I think this man does not understand

What’s so bad about wealth without labor? It depends on who owns the wealth. Under capitalism, wages are how workers receive a portion of what they produce. That portion has always been small, relative to the rewards that flow to the owners of capital.

Actually, I think he’s an idiot.

Think about it just for a second. The capitalist makes how much from each worker? No, not the aggregate income of the capitalist, but how much from each worker? More or less than the worker?

We can even check this at the aggregate level. The capital share of the economy is usually in the 20-30% range, the labour share in the 55-65% range (no, rightly they do not sum to 100%). And the capital share includes paying for depreciation.

Who is getting more of the pie?

Man’s an idiot. For it gets worse, next sentence is:

And over the past several decades, it’s gotten smaller: the share of the national income that goes to wages has been steadily shrinking, while the share that goes to capital has been growing.

That sentence linking to this research which states:

The OECD (2012) has
observed, for example, that over the period from 1990 to 2009 the share of labour
compensation in national income declined in 26 out of 30 advanced countries for which
data were available, and calculated that the median (adjusted) labour share of national
income across these countries fell from 66.1 per cent to 61.7 per cent.

The labour share is more than half the economy. Thus the workers cannot be getting less of the value add than the capitalists, can they?

26 comments on “I think this man does not understand

  1. yes and even if his figures are right we’re just left with his assumed conclusion: “that ain’t fair, rise workers and resist your exploitation!”

    Instead, before we down sickles, wouldn’t we want to know if there was a way to measure the value add of capital (tech and hardware) and the value add of human capital (not nice phrase but i mean the skills/education/ know how of the peeps)?

    We know (all things being equal) if you increase the hardware/technology, the absolute level of Labour wages rises, so it doesn’t automatically follow that the percentage split should stay the same. Labour could be getting a mite less in the vig but getting more overall thanks to capital investment and everyone’s better off.

  2. Capital takes the major share of income?

    Not in any business I’ve seen. I recently turned down the opportunity to manage a small (tiny really) restaurant where I got to keep the profit (after a fee to the owner) because I couldn’t make any money off of it even if he let me keep everything.

    He had made it work because it was a family-run business – I’d have to hire people. Where I live, a single employee costs $1,600/mo – just in what you pay them, not counting my share of taxes and insurance.

    He was able to get away with employing a couple of his teenage kids for $600/mo – I would have been paying over $3,200. And still having to put time cooking/serving in addition to the management side.

    Labor is freaking *expensive*.

  3. He also does not understand that the labor share has been shrinking because its been so large, historically, that capitalists have had yuuuuuge incentives to find ways to economize that labor.

    The larger percentage of income that labor captures, the larger the incentive to conserve the use of labor – just like any other resource.

    I find it hard to believe the guy can’t understand that. Writing like this just strengthens my assumption that he’s a hack who’s willing to sell his soul for power.

    Luckily he’s shit at it.

  4. Agammamon: That’s exactly the sort of example that minimum wage proponents will go miles out of their way to ignore. They just don’t see that putting people out of work isn’t purely limited to mass firings.

  5. I can understand lefties not being able to calculate whether its better to take £1,000 a year for 10 years or £900k but surely they must understand that its better to have 10% of £1m than 50% or £1000?

    All this tosh about robots has been going on for years, the problem is that now these robots are really AI/machine learning and its nice middle class jobs that are being automated. Its no different to the man with a shovel taking the work of 10 men with clam shells and the man with a digger taking the work of 10 men with shovels. Its progress and we’re all richer for it.

  6. From whom does the capital owner or the labourer get their income?
    Unless every customer is a capitalist there will be no income for anyone, without labour getting paid a fair rate.

  7. I think you’re miss-reading him.
    “Under capitalism, wages are how workers receive a portion of what they produce. That portion has always been small, relative to the rewards that flow to the owners of capital.”
    He’s stating the blindingly obvious fact; an individual with capital will benefit more from productivity than a worker without capital. But with reference to “robotics, he’s missing out something equally blindingly obvious.
    I’ll give you an example from the construction industry.
    Construction used to be labour intensive. A skilled worker was limited in what he could earn by the physical limit of what he could do with his own hands, aided by some simple tools.
    “Robotics” started to change this when it was deployed in the factories that made tools. It no longer took skilled workers to make the tools, so they became relatively cheaper. Now it became possible for skilled workers (or even non-skilled workers) to deploy a modest amount of capital & tool up. Power saws replaced handsaws. Powerdrills replaced hand drills. Routers replaced the hammer & chisel. Some went further & introduced mechanical handling, so reducing the non-skilled support the skilled worker had needed. A whole raft of skilled workers became capitalists. If you’re a “builder” engaged in a building project, you may hardly employ anyone directly yourself. It’s all sub-contracted out to the specialist companies that were once the skilled labour force.
    Isn’t this what’s happened in many other areas? What were large concerns replaced by smaller, highly productive, newcomers. Capital is being deployed more efficiently & the ownership of capital becoming more diffused across the economy.

  8. BiS>

    But he doesn’t say that. He says, very clearly, that the workers are being screwed. You’re attempting to pick some sense out of that piece, but while your generosity of spirit does you credit, there’s nothing in that rancid polemic that’s not rooted in vile Nazi filth.

  9. In my experience workers in capitalist economies are ruthless profiteers. Do they ever settle for a subsistence wage? No, they ruthlessly exploit market forces to rip off the people who put their capital at risk to found and run the business.

