Bain Capital - GST Steel - Obamas Commercial

[meazza]

There's no clear-cut view on what Obama will do tomorrow.

 

The whole GM deal didn't just royally !@#$ over investors, it called into question the integrity of an entire segment of the industry that provides working capital to corporations (why would anyone loan money to a company under the possibility that the federal government could unilaterally and without due process cancel the obligation?) What business isn't going to be hesitant in that sort of an environment?

 

Exactly. Same thing as with Greek CDS. So you hedge yourself perfectly by buying protection and going long the debt instrument and all of a sudden, your debt is cut down to 35 cents on the dollar and your CDS is worthless because it's not a credit event?

[3rdnlng]

There's no clear-cut view on what Obama will do tomorrow.

 

The whole GM deal didn't just royally !@#$ over investors, it called into question the integrity of an entire segment of the industry that provides working capital to corporations (why would anyone loan money to a company under the possibility that the federal government could unilaterally and without due process cancel the obligation?) What business isn't going to be hesitant in that sort of an environment?

 

 

At the risk of being accused of "sucking up to DCTom" your post is a Grand Slam.

[MARCELL DAREUS POWER]

There's no clear-cut view on what Obama will do tomorrow.

 

The whole GM deal didn't just royally !@#$ over investors, it called into question the integrity of an entire segment of the industry that provides working capital to corporations (why would anyone loan money to a company under the possibility that the federal government could unilaterally and without due process cancel the obligation?) What business isn't going to be hesitant in that sort of an environment?

 

 

how can investors be !@#$ed over when capital does not deserve profits? their reward was their money they got from working, not what others create and work for...

 

money does not create new money. just like a hammer does not magically make a hammer on its own...lol

 

if you created the hammer, the hammer is yours. you cant give the hammer to someone else and then take all their ****...

 

again, the reward for doing nothing.

 

capital is not productive!

 

 

 

!@#$ THE INVESTMENT CLASS!

Edited May 25, 2012 by MARCELL DAREUS POWER

[DC Tom]

Exactly. Same thing as with Greek CDS. So you hedge yourself perfectly by buying protection and going long the debt instrument and all of a sudden, your debt is cut down to 35 cents on the dollar and your CDS is worthless because it's not a credit event?

 

But fortunately, working capital doesn't actually do anything, and it's the labor of the last guy that touches the car (presumably the guy that turns the key and drives the Chevy off the conveyor) that actually creates the value.

 

Learned that from Marcell.

 

how can investors be !@#$ed over when capital does not deserve profits? their reward was their money they go from working, not what others create and work for...

 

If I lend you $100 that you agree to pay back, then you refuse to pay me back, then I've been !@#$ed over.

 

You. !@#$ing. Idiot.

[Doc]

I know...but I want my question answered. I keep hearing that only Obama cronies get DoE grants for alternative energy companies. I want to know if that's because of rank favoritism, or simply because the people who own and operate alternative energy companies are more likely to be Greens and vote for Obama.

 

I want people to stop throwing around that totally useless claim until someone can actually back it up. It ain't cronyism until someone shows me that private equity is distributed significantly differently in that sector.

It would also help to know how many companies that didn't fill Barry's coffers were looking for the grants and funds that ultimately went to those that did.

[MARCELL DAREUS POWER]

But fortunately, working capital doesn't actually do anything, and it's the labor of the last guy that touches the car (presumably the guy that turns the key and drives the Chevy off the conveyor) that actually creates the value.

 

Learned that from Marcell.

 

 

 

If I lend you $100 that you agree to pay back, then you refuse to pay me back, then I've been !@#$ed over.

 

You. !@#$ing. Idiot.

 

 

Another defence of surplus value by capitalist economics is also based on time. This argument is related to the "time preference" one we have discussed in the last section and is, likewise, rooted in the idea that money now is different than money later and, as a consequence, surplus value represents (in effect) an exchange of present goods for future ones. This argument has two main forms, depending on whether it is interest or profits which are being defended, but both are based on this perspective. We will discuss each in turn.

