[Red Barn]

From an ethical point of view, people, being self-owners, also own all the wealth that they personally produce (or that others gift them).

What's come over you, Eran? You don't seem quite yourself today.

If you genuinely believe that a person rightfully owns - or should own - "all the wealth that they personally produce," then you are definitely barking up the wrong ideological tree.

This whole idea is completely antithetical to capitalism, and capitalism would cease to exist if ever it was actually put into practice. I mean, just think about it for a second: if wage workers were paid exactly the value of what they produced, there'd be no profit for the capitalist - hence, no capitalism.

So I'm thinking that perhaps you'd like to rephrase this just a bit, for the sake of clarity? For instance:

From a capitalist point of view, people who work for wages are self-owners, but own only an externally determined portion of the wealth that they personally produce.

In any honest argument involving capitalism and ethics, this would make a lot more sense. It would also help to explain why "welfare states" come into being under capitalism in the first place, and why wealth must be artificially "redistributed" to prevent famines and revolutions and so forth.

In other words, "theft" in the form of taxes will eventually be made necessary by the perpetual "theft" inherent in the relationship of the class of capitalists (who own more than they personally produce) and the the far, far larger class of wage workers (who own less).

See what I mean? It's a pretty basic point, I admit, but nobody's mentioned it so far, so I thought I ought to toss it in there.

[Rugoz]

This is both short-sighted (to the point of being blind) and incredibly ungrateful attitude, given, as mentioned above, that the wealthy effectively fund your precious state.

Again, setting aside the cronies of the state (to which I oppose as strongly as any person), wealthy people do not acquire their wealth at others' expense. Rather, they produce their wealth from nothing. Wealth is not constant - the world today is immeasurably wealthier than it was, say, 100 years ago. The difference has been produced, and has been produced predominantly by the people who currently own it (again, ignoring the wealth expropriated by the political class and handed to themselves and their cronies).

The most common way to get wealthy is still to just climb the career ladder. High wages at the top are of course not only the result of "corruption", but exist because the number of people who have climbed all the way to the top is limited. Its like having only one university in the world which teaches computer science (with lets say 10'000 students). Does that mean there would only be 10'000 capable software engineers in the world? Of course not, but the system just does not produce more. The fact that you are rare in a free-market economy doesn't mean somebody as capable as you wouldn't be in your shoes if you didn't aim for a career.

[Eran]

If you genuinely believe that a person rightfully owns - or should own - "all the wealth that they personally produce," then you are definitely barking up the wrong ideological tree.

You are absolutely right - I should have learned by now to be more careful.

Clearly we have a different understanding of what it is to produce wealth.

Let's look at a concrete example. An employee of a small industrial firm comes to work in the morning, assembling widgets. He produces one widget per day. The components making up a widget cost the factory $10. The final widget is sold for $50. How much wealth did the employee produce?

A naive first answer would be - $40 of course. But that is only a naive reading of the situation. The worker used machinery to produce the widget. Without the machinery, the worker would have only been able to produce 0.1 widgets per day. Further, for the widgets to be sold for $50, somebody had to:
1. Determine which widgets are to be produced
2. Determine how to best produce widgets
3. Identify the most appropriate widget buyers
4. Persuade the widget buyers to buy widgets at all, and to buy these widgets specifically
5. Acquire the machinery required to produce widgets
6. Pay in advance for the machinery
7. Pay in advance for the worker's pay
8. Take the risk that, despite prior estimations, the produced widgets wouldn't be sold for $50 due to changes in public preferences, economic conditions, or more efficient competition

etc, etc.

All those actions, while not as obvious as those of the worker, are just as necessary for the production process. How do we properly allocated production value between actual physical production of widgets and the many prerequisites for that production?

The Labour Theory of Value is dead. Value is subjective. It can only be determined by observing the results of negotiations between willing buyers and sellers.

