Re-Framing Capitalism

[DBT]

The customer may hold the balance of power when it comes to quoting price.

The firm may be desperate for work, perhaps with too much competition in town they quote low in order to secure work.

If the shoe is on the other foot, prices surge, they quote high.

Supply and demand.

Individual workers without marketable skills, without protection in law, or a union, tend to get exploited. That's human nature.

So you do understand. A worker with nothing marketable to sell to his customer (the business he wants to work for) will not get much for his product (his labor). It is odd that you advocate that the business should pay more to buy an unmarketable product rather than that the worker should develop some marketable skills to sell.

It appears that I understand the issue far better than you.

We are not just talking nothing more than a commodity, but people's lives. Just because there may be a pool of unemployed to draw from shouldn't give firms free rein to exploit. Which is why progressive nations set minimum pay and conditions.....without which it's a race to the bottom. Merciless exploitation of workers regardless of the firms ability to pay significantly more. Greed rules.

There are countless examples of this in history and in current times.

And you don't seem to understand reality. When the minimum wage is set at a rate greater than the value/hour of unskilled workers then the company automates or relocates or maybe drops a product line (and the workers on that product) that is made unprofitable. Which means that rather than receiving low wages the worker receives no wages.

But it's not set at market value of the labour. Look at places like Walmart, do you think that the workers are getting a fair market value for their labour and the wealth they help generate?

They are apparently getting more than their 'fair market value' as evidenced by Walmart is finding that automation is more economical than the non-skilled workers it is replacing. Of course Luddites will have hissy fits.

Skilled labor does not mean lawyers, doctors, engineers, etc. It means plumbers, electricians, carpenters, heavy equipment operators, etc. etc. Skills that can be learned in fairly short time either in a trade school, independently, or as on the job training. Such skilled labor is in high demand and well paid. Minimum wage jobs that require no skills should be considered by a worker as temporary while they are learning the skills to really enter the job market.

I think it is a failure of government and government schools that people are graduating from public schools with no job skills. The "industrial arts" that were taught were phased out during the middle 20th century. Classes like wood shop, metal shop, auto shop, etc. etc. gave students skills that would allow them to step into a well paying job. Now learning job skills is left to the initiative of each individual.

The desire to reduce running costs drives automation, which doesn't mean that Walmart wasn't a profitable business before automation.

It's another example of cost cutting in order to increase profits. If pay can't be kept to a bare minimum, practically slave wages, let's automate.

If it were the old British mercantile system of the 1800s (that Marx railed against), that gibberish would almost make a little sense. However, today keeping costs down is necessary to compete in the market.

If that practice becomes widespread, there may be fewer customers - there being a large base of long term unemployed - to buy their products.

Utter nonsense. The world is much more than Walmart.

Not to mention creating a sector of disenfranchised people living with a sense hopelessness, drug addiction and social unrest.

More Marxist nonsense.
You still haven't explained why you think that unskilled people can't learn the skills necessary so they can compete in the job market, if they have the initiative. It is as if you believe that individuals have absolutely no personal responsibility, that they are surfs forbidden by law to act in their own behalf as individuals. You appear to accept the Marxist idea that, instead of individuals, only classes exist and that everyone must remain in their class because there are class barriers and there is no class mobility.

It has nothing to do with Marxism. It's how the world works, human nature in relation to how business is conducted in terms of profits and running costs.

It's only natural that a business maximizes its profits and keeps its costs down.

Which is fair enough.

The issue here is when business interests take advantage of marginalized workers and use their own leverage to suppress wages to the point where the pay rate barely cover basics expenses and do not relate to the productive value the employees.



Employers get to pick what they pay.

''If price growth merely stays at its current level of 3.5%, the budget’s forecast of 3.25% wages growth means real wages will fall.
And, given most of the budgets since 2014 have overestimated wages growth, it is worth considering what would happen if wages growth has been overestimated once again: real wages would fall still further.

Something weird is happening in the labour market.

With very few unemployed people available for each vacancy, employers ought to be offering higher wages to compete for workers.
But the concept of “monopsony” gives us an idea why that’s not happening.

The core idea of monopsony is that employers can choose (within constraints) the wages they pay their workers.''

---

 

[Harry Bosch]

The customer may hold the balance of power when it comes to quoting price.

The firm may be desperate for work, perhaps with too much competition in town they quote low in order to secure work.

If the shoe is on the other foot, prices surge, they quote high.

Supply and demand.

