The Case For Usury

[neverfox]

Well to be completely honest I do not really care for what Tucker or you declare is labor or worth compensation and what is not, no offense meant. Whatever is valued by people in so far as to warrant them voluntarily entering into contract for payment of that service or labor is fine with me. My eyebrow raises a bit whenever I hear discussion of what someone considers a legitimate laborer or significant contribution.

You misunderstand the point. It's not a normative concept. It's the concept of marginal economics, i.e. Austrians. It's simple empirical math.

Product = Capital + Land + Labor not Product = Capital + Capitalist + Land + Labor.

The capitalist as a person is not a necessary condition for the product. It's just a fact not a judgment. I also support people making contracts for what they want but not contracts that are fraudulent, i.e. they don't reflect real facts. At that point, it's a voluntary choice to accept the outcome by rewriting the contract to be fulfillable or backing out and getting back what one originally put in. The only problem for capitalist is the only fulfillable contract that gets them the product legitimately is to rent or sell their capital and then but the product from labor.

Well this is something now that I had been talking to Franc before about. The ownership of the product of ones labor. To my knowledge, this homesteading principle applies to the appropriation of unowned resources. In the example of a field owned by plough renter Joe, He owns the field and not the plow and is renting the use of the plow... unless he was strange enough to contract some other crop agreement as payment, which I say he is perfectly free to do if he pleases. But I think it pretty obvious that the plough is being rented as a tool in the process and of which the end result is not a part of.

Then you are saying what I'm saying. The plough owner doesn't earn any rights to the crop. But it doesn't matter that the plough didn't become "part of" the product. If I rent flour from you to make a cake, you don't own the cake. Rental is rental and capital is capital.

Then there is a case of a baker in Joe's bakery making cakes. He does not own the eggs, nor does he own the milk the flour the sugar the oven. None of these. In fact the ground upon which they are used is not even his, it is Joe's. Maybe even his funny little white hat and apron are the property of the Joe the baker here. Nothing he is using is actually his.

Nor does it need to be. Ownership of the used-up inputs only need determine to whom the liability for their use is owed.

Homesteading/mixing of labor/etc does not apply in this situation to make the product his because the principle applies to UNOWNED matter.

I don't base my point on homesteading principles. Locke is not my master in every word. I refer to the juridical imputation principle that says that contracts, to be valid, must reflect reality. But the situations involved in capitalist employment contracts don't. And since it doesn't, the contracts are invalid.

The person responsible for both using up inputs and for exerting labor appropriates the product. This much Locke knew. But what if the inputs are owned by someone else? Well, unless they in fact are the ones using them up, then they have actually loaned them out despite what the contract says. So the only normative principle here is that contracts should not lie about reality. Saying that you are the one responsible for using up the inputs and labor doesn't make it so. If I make a contract with you to sell you a widget, then give you a pseudo-widget instead, I can't claim I gave you a real widget just because the contract said I did.

When you use inputs that are someone else's you still appropriate the result being responsible for it but unlike unowned inputs you also appropriate a liability to the owner for the used up inputs. This is what was meant my whole product (not just the positive but the negative aspects of it). If the owner of inputs had to acquire part of the product, i.e. it was the fact that they used-up the inputs, then rental would not work the way you know it does. That's why we can rent things without fear of losing our work to someone else by some natural principle of fact. You can contract all day long and arrive at just about any end result. But the contract has to reflect de facto reality to be valid under challenge. Our employment contracts today are valid under challenge because our system is inconsistent and unlibertarian.

The responsibility of humans (which means that capitalist can't claim they used them as instruments) is is seen clearly if the action turns out to be criminal. The non-laboring capitalist would quickly acknowledge that all along the responsibility was the employee's and that he was indeed more than an instrument. The laborer appropriates the whole product which is both the positive output and the liability for used up inputs. In other words, all capital would be rationally sold or rented to labor knowing that responsibility isn't alienable otherwise you would be creating a contract that wouldn't be defensible if it were ever challenge in a free court that correctly recognizes that people can't be things (i.e. libertarian courts).

If this principle applied to owned property as well then a man could very well paint your house in the middle of the night and claim it his the next morn. I could dig a hole in your driveway and declare it mine. I could, while you are on holiday, reseed an entire field you labored on and proclaim it my own.

If you consistently use your plough example, then the house, driveway and field are not actually in the product (a shell of paint, a hole, a crop). So they aren't used up inputs. They would then never really be part of the loan to the worker. It's only when inputs are used-up that they would induce the next step of the analysis: the negative product, i.e. a liability for the used-up inputs. Ignoring that is the number one mistake in analysis by both capitalists and Marxist socialists. Not to mention is was done without voluntary agreement, leaving the perp open to defensive action.

