Saturday, February 9, 2019

There Is As Much Sense in Saying That Capital Exploits Labor As in Saying That Labor Exploits Capital, or That Electricity Exploits Roofing Tiles

One of the many fateful consequences of marginal productivity is that it sweeps away such theories as Marx's which see interest as consisting of 'unpaid labor.' Under competitive market conditions, a worker tends to be paid what his labor contributes to output, no more and no less. The same goes for the owner of a machine or a piece of real estate. The analysis demonstrates the symmetry of all types of inputs: there is as much sense in saying that capital exploits labor as in saying that labor exploits capital, or that electricity exploits roof tiles. Of course, this does not touch the ethical arguments of socialists who acknowledge that non-labor factors make a determinate contribution to output, analytically separable from labor's contribution, yet still contend that it is illegitimate for anyone to own capital or land and reap the payment for their services. But that is not the position of Marx, nor of many other socialists. They specifically contend that, given a resource-owner's right to the product of the resource he contributes to production, positive net incomes to non-labor resource-owners are entirely created by owners of labor resources. It certainly clarifies the discussion to recognize that this position is untenable.

--David Ramsay Steele, From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation (La Salle, IL: Open Court Publishing, 1992), Kobo e-book.


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