 

One of the oldest defences of interest is the "abstinence" theory first postulated by Nassau Senior in 1836. For Senior, abstinence is a sacrifice of present enjoyment for the purpose achieving some distant result. This demands the same heavy sacrifice as does labour, for to "abstain from the enjoyment which is in our power, or to seek distant rather than immediate results, are among the most painful exertions of the human will." Thus wages and interest/profit "are to be considered as the rewards of peculiar sacrifices, the former the remuneration for labour, and the latter for abstinence from immediate enjoyment." [An Outline of the Science of Political Economy, p. 60 and p. 91]

 

Today, the idea that interest is the reward for "abstinence" on the part of savers is still a common one in capitalist economics. However, by the end of the nineteenth century, Senior's argument had become known as the "waiting" theory while still playing the same role in justifying non-labour income. One of the leading neo-classical economists of his day, Alfred Marshall, argued that "f we admit [a commodity] is the product of labour alone, and not of labour and waiting, we can no doubt be compelled by an inexorable logic to admit that there is no justification of interest, the reward for waiting." [Principles of Economics, p. 587] While implicitly recognising that labour is the source of all value in capitalism (and that abstinence is not the source of profits), it is claimed that interest is a justifiable claim on the surplus value produced by a worker.

 

Why is this the case? Capitalist economics claims that by "deferring consumption," the capitalist allows new means of production to be developed and so should be rewarded for this sacrifice. In other words, in order to have capital available as an input -- i.e. to bear costs now for returns in the future -- someone has to be willing to postpone his or her consumption. That is a real cost, and one that people will pay only if rewarded for it:

 

 

 

 

"human nature being what it is, we are justified in speaking of the interest on capital as the reward of the sacrifice involved in waiting for the enjoyment of material resources, because few people would save much without reward; just as we speak of wages as the reward of labour, because few people would work hard without reward." [Op. Cit., p. 232]

 

The interest rate is, in neo-classical economic theory, set when the demand for loans meets the supply of savings. The interest rate stems from the fact that people prefer present spending over future spending. If someone borrows £200 for one year at 5%, this is basically the same as saying that there would rather have £200 now than £210 a year from now. Thus interest is the cost of providing a service, namely time. People are able to acquire today what they would otherwise not have until sometime in the future. With a loan, interest is the price of the advantage obtained from having money immediately rather than having to wait for.

 

This, on first appears, seems plausible. If you accept the logic of capitalist economics and look purely at individuals and their preferences independently of their social circumstances then it can make sense. However, once you look wider you start to see this argument start to fall apart. Why is it that the wealthy are willing to save and provide funds while it is the working class who do not save and get into debt? Surely a person's "time preference" is dependent on their socio-economic position? As we argued in the last section, this means that any subjective evaluation of the present and future is dependent on, not independent of, the structure of market prices and income distribution. It varies with the income of individual and their class position, since the latter will condition the degree or urgency of present wants and needs.

 

So this theory appears ludicrous to a critic of capitalism -- simply put, does the mine owner really sacrifice more than a miner, a rich stockholder more than an autoworker working in their car plant, a millionaire investor more than a call centre worker? As such, the notion that "waiting" explains interest is question begging in the extreme as it utterly ignores inequality within a society. After all, it is far easier for a rich person to "defer consumption" than for someone on an average income. This is borne out by statistics, for as Simon Kuznets has noted, "only the upper income groups save; the total savings of groups below the top decile are fairly close to zero." [Economic Growth and Structure, p. 263] Obviously, therefore, in modern society it is the capitalist class, the rich, who refrain from expending their income on immediate consumption and "abstain." Astonishingly, working class people show no such desire to abstain from spending their wages on immediate consumption. It does not take a genius to work out why, although many economists have followed Senior in placing the blame on working class lack of abstinence on poor education rather than, say, the class system they live in (for Senior, "the worse educated" classes "are always the most improvident, and consequently the least abstinent." [Op. Cit., p. 60]).

 

Therefore, the plausibility of interest as payment for the pain of deferring consumption rests on the premise that the typical saving unit is a small or medium-income household. But in contemporary capitalist societies, this is not the case. Such households are not the source of most savings; the bulk of interest payments do not go to them. As such, interest is the dependent factor and so "waiting" cannot explain interest. Rather, interest is product of social inequality and the social relationships produced by an economy. Lenders lend because they have the funds to do so while borrowers borrow because without money now they may not be around later. As those with funds are hardly going without by lending, it does not make much sense to argue that they would spend even more today without the temptation of more income later.