I find no normative sense in which the Joe the baker owes our baker in question anything beyond which he contracts with Joe for.

It's a descriptive, not normative fact that you can't alienate responsibility for a result. Contracts can be invalid when they don't match descriptive facts. I highly suspect you believe that. That would mean supporting fraud. Now that is normative but it's a normative view that most libertarians share with mutualists: that contracts should reflect the facts. Crazy idea, I know.

Nor do I think it necessary to hold such a principle considering with freedom to contract and compete would invariably drive the wage or payment towards the worker towards the marginal revenue of his own product. Profit over the cost eats itself down close to cost through free entry of competing bakeries.

The net income would indeed be the same in a freed market. But net income isn't all that matters. It also matter that the contract is fulfillable in fact. To be fulfillable, capital would need to be rented or sold to labor and labor would have to manage the project. If the capitalist wants to run the show, he can do so as a worker, sharing in a partnership with the others. That's a separate "hat" from the capitalist one and would involve sharing decision-making power with them again as a rational choice that reflects people's desire not to enter into contracts that aren't defensible (except in today's state legal environment).

If you are interested it reading more, check out the book linked through "this" in my sig.

[Thorsmitersaw]

Then you are saying what I'm saying. The plough owner doesn't earn any rights to the crop. But it doesn't matter that the plough didn't become "part of" the product. If I rent flour from you to make a cake, you don't own the cake. Rental is rental and capital is capital.

The plough can be returned, the flour cannot. There is no similairity there. Rental of the plough is not the same as sale of flour. One is permanent transfer of property and the other is temporary.

There are two basic sorts of situations in the world where I bake a cake with other ingrediants that were obtained form others. One is where I go to the local market and pick up the ingrediants and the other is the Joes baker in question here.

In the first, it is explicitly made clear that the cake maker, me, the laborer, whatever the fuck you want to call him... has purchased the ingrediants voluntarily from the previous owner. I own the flour and milk and shit now because they voluntarily exchanged them to me for another commodity or something. Even if the market owner was a mad man and started handing out all his shit for free its an explicit giving-up of the title to the property, transfering it to me.

In the second there is no such explicit or even implied transfer of property ownership. There is one man with the same ingrediants allowing me to utilize them to do some task X with his property which he explicitly remains clear is still his regardless of what I do with it. (much like, I would think, renting a bike or loaning my jacket to you for the day. Its still my jacket its still my bike)

Then there is a case of a baker in Joe's bakery making cakes. He does not own the eggs, nor does he own the milk the flour the sugar the oven. None of these. In fact the ground upon which they are used is not even his, it is Joe's. Maybe even his funny little white hat and apron are the property of the Joe the baker here. Nothing he is using is actually his.

As I said, why isn't this stuff rented to the baker for cost? What's the libertarian principle or market principle for this?

What do you mean? What principle says I must sell these things to him or transfer their ownership to him in order to have him labor upon them? Allowing other people to use MY things, the products of MY labor, should not magically transfer title to the current user unless I explicitly say so. Otherwise your denying me the products of my labor and violating the homesteading principle...

Homesteading/mixing of labor/etc does not apply in this situation to make the product his because the principle applies to UNOWNED matter.

I don't base my point on homesteading purely. I base it on the market mechanism of appropriation that is clearly seen in the rental examples you mention above. When you use inputs that are someone else's you still appropriate the result but unlike unowned inputs you also appropriate a liability to the owner for the used up inputs. If the owner of inputs had to acquire part of the product by some transcendent libertarian principle, then rental would not work the way you know it does.

Explain. I fail to see how you can base it even partially on the homesteading principle since the property was already previously owned and so the homesteading principle flies out the window from the start...

But back to homesteading. It doesn't say that owners of property gain ownership when their property is used to make new property either.

No. That should be implied. If I bash my cellphone with a hammer right now I think its assumed since I own my hammer and my cellphone that I also own the new 'improved'(haha) cellphone which is really just a recombination of the same matter. The same should be true if I contract another to bash my phone into bits. He acts as if he is me with my property.

all property theory says, is that you are owed compensation for property you lose.

I disagree. A theif who robs me of my television owes me my television firstly, if this is impossible, he owes me the closest market equivelant and some compensation for the loss. What is assumed is that I am owed for their use or approriation, these matters of justice pertaining to what I am owed are derived from acknowledgement that others do not have any right to my property to begin with. You do not assume that you may go to a mans home and place $50k, $60k, even $1000k in his mail box, and drive away with his corvette.

