Where does Profit come from?

Marx's Labor Theory of Value

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[rd1999]

ya but who is taking the risk in the first place? These jobs would not be there were it not for the the guy with the deep pockets.

[alexanderthomasfu]

risk implies that someone has enough capital to invest. the question is: where did that capital come from?

[pr0gm3r]

I think everyone should be partnership and share the profits within the corporations - LLP.

[theodorewolfgang]

@TheSophist2007 yes, technology often leads to massive production increases (decreasing the socially necessary labor time needed to produce specific commodity's, and hence their value as such). But this fact does not add an iota of explanatory power to your presumption that technology of-itself actively creates value. BTW my use of the concept of value is borrowed from Marx. If interested, read chapter of 1 of das kapital for a basic exposition of these concepts.

[theodorewolfgang]

@TheSophist2007 the value of labor power (as expressed in wages) is based on the socially necessary labor time needed to reproduce that labor power. obviously, the labor power of a highly skilled/trained electrician is more costly to reproduce (and hence their wage is higher) than that of a cleaner. you're right, though, that technology (for one) has led to massive productivity increases that have lowered the value of many items. (a fact that's central to marx's analysis of capitalism btw.)

[theodorewolfgang]

@TheSophist2007 no, real wages have stagnated and declined for the large majority of the population for the last thirty years or so. this is all in the midst of staggering productivity increases which have almost exclusively flowed to the top 1% of earners. see: elsa.berkeley.edu/~saez/pikett­yqje.pdf

[theodorewolfgang]

@TheSophist2007 those are both after-the-fact normative justifications for the appropriation of surplus value in the form of profit; neither has any explanatory power in answering where profit comes from. try again please.

[TheSophist2007]

profit is the payment for the service of problem solving and undeconsumption of capital for investment purposes of creating more valuable processes of production

[TheSophist2007]

@theodorewolfgang "technology doesn't create value, its value is transferred to a product via the labor process"

arn't you excluding the creative capacity of devices, say for instance fishing rods. A person who steals a fishing rod has a greater fishing capacity than without it.

the fishing rod has created a more valuable situation of more fish.

value is not contained within things it is an evaluation by a person

[TheSophist2007]

@theodorewolfgang are you talking nominally?

what I said still applies via proportionality i.e. an electrician earns more than a cleaner.

the value of money is not measured purely in numbers, i.e. 5 gold coins would buy you more now than in 1500 or medieval times or prehistoric times.... Why? you ask

Because of technological innovation!

[theodorewolfgang]

@TheSophist2007 also, workers wages are not set via 'the amount of value they create', i.e. productivity. in fact throughout much of the western world (US, Canada, UK etc.) workers wages have consistently stagnated- and have in many cases declined- for the last thirty years in the midst of steadily increasing productivity. nice rhetoric, though.

[theodorewolfgang]

@TheSophist2007 none of this explains the origin of profit; in fact this is all either metaphysical ('creative entrepreneurial spirit') or surface explanation. 1)technology doesn't create value, its value is transferred to a product via the labor process. 2)efficiency is used to describe various organizational forms; 'efficiency' doesn't engage in a process of value creation. what, then, is efficiently organized? the labor process, insofar as labor power creates more value than it is bought for.

[TheSophist2007]

@annablue1 its nothing to do with how fast you run, its the technique you use in running (say jogging, going all out) and which direction you choose to run.

You don't have to use the running wheel