An Old Argument with a New Twist
Posted by deleted 8 years, 1 month ago to Economics
The top one tenth of one percent of Americans own more than the bottom 90 percent. Karl Marx said capital tends to accumulate and concentrate. He based the claim on the following argument. The worker has no capital, while the capitalist has. The worker produces a material value using his labor. The capitalist owns the raw material, the product of the worker's labor, and the final product which is sold on the market for a profit. The profit belongs to the capitalist by virtue of private property. Thus the capitalist is free to distribute his wealth according to his "mood". And as a capitalist, his concern is to expand his profit and thus his investments favor increasing production in order to drop price and retain a greater share of the market. Thus capital tends to accumulate and result in material over-production which causes the boom and bust economic cycle.
The basic message from this argument. The capitalist maintains the worker at subsistence level, uses division of labor to lower his wages, and considers the worker as a commodity.
So the capitalist is willing to put extraordinary capital into production of a material good for consumption (1) and not invest in the worker (2) and is not concerned that as his wealth accumulates, diminishing proportions of the populace will be able to afford more than a roof, three meals, a pair of pants, shoes, and a shirt?
This absurd claim is the essence of Marxism.
And I do not even want to demonize Sanders for spreading this claim. For someone who does not see any alternative to corporatist political oligarchy, his message to end it is commendable in a certain way. End corporate welfare! More power to you!
The trouble though is double: government cannot replace industry. A government turns no profits because it cannot tax itself. So from where then does such a government receive it's income? Think about that. That leads to the second problem: enforcement.
In my view, if Any Rand and Karl Marx agreed on any one thing it was this: that the disappearance of profits implies the disappearance of the state. Think about that.
The basic message from this argument. The capitalist maintains the worker at subsistence level, uses division of labor to lower his wages, and considers the worker as a commodity.
So the capitalist is willing to put extraordinary capital into production of a material good for consumption (1) and not invest in the worker (2) and is not concerned that as his wealth accumulates, diminishing proportions of the populace will be able to afford more than a roof, three meals, a pair of pants, shoes, and a shirt?
This absurd claim is the essence of Marxism.
And I do not even want to demonize Sanders for spreading this claim. For someone who does not see any alternative to corporatist political oligarchy, his message to end it is commendable in a certain way. End corporate welfare! More power to you!
The trouble though is double: government cannot replace industry. A government turns no profits because it cannot tax itself. So from where then does such a government receive it's income? Think about that. That leads to the second problem: enforcement.
In my view, if Any Rand and Karl Marx agreed on any one thing it was this: that the disappearance of profits implies the disappearance of the state. Think about that.
This line is key. A commodity means interchangeable, like gold. Something being commoditized means its price goes down do to competition. There is a constant cycle of commoditization - decommoditization. Maybe you put together a computer with commoditized chips and create something differentiated (non-commoditized). Eventually the computer you make becomes a commodity, and chip suppliers work on creating differentiated new parts. (See The Innovators Dilemma for more on this.)
It works the same for labor. Labor buyers will create systems to use commoditized labor, so if one unit of labor quits, it leaves the same hole as your finger leaves when you pull it out of a cup of water. Labor providers need to find ways to differentiate and not be an interchangeable unit of labor. (See Linchpin by Seth Godin.) This is just like a chip manufacturer getting out of just making old-fashioned logic gates and making something new. This is where value comes from.