It is a fact of reality that only humans have responsibility for their actions. When someone produces something using someone else's property as an input, they are responsible for the result being the only human that is marginal. This is seen clearly if the action turns out to be criminal. The non-laboring capitalist would quickly acknowledge that all along the responsibility was the employee's and that he was indeed more than an instrument. The laborer appropriates the whole product which is both the positive output and the liability for used up inputs. In other words, all capital would be rationally sold or rented to labor knowing that responsibility isn't alienable otherwise you would be creating a contract that wouldn't be defensible if it were ever challenge in a free court that correctly recognizes that people can't be things (i.e. libertarian courts).

I do not understand this line of argument. I cannot see how responsibility allows the man digging a hole in my drive way, with or without my permission, to become the new owner of it.

If this principle applied to owned property as well then a man could very well paint your house in the middle of the night and claim it his the next morn. I could dig a hole in your driveway and declare it mine. I could, while you are on holiday, reseed an entire field you labored on and proclaim it my own.

This is incorrect because you are ignoring the negative product. This is the number one mistake in analysis by both capitalists and Marxist socialists. What the painter gains is the paint job, not the house. What the digger gains is the hole, not the driveway. What the planter gains is the crop, not the field.

Well then I am going to have to say that sounds absurd. There was no explicit nor implicit agreement to allow that man to even engage in the activity with my property in the first place. The siding on my house does not become the bandit-painters property by virtue of him simply having performed the unwanted task....

As for the house, I don't consider it part of the paint job anyway. The paint job is on the house. But if it were, the painter would owe the negative product,i.e. the house or it's value to the homeowner.

So its not really a violation of property rights then to you? Would you extend the same courtesy to a man dumping toxic waste on my lawn? How about the graffiti artist/vandal? This sort of thing seems it can justify the payment of a host of "services" the state currently "provides" us with.

I find no normative sense in which the Joe the baker owes our baker in question anything beyond which he contracts with Joe for.

It's a descriptive, not normative fact that you can't alienate responsibility for a result. Contracts can be invalid when they don't match descriptive facts. I highly suspect you believe that. That would mean supporting fraud. Now that is normative but it's a normative view that most libertarians share with mutualists.

Again I dont understand how responsibility for the result plays in here. No where do I deny that a man is an actor and that all of the results of his labor are caused by himself. I do however, again, fail to see why this matters at all concerning the property of others.

Nor do I think it necessary to hold such a principle considering with freedom to contract and compete would invariably drive the wage or payment towards the worker towards the marginal revenue of his own product. Profit over the cost eats itself down close to cost through free entry of competing bakeries.

The net income would indeed be the same in a freed market. But net income isn't all that matters. It also matter that the contract is fulfillable in fact. To be fulfillable, capital would need to be rented or sold to labor and labor would have to manage the project. If the capitalist wants to run the show, he can do so as a worker, sharing in a partnership with the others. That's a separate "hat" from the capitalist one and would involve sharing decision-making power with them again as a rational choice that reflects people's desire not to enter into contracts that aren't defensible (except in today's state legal environment).

"is fulfillable in fact?" I do not understand this. I do not understand why capital would need to be rented or sold to the laborer by some virtue of responsibililty. Honestly, it seems like this is contrived merely to defend your preference for 100% horizontal economic organization.

[Hierophant]

Thorsmitersaw, you seem to be confused on the issue. If you don't agree that man should fully own his own labour and want to hire people so you can steal the products of their labour, it's not mutualism. If you disagree with mutualism, that's fine, but what's the point of saying you disagree? So what? What exactly is it that you want to hear?

[neverfox]

Thorsmitersaw,

Most of your replies are misinterpretations of my argument that I've spent a great deal of time laying out in another thread to Cork and Nokes. No offense. These are somewhat natural responses when first extracting your mind from the muddled mire. But please, if you want to read these other threads first, I'd appreciate it because I have little energy to go back over old ground again. It's the "Why I'm still not a mutualist?" "Why mutualism over ancapism?" etc. In the meantime, I'll look for things in your post that might require new answers.

[Thorsmitersaw]

Thorsmitersaw,

Most of your replies are misinterpretations of my argument that I've spent a great deal of time laying out in another thread to Cork and Nokes. No offense. These are somewhat natural responses when first extracting your mind from the muddled mire. But please, if you want to read these other threads first, I'd appreciate it because I have little energy to go back over old ground again. It's the "Why I'm still not a mutualist?" "Why mutualism over ancapism?" etc. In the meantime, I'll look for things in your post that might require new answers.

spare me the condescending speech about my mind being in the "muddled mire" please. I am going back over them now.

[neverfox]

Dude I was playing around. I thought the alliteration was obvious enough not to be taken seriously.