The main point to keep in mind is that the worker (in isolation, or together with other workers) is, in the free market, always allowed to replace the contributions of owners and managers and thereby retain a larger fraction of the overall added value of the production process. This is not merely a theoretical possibility - economic history is full of examples of businesses that were started by workers becoming entrepreneurs themselves. Those who choose not to are indicating through their actions that the value they gain from owners and managers is indeed remarkably valuable.

[Red Barn]

You are absolutely right - I should have learned by now to be more careful.

You should, indeed. If one is going to play the An-Cap intellectual, one should really make every effort to avoid falling into Tea Party sound bites.



One should also try to avoid "debunking" arguments that never existed anywhere in the real world of ideas.

For instance: Neither Marx, nor any other proponent of the various labor theories of value, ever put forward a model even roughly resembling the bizarre over-simplification of your widget example, so you clearly don't win any points there, either. (The only people likely to be impressed by this kind of straw-manning haven't a clue anyway, so I wonder why you'd even take time to type this all out?)

Even sloppier, though, is your failure to address my over-arching point, which is that welfare capitalism is a direct product of the forces of capitalism itself, which are inherently unstable, and have an inevitable tendency to funnel capital upwards over time.

(I made a point of introducing this idea simply to support Grassroots' overall argument, which - I can't help but notice - you're side-stepping right along with mine.)

[jimjam]

Find a bar with working class people in it, walk into it, and talk. Tell me if their behaviour changes upon hearing you.

Class really does exist.

I walked into a pub in southern Ireland and was unnoticed. My red hair helped. I then went up to the bar and said, "one pint please" and EVERY single head turned together as if a rehersed move to look at me. I guess my Yankee accent sounded as severe to them as their Irish accents sounded to me.

[Eran]

Red, you should know by now that I value our conversations, and would hate to make you feel like I am ignoring your arguments.

Neither Marx, nor any other proponent of the various labor theories of value, ever put forward a model even roughly resembling the bizarre over-simplification of your widget example, so you clearly don't win any points there, either.

Fair point. I thought I understood the basics of Marxist exploitation theory, but clearly got it wrong.

Why don't you give me an example of how a set of voluntary interactions and agreements between an employer and an employee results in exploitation (or otherwise immoral, unfair or improper results)?

Welfare capitalism is a direct product of the forces of capitalism itself, which are inherently unstable, and have an inevitable tendency to funnel capital upwards over time.

Here is how I see it. I have marked as bold the statements that I believe we can both agree on. Please correct me if I am wrong.

1. Historic capitalism was built on a society dominated by the use of state power to favour one group of people (gentry and aristocracy) over the masses.
2. In modern capitalism we see (to varying degrees) the use of state power to favour one group of people (government cronies, special-interest groups and politicians) over the masses. We part ways in how they classify labour unions, for example.
3. Our current society is still class-divided, with one class using force to exploit the productive effort of the other class. We will differ, naturally, on the identification of those classes. Libertarians will identify the political class, with their cronies and special interests (Goldman Sacks but also UAW) as the exploiting class, with productive people (from low-skilled working people all the way to successful entrepreneurs) as being exploited. Socialists draw the lines differently.
4. Despite that historic experience, government is not an inherent part of capitalism (socialists would probably have a mirror statement to make about dictatorships not being an inherent part of socialism, despite historic experience to the contrary).


Since neither pure capitalism (i.e. capitalism free of state intervention) nor pure socialism (e.g. one based on democratic decision-making, rather than dictatorial top-down decision making) ever existed, we are forced to one of two options:
a. Draw historic conclusions by comparing the differential outcomes of societies with differentially varying levels of laissez-faire vs. egalitarian economic norms, or the differential outcomes of economic sectors with differing levels of government intervention
b. Use logic and common sense, informed by historic anecdote to try and project the likely success of different economic systems.

Pure capitalism within a society in which respect of several property rights (property rights of individuals and voluntary groups) is broadly accepted is perfectly stable.

