Mises: Myth of Wage-earners vs Capitalists

[Hopeful71]

Figures quoted from 1961 are from the HEIGHT of Keynesian economics. In this post Reagan "free(er) market" the middle class is dead (or dying). He is no longer a saver. The only way to sustain the unregulated "free" market was to leverage the wage earner into indentured servitude. THAT is the end game of a free market economy; a "winner" who has total control of the market & therefore NO LONGER needs to serve the consumer OR labor.

Libertarians need to wise up; free market=feudalism

[bjarnet3]

@Hopeful71 It is impossible to have total control in a free marked... You can have total control, but this is only possible trough protection from the State. But if the State have enormous control in the marked it is not a "free marked".

It is like saying that Nokia always will have marked monopoly on Cell phones (they had 90% of the whole marked, now they are almost bankrupt),, Or Microsoft will always have monopoly on computers and operation systems. Nobody knows, what the future will bring.

[bjarnet3]

@Hopeful71 If free individual entrepreneurs se that some company have (or close to) marked monopoly, many people will go into that sector, because this is where you can earn money.

Ok,, google is very successfully,,, people will try to come up with better ideas. What happened when groupon was launched and they earned a lot of money,, hundreds duplicators and copycats created equal services.

Nintendo once dominated the gaming marked,, then came Sony, then Xbox, Now Apple and others...

[Laughingblades]

In Capitalism, someone else owns your ass, you can bring hundreds of dollars to your company in a day, and be paid less than a hundred, the business owner owns your labor, your wage isn't much different from a bag of oats given to a feudal serf, only a feudal serf had guaranteed food and shelter you don't even have that.

There are other free market alternatives, if you must insist on a free market, capitalism and corporations rely on your ignorance of those alternatives to foster acceptance.

[MrBigEnchilada]

@Laughingblades Now certainly the business owner is not giong to hire anyone if they work less than a hundred dollars, or even bring in exactly 100 dollars. This is because the owner is the one who is held responsible to pay for the rent, liabilities payments, depreciation, utilities, and related taxes. The worker is not held accountable for any expenses associated with his job, ie, the cost of producing or operating.

[Laughingblades]

@MrBigEnchilada In a Worker Cooperative the workers would all share the costs, liabilities, depreciation, utilities, and taxes, and would all earn more.

And if what you say were true the business owners would be no better off than labor. Also the worker is held accountable for whatever risks the capitalist takes, any cost to the business owner is passed to the workers, labor creates a cushion.

[MrBigEnchilada]

@Laughingblades many times the business owners do not get that much more money than the workers, this is mostly true for small and med-size businesses. The owner must manage everything as he/she has no fund to hire a manager.

The worker is held accountable for only one reason, if the owner is not doing well, the worker might get fired. Any costs to the business owner is passed to the consumer, the labor may be a consumer, but all costs from the worker are passed to the owner.

[Laughingblades]

@MrBigEnchilada Not true, first risks get passed to workers. Second, Small Business Owners hardly even count as capitalist, at best they're middle class, however.

The system is flawed. First if they shared ownership and responsibility their expenses would be shared, secondly the workers would no longer be disposable commodities, they'd be co-owners and as such they would have a vested interest in making the company as profitable as possible because they'd get paid more.

[Laughingblades]

@MrBigEnchilada The Aristocrats accounted for small business owners, they would never be big enough to pose a threat, they would be used as a cushion between the aristocracy and the paupers. When the workers revolted, they would revolt against managers and small factory owners, the capitalists profits might be effected, but they'd be safe in their gated mansions.

Any who rose through the ranks would be welcomed into the class of aristocracy, the rest would be shills and fall guys.

[MrBigEnchilada]

@Laughingblades Now undeniably the business owner will act in his best interest to decrease the costs of operating or producing, he will reduce the labor cost, ie: outsource to india, china, vietnam, mexico, etc etc...it is unfortunate that a worker in those countries are paid with such low money, a direct cause is of course the exchange rates. I am not against protesting the treatment of workers and the environment by these companies, but it is also our desire to buy and use cheaper goods.