 

To put this point differently, the capitalist proponents of interest only consider "postponing consumption" as an abstraction, without making it concrete. For example, a capitalist may "postpone consumption" of his 10th Rolls Royce because he needs the money to upgrade some machinery in his factory; whereas a single mother may have to "postpone consumption" of food or adequate housing in order to attempt to better take care of her children. The two situations are vastly different, yet the capitalist equates them. This equation implies that "not being able to buy anything you want" is the same as "not being able to buy things you need", and is thus skewing the obvious difference in costs of such postponement of consumption!

 

Thus Proudhon's comments that the loaning of capital "does not involve an actual sacrifice on the part of the capitalist" and so "does not deprive himself. . . of the capital which be lends. He lends it, on the contrary, precisely because the loan is not a deprivation to him; he lends it because he has no use for it himself, being sufficiently provided with capital without it; be lends it, finally, because he neither intends nor is able to make it valuable to him personally, -- because, if he should keep it in his own hands, this capital, sterile by nature, would remain sterile, whereas, by its loan and the resulting interest, it yields a profit which enables the capitalist to live without working. Now, to live without working is, in political as well as moral economy, a contradictory proposition, an impossible thing." [interest and Principal: A Loan is a Service]

 

In other words, contra Marshall, saving is not a sacrifice for the wealthy and, as such, not deserving a reward. Proudhon goes on:

 

 

 

 

"The proprietor who possesses two estates, one at Tours, and the other at Orleans, and who is obliged to fix his residence on the one which he uses, and consequently to abandon his residence on the other, can this proprietor claim that he deprives himself of anything, because he is not, like God, ubiquitous in action and presence? As well say that we who live in Paris are deprived of a residence in New York! Confess, then, that the privation of the capitalist is akin to that of the master who has lost his slave, to that of the prince expelled by his subjects, to that of the robber who, wishing to break into a house, finds the dogs on the watch and the inmates at the windows."

 

Given how much income this "abstinence" or "waiting" results in, we can only conclude that it is the most painful of decisions possible for a multi-millionaire to decide not to buy that fifth house and instead save the money. The effort to restrain themselves from squandering their entire fortunes all at once must be staggering. In the capitalist's world, an industrialist who decides not to consume a part of their riches "suffers" a cost equivalent to that of someone who postpones consumption of their meagre income to save enough to get something they need. Similarly, if the industrialist "earns" hundred times more in interest than the wage of the worker who toils in their workplace, the industrialist "suffers" hundred times more discomfort living in his palace than, say, the coal miner does working at the coal face in dangerous conditions or the worker stuck in a boring McJob they hate. The "disutility" of postponing consumption while living in luxury is obviously 100 times greater than the "disutility" of, say, working for a living and so should be rewarded appropriately.

 

As there is no direct relationship between interest received and the "sacrifice" involved (if anything, it is an inverse relationship), the idea that interest is the reward for waiting is simply nonsense. You need be no anarchist to come to this obvious conclusion. It was admitted as much by a leading capitalist economist and his argument simply echoes Proudhon's earlier critique:

 

 

 

 

"the existence and height of interest by no means invariably correspond with the existence and the height of a 'sacrifice of abstinence.' Interest, in exceptional cases, is received where there has been no individual sacrifice of abstinence. High interest is often got where the sacrifice of the abstinence is very trifling -- as in the case of [a] millionaire -- and 'low interest' is often got where the sacrifice entailed by the abstinence is very great. The hardly saved sovereign which the domestic servant puts in the savings bank bears, absolutely and relatively, less interest than the lightly spared thousands which the millionaire puts to fructify in debenture and mortgage funds. These phenomena fit badly into a theory which explains interest quite universally as a 'wage of abstinence.'" [Eugen von Böhm-Bawerk, Capital and Interest, p. 277]

 

All in all, as Joan Robinson pointed out, "that the rate of interest is the 'reward for waiting' but 'waiting' only means owning wealth . . . In short, a man who refrains from blowing his capital in orgies and feasts can continue to get interest on it. This seems perfectly correct, but as a theory of distribution it is only a circular argument." [Contributions to Modern Economics, p. 11] Interest is not the reward for "waiting," rather it is one of the (many) rewards for being rich. This was admitted as much by Marshall himself, who noted that the "power to save depends on an excess of income over necessary expenditure; and this is greatest among the wealthy." [Op. Cit., p. 229]

 