Government interventions in the market tend to be unstable, as they tend to exacerbate the very problems they try to solve, or create unanticipated and intended consequences, leading to an escalation of intervention.

Here are a few examples:

Foreign interventions, rather than making America safer, has created global resentment to Americans, greatly reducing their safety.

War on drugs, rather than reduce societal cost associated with drugs has greatly increased it.

War on poverty, rather than reducing poverty, has trapped millions of people into poverty

Rent control, rather than creating affordable housing in large cities has ensured both shortage of housing, and deterioration in the quality of existing housing

Minimum wage, rather than improving the lot of low-skilled employees, creates unemployment for such employees, as well as a dynamics of mistreatment and discrimination

Medical licensing laws, purported to maintain high quality medical services, results in greatly-increased cost of medical services, reducing the availability of professional medical care for low-income people

Public schools, rather than providing quality education to low-income people has resulted in both great waste of public resources and abysmal quality of schooling (no education to speak of actually takes place) in inner-city schools

(Can we agree on the first, and maybe second point?)

Finally, to restate my previous statement:

From a capitalist point of view, people who work for wages are self-owners, and own whatever property they (1) created from unowned natural resources or (2) obtain through voluntary interaction with others.

Economics (both Austrian and neo-classical) suggest that in a market with free voluntary interactions, workers will tend to get paid an amount equal to their marginal productivity

edit:
I just encountered a simple chart to illustrate the third of the examples given above for self-defeating government policies: the War on Poverty:

[Red Barn]

I just encountered a simple chart to illustrate the third of the examples given above for self-defeating government policies: the War on Poverty:

Okay. And I'll counter your chart with another - way better - chart showing how rapidly capital has been funneled upwards since the advent of Reagan's "the-government-is-the-problem" worldview, thus rendering the "War on Poverty" null and void.



See how easy it is? You don't need a whole bunch pseudo-metaphysical crap about "fairness" or "morality" to understand that this tendency is simply an inherent product of capitalism, and that real world policies must address this tendency one way or another.

Welfare states "redistribute" the surplus after the fact, which makes them somewhat more stable than your system, though not my own personal first choice. (As you may recall, I'm a Left Anarchist, so not very likely to spend a lot of time defending a paternalist state. I'd much rather see workers in charge of their own destinies in the first place, but that's a whole 'nother conversation. I'm just backing grassroots' point here.)

The fact that welfare states reduce poverty, and are more conducive to social mobility as well, is easily demonstrated by comparing poverty rates and mobility in the US and any of the European welfare states, or even by comparing American stats through decades of deregulatory "reform."



http://www.washingtonmonthly.com/archiv ... 011380.php


http://100treatises.com/2010/04/

You will not, I think, be able to find real world statistics showing that less fettered capitalism has reduced poverty or aided in social mobility as state regulations and redistributive efforts have been reduced. I welcome you to try, of course, but I feel fairly confident that I'll remain the Queen of Charts for some time.

[Lasher]

To justify their own obscene wealth, even for the most cold blooded and obnoxious tory it must be unsettling on occasion thinking that they live with wealth which could give thousands a decent standard of living, and still live in splendour. They justify it by making out that all poor people are 'workshy' 'lazy' 'benefit frauds' etc etc.

And they are generally right.

[Eran]

I'll start with your first chart. It is unfortunate that it doesn't show longer history to support its "transition" narrative.

Without a source, the quality and nature of the data is unclear. One common error is to conflate "wages" with "productivity". Even to be faithful to your story, the real variable should be "cost of employment" rather than "wages". It is clear that excess cost of employing people has balooned due to both increased cost of benefits (mainly by not exclusively health-care), employment-related taxation and regulation.

I would also be interested to understand how "labour productivity" is defined and measured.


International comparisons are even more problematic. For example, the US has been a much more ethnically and culturally diverse society than any single European nation. Further, the US has seen much greater immigration of low-income people in the past few decades. Those have pushed down meaningless aggregate measures, without necessarily making any particular person less well off.