[Laughingblades]

@MrBigEnchilada Cheap Goods that come at the cost of American Jobs aren't cheap, and what starts off as savings becomes a desperate trap as the economy collapses around you, and what started out as less becomes all you can afford.

[MrBigEnchilada]

@Laughingblades true, cheap goods have lots of hidden costs that hurts people indirectly, it means workers really need to get better skills nowadays. I didnt really understand the last sentences...

[Laughingblades]

@MrBigEnchilada That's not sufficient. No matter how skilled the workers are there's only so much work that needs doing and can turn a profit, capitalism was designed to create a surplus of labor, and even if there weren't surplus labor, buying cheap goods made in foreign countries sends the wealth of your nation to another, slowly making your nation poorer.

If the trade is in something that will maintain or appreciate it's value, that may be a different story, but if it is consumed, you lose.

[Laughingblades]

Man this guy is wrong on a lot but you can't blame him, he didn't get to see how bull shit his naively optimistic ideas would turn out to be.

[Laughingblades]

HISTORY FAIL

Also Feudal Serfdom sounds a lot like capitalism.

[AroundSun]

America is fucked. Mises.org is great!  Read the article 'Chomsky Economics!' LMAO!

[faterlandas]

he fails to note that inheritant nature of all business is a trend towards monopoly. (that's how fellow 'good' capitalists maximize their profit) and once monopoly is achieved then neither goods are cheap nor wage is raised any more.

.

so as capitalism was a step ahead over primitive exploatation of medieval peasantry we need another step ahead to finish this modern exploatation.

[mba2ceo]

They are natural enemies !!! Capitalists exploit workers.

[natepepin09]

You sound like someone on Freedom Watch.

[midtra52]

Are there any economists left that understand economics and are actually allowed to teach in our schools?? I went to get an MBA, took economics and statistics, couldn't believe the nonsense I heard and left the program. I studied on my own and can now poke more holes in the nonsense MBA students say than you'd find in Swiss cheese. We need actual schools that teach real economics instead of this more or less voodoo Keynesian stuff that teaches economists to be gypsies.

[raindog504]

"let's look at a little history" says vonmises. okay:

haymarket affair; italian hall disaster; cripple creek miners' strike of 1894; anaconda road massacre; trianlge shirtwaist factory fire; textile workers' strike (1934). wikipedia has articles with those titles

[raindog504]

haha, as you call me illiterate, please look at the so-called "evidence against" me. clearly, it was not i that said that, but instead poleske. you are completely hanging your hat on one fact or argument and totally ignoring everything else, and pretty much even facts that contradict your one point. what your saying is simply not the whole truth. to what value is knowing one fact and ignoring all others? what are you afraid of? why does everyone have to use your terms? it is not more inclusive

[raindog504]

...tools used by economists fail to realize this increase, therefore, incorrectly put real compensation higher than it ought to be. truth be told, the majority of economists in the u.s. are totally bourgeois, so everything that is presented as truth should be taken with a grain of salt. nonetheless, most of the lowest paid workers do not recieve any benefits like pensions and medical insurance. what good is a graph that says that they ought to be happy that there is a correllation to them?

[raindog504]

...receive is 401(k) and hedged pensions &cetera. this is money that promotes business; it works as a business investment. the largest benefit compensation, by far, is medical insurance. MEDICAL COSTS HAVE SKYROCKETTED. most arguments of why are not the fault of the worker such as, the american medical association being a cartel, defensive medicine, drug patents, doctors investing in their own technology, administrators controlling for more prestigue, etc. there are many ways that inflation...

[raindog504]

...banks and businesses, without the workers getting smart to it. how abouts a source not so biased? furthermore, compensation may include health insurance. but if you looked at the figures, health costs have greatly surpassed inflation. most of this money goes to drug patents, doctors, etc. this does not mean that worker has more money to put a down-payment on a home.

[GoingGoingGalt]

@raindog504 Your conveniently shifting the topic from the fact that benefits to workers has been increasing to extraneous issues such as whether productivity and compensation are perfectly matched (they are still highly highly correlated).And ask yourself this-is economic freedom greater in the years after 2000 or before? Even, it doesn't change a thing-the value of benefits have been rising. The fact that you think enough hasn't been done is irrelevant.