Little wonder, then, that neo-classical economists introduced the term waiting as an "explanation" for returns to capital (such as interest). Before this change in the jargon of economics, mainstream economists used the notion of "abstinence" (the term used by Nassau Senior) to account for (and so justify) interest. Just as Senior's "theory" was seized upon to defend returns to capital, so was the term "waiting" after it was introduced in the 1880s. Interestingly, while describing exactly the same thing, "waiting" became the preferred term simply because it had a less apologetic ring to it. Both describe the "sacrifice of present pleasure for the sake of future" yet, according to Marshall, the term "abstinence" was "liable to be misunderstood" because there were just too many wealthy people around who received interest and dividends without ever having abstained from anything. As he admitted, the "greatest accumulators of wealth are very rich persons, some [!] of whom live in luxury, and certainly do not practise abstinence in that sense of the term in which it is convertible with abstemiousness." So he opted for the term "waiting" because there was "advantage" in its use to describe "the accumulation of wealth" as the "result of a postponement of enjoyment." [Op. Cit., pp. 232-3] This is particularly the case as socialists had long been pointing out the obvious fact that capitalists do not "abstain" from anything.

 

The lesson is obvious, in mainstream economics if reality conflicts with your theory, do not reconsider the theory, change its name!

 

The problems of "waiting" and "abstinence" as the source of interest becomes even clearer when we look at inherited wealth. Talking about "abstinence" or "waiting" when discussing a capitalist inheriting a company worth millions is silly. Senior recognised this, arguing that income in this case is not profit, but rather "has all the attributes of rent." [Op. Cit., p. 129] That such a huge portion of capitalist revenue would not be considered profit shows the bankruptcy of any theory which see profit as the reward for "waiting." However, Senior's argument does show that interest payments need not reflect any positive contribution to production by those who receive it. Like the landlord receiving payment for owning a gift of nature, the capitalist receives income for simply monopolising the work of previous generations and, as Smith put it, the "rent of land, considered as the price paid for the use of land, is naturally a monopoly price." [The Wealth of Nations, p. 131]

 

Even capitalist economists, while seeking to justify interest, admit that it "arises independently of any personal act of the capitalist. It accrues to him even though he has not moved any finger in creating it . . . And it flows without ever exhausting that capital from which it arises, and therefore without any necessary limit to its continuance. It is, if one may use such an expression in mundane matters, capable of everlasting life." [böhm-Bawerk, Op. Cit., p. 1] Little wonder we argued in section C.2.3 that simply owning property does not justify non-labour income.

 

In other words, due to one decision not to do anything (i.e. not to consume), a person (and his or her heirs) may receive forever a reward that is not tied to any productive activity. Unlike the people actually doing the work (who only get a reward every time they "contribute" to creating a commodity), the capitalist will get rewarded for just one act of abstention. This is hardly a just arrangement. As David Schweickart has pointed out, "Capitalism does reward some individuals perpetually. This, if it is to be justified by the canon of contribution, one must defend the claim that some contributions are indeed eternal." [Against Capitalism, p. 17] As we noted in section C.1.1, current and future generations should not be dominated by the actions of the long dead.

 

The "waiting" theory, of course, simply seeks to justify interest rather than explain its origin. If the capitalist really did deserve an income as a reward for their abstinence, where does it come from? It cannot be created passively, merely by the decision to save, so interest exists because the exploitation of labour exists. As Joan Robinson summarised:

 

 

 

 

"Obviously, the reward of saving is owning some more wealth. One of the advantages, though by no means the only one, of owning wealth is the possibility of getting interest on it.

 

"But why is it possible to get interest? Because businesses make profits and are willing to borrow." [Collected Economic Papers, vol. 5, p. 36]

 

This is the key. If ones ability and willingness to "wait" is dependent on social facts (such as available resources, ones class, etc.), then interest cannot be based upon subjective evaluations, as these are not the independent factor. In other words, saving does not express "waiting", it simply expresses the extent of inequality and interest expresses the fact that workers have to sell their labour to others in order to survive:

 

 

 

 

"The notion that human beings discount the future certainly seems to correspond to everyone's subjective experience, but the conclusion drawn from it is a non sequitor, for most people have enough sense to want to be able to exercise consuming power as long as fate permits, and many people are in the situation of having a higher income in the present than they expect in the future (salary earners will have to retire, business may be better now than it seems likely to be later, etc.) and many look beyond their own lifetime and wish to leave consuming power to their heirs. Thus a great many . . . are eagerly looking for a reliable vehicle to carry purchasing power into the future . . . It is impossible to say what price would rule if there were a market for present versus future purchasing power, unaffected by any other influence except the desires of individuals about the time-pattern of their consumption. It might will be such a market would normally yield a negative rate of discount . . .