Individual workers without marketable skills, without protection in law, or a union, tend to get exploited. That's human nature.

So you do understand. A worker with nothing marketable to sell to his customer (the business he wants to work for) will not get much for his product (his labor). It is odd that you advocate that the business should pay more to buy an unmarketable product rather than that the worker should develop some marketable skills to sell.

It appears that I understand the issue far better than you.

We are not just talking nothing more than a commodity, but people's lives. Just because there may be a pool of unemployed to draw from shouldn't give firms free rein to exploit. Which is why progressive nations set minimum pay and conditions.....without which it's a race to the bottom. Merciless exploitation of workers regardless of the firms ability to pay significantly more. Greed rules.

There are countless examples of this in history and in current times.

And you don't seem to understand reality. When the minimum wage is set at a rate greater than the value/hour of unskilled workers then the company automates or relocates or maybe drops a product line (and the workers on that product) that is made unprofitable. Which means that rather than receiving low wages the worker receives no wages.

But it's not set at market value of the labour. Look at places like Walmart, do you think that the workers are getting a fair market value for their labour and the wealth they help generate?

They are apparently getting more than their 'fair market value' as evidenced by Walmart is finding that automation is more economical than the non-skilled workers it is replacing. Of course Luddites will have hissy fits.

Skilled labor does not mean lawyers, doctors, engineers, etc. It means plumbers, electricians, carpenters, heavy equipment operators, etc. etc. Skills that can be learned in fairly short time either in a trade school, independently, or as on the job training. Such skilled labor is in high demand and well paid. Minimum wage jobs that require no skills should be considered by a worker as temporary while they are learning the skills to really enter the job market.

I think it is a failure of government and government schools that people are graduating from public schools with no job skills. The "industrial arts" that were taught were phased out during the middle 20th century. Classes like wood shop, metal shop, auto shop, etc. etc. gave students skills that would allow them to step into a well paying job. Now learning job skills is left to the initiative of each individual.

The desire to reduce running costs drives automation, which doesn't mean that Walmart wasn't a profitable business before automation.

It's another example of cost cutting in order to increase profits. If pay can't be kept to a bare minimum, practically slave wages, let's automate.

If it were the old British mercantile system of the 1800s (that Marx railed against), that gibberish would almost make a little sense. However, today keeping costs down is necessary to compete in the market.

If that practice becomes widespread, there may be fewer customers - there being a large base of long term unemployed - to buy their products.

Utter nonsense. The world is much more than Walmart.

Not to mention creating a sector of disenfranchised people living with a sense hopelessness, drug addiction and social unrest.

More Marxist nonsense.
You still haven't explained why you think that unskilled people can't learn the skills necessary so they can compete in the job market, if they have the initiative. It is as if you believe that individuals have absolutely no personal responsibility, that they are surfs forbidden by law to act in their own behalf as individuals. You appear to accept the Marxist idea that, instead of individuals, only classes exist and that everyone must remain in their class because there are class barriers and there is no class mobility.

It's much more fun to play video games than train for new skills.

 

[skepticalbip]

It has nothing to do with Marxism. It's how the world works, human nature in relation to how business is conducted in terms of profits and running costs.

I guess then that it is just a wild coincidence that you seem to see the way the world works the same way Marx saw it... and both offer many of the same "solutions". You should read Marx. You would find a new kindred spirit.

Personally I found kindred spirits when reading thinkers like Voltaire, Montesquieu, and Smith.

 

[Tharmas]

I'm no economist, but my understanding is that Marx developed his ideas about how capitalism works based on the earlier economic theories of various pro-capitalist writers. For instance, the labor theory of value comes from Adam Smith.

I believe, but I may be mistaken because it’s been fifty years, that I learned about Marx’s sources from Edmond Wilson’s To the Finland Station, which traces the development of socialism from the French Revolution right up to the eve of the Communist Revolution in 1917.

I am not necessarily claiming that the labor theory of value is correct or accepted by economists today. It's just one example of an idea Marx picked up from capitalist apologists.

 

[Loren Pechtel]

The customer may hold the balance of power when it comes to quoting price.

The firm may be desperate for work, perhaps with too much competition in town they quote low in order to secure work.

If the shoe is on the other foot, prices surge, they quote high.

Supply and demand.

Individual workers without marketable skills, without protection in law, or a union, tend to get exploited. That's human nature.