[GoingGoingGalt]

@raindog504 Income inequality is another irrelevant issue. So what? All income groups have been rising. No one cares except leftist intellectuals, who have much to gain from this form of class conflict.

Youre so quick to assume the worst. Maybe it is YOU who is biased.

Remember you claimed that while productivity was rising, the wealth workers were accumulating was falling. I showed you that workers were benefiting more. Stick to that subject. Admit you were wrong about that.

[raindog504]

@GoingGoingGalt "Remember you claimed that while productivity was rising, the wealth workers were accumulating was falling" i don't remember this, when did it happen? how can i admit i was wrong until you show me what i said that was wrong? what i remember happening was you insisted that everyone stop talking about wages, and instead talk about compensation (for what reason: false consciousness, your parents are rich, you obey your masters?). the second largest benefit that these workers may...

[GoingGoingGalt]

@raindog504 Bla bla bla. You talk so much yet say nothing valuable. Only baseless rhetoric. Here is the evidence against you:

The average American worker is now 1.5 times as productive as he was 40 years ago yet real wages have gone down 50%.

Are you completely economically illiterate? In fact are you just plain illiterate? Did I not tell you many times that real compensation is more inclusive of all the benefits a worker receives than his wage and therefore more accurate.

[raindog504]

furthermore, the lines diverge rather significantly immediately after the year 2000 and continue to do so. four years have gone by since the last year this graph reports and there still exists a difference in productivity and real compensation. if you simply read the paragraph directly below YOUR graph, it says that "real compensation per hour have, for the most part, lagged behind productivity growth". and this is from the a source that wants so badly to defend its position of helping the...

[raindog504]

...graph (where i would choose not to trust the fed fully), there is a gap during the reagan years. the two lines converge in 2000, but this is simply definitional, it is a trick the creator of the graph used. to understand this, you need to understand what a base year is. they chose the year 2000 as the base year, so both figures are defined by a 100, that is why they both exist on the hundred point. it does not mean that they are equal in value, it is just a trick definition where both are 100

[poleske]

@GoingGoingGalt

You mean the point when you put out a link which... leads to a page not found screen

here it is unencrypted

Did you honestly think I would just see a link, assume your lies were fact and not even take the time to type it into my URL?

[poleske]

This is 100% bullshit

It is always in the interest of an employer to Decrease wages as marginal productivity is increased. The average American worker is now 1.5 times as productive as he was 40 years ago yet real wages have gone down 50%.

Labor costs will always detract from profits.

He talked about the wage earner also being an investor. Supply side economics has changed this to the point where most American households operate in debt and have income for savings.

[GoingGoingGalt]

@poleske Do some research. Productivity has gone up and with it, real compensation (wages plus all other benefits in terms of monetary value)

[poleske]

@GoingGoingGalt I have done research and am glad we are on a completely recorded medium of discussion because you are simply lying. You are outright lying and all of the hard evidence proves that you are lying. The only way one can claim wages have increased is if they disregard inflation. If you take inflation into account wages have decreased in every industry by an average of about 50%

[GoingGoingGalt]

@poleske I guess this is the moment where I pull out data that makes your comment meaningless and wrong. I do love recorded mediums of discussion, don't you? You are talking ONLY about real wages. I talk about real COMPENSATION, which includes both wages and benefits. And here is the data:

federalreserve(dot)gov(slash)n­ewsevents(slash)speech(slash)k­roszner20060927a(dot)html

[poleske]

That link simply leads to a page not found screen. There is no data there.

[GoingGoingGalt]

@poleske Hmm, then google the following sentence:

"What Drives Productivity Growth? Implications for the Economy and Prospects for the Future"

Click the first link, scroll down to the bottom of the page, and you will find a chart

[raindog504]

@GoingGoingGalt i only briefly looked at this graph and the paragraph below it and immediately decided the g.g.g's logic is faulty. primarily, any co-integration between real comp and productivity is between world war ii and ronald reagan. the argument that real wages (or even compensation if everyone has to use your terms because you are so important) has decreased isn't refering to the golden years, it is since the god-blessed reagan starting attacking poor people. as you can see, in YOUR...