 

"The rate of interest is normally positive for a quite different reason. Present purchasing power is valuable partly because, under the capitalist rules of the game, it permits its owner . . . to employ labour and undertake production which will yield a surplus of receipts over costs. In an economy in which the rate of profit is expected to be positive, the rate of interest is positive . . . [and so] the present value of purchasing power exceeds its future value to the corresponding extent. . . This is nothing whatever to do with the subjective rate of discount of the future of the individual concerned. . ." [The Accumulation of Capital, p. 395]

 

So, interest has little to do with "waiting" and a lot more to do with the inequalities associated with the capitalist system. In effect, the "waiting" theory assumes what it is trying to prove. Interest is positive simply because capitalists can appropriate surplus value from workers and so current money is more valuable than future money because of this fact. Ironically, therefore, the pro-capitalist theories of who abstains are wrong, "since saving is mainly out of profits, and real wages tend to be lower the higher the rate of profit, the abstinence associated with saving is mainly done by the workers, who do not receive any share in the 'reward.'" [Robinson, Op. Cit., p. 393]

 

In other words, "waiting" does not produce a surplus, labour does. As such, to "say that those who hold financial instruments can lay claim to a portion of the social product by abstaining or waiting provides no explanation of what makes the production process profitable, and hence to what extent interest claims or dividends can be paid. Reliance on a waiting theory of the return to capital represented nothing less than a reluctance of economists to confront the sources of value creation and analyse the process of economic development." [William Lazonick, Competitive Advantage on the Shop Floor, p. 267] This would involve having to analyse the social relations between workers and managers/bosses on the shop floor, which would be to bring into question the whole nature of capitalism and any claims it was based upon freedom.

 

To summarise, the idea that interest is the "reward" for waiting simply ignores the reality of class society and, in effect, rewards the wealthy for being wealthy. Neo-classical economics implies that being rich is the ultimate disutility. The hardships ("sacrifices") of having to decide to consume or invest their riches weighs as heavily on the elite as they do on the scales of utility. Compared to, say, working in a sweatshop, fearing unemployment (sorry, maximising "leisure") or not having to worry about saving (as your income just covers your out-goings) it is clear which are the greatest sacrifices and which are rewarded accordingly under capitalism.

 

Much the same argument can be applied to "time-preference" theories of profit. These argue that profits are the result of individuals preferring present goods to future ones. Capitalists pay workers wages, allowing them to consumer now rather than later. This is the providing of time and this is rewarded by profits. This principle was first stated clearly by Eugen von Böhm-Bawerk and has been taken as the basis of the "Austrian" school of capitalist economics (see section C.1.6). After rejecting past theories of interest (including, as noted above, "abstinence" theories, which he concluded the socialists were right to mock), Böhm-Bawerk argued that profits could only by explained by means of time preference:

 

 

 

 

"The loan is a real exchange of present goods against future goods . . . present goods invariably possess a greater value than future goods of the same number and kind, and therefore a definite sum of present goods can, as a rule, only be purchased by a larger sum of future goods. Present goods possess an agio in future goods. This agio is interest. It is not a separate equivalent for a separate and durable use of the loaned goods, for that is inconceivable; it is a part equivalent of the loaned sum, kept separate for practical reasons. The replacement of the capital + the interest constitutes the full equivalent." [Capital and Interest, p. 259]

 

For him, time preference alone is the reason for profit/interest due to the relative low value of future goods, compared to present goods. Capital goods, although already present in their physical state, are really future goods in their "economic nature" as is labour. This means that workers are paid the amount their labour creates in terms of future goods, not current goods. This difference between the high value of current goods and low value of future goods is the source of surplus value:

 

 

 

 

"This, and nothing else, is the foundation of the so-called 'cheap' buying of production instruments, and especially of labour, which the Socialists rightly explain as the source of profit on capital, but wrongly interpret . . . as the result of a robbery or exploitation of the working classes by the propertied classes." [The Positive Theory of Capital, p. 301]

 

The capitalists are justified in keeping this surplus value because they provided the time required for the production process to occur. Thus surplus value is the product of an exchange, the exchange of present goods for future ones. The capitalist bought labour at its full present value (i.e. the value of its future product) and so there is no exploitation as the future goods are slowly maturing during the process of production and can then be sold at its full value as a present commodity. Profit, like interest, is seen as resulting from varying estimates of the present and future needs.

