[theohofpleasure]

It's a company which makes the profit. If you started a company and sold the tool for $500 and the company paid you $500 then there is no more profit for the company. If the company paid you $250, only then can they claim to have made $250 profit.

Hence, profits are nothing more than unpaid wages.

[username90]

A goes and buys flour for 100$ from farmer B. Then A goes and pay independent baker C 100$ to make bread from the flour. Then A goes and pay independent retailer D 100$ to sell the bread for $500.

Each cycle A makes $200 in profit, nobody loses out as everyone agreed to the terms.

This is enough margin for A to pay an independent manager $100 each time he repeats the process, ultimately netting A $100 without A doing anything. Is A taking advantage of everyone here? No, of course not, everyone still agreed to all the terms, A was just aware of a business opportunity the others were not, risked his own money paying for goods and labor he wasn't sure he could sell and now everyone is richer as a result.

This is how businesses works. Of course in practice sometimes businesses does scummy things, but that is why we have laws which are meant to ensure that all businesses are net positive for society. If a business is not net positive then we send the police to them and shut them down. That doesn't work when businesses have politicians in their pockets, but it works in parts of the world where workers have more political influence.

[anigbrowl]

In reality most people are not sole traders and the market does not operate under conditions of perfect competition. Over-simplification is not helpful; I could describe a similar virtuous circle based on entirely different economic arrangements, and it would be just as facile.

[johncalvinyoung]

There's a word for this in economics. The 'normal profit' is the 'wages' of the entrepreneur and risk-taker -> the return on the money invested or put at risk, and the time and effort of the entrepreneur to build the business. Nothing immoral about that.

[_carl_jung]

You make a philosophical leap about rightful ownership when you say "unpaid wages". I don't agree with that leap.

Further, your definition doesn't include situations in which there is no employee (such as the one I gave).

It is more correct to say that the profit is the gains made to some agent in a market transaction.

[theohofpleasure]

I don't entirely agree either. I was just expanding on the idea. However, when there is no employee, such as in the example you gave, there is also no profit. What you have called profit is actually your wage. Do I make a profit when I go to work for a company? No, I earn a wage.

[tathougies]

You can easily think of your wage minus your yearly expenditures as your profit, which, if you're doing things right, should be positive.

[BuckRogers]

It's never positive as your life is worth far more than those wages in all cases. That's why no one can be considered overpaid, or we would limit payment to CEOs. Thus wages can only be considered at best, a trade.

That's why I asserted that profits are nothing more than unpaid wages. Since it's objectively a trade of your life for wages, paying others less than the value you produced is simply not valuing human life. The worst sort of theft.

For your example, it doesn't hold up because most people only make enough to live, there's nothing to optimize other than going "full ramen". While others have far more than necessary for basic food, shelter and medical care. Those who are just-surviving aren't doing anything wrong, when an economic ponzi scheme simply doesn't value their life by paying them less than the value they produce.

[tathougies]

> That's why I asserted that profits are nothing more than unpaid wages. Since it's objectively a trade of your life for wages, paying others less than the value you produced is simply not valuing human life. The worst sort of theft.

This is ridiculous. As someone who has, in the past, run their own business, and now works for a living, the fact of the matter is that my employer does a lot of work I am unwilling / uninterested in doing, such as making sure there is money to pay me and advertising the product to others, as well as figuring out how to accept payments, get the requisite insurance etc.

The profit retained by the company is the share agreed upon in advance paid to those who, through their own labor, at some point made the company possible, whether it be by direct action, or by stored labor output from a previous position (i.e. capital).

[aguyfromnb]

>paying others less than the value you produced is simply not valuing human life. The worst sort of theft.

And yet, both the planet and individual people are far wealthier today than when they were producing and receiving "full value" for their labour.

[BuckRogers]

That’s extremely loaded, and not true. I’ll unpack it all if someone is curious but in short your statement is only true if you define wealth in terms of faith-based fiat currency or define wealth as central bank issued scrip. There’s a reason credit is readily available. It’s a scheme that only works until it doesn’t, which is objective evidence that it makes for a very hollow definition of wealth.