So you do understand. A worker with nothing marketable to sell to his customer (the business he wants to work for) will not get much for his product (his labor). It is odd that you advocate that the business should pay more to buy an unmarketable product rather than that the worker should develop some marketable skills to sell.

It appears that I understand the issue far better than you.

We are not just talking nothing more than a commodity, but people's lives. Just because there may be a pool of unemployed to draw from shouldn't give firms free rein to exploit. Which is why progressive nations set minimum pay and conditions.....without which it's a race to the bottom. Merciless exploitation of workers regardless of the firms ability to pay significantly more. Greed rules.

There are countless examples of this in history and in current times.

You are still giving no reason to believe a business can remain in business while paying too much. Maybe for a while during good times but the market sets a basic profit ratio and good wishes can't change that--a field of business which makes too much profit will face added competition as others try to get in on the good times (exception: those with monopoly power of some type). A field of business which makes too little profit will not see replacement of attrition. In either case this will in time move the profit margin back to where the market puts it.

The only way you can overcome this is by force--minimum wage laws. However, when minimum wage is above market rate you will find employers exploiting their workers in other ways--they'll put up with the exploitation rather than not have a job.

Thus the only true fix is to improve the economy.

 

[Loren Pechtel]

And you don't seem to understand reality. When the minimum wage is set at a rate greater than the value/hour of unskilled workers then the company automates or relocates or maybe drops a product line (and the workers on that product) that is made unprofitable. Which means that rather than receiving low wages the worker receives no wages.

WTF do you have against the idea of someone improving their skills so that their labor will be valuable and companies will compete to hire them? That would be good for the worker, good for the company, and good for the country.

Blasphemy!

It's religious thinking--a fundamental tenant of their faith is that there is enough profit to fund anything they consider worthwhile. It's a matter of faith, contradicting it is blasphemy and basically incomprehensible and thus any rebuttal will not be understood. Note that it is not only the left that has this problem, we see even more of it from the right.

 

[Loren Pechtel]

But it's not set at market value of the labour. Look at places like Walmart, do you think that the workers are getting a fair market value for their labour and the wealth they help generate?

As usual, the demonizing of WalMart. Oops--they tend to pay more than similar jobs elsewhere. Their real "sin" is their rabid anti-union stance, not their wages.

 

[Loren Pechtel]

I think it is a failure of government and government schools that people are graduating from public schools with no job skills. The "industrial arts" that were taught were phased out during the middle 20th century. Classes like wood shop, metal shop, auto shop, etc. etc. gave students skills that would allow them to step into a well paying job. Now learning job skills is left to the initiative of each individual.

Yes. We have community colleges. We should have community trade schools.

 

[Loren Pechtel]

• Walmart annual gross profit for 2022 was $143.754B, a 3.54% increase from 2021.
• Walmart annual gross profit for 2021 was $138.836B, a 7.33% increase from 2020.
• Walmart annual gross profit for 2020 was $129.359B, a 0.2% increase from 2019.

And this is supposed to prove anything beyond your lack of economic knowledge?

Hint: What's the GDP growth rate for the USA?

Walmart is a nationwide company. If it were simply holding even you would expect it to grow with the economy. That's all your numbers show.

 

[Loren Pechtel]

I'm no economist, but my understanding is that Marx developed his ideas about how capitalism works based on the earlier economic theories of various pro-capitalist writers. For instance, the labor theory of value comes from Adam Smith.

I believe, but I may be mistaken because it’s been fifty years, that I learned about Marx’s sources from Edmond Wilson’s To the Finland Station, which traces the development of socialism from the French Revolution right up to the eve of the Communist Revolution in 1917.

I am not necessarily claiming that the labor theory of value is correct or accepted by economists today. It's just one example of an idea Marx picked up from capitalist apologists.

There is a fundamental flaw in his system that Marx knew about.

Note that he said a country must industrialize before going Marxist. This shows that he knew a Marxist system can't build factories, only steal them. He failed to realize that "industrialize" is not a one-and-done thing, those factories keep getting replaced.

 

[skepticalbip]

I think it is a failure of government and government schools that people are graduating from public schools with no job skills. The "industrial arts" that were taught were phased out during the middle 20th century. Classes like wood shop, metal shop, auto shop, etc. etc. gave students skills that would allow them to step into a well paying job. Now learning job skills is left to the initiative of each individual.

Yes. We have community colleges. We should have community trade schools.

We do have two year technical schools but the public high schools should reinstitute the teaching of 'industrial arts' like they did until the mid 20th century. For instance a student that completed the courses of 'auto shop' would graduate from high school prepared to step into a well paying auto-mechanic job.