 

As should be obvious, our criticisms of the "waiting" theory of interest apply to this justification of profits. Money in itself does not produce profit any more than interest. It can only do that when invested in actual means of production which are put to work by actual people. As such, "time preference" only makes sense in an economy where there is a class of property-less people who are unable to "wait" for future goods as they would have died of starvation long before they arrived.

 

So it is the class position of workers which explains their time preferences, as Böhm-Bawerk himself acknowledged. Thus capitalism was marked by an "enormous number of wage-earners who cannot employ their labour remuneratively by working on their own account, and are accordingly, as a body, inclined and ready to sell the future product of their labour for a considerably less amount of present goods." So, being poor, meant that they lacked the resources to "wait" for "future" goods and so became dependent (as a class) on those who do. This was, in his opinion the "sole ground of that much-talked-of and much-deplored dependence of labourer on capitalist." It is "only because the labourers cannot wait till the roundabout process . . . delivers up its products ready for consumption, that they become economically dependent on the capitalists who already hold in their possession what we have called 'intermediate products.'" [Op. Cit., p. 330 and p. 83]

 

Böhm-Bawerk, ironically, simply repeats (although in different words) and agrees with the socialist critique of capitalism which, as we discussed in section C.2.2, is also rooted in the class dependence of workers to capitalists (Bakunin, for example, argued that the capitalists were "profiting by the economic dependence of the worker" in order to exploit them by "turn[ing] the worker into a subordinate." [The Political Philosophy of Bakunin, p. 188]). The difference is that Böhm-Bawerk thinks that the capitalists deserve their income from wealth while anarchists, like other socialists, argue they do not as they simply are being rewarded for being wealthy. Böhm-Bawerk simply cannot bring himself to acknowledge that an individual's psychology, their subjective evaluations, are conditioned by their social circumstances and so cannot comprehend the class character of capitalism and profit. After all, a landless worker will, of course, estimate the "sacrifice" or "disutility" of selling their labour to a master as much less than the peasant farmer or artisan who possesses their own land or tools. The same can be said of workers organised into a union.

 

As such, Böhm-Bawerk ignores the obvious, that the source of non-labour income is not in individual subjective evaluations but rather the social system within which people live. The worker does not sell her labour power because she "underestimates" the value of future goods but because she lacks the means of obtaining any sort of goods at all except by the selling of her labour power. There is no real choice between producing for herself or working for a boss -- she has no real opportunity of doing the former at all and so has to do the latter. This means that workers sells their labour (future goods) "voluntarily" for an amount less than its value (present goods) because their class position ensures that they cannot "wait." So, if profit is the price of time, then it is a monopoly price produced by the class monopoly of wealth ownership under capitalism. Needless to say, as capital is accumulated from surplus value, the dependence of the working class on the capitalists will tend to grow over time as the "waiting" required to go into business will tend to increase also.

 

An additional irony of Böhm-Bawerk's argument is that is very similar to the "abstinence" theory he so rightly mocked and which he admitted the socialists were right to reject. This can be seen from one of his followers, right-"libertarian" Murray Rothbard:

 

 

 

 

"What has been the contribution of these product-owners, or 'capitalists', to the production process? It is this: the saving and restriction of consumption, instead of being done by the owners of land and labour, has been done by the capitalists. The capitalists originally saved, say, 95 ounces of gold which they could have then spent on consumers' goods. They refrained from doing so, however, and, instead, advanced the money to the original owners of the factors. They paid the latter for their services while they were working, thus advancing them money before the product was actually produced and sold to the consumers. The capitalists, therefore, made an essential contribution to production. They relieved the owners of the original factors from the necessity of sacrificing present goods and waiting for future goods." [Man, Economy, and State, pp. 294-95]

 

This meant that without risk, "[e]ven if financial returns and consumer demand are certain, the capitalists are still providing present goods to the owners of labour and land and thus relieving them of the burden of waiting until the future goods are produced and finally transformed into consumers' goods." [Op. Cit., p. 298] Capitalists pay out, say, £100,000 this year in wages and reap £200,000 next year not because of exploitation but because both parties prefer this amount of money this year rather than next year. Capitalists, in other words, pay out wages in advance and then wait for a sale. They will only do so if compensated by profit.