[GoingGoingGalt]

@raindog504 Ad hominem doesn't pay off. The reason real compensation is more important than real wages is because it includes real wages plus all the other benefits workers receive in their monetary value. In other words, real compensation is MORE inclusive. I think that makes it a little more important, don't you. Regardless what you might think of me, regardless what conclusions you can jump to, the fact remains real compensation has been increasing, and you can't disprove that.

[raindog504]

@GoingGoingGalt gini coefficient measures inequality by plotting income on one axis and people on the other, cummatively, by percentages. if we want to see who is gaining by productivity, look at wikipedia's page on the gini coeff. scroll down to the graph of "income disparity since world war 2". the united states is near china and converging with mexico. if you plot wealth instead of income, the disparity is even greater.

[raindog504]

"goods of labourers to sell thanks to allowing them (immediately) free usage of productivity enhancing capital in exchange for their labour" oh yeah, and labourers do not "sell", the capitalist is in possession of the products and brings them to the market to receive the revenues. the worker is alienated from the product, so sells nothing but labour. "free usage," all you have to do to receive something for free is become someones slave. your idea of freedom is distorted

[raindog504]

...about wages as well as one about capitalists allowing usage of their investment) workers should essentially be honored by the capitalists being so kind to let them use their capital to be productive. where would the capitalist be without the worker? the capital would be completely useless without workers. they were able to afford this capital investment simply from the labour of others. where else does profit come from except from the labour process? (read from bottom to top)

[raindog504]

...productivity increases. you are missing the point completely. if the costs go down, from productivity, so does the revenue per item. it will be proportional. you are taking this point and distorting it into some change in the relationship between these variables. then, you continue to spew out obvious relationships between costs and profits. lastly, you assert that (please notice that your run-on sentences lack coherence; such as the last one, which is one sentence and contains a statement...

[raindog504]

...decreases. those things represent two different scenarios. transfering more to profit comes from the opposite scenerio, where the cost/revenue relationship is favorable to the firm. so you must mean LESS profits or wage decreases. i cannot do your logic for you for you to simply be able to conduct a debate. let's assume you meant what you didn't say. you are assuming a changing a relationship between revenues and costs. this is somehow a retort against my argument that prices go down when...

[raindog504]

be "allowing a more competitive low price"? when you say "thanks to HIGH prices" i'll assume you mean costs. typically, in bourgeios theory, you call what the firm spends on 'costs' and what they sell for 'price' so that there is no confusion, like the contradiction you presented. it does not make logical sense what you are saying anyway. you are saying that if the relationship between costs and revenues is unfavorable to the firm, they will have to transfer this into more profit or wage...

[raindog504]

...is the worker, and they receive the rent, based on the bourgeios theory that you adhere to. then you start talking about revenues relative to costs. first, you conjecture that somehow the fact that the worker doesn't need to have lower wages, which would result in a competitive low price? let's assume that by not necessitating a lower wage you mean actually a higher wage is possible, how could the logical conclusion...

[raindog504]

...and law suits, &c. if a firm realizes scale, and for some reason no one else has done so, they can instead of selling widgets for 2$, sell them for 1.99$ (i don't know how many shillings that translates to), even thought their cost is only a dollar, and pocket that 99cents easily, without hiring a single additional worker. "capital-renting worker", the buyer is the renter, the worker is rented. rent is another term for producer surplus, based on opportunity cost, therefore, the producer...

[raindog504]

...you claim that productivity leads to greater wages. this is an outrageous assumption because productivity does not necessarily mean that the firm has greater revenues because for the maket to clear, the price of the widget goes down. even if there was greater revenue, the firm has no incentive to hire more workers, the market is already glutted and needs no more widgets. more likely they will use this revenue to kill off competitors through predatory pricing, legislature (monopolizing)...

[raindog504]

...the increase in the supply of widgets, the doubling of production, for the market to clear, the price is now 2.50$. this means that the marginal revenue from the worker is still 10$, and will hire the exact same amount of workers. the firm may make the gov't to pass legislature that decreases corporate taxes saying that they will use the money to create jobs. when they receive this extra income, they will just pocket it because the market is already established. they have inventory to clear..