[claudiawerner]

It should be worth noting that this is a pretty strong (and I don't think defensible in the case given) claim to make - you're echoing the Marxist/socialist objection to profits (one which I may agree with) but Marx (nor anyone else) ever claimed that this happens without employing wage labour. For profits to be nothing more than unpaid wages, we need to be talking about at least one waged worker who applies labour, and his product is appropriated by his employer.

[_carl_jung]

For what it's worth, the principle objection I have to the Marxist position on wage and profit is the redefinition of the term "exploitation".

It muddies the argument because it enables a circular argument whereby the transaction of employment can be labelled as exploitative, where it's easy to defend against the claim of exploitation if the original definition of the word is preserved.

In other words, profit generation as it comes from an employer/employee relationship is Exploitative but not exploitative.

[claudiawerner]

The definition of "exploitation" is a technical one; even those who argue against the Marxist claim actually take this in stride, for instance, there is an objection to the Marxist idea of exploitation that Marx's selection of labour-power as the exploited commodity is arbitrary, thus we can say that any commodity (such as steel, peanuts or shoes) is "exploited" - the Marxist reply to this isn't to say "well, exploitation doesn't mean that, exploitation is evil and you can't be evil toward inanimate objects".

In other words, I think the definiton used by Marxists is somewhere between the two. It not only means to use something up (to exploit resources) but also the Marxist idea that exploitation relates to workers being forced (by man-made historically arisen structures, that is) to sell their labour-power.

Nevertheless, newer schools of Marxism (such as the ones from the 80s which attempted to use neoclassical economic models) have axiomatic definitions of exploitation. For some simplified models of a commodity economy, researchers such as Veneziani and Yoshihara (and Roemer on different grounds) prove that the axiomatic definition of exploitation is satisfied. Defined axiomatically, we can escape the talk about morality. But you can easily rephrase Marx without the word "exploitation" - the claim is, rather simply, that there is some amount of labour that is unpaid, this labour forms the substance of surplus value, which is appropriated. No judgement, no morality, no right or wrong - that's just the fact, and of course it may well be a good thing(!) that workers are "exploited" - Marx certainly said as much, when writing that the capitalist's point of view, his idea of "fairness" is just as worhless as anyone else's.

[AnimalMuppet]

I could agree with almost everything in your last paragraph, but you're still using loaded words. "Appropriated", for instance. Even "unpaid" carries (perhaps just to me?) the implication that it should be paid.

I would describe the same thing like this: The workers plus tools (capital) create value. The workers don't get all the value produced; capital also gets a cut.

You can say that this is morally right. Or you can say that this is necessary, because the capital isn't invested out of the goodness of the capitalist's heart. We have to give them some payback if we want them to buy the tools. The alternative is to have only the tools that our in-house workers create, which is usually a sub-optimal situation.

Now, any given situation can still be exploitation of the workers (in the common rather than axiomatic sense), and still be morally wrong.

[ernst_klim]

>that there is some amount of labour that is unpaid

What is unpaid labor? If I employ a carpenter, and pay him $10 for a chair I later sell for $15, is this labor paid?

[claudiawerner]

The question is incomplete without knowing how the $15 and the $10 breaks down - if you paid, say $3 for the materials (C) and $10 for the labour (V), you'd sell at a $2 profit, Marx would say that assuming equivalent exchange of values on the market, neglecting the role of advertising and such, and assuming the chair is freely reproducible (i.e unencumbered by patents and trademarks, and not a one-of-a-kind item like a piece of artwork), the $2 is the monetary value of the surplus labour (S), also known as "unpaid" labour. This provides a rate of profit (or "rate of exploitation") r = S/(C+V) = 2/(3+10) = 0.153, the final product of course having a value of S+V+C, expressed, i.e 2+10+3 = $15.

[ernst_klim]

> the $2 is the monetary value of the surplus labour (S), also known as "unpaid" labour

What about risks and decision making, investing in the future products and potential failures? How much is "paid risk" and "unpaid labor", how to objectively evaluate that?

I would argue that $2 is paid risk, not unpaid labor, how to prove that that's not the case?

Also, if I paid you a salary, and than the product failed in the market, is it just according to marxists to ask your salary back, or, if the product was net loss, to ask you to pay for it as an employee?