Why?
[Edit, I very much dislike circle jerking.]
Deep stuff here.
- The way I see it, Nero is saying that a worker is just one more “raw material” that goes into making a product. And just as the provider of steel say, is clearly not entitled to the profits of a car manufacturer, so too an auto worker has no right to demand a cut of the profits. He gets what he is worth, just as the steel mill gets what the steel is worth. Supply and demand get both the steel mill and the auto worker exactly what they are deserve.
With this analysis, who cares where profits "come from’? What counts is why the worker is getting paid what he is getting, and that is determined by impartial market forces. Nothing to do with exploitation.
Makes a lot of sense to me.
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Filc, I don’t really grasp what you are saying. Why do you see Bohm Bawerks interets analysis as the only possible reply to the cry of exploitation. Why are all the other factors, such as risk etc. mere sideshows? What do you see wrong with Nero’s reasoning?
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[Later]: After looking at the Wiki, I get it. If we define “exploitation” in the way its defined there, under the assumption that the value of an object lies in the labor put into it, then of course the only thing that counts, by assumption, is labor input. No matter how you shake it, risk or no risk, the car has risen from its prefactory price as a pile of nuts and bolts to its post factory price as a sleek new car due to only one thing: the labor input. So that the laborer is always getting screwed. His labor is much different than all the other inputs, such as the steel, because only his labor makes all the other inouts more valuable.
Of course, by this kind of thinking, the fact that the worker gets paid less in exchange for not having to share in the risk does explain how he is not exploited to some extent. As does the fact that he has to pay for the right to use the factory resources to do his work. I mean, let’s say he is a self employed carpenter. Can he go into home depot and say give me allthe tools I want for free, because all the value of the things I make with them are from my labor? Non sequitor. Same if he works for someone in a factory.
- A question that occured to me. Even if we reject the LTV and accept that value is subjective, is it not right to say that the increase in price caused by changing a pile of steel into a car comes from labor, and thus we need recourse to Bohm Bawerks argument? Or, once we reject the LTV, does Bohm Bawerks explanation become unnecessary?
But is not the capitalist and entrepreneur just one more “raw material” that goes into making a product? Are they not all sometimes required in the recipe?
Because the critique is about interest. So the explanation needs to be about interest. Other responses are red-herrings. A logical fallacy is not a suitable way to respond to a criticism IMHO.
I am not saying Nero’s points aren’t legitimate. I am stating that they don’t address the actual issue. His points are really points to other criticisms but not about why laborers don’t share the interest.
filc, I do understand the question. My comments were on topic, I apologize though if I buried the lead. The all-important point was: How wage rates are set determines whether profits are “shared” or not. And whether profits are “shared” or not determines whether exploitation theory is nonsense. That’s why I am talking about how wage rates a set. If wages are some “share” of a factories profits then it makes sense to ask what share the worker is entitled to. But we know that wages are not a share of the profits, wages are determined by supply and demand. Like the price of raw materials. I am telling you that the whole assumption of profits being shared is bunk in the first place. Therefore it doesn’t even make sense to ask what share of profits the worker is entitled to. There is no sharing of profits at all. When you argue why the capitalist is entitled to some of the profits you are implicitly accepting the Marxist assumption of labor having an objective value.
Fllc:
I think you’re missing something here honestly. What Nero is saying, and everyone else I think, is that labor is a commodity whose price is determined on the market. That’s it. That’s all you need.
And I see this is a non-sequitur. As even today laborers share company profits all the time. The difference between earning the interest and not, depends at which point the laborer is paid and in what type of installments. Vis receiving one lump sum at the end of a production cycle or regularly scheduled installments during a production cycle.
It also shows that you seem to be disatisfied with Bohm-Bawerk’s critique of exploitation theory. I wonder why his explanation is not adequate enough? Your explanation does not reveal the behavior of originary interest and how/why it appreciates over time. This is a key/critical component to Austrian Economics and a core tenant of AE’s capital theory.
They are handed out as shares. Stock options ect… It’s a fairly common practice in large companies and in small startups. What shares they get depends on the agreements they sign with their employer. How much of a share they should get(if any at all) is up to the business.
No it doesn’t. How much share the worker is entitled to depends on the business and it’s policies. Some business’s may offer a greater amount of shares earlier on to attract employees. Others may be more stingy. If a business chooses to follow this practice how much they share will be driven by the market. Some of these business’s offer less in the way of salary but stock options to compensate. Other business’s offer large salary compensation but no stock options. It’s all market driven(just as you said)
This is a non-sequitur. Just because wages are detirmined by supply and demand does not mean that a laborer can’t share in the profit at the end of a production cycle. We’re talking about money here. Money earned in a wage is no different than money earned on interest. How it is earned is different yes but it’s function as money is the same. They are not “differnet” objective things. Money is money.
There’s another fallacy here that is in the assumption that a worker can only get his livelihood through wages when in reality working for wages represents those things the worker cannot produce himself. I.e. It assumes that workers are only consumers and not consumers and producers at once.