[raindog504]

..., at the margin, the revenue equals (or is greater than) the cost. the revenue is defined by the marginal product of labour, multiplied by the price of the good produced. therefore, if the marginal worker-hour can produce 2 widgets, and a widget is sold for $5(or pounds, &c.), then the firm would hire the worker, provided his/her wage is < (or equal to) 10$. now take productivity into the equation. productivity would make it so that arbitrarily 4 widgets are produced. however, because of...

[jamo387]

Mises was an amazing man. We need universities that nurture genius like his and less that propagate pseudo-intellectuals like Obama. It is a shame what has happened to the educational systems of the west. A real shame. Does anyone know where Sowell went to school? How about Walter E. Williams or Milton Friedman? I would like my children going to institutions that truly educate rather than the dogmatic collectivist mills that characterize American higher education today.

[fairman1952]

Keep your perverted Marxist chains to yourself. I prefer freedom. If you can read try "The Road to Serfdom" by Hayek. If you are a Marxist try the cartoon form on youtube.

[jak1428]

meh.

[kingofmilwaukee]

Mises is the man. And buy do I wish we had someone this good now.

[Bluedybluedyblue]

@kingofmilwaukee Hoppe. 

[MrBigEnchilada]

@kingofmilwaukee Jeffrey M. Herbener, Robert P. Murphy, Joseph Salerno.

[texndaisy]

@kingofmilwaukee - you do.......his name is Peter Schiff

[JamesBlakeWilliams]

Marx, is dead, and it's funny that it has believers even today, even though there is enormous credible refrutable evidence that Marxism cannot work! Only free markets, small government, and pure capitalism is the answer!

[raindog504]

you know everything james blake!!! i wish i could shake your hand

[81AmericanGirl]

Good video!

[ComradeSephiroth]

Forty years ago the arguments in this video might have made perfect sense, but the Reagan Revolution and its outcomes have completely discredited the notion that capitalists and workers are not at odds with each other at least some of the time. (the key word is SOME of the time!)

[KingLeon1daz]

@ComradeSephiroth That's because you're sloppily lumping all capitalists into one convenient pigeonhole. You have no idea how ideologically opposed Misesians are to Reaganites & neocons. Anything those people claim to believe in terms of "free market" is pure rhetoric/lip service. If you don't believe me just google "Murray Rothbard Ronald Reagan" and see how many articles there are in which Rothbard completely destroys Reagan and his drones. Do not judge all capitalists by the easiest targets.

[raindog504]

of course, there is a social benefit to factory investment: lower prices because this cannot be held by a single capitalist in perfect competition. it is absolutely true that technological advances lead to a more productive society. but this does not change the fact that there is NO GAIN TO WAGES. all competitors have the same access to this tech advancement and the price is lowered. therefore, the demand for workers does not increase. this is all in regard to what he said right before minute 2

[adsicks]

Then explain why people made $10 per hour at McDonalds in CA back in the late 1990's. By your argument they should have only made minimum wage...

[raindog504]

primarily, i do not know the ca min wage or whether or not you are refering to one franchise in san fran that has its own city min wage. yes mcdonalds workers make 10/hr but so do landscapers. many people make many different wages. perhaps paying 8/hr has proven to mcd's to be unsatisfactory because it renders the employee less concerned for thew product. perhaps the rents in the area are so large that 10/hr in 1990s was merely subsistence. perhaps it was due to a workers movement. do you know?

[adsicks]

My bet is its just like any other wage I have been paid in my life...set by the Free Market.

[Nintendomanwill]

And guess what? These lower running costs in producing each widget, from economies of scale and greater capital investment, allow more revenues to be put back into wages.