    I have had a tiny biz, so has my wife, so have the offspring. Rule #1: employ no workers.

  10. Increasing regulation makes it more and more difficult for “small” to take the ultimate sanction if they believe that their share is not enough – ie try to set up themselves / compete.

    The risk to individual freedom (in the sense above) is increasing regulation continuing to be a one way process.

    If that freedom exists, then what exactly is the problem anyway?

  11. “rooted in vile Nazi filth”

    Marxism. The article implies primacy of labor.

    ‘Under capitalism, wages are how workers receive a portion of what they produce.’

    A dangerous fucking lie. Workers are paid for doing what they are paid to do. Period.

    ‘That portion has always been small, relative to the rewards that flow to the owners of capital.’

    Non sequitur.

    “Employers pay what they have to pay to attract and retain people who can do what they want done.” – GC

    Labor is simply a commodity. A job entitles them to agreed upon compensation. It does not entitle them to anything else, like a piece of the business.

  12. ‘labour getting paid a fair rate’

    No such thing. There is the market rate. It cannot be “fair” or “unfair.”

  13. ‘The risk to individual freedom (in the sense above) is increasing regulation continuing to be a one way process.’

    Indeed. This is the fascist model. Poorly capitalized businesses can’t compete with big corporations in a highly regulated economy. The big corporation finely quits fighting regulation and joins with government, resulting in monopoly and government partnership (crony capitalism).

  14. Under capitalism, wages are how workers receive a portion of what they produce.

    Good to see this goof doesn’t even understand the concept of wages. Wages are what workers receive in exchange for their time/skills/productivity.

    Workers at the local tofu factory take home cash, not tofu.

  15. Its odd really that someone is attempting to return the employer/employee pay relationship to one of piece work. I thought that was the work of the devil, or was that last century’s leftist idea? It would be interesting to see exactly how much people would get paid if their reward was directly linked to what they had actually produced.

    Not a lot in many cases. In fact I might suggest that this should be implemented in the Public Sector as a matter of urgency. The budget deficit would disappear overnight……………

  16. ‘labour getting paid a fair rate’

    No such thing. There is the market rate. It cannot be “fair” or “unfair.”

    A ‘fair rate’ can exist if you want to make a living at selling it as such. That’s what SJW types do… Just ask Spud.

  17. I’d bloody well like money without labour. A working life at the UK average wage is less than £1.5 million, and the state steals a good proportion of that.

    A decent lottery win could hive you more than a dozen lifetimes of earnings.

    Fuck the job, I’ll take the unearned lottery win – which comes tax-free.

  18. Usually I think Dave is full of sh!t. Most monomaniacs are.

    But I noticed that they have arrested someone for all those bomb threats to Jewish centres in the US. He turns out to be a journalist. A Queer, Obama-voting, Sanders-supporting, Black, hard core leftist otherkin journalist. A whole heap of mess in other words.

    Apparently he was upset about breaking up with his Jewish girlfriend. Which is a surprise because I thought that Queer otherkin-ites don’t have girlfriends. Unless she was a Siamese who simply identified as a Jewish, female human.

  19. SMFS>

    Pointing out the neo-anti-Semites is not monomania. I just end up banging on about it here a lot because Ritchie and his chums are some of the leading lights in that world.

    Don’t forget, both Ritchie and Steven Keen have explicitly confirmed that MMT owes an intellectual debt to The International Jew. Anyone who fails to dismiss MMT as nothing more nor less than Nazi bullshit is either a neo-anti-Semite or a useful idiot of the neo-anti-Semites.

  20. “Don’t forget, both Ritchie and Steven Keen have explicitly confirmed that MMT owes an intellectual debt to The International Jew. Anyone who fails to dismiss MMT as nothing more nor less than Nazi bullshit is either a neo-anti-Semite or a useful idiot of the neo-anti-Semites.”

    You may well be right but can you provide proof please?

  21. I don’t keep track of the Ritchie quotes, there are so many of them, but this Keenism was easy to find:

    “Of course I was aware that Hitler understood monetary dynamics, which is why he wrote off so much German debt and ran huge deficits which built up German military might prior to the War. It is strange to now realise that he may have learnt much of this from Ford.”

    http://www.debtdeflation.com/blogs/2016/12/13/prof-steve-keen-on-private-debt-and-his-solution-peoples-qe/#comment-44768

  22. “I owe Ford no intellectual debt, since I had never read him on this topic prior to your comment. I am now painfully aware of his anti-semitism: I found reading enough of that reference to see his knowledge of money an extremely distasteful experience.”

    You could put it in context, however.

    This blog seems to know a lot about ‘Ritchie’ but you’re the only one that explicitly states he is anti- semitic. It doesn’t need much reading to see a big statist, sure, but that doesn’t make him a Nazi.

    Have you ever driven a Ford?

    Are rocket scientists anti-semitic?

    The International Jew is a fucking disgrace, but you may as well say all industrialists owe a big debt to Ford so they all anti-semites.

  23. Dave

    “Anyone who fails to dismiss MMT as nothing more nor less than Nazi bullshit”

    It’s just bullshit – full stop? I may be missing something here, but I sort of doubt the likes of Bob Mitchell & co identify as Nazis!? Do you know something I don’t?

    Replace MMT with vegetarianism if my point isn’t clear?

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