 

Rothbard's argument simply assumes a class system in which there is a minority of rich and a majority of property-less workers. The reason why workers cannot "wait" is because if they did they would starve to death. Unsurprisingly, then, they prefer their wages now rather than next year. Similarly, the reason why they do not save and form their own co-operatives is that they simply cannot "wait" until their workplace is ready and their products are sold before eating and paying rent. In other words, their decisions are rooted in their class position while the capitalists (the rich) have shouldered the "burden" of abstinence so that they can be rewarded with even more money in the future. Clearly, the time preference position and the "waiting" or "abstinence" perspective are basically the same (Rothbard even echoes Senior's lament about the improvident working class, arguing that "the major problem with the lower-class poor is irresponsible present-mindedness." [For a New Liberty, p. 154]). As such, it is subject to the same critique (as can be found in, say, the works of a certain Eugen von Böhm-Bawerk).

 

In other words, profit has a social basis, rooted in the different economic situation of classes within capitalism. It is not the fact of "waiting" which causes profits but rather the monopoly of the means of life by the capitalist class which is the basis of "economic dependence." Any economic theory which fails to acknowledge and analyse this social inequality is doomed to failure from the start.

 

To conclude, the arguments that "waiting" or "time preference" explain or justify surplus value are deeply flawed simply because they ignore the reality of class society. By focusing on individual subjective evaluations, they ignore the social context in which these decisions are made and, as a result, fail to take into account the class character of interest and profit. In effect, they argue that the wealthy deserve a reward for being wealthy. Whether it is to justify profits or interest, the arguments used simply show that we have an economic system that works only by bribing the rich!

 

But fortunately, working capital doesn't actually do anything, and it's the labor of the last guy that touches the car (presumably the guy that turns the key and drives the Chevy off the conveyor) that actually creates the value.

 

Learned that from Marcell.

 

 

 

If I lend you $100 that you agree to pay back, then you refuse to pay me back, then I've been !@#$ed over.

 

You. !@#$ing. Idiot.

 

 

no, i agree with paying back the 100$, NOT INTEREST! that is a reward for doing nothing.

[dayman]

lol i read that wall of text

 

/sarcasm

[DC Tom]

<snip> <stop posting copyrighted material, dumbass>

 

Stop posting this bull ****, and just link to the anarchists library. It'll be easier on everyone.

 

no, i agree with paying back the 100$, NOT INTEREST! that is a reward for doing nothing.

 

1) I didn't do nothing, I loaned you $100.

2) Even so, you just agreed with my original point: the GM lenders were royally !@#$ed.

[meazza]

lol i read that wall of text

 

/sarcasm

 

And I thought Pyrite gal was bad.

[DC Tom]

And I thought Pyrite gal was bad.

 

Pyrite Gal was original, at least. When he wrote, he WROTE. Original works.

[meazza]

Pyrite Gal was original, at least. When he wrote, he WROTE. Original works.

 

So it was a guy?

[DC Tom]

So it was a guy?

 

Yep.

 

Hope I didn't cause you any sort of a "Crying Game" moment with that news.

[meazza]

Yep.

 

Hope I didn't cause you any sort of a "Crying Game" moment with that news.

 

No, MDP is giving me crying game moments since I now know I'm a slave working for the .00001%

[MARCELL DAREUS POWER]

Stop posting this bull ****, and just link to the anarchists library. It'll be easier on everyone.

 

 

 

1) I didn't do nothing, I loaned you $100.

2) Even so, you just agreed with my original point: the GM lenders were royally !@#$ed.

 

 

no, your effort was the 100$, not my labor.

 

when you loan me a hammer, and i create a house, you do not deserve or own the house.

 

your reward was the hammer you created. or the 100$ you got from working, not my work.

 

if this were valid, i could buy a candybar at walmart and therefore own all walmart.

Edited May 25, 2012 by MARCELL DAREUS POWER

[DC Tom]

no, your effort was the 100$, not my labor.

 

Great. You've admitted that my providing you with capital represents actual effort. Now what do I get in return for my effort?

 

when you loan me a hammer, and i create a house, you do not deserve or own the house.

 

your reward was the hammer you created. or the 100$ you got from working, not my work.

 

No, my reward for creating the hammer is: I have a !@#$ing hammer. What's my reward for letting you borrow my !@#$ing hammer?

 

if this were valid, i could buy a candybar at walmart and therefore own all walmart.

 

Actually, you mean "I could buy a candy bar and own all of M&M Msrs." You're already confused enough with the fractional distinction between consumer and producer, don't confuse yourself further by introducing a retailer into the mix to broker the consumer-producer relationship.

