[ChrisLomont]

>All of that capital was produced by labor

Not all capital is the result of labor. Economists put around a third of modern capital to be the result of labor, around a third from leveraging capital, and around a third created by technology.

Labor, investment, and technology all drive new capital creation.

[adamsea]

Where does technology come from?

Labor. The labor of knowledge workers, which is what software engineers are called by economists ...

[ChrisLomont]

Yes, labor is a component. So is capital. And, recursively, so is technology. That is why economists don't claim all value is created solely by labor, and why econometrics measures the contribution of various components.

Where does Labor come from? From being taught skills - and that took capital to train someone before their labor could add value. All pieces are interrelated, and modern economies cannot work by ignoring that all pieces are needed.

>The labor of knowledge workers, which is what software engineers are called by economists

And those knowledge workers did their labor with zero capital investment before by an employer (or themselves)? Computers, tools, infrastructure all were provided so the knowledge worker could work, and those pieces required capital before the knowledge worker could produce labor.

I have hard time understanding why so many people cannot accept that capital is a valid and necessary input to creating things, including creating more capital, which can then be invested in yet further productive pursuits.

[sudosysgen]

Technology can be reduced to labour, capital, and previous technology. Capital can be reduced to labour, capital, and land.

The first unit of technology was the product of labour and capital.

The first unit of capital was the product of land and labour.

If you operate recursively until the first unit of capital and the first unit of technology you end up finding that all value is the product of land and labour.

There are certainly a great many economists that agree with this definition. Actually, a famous economist gave a talk at Google that made this exact point!

[ChrisLomont]

>If you operate recursively until the first unit of capital and the first unit of technology you end up finding that all value is the product of land and labour.

That's simply untrue. When a stock tanks, billions in value is lost. When a stock surges, billions can be gained. That sudden change is not the product of labor, nor the destuction of labor, but a capital multiplier from belief.

Also, arguing that since the first of any process happened in some manner implies that everything later in the process is created the same way isn't true.

>There are certainly a great many economists that agree with this definition

A great many are Austrian school, and would argue things like this, but this is overall a tiny fraction, and none are among the world's top economists. Do you claim the majority or even more than a small fraction of economists would agree with this definition?

>Actually, a famous economist gave a talk at Google

Name?

If what you're arguing for is the Labor Theory of Value [1], which it sounds like, it's widely and almost universally discredited. Every model macro model I can think of creates value in the manner I described above. Some intro examples [2]

Here's another take hitting more modern economics [3]. The "land and labor" is an ancient and not very tenable argument from this modern viewpoint.

[1] https://en.wikipedia.org/wiki/Labor_theory_of_value

[2] https://en.wikipedia.org/wiki/Macroeconomic_model

[3] https://en.wikipedia.org/wiki/Factors_of_production

[sudosysgen]

I don't understand why you refuse to engage with the argument. Yes, capital can create value, and the inefficiency of price discovery in stock markets can lead to fluctuations in the price of a stock.

But ultimately, that capital came solely from labour and natural resources. If you follow the chain of value, you invariantly end up at labour and nature, because those are the only two things that can actually create value from nothing else.

And no, this isn't the LTV. Read the comment carefully. Even if you admit that capital can create value, the capital still had to come from somewhere, and ultimately that somewhere is labour.

[adamsea]

So confused. The argument is simple. Something of value requires effort to create. That effort is called labor. One way we quantify the value created by the labor of people is with money.

I think the argument can be boiled down to, “What is an army without soldiers? Or workers to maintain the robots?”

[adamsea]

This. At the bottom is someone doing work, i.e. labor. Capital is a force multiplier of labor, so to speak, and also capital is originally created by labor.