 

[skepticalbip]

I'm no economist, but my understanding is that Marx developed his ideas about how capitalism works based on the earlier economic theories of various pro-capitalist writers. For instance, the labor theory of value comes from Adam Smith.

I believe, but I may be mistaken because it’s been fifty years, that I learned about Marx’s sources from Edmond Wilson’s To the Finland Station, which traces the development of socialism from the French Revolution right up to the eve of the Communist Revolution in 1917.

I am not necessarily claiming that the labor theory of value is correct or accepted by economists today. It's just one example of an idea Marx picked up from capitalist apologists.

There is a fundamental flaw in his system that Marx knew about.

Note that he said a country must industrialize before going Marxist. This shows that he knew a Marxist system can't build factories, only steal them. He failed to realize that "industrialize" is not a one-and-done thing, those factories keep getting replaced.

And DBT's ideas repeat this. He wants to control how Walmart, an already established company, operates rather than develop a company along his ideal of how a company should operate to compete with and drive Walmart out of business.

 

[DBT]

Nothing of the sort. DBT doesn't ''want to control anything.'' I merely point out the obvious.

That the issue of inequality, pay, wealth, power, status, is and always was a matter of power imbalance between individuals, groups and organizations.

Abstract
''Social inequality has become a challenging social phenomenon in many advanced countries lately. Individuals are affected by social divisions of race, gender, economic, cultural, and political structures. Among these social divisions, income and power inequality have become the major political preoccupation in most developed countries. In the United States, income disparity between the upper and middle classes has been increasing for several decades. While the top 1% earners who contributed to 10% of the U.S. national income in 1980 increased to 20% in 2016, the bottom 50% earners who contributed to 20% of national income in 1980 decreased to 13% in 2016. There have been several interpretations of this phenomenon but from a globalization point of view. This study, therefore, seeks to explore the phenomenon from a globalization standpoint. Using intersectionality as the theoretical framework, this paper explains how various social constructs (e.g., race, gender) intersect in a globalized economy to create income and power disparities.''

Inequality is a vicious cycle
“The rich get richer, the poor get poorer” is not just a cliche. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals [5]. The reason is simple: People who already hold wealth have the resources to invest or to leverage the accumulation of wealth, which creates new wealth. The process of wealth concentration arguably makes economic inequality a vicious cycle.

The effects of wealth concentration may extend to future generations [3]. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the vicious cycle.

The French economist Thomas Picketty recently published a book, Capital in the Twenty-First Century [6]. Picketty’s thesis supports the previous proposition. It is a 700-page book on the topic of income inequality. The rich collection of statistics in the book shows that in almost every country (examined by Picketty), the wealth gap has widened since 1980. Picketty holds the view that inequality will remain as long as the aforementioned wealth concentration process persists through generations. However, Picketty argued that global inequality has probably decreased, as there has been rapid growth in Asia partly at the expense of lower-to-middle income earners in developed countries. The statistics show economic inequality is not just the top 10 percent of the population is richer than the bottom 20 percent. Rather, it is “1 percent versus the remaining 99 percent,” i.e. the top 1 percent of the population has the vast majority of wealth in the economy and control of financial markets.

 

[skepticalbip]

That the issue of inequality, pay, wealth, power, status, is and always was a matter of power imbalance between individuals, groups and organizations.

Exactly. The ideal that Marx dreamed of was absolute equality of wealth, power, and status. That was the idea behind his utopia of no private property and no government where everyone shared everything, a paradise of community where everyone willingly worked together for a common cause. He called it communism.

 

[DBT]

That the issue of inequality, pay, wealth, power, status, is and always was a matter of power imbalance between individuals, groups and organizations.

Exactly. The ideal that Marx dreamed of was absolute equality of wealth, power, and status. That was the idea behind his utopia of no private property and no government where everyone shared everything, a paradise of community where everyone willingly worked together for a common cause. He called it communism.

Not really, not even close...collective bargaining, a more equal balance of power enables workers to negotiate better pay and condition within their sector. The business needs workers, workers need incomes, and if the power balance is reasonably workers can secure a better deal.

Nobody has suggested that a cleaner gets the same as a mechanic or a mechanic gets the same as a brain surgeon. Just that there is a vast gulf between those at the bottom and those at the top of the economic heap, and that the sheer size of that gulf should be addressed.