 

And even then...the only person claiming anything remotely like that is you. The rest of us would simply claim that you own a candy bar that you bought at a retailer who was supplied by M&M Mars.

[IDBillzFan]

I believe this to be correct, and probably what LABILLZ was refering too...

Pretty much. Unlike the president, most business people aren't stupid. The problem right now is not so much his "people with money need to play more fairly" stupidity but also his inability to even acknowledge the pending craphole that is our debt and deficit that has ANYONE with money putting it to the side and and plodding along with no plans to expand. This means nothing to Obama as evidenced by the fact that he commissions a bipartisan group to come up with suggestions, and he ignored it all.

 

Think about it. Imagine you have a boss. He calls everyone together and says "The company is failing. We must come up with ways to cut costs and be more innovative." So the best people in the business and company get together for a few weeks and come back with a solid plan which everyone agrees are excellent first steps to get the company back on track.And instead of acting on their recommendations, your boss says "Thanks, but I think what I really need to do is have a company golfing picnic instead."

 

Obama is that kind of boss. Lost, leaderless, and doing things strictly so people will think his activity somehow equates to productivity.

[DC Tom]

Pretty much. Unlike the president, most business people aren't stupid. The problem right now is not so much his "people with money need to play more fairly" stupidity but also his inability to even acknowledge the pending craphole that is our debt and deficit that has ANYONE with money putting it to the side and and plodding along with no plans to expand. This means nothing to Obama as evidenced by the fact that he commissions a bipartisan group to come up with suggestions, and he ignored it all.

 

Think about it. Imagine you have a boss. He calls everyone together and says "The company is failing. We must come up with ways to cut costs and be more innovative." So the best people in the business and company get together for a few weeks and come back with a solid plan which everyone agrees are excellent first steps to get the company back on track.And instead of acting on their recommendations, your boss says "Thanks, but I think what I really need to do is have a company golfing picnic instead."

 

Obama is that kind of boss. Lost, leaderless, and doing things strictly so people will think his activity somehow equates to productivity.

 

But only for the people in the mailroom. Paid for out of the salaries of your top 3 sales executives.

[MARCELL DAREUS POWER]

Great. You've admitted that my providing you with capital represents actual effort. Now what do I get in return for my effort?

 

 

 

No, my reward for creating the hammer is: I have a !@#$ing hammer. What's my reward for letting you borrow my !@#$ing hammer?

since you are not working, nothing. i simply give the hammer back. permission is not a productive act. its simply a position of power/hierachy.

 

 

 

 

 

Actually, you mean "I could buy a candy bar and own all of M&M Msrs." You're already confused enough with the fractional distinction between consumer and producer, don't confuse yourself further by introducing a retailer into the mix to broker the consumer-producer relationship.

 

And even then...the only person claiming anything remotely like that is you.

The rest of us would simply claim that you own a candy bar that you bought at a retailer who was supplied by M&M Mars.

 

this is the equivalent of me lending you a pencil, and then you draw a wonderful bob ross drawing. do i now own the drawing? i worked for the pencil, NOT THE PAINTING! permission is not work.

Edited May 25, 2012 by MARCELL DAREUS POWER

[IDBillzFan]

Could you all lead the monster back where he's only polluting one thread? Thank you.

[MARCELL DAREUS POWER]

Could you all lead the monster back where he's only polluting one thread? Thank you.

 

its sad when people like you cant handle reality hitting you in the face. you now realize capitalism is a pyramid scheme. its a welfare state for the rich.

 

its to shocking to your system that the poor this whole time were giving welfare to the rich.

 

Great. You've admitted that my providing you with capital represents actual effort. Now what do I get in return for my effort?

 

 

 

No, my reward for creating the hammer is: I have a !@#$ing hammer. What's my reward for letting you borrow my !@#$ing hammer?

 

lending is not work. you only deserve your hammer back.

 

Actually, you mean "I could buy a candy bar and own all of M&M Msrs." You're already confused enough with the fractional distinction between consumer and producer, don't confuse yourself further by introducing a retailer into the mix to broker the consumer-producer relationship.

 

And even then...the only person claiming anything remotely like that is you. The rest of us would simply claim that you own a candy bar that you bought at a retailer who was supplied by M&M Mars.

Edited May 25, 2012 by MARCELL DAREUS POWER