[raindog504]

marginal revenue product is the derivative of demand, which vonmises alludes to as being one of the avenues that would benefit joe-schmo, by increasing through the marginal product of labor. however, he does not see that he directly contradicted himself in the second avenue, the lower prices! marginal revenue product=mpl*p. if the product of labor doubles, then the price is halved. he called it a two-fold benefit, but it leaves the wage unchanged because the demand for labor is unchanged

[raindog504]

actually, the cheapening of price in marxist theory would lead to a greater extension of the relative surplus value by capital and the worker would be no better off at all

[Nintendomanwill]

@raindog504

No, the wages can rise with increased capital investment per worker to increase the marginal product of the labour, only increasing profits insofar as the capitalist provides a greater addition to the firm's productivity with the greater capital investment. Demand for the products of labour is not demand for labour and the lower prices from greater production do not necessitate a greater share from revenues being profits, precisely due to lower *running costs* implied in cheaper gds.

[Nintendomanwill]

As profits from exchange derive from the revenues minus the running costs used to gain them, with lower prices making lower revenues, the capital renting worker doesn't have to get less in wages from greater efficiency allowing a more competitive low price, whereas if running costs are high enough in terms of capital investment, high relative to the revenues made from the goods sold from that capital, then either the capital must be transferred for profit or wages must fall thanks to HIGH prices

[Nintendomanwill]

If those high prices are necessitated by a higher cost of capital running-costs then the amount the capitalist can afford to pay the worker FALLS, just as cheaper capital investment (compared to revenues from goods at market clearing price levels) allows the worker to take higher wages from what can be a lesser capitalistic discount by their possession of the goods of labourers to sell thanks to allowing them (immediately) free usage of productivity enhancing capital in exchange for their labour

[raindog504]

@Nintendomanwill sorry, i didn't see that i had a comment until now. i never once claimed that demand for labor is demand for the products. if inputs costs go down, how is this "precisely" the reason why a greater share of the revenues do not go to profits? inventory and glut are predominant in this epoch. the problem isn't that firms don't have enough money to hire workers; they can produce goods but lack market demand to clear those goods. the bourgeios argument for hiring workers is if...

[jebustheone]

no, its how much you prefer having somethign now, as opposed to in the future.

For example, TVs come down in price over time, yet many people buy them when the price is high because they prefer their time preference for the object is they want it now.

[jebustheone]

obviously

[stevenavarro]

dang, some really eloquent rants here. Its civil too, or is it all passive aggression?

GO RP!

[Offatwork]

HEY GUYS! REMEMBER THE BERLIN WALL? THAT WAS PRETTY GREAT, EH? YOU KNOW, THE WHOLE, "MR. GORBACHEV, TEAR DOWN THIS WALL.." THAT WAS PRETTY COOL.

ANYONE REMEMBER THAT?

ANYONE AT ALL?

.... for some people, apparently not.

[nurbSoldier]

Probably the people you are targeting are too young to remember.

Keep in mind, someone who is 18 today was born in 1991 or 1992.

[brainpolice2]

Except I'm not abusing science in the attempt to legitimize people's psychopathic philosophical presuppositions.

[DeraJa]

(in reference to all comments)

OKAY.... I THINK EVERYONE IS RIGHT!!!

[brainpolice2]

Your "evolution stopped at the neck" deal is an old, tiring talking point. The problem is that noone is proposing that exactly. People are disagree with your misleading appeals to empirical science in the attempt to prove something much more specific and sinister than "evolution didn't stop at the neck"; namely, the fact that you abuse science to lend credence to the philosophical presuppositions of racists, which in fact are not proven by any science (only confirmation bias).

[Moragauth]

Not wanting drugees in my room is a condition I set. A "restrictive covenant" if you will. Where's the problem?

[brainpolice2]

The problem is when you start enforcing your restrictive covenant outside of your home and onto an entire community, at which point it is indistinguishable from an involuntary social contract and communitarianism. When you start talking about community-wide "restrictive covenants", statism very obviously starts to rear its ugly head again.

[Moragauth]

No, it's whether you wish a good (by definition homogeneous) now or later.

[Moragauth]

Oh but your view on profits is purely Marxian. And what is wrong w/ restrictive covenants?

[Moragauth]

Only to clowns.

[Moragauth]

Here's a suggestion: you fuck off instead. At least he doesn't believe the same Marxian garbage you do.

[Austrolibertarian]

Only if you consider Mises's overpowering intellect to be funny.