[Red Barn]

^ In other words, you got nothin'.

But that's okay. It's pretty much what I expected.

[Eran]

You gave us a chart with no source or explanation of terms. What do you expect?

[Red Barn]

The whole problem of productivity and wages has been discussed so extensively, and for so long, that I have a hard time believing that this graph is really news to you, but . . . whatever, Comrade. An-Caps really ARE notorious for obliviousness to real world events, so I suppose anything's possible.

Anyway, I don't remember where I grabbed that particular image (here is what you get if you do a Google image search on "productivity wages usa" http://www.google.com/search?pq=19th+ce ... 24&bih=612 ) so I'll supply another, complete with as much explication and source material as anybody could possibly ask for:

From the end of World War II until the early 1970s, the benefits of economic growth were broadly shared by those in all income categories: workers received increases in compensation (wages plus benefits) that essentially matched the rise in their productivity. Neoclassical economist John Bates Clark (1847-1938) first formulated what he termed the “natural law” of income distribution which “assigns to everyone what he has specifically created.” That is, if markets are not “obstructed,” pay levels should be “equal [to] that part of the product of industry which is traceable to labor itself.” As productivity increased, Clark argued, wages would rise at an equal rate.

The idea that compensation increases should equal increases in average labor productivity per worker as a matter of national wage policy, or a wage norm, is traceable to the President’s Council of Economic Advisors under the Eisenhower and Kennedy administrations. This macroeconomic approach was anchored in the fact that if compensation rises in step with productivity growth, then both unit labor costs and capital’s versus labor’s share of national income will remain constant. This “Keynesian Consensus” never questioned the fairness of the initial capital/labor split, but it at least offered workers a share of the fruits of future economic growth.

As the figure below shows, both Clark’s idea of a “natural law” of distribution and Keynesian national wage policy have ceased to function since the onset of the neoliberal/supply-side era beginning in the early 1970s. From 1972 through 2009, “usable” productivity—that part of productivity growth that is available for raising wages and living standards—increased by 55.5%. Meanwhile, real average hourly pay fell by almost 10% (excluding benefits). As a group, workers responded by increasing their labor-force participation rate. To make the calculation consistent over time, employment is adjusted to a constant participation rate set at the 1972 level. Had compensation matched “usable” productivity growth, the (adjusted) 84 million non-supervisory and production workers in 2009 would have received roughly $1.91 trillion more in wages and benefits. That is, 13.5% of the nation’s Gross Domestic Product in 2009 was transferred from non-supervisory workers to capitalists (and managers) via the gap of 44.4% that had opened up between compensation and “usable” productivity since 1972.



This calculation is based on the 1972 average real hourly wage expressed in 2009 dollars, $17.88, plus $2.95 per hour in benefits, with total compensation [wages + benefits] equal to $20.83 per hour for non-supervisory workers (U.S. Department of Labor, 2010a, 2010b: 85-90; Economic Policy Institute, 2011). The growth of private productivity from 1972 to 2009 was 92.7%. Adjusting the productivity figure (downward) to account for lower economy-wide productivity, consistent deflation in both producer prices and consumer prices, and a rising rate of depreciation, the net growth of “usable” productivity was 55.5% (Baker 2007). If workers had been paid the value of their annual productivity increases (as they essentially were prior to the early 1970s) they would have received an average of $35.98 per hour in compensation in 2009 instead of the $23.14 they actually received. The differential was $12.84. Workers worked an average of 39.8 hours per week in 2009, so $511 of compensation that they would have received under conditions prior to the early 1970s instead was diverted. On an annual basis of 1,768 hours worked per year, according to the OECD, each worker lost to capital an average of $22,701. Adjusting the 88,239,000 production and non-supervisory workers employed in 2009 to the lower 1972 labor force participation rate equivalent of 84,180,000 workers, the total of purloined workers’ compensation for 2009 comes to $1.91 trillion (Council of Economic Advisors, 2010: Tables B-47, B-49; U.S. Department of Labor, Bureau of Labor Statistics, 2011 Table B-6).


http://www.dollarsandsense.org/archives ... ypher.html

See how obliging I am?

