrepreneurial laborers. In your world, it is (1) that hold all the capital (means of production) and get all the ideas on how to employ it while (2) sit idly by the road waiting for proposals on how to use their heads and two hands. Quite depressing, and even veering a tad toward Marxism.
In my world, everyone is an entrepreneur and gets to propose to others on how they can mutually improve their situations – even if the only capital they own is their two hands, a head, and a shirt on their back.
Z.