"If capitalism is fair then unionism must be. If men have a right to capitalize their ideas and resources of their country, then that implies the right of men to capitalize their labor" - Frank Lloyd Wright

 

[Bomb#20]

I'm no economist, but my understanding is that Marx developed his ideas about how capitalism works based on the earlier economic theories of various pro-capitalist writers. For instance, the labor theory of value comes from Adam Smith.

David Ricardo, actually. Adam Smith knew better.

 

[skepticalbip]

"If capitalism is fair then unionism must be. If men have a right to capitalize their ideas and resources of their country, then that implies the right of men to capitalize their labor" - Frank Lloyd Wright

People can and do capitalize their labor. Their labor is the product that they sell to those who will pay for it. In this case an individual is a business. Antitrust laws had to be passed to prevent businesses from colluding to fix the prices of their products because such collusion was destroying competition and the free market because collusion creates product pricing above 'fair market value'. Individuals (who are their own business) colluding to fix the prices of their product (their labor) by forming a union is no different.

I know that this will make no sense to you since you can not think of people as individuals, only as a member of a class.

 

[Loren Pechtel]

Nothing of the sort. DBT doesn't ''want to control anything.'' I merely point out the obvious.

Notably, you failed to respond to my point.

Inequality is a vicious cycle
“The rich get richer, the poor get poorer” is not just a cliche. The concept behind it is a theoretical process called “wealth concentration.” Under certain conditions, newly created wealth is concentrated in the possession of already-wealthy individuals [5]. The reason is simple: People who already hold wealth have the resources to invest or to leverage the accumulation of wealth, which creates new wealth. The process of wealth concentration arguably makes economic inequality a vicious cycle.

Of course--the same factors that made one rich and another poor remain in effect.

The effects of wealth concentration may extend to future generations [3]. Children born in a rich family have an economic advantage, because of wealth inherited and possibly education, which may increase their chances of earning a higher income than their peers. These advantages create another round of the vicious cycle.

But note that wealth also dissipates over time because most people have more than one child. The Law of Primogeniture existed specifically because they knew that without it wealth would soon be dissipated. We don't operate under a primogeniture system.

The French economist Thomas Picketty recently published a book, Capital in the Twenty-First Century [6]. Picketty’s thesis supports the previous proposition. It is a 700-page book on the topic of income inequality. The rich collection of statistics in the book shows that in almost every country (examined by Picketty), the wealth gap has widened since 1980. Picketty holds the view that inequality will remain as long as the aforementioned wealth concentration process persists through generations. However, Picketty argued that global inequality has probably decreased, as there has been rapid growth in Asia partly at the expense of lower-to-middle income earners in developed countries. The statistics show economic inequality is not just the top 10 percent of the population is richer than the bottom 20 percent. Rather, it is “1 percent versus the remaining 99 percent,” i.e. the top 1 percent of the population has the vast majority of wealth in the economy and control of financial markets.

I read part of his book, gave up when it became apparent he was incapable of seeing that there kept being new players climbing up on top, not merely the old players passing it to their children.

 

[Loren Pechtel]

"If capitalism is fair then unionism must be. If men have a right to capitalize their ideas and resources of their country, then that implies the right of men to capitalize their labor" - Frank Lloyd Wright

People can and do capitalize their labor. Their labor is the product that they sell to those who will pay for it. In this case an individual is a business. Antitrust laws had to be passed to prevent businesses from colluding to fix the prices of their products because such collusion was destroying competition and the free market because collusion creates product pricing above 'fair market value'. Individuals (who are their own business) colluding to fix the prices of their product (their labor) by forming a union is no different.

This. Unions would be subject to anti-trust action if they weren't specifically shielded from it.

I know that this will make no sense to you since you can not think of people as individuals, only as a member of a class.

Which is the problem with Picketty's book--he's entirely focused on members of classes without realizing the classes are not fixed. The people that fly high often crash hard and the later generations rarely lack the skill to maintain the wealth they do inherit.

 

[skepticalbip]

Which is the problem with Picketty's book--he's entirely focused on members of classes without realizing the classes are not fixed. The people that fly high often crash hard and the later generations rarely lack the skill to maintain the wealth they do inherit.

True. And, on the flip side, many individuals that would be grouped in DBT's class of 'the underdogs' become powerful or wealthy or even 'stinking rich'. What DBT and those with his mindset see as classes is an illusion, only a snapshot in time, because individuals can and do change their condition in life constantly. Some improve, some decline, some flutter back and forth.