Oh! And you wanted to see a longer trajectory, right? Here you go:


Sources: US Department of Labor, Bureau of Labor Statistics; US Department of Commerce, Bureau of the Census, Historical Statistics of the United States. Jason Ricciuti-Borenstein produced this graph.

http://rdwolff.com/content/capitalist-c ... ering-marx

[Nunt]

This link: http://www.heritage.org/Research/Report ... oductivity sheds some light on the productivity-wage gap.

Basically the autheor states that previous measures of wages do not include non-wage income such as better working conditions, pension plans,... But as these are real expenses made by the employer for the benefit of the employee, they should be included. The author also claims that productivity measures were adjusted for inlfation using the IPD and the wages were adjusted for inflation using the CPI. As CPI tends to estimate inflation higher than IPD, using different indices makes wages appear lower compared to productivity.

Even after applying these corrections, the author still finds a productivity-wage gap, but this gap is much smaller and does not seem to be a long term phenomenon.

[TropicalK]

Productivity is a measure of output per worker, but it is frequently not the worker responsible for the output. Marginal output from technology and capital goods seems much more pertinent. I am not aware of any economic logic which states that wages should match productivity unless you believe in the fully discredited labor theory of value.

[Red Barn]

The minute I saw the word 'heritage" in your your link, New Comrade Nunt, I knew exactly what your counter argument would be.

Counting skyrocketing health care costs as an increase in wages is pretty mendacious, however - even for the fine folks over at Heritage - because these numbers simply reflect the rising costs of private sector health insurance across the board. These numbers are up not because health care plans are becoming better or more inclusive in some way, or because workers now contribute less, while employers contribute more. In fact, far from indicating a net gain for workers, these increases actually indicate a net loss.

Interestingly, the costs to employees have increased as well. NCS estimates indicate that the average medical plan monthly flat-rate premium paid by private industry workers in single and family coverage has increased from $67.57 (single) and $264.59 (family) in 2004 to $92.43 (single) and $349.36 (family) in 2009.3 Even though the cost for both employer and employee has increased, the proportion of cost for the employer and employee has remained similar. In 2003, private employers’ share of the premium for single coverage reflected 82 percent of the total premium, whereas the employees were responsible for the remaining 18 percent. In 2009, the employer’s share for single coverage was 80 percent compared with 20 percent for the employee’s share. The share for family coverage was at 70 percent for the employer and 30 percent for the employee in 2003 and in 2009.



http://www.bls.gov/opub/cwc/cm20101019ar01p1.htm

In other words, the only net gain here falls to the insurance companies:


http://www.dailykos.com/story/2010/12/2 ... costs-soar

New York Times: Health Insurers Making Record Profits as Many Postpone Care
http://www.nytimes.com/2011/05/14/busin ... .html?_r=1

[Nunt]

:) The minute I saw the word 'heritage" in your your link, New Comrade Nunt, I knew exactly what your counter argument would be.

Discuss the arguement, not the source.

Counting skyrocketing health care costs as an increase in wages is pretty mendacious, however - even for the fine folks over at Heritage - because these numbers simply reflect the rising costs of private sector health insurance across the board. These numbers are up not because health care plans are becoming better or more inclusive in some way, or because workers now contribute less, while employers contribute more. In fact, far from indicating a net gain for workers, these increases actually indicate a net loss.

Health care increases in price. Employers (at least partly) increase their payment to health care plans. Then this is a wage increase for the employees. Even though may not get additional health care, their employer pays extra.