And that is besides the point entirely. This has nothing to do with the OP.
[EDIT] Honestly I have pointed out 1 non-sequitur and a few red-herrings. Why is everyone so quick to cling to logical fallacies and so reluctant to adopt the Austrian position via Bohm-Bawerk’s critique’s?
When you buy a car can the car share in the benefits of having that car? Or can an apple share in the energy it provides the person who eats it? I mean this might sound bad to a socialist on an emotional level, but it’s reality.
Just because you say it’s a non-sequitor doesn’t make it so. The OP is asking whether or not the worker is exploited because they are not justly compensated (reminiscent of medieval and previous “just price” which Rothbard has shown was determined to be the market price). If labor is a commodity whose price is determined by supply and demand then whatever a laborer chooses to work for is the “just price” and therefore they are duly compensated.
You can say you think they should be paid more or feel that they should be paid more, but that is an emotional argument (or a value judgment).
But it is a non-sequitur. Can you explain how it logically follows? If it’s not a non-sequitur you might as well get started with an explanation. The car example makes no sense whatsoever. I already provided several examples of where a laborer can and often does share in the interest recieved in a given production period. How many ways do you want me to explode the fallacy?
Correct. Please do some reading.
If your going to respond to me and critique me please first review the literature I provided you. It’s not long.
I told you how it follows. You don’t understand it at its most basic level.
Flic, you’re loosing me. Aren’t wages set by supply and demand?
Yes, money is money, so what?
If the owner of the capital wants to share his profit, he is free to do so, he has no obligation.
Worker get’s payed to work on someone else’s investment.He get’s payed to do mediocre things, like cleaning shelves at walmart or being a cashier. He did not invest in walmart himself, if he did (via shares) then he would have gotten his return on investement. I don’t think this should get complicated.
I have nothing againts co-ops, as long as it’s voluntary where both parties agree on. I personally think that they are a useless and primitive form of wealth redistribution.
I think that article is dealing primarily with this thought experiment, “In other words, Böhm-Bawerk will now proceed to show that even if we restrict ourselves to cases where labor is the only scarce resource used in the production of a certain good, the exploitation theory is still faulty.”
In other words, aside from the fact that the labor theory of value is incorrect and that wages are determined by supply and demand, etc. we can still show that the exploitation theory is wrong.
No one was talking about stock options. The idea behind “workers owning the means of production” can be explained like this:
You (~~flic)~~Flic own a factory, you payed for everything, it is your property. I Drewie, Nero, Phaedros and hundreds of others are your personal “wage slaves”. One day we all decide to do a revolution,mkay…, and take your property because you aren’t working and earning more then us. Thus we all get EQUAL SHARES, no 5%, no10%, EQUAL. You also cannot sell your share. We all EQUALLY own the factory.lol.
This has nothing to do with co-ops in capitalism.
As stated for the 3rd time now? THe point is it has nothing to do with the OP. Why are you going off on a side tangent? Who is arguing over how wage rates are set? (Not me)
My apologies then.
Where? In your Car analogy? I imagine publicly traded companies are very confusing for you then.
@ Everyone else. Look, I don’t have time to bicker with everyone tonight and defend Bohm-Bawerks critique. If you think his arguments are inadequate please stop pestering me and make another post about it.
@the OP. This post is directed at the OP. You came to an Austrian Economics forum. If you want an actual Austrian Economists response to the Exploitation Theory as put forwarded by Marx please see Eugene von Bohm-Bawerk’s Economics Capital and Interest, a Critical History of Economical Theory. This is as close to an official Austrian response you can get(Right from the economists own writing).
Otherwise your left with armchair theorizers fumbling through their own reasoning.
Given that you might not want to purchase the book and read the whole thing I would suggest googling him. You will find many Austrian Economists reflect on Bawerk’s literature paraphrasing much of what he wrote. Bohm-Bawerk is popular enough amongst the Austrian community that he’s pretty well known, understood, and written about.
You might also find some good stuff on his author page here on the Mises website. Bob Murphy has also occasionally written about exploitation theory, you can find many of his articles here as well.
There is also this.
Profts in the Marxist sense: “capitalist profit is the extraction of surplus value from the exploited proletariat”, where the implied proper value I assume means what the product fetches on the market and where “surplus” means “more than that”.
Not that this is the point, but I’d be interested to hear a Marxist’s answer as to whether, then, workers should be entitled to share in the employer’s losses as well. Or is it that they are only being–can only be–exploited if profits exist? If that is so: then when losses occur doesn’t it then mean that the workers are exploiting the capitalist? Isn’t the capitalist now entitled to share in the profits of the workers?
Profts in this sense: “proletarian profit is the extraction of surplus value from the exploited capitalist”, where the proper value is what labor fetches on the market (and paid by the capitalist) and where “surplus” means “more than that”.
Am I sitting on a logical fallacy here?