This is an increase in what the employer has to pay the employee. So it is a relevant wage cost from the point of view of the employer. It doesn't matter whether the employee is actually better off in the end. They may be worse off as you say. But that's not the employer's fault, he gives more money to the employees than he used. It's the fault of the healthcare programs whose costs rise faster than inflation and thus cause a real drop in income for the consumers of those programs.

I think the relevant definition of wages here is: "all the costs that the employer has to pay the employee, this includes wages paid to the employee, taxes, and other benefits such as healthcare". If this increases faster than inflation for any reason, then it is an increase in real wage costs.

I am not trying to say that the data you gave is totally wrong. I think its just important to realize what is actually being measured and the shortcommings of the data. If it just measures monetary income given to the employee, then I think we can both agree that this data does not actually reflect the relevant wages for the employee because there are so many non-wage or non-monetary benefits that are also important. For example many employees now receive laptops and mobile phones from their employers. Is this counted in the data? Or maybe the working environment is much healthier then it used to be? If the employer invests money that benefits the health of his employees, then this should be counted as a wage cost. Because employees prefer working in healthy conditions.

Btw: nice of you to illustrate that health care costs do increase faster than inflation. This illustrates my point. If your employer buys stuff for you and the price of those goods increase faster than inflation, you receive an increase in the amount of money that the employer spends on you at a rate that is higher than inflation and thus you get a real wage increase.

edit: I was looking at this graph you posted regarding social mobility: http://100treatises.com/wp-content/uplo ... ss.jpg.gif Do you see a trend there? It seems to me that there were very big effects from WO2, seems logical that such a deep change like WO2 would have a high impact on mobility. But then from the 1960's on it stays pretty stable around 4%.

[Red Barn]

Btw: nice of you to illustrate that health care costs do increase faster than inflation. This illustrates my point.

Well, if your point is that insurance companies are screwing both employers and employees, then sure: it does.

My point, however, isn't that employers profit on health care. They don't. My point, as it's been all along, is that capitalism will tend to funnel money upwards over time, and that workers, in times of crisis especially, are the net losers. This is just one more example of same.



(And welcome to the board, also BTW.)

[Nunt]

Well, if your point is that insurance companies are screwing both employers and employees, then sure: it does.

That was indeed my point. Although I don't want to go into the cause of health care costs. That's not important here. What is important is that such a thing can cause the data you provided to be wrong.

(And welcome to the board, also BTW.)

Thank you. Glad to be here.

[grassroots1]

In what way has the idea, "capitalism will tend to funnel money upwards over time, and that workers, in times of crisis especially, are the net losers," been refuted in any way by any poster in here? It hasn't. Libertarians try to uphold the myth that all would benefit from a society that lacks all forms of regulation and social service, when the data and the history reflect the opposite. Regulations and social services are necessary for some level of quality of life to be enjoyed by so-called "middle" classes, who are really just the upper layers of the working class. There is a drastic difference between those who hold wealth and those who don't, and often this is a power relationship and not just a "consensual, contractual agreement" as libertarians would unknowingly spin it.

[Red Barn]

That was indeed my point. Although I don't want to go into the cause of health care costs. That's not important here. What is important is that such a thing can cause the data you provided to be wrong.

Good grief. How is the data "wrong?"

The point - which has now been repeated like 86 times, and never yet addressed - is that workers haven't gained anything from the rapid and dramatic increases in productivity that have occurred over the last 30 years. Privatization, and neoliberal policy generally, haven't improved the average person's condition or earning power one iota, in spite of the fact that wealth is being generated hand over fist. In fact, working people are losing ground every day - in health care as in everything else - in spite of the fact that they're now working more hours and are more productive than they've ever been before.

"Free" market health care is just one more example of how wealth is systematically extracted from the working class and shuttled upward, so it's pretty hard to see how you think this bolsters any Right Libertarian point you might be trying to make.

Now, if you're trying to demonstrate that privatized health care is a piss-poor idea - well, that's another story altogether.



But somehow I doubt that's your intention . . . am I right?