[neverfox]

The plough can be returned, the flour cannot. There is no similairity there. Rental of the plough is not the same as sale of flour. One is permanent transfer of property and the other is temporary.

That's a forced distinction. I might not tell you what I'm using the flour for. Maybe I need it as a paper weight. Trying force implicit assumptions about use into implicit loans is not a useful way to proceed. The only distinctions that need to be made are 1) does the transfer create an obligation (gift vs. non-gift) and 2) how will that obligation be paid (original item vs. other payment).

Typically implicit transfers do create an obligation unless otherwise stated and that obligation is typically prioritized as the original item first and fair payment second.

There are two basic sorts of situations in the world where I bake a cake with other ingrediants that were obtained form others. One is where I go to the local market and pick up the ingrediants and the other is the Joes baker in question here.

There is no good reason not to see Joe differently from the local market, both being a source of materials.

In the first, it is explicitly made clear that the cake maker, me, the laborer, whatever the fuck you want to call him... has purchased the ingrediants voluntarily from the previous owner. I own the flour and milk and shit now because they voluntarily exchanged them to me for another commodity or something. Even if the market owner was a mad man and started handing out all his shit for free its an explicit giving-up of the title to the property, transfering it to me.

In the second there is no such explicit or even implied transfer of property ownership. There is one man with the same ingrediants allowing me to utilize them to do some task X with his property which he explicitly remains clear is still his regardless of what I do with it. (much like, I would think, renting a bike or loaning my jacket to you for the day. Its still my jacket its still my bike)

There is an implied transfer of responsibility. Property rights are not monotonic. You can exchange different aspects of property of which title is only one (title being the right to transfer other aspects of the property not yet transferred). For example, say I own a piece of land. I can sell use rights to it and retain title rights. The user can defend me from using it as my only remaining rights are transferring the title. So when you let someone use your property, you are transferring responsibility for any use while not transferring title or absolute use rights.

What do you mean? What principle says I must sell these things to him or transfer their ownership to him in order to have him labor upon them? Allowing other people to use MY things, the products of MY labor, should not magically transfer title to the current user unless I explicitly say so. Otherwise your denying me the products of my labor and violating the homesteading principle...

I'm not talking about title but responsibility. Ask any employer if they will take the rap for an employee using one of his pieces of machinery to kill someone. After all, he didn't transfer responsibility, right? All use of other people's property is assumed by most people I know to obviously imply responsibility for it, damage to it or actions performed with it. Again, property rights are not monotonic.

Explain. I fail to see how you can base it even partially on the homesteading principle since the property was already previously owned and so the homesteading principle flies out the window from the start...

It's based partly on it since you have responsibility for all the items in your possession (a special case of exchange), which then create a product and fulfill it. Title to property isn't what powers the HP. Being in possession of the part of property rights that cover responsibility is. My proof? Simple intuition pumps like the criminal employee or the person how borrows a hammer to build a chair.

No. That should be implied. If I bash my cellphone with a hammer right now I think its assumed since I own my hammer and my cellphone that I also own the new 'improved'(haha) cellphone which is really just a recombination of the same matter. The same should be true if I contract another to bash my phone into bits. He acts as if he is me with my property.

You are forgetting the negative product. The cellphone's matter becomes an obligation to the owner of said matter. So if someone else take the phone with your permission and bashes it, they acquire the new phone but all acquire an obligation for the value of the original phone. If you specify that you want the "new" phone, you can deduct the price of the obligation and "buy" it back for free. All this happens naturally with no fuss.

all property theory says, is that you are owed compensation for property you lose.

I disagree. A theif who robs me of my television owes me my television firstly, if this is impossible, he owes me the closest market equivelant and some compensation for the loss. What is assumed is that I am owed for their use or approriation, these matters of justice pertaining to what I am owed are derived from acknowledgement that others do not have any right to my property to begin with. You do not assume that you may go to a mans home and place $50k, $60k, even $1000k in his mail box, and drive away with his corvette.

I agree. That was implied given that it's pretty much common sense. But you acknowledge that even theft creates a transfer of responsibility and liability. You wouldn't be responsible for the destruction the joyrider might inflict right?

Well then I am going to have to say that sounds absurd. There was no explicit nor implicit agreement to allow that man to even engage in the activity with my property in the first place. The siding on my house does not become the bandit-painters property by virtue of him simply having performed the unwanted task....

I'm sorry I was answering a non-criminal version of the example. I forgot you said they did it on the sly. That changes everything. However, he still obtained responsibility for the action which is the exact reason that you can enforce your claim against him. Otherwise you'd say, "well I has responsibility all along so let him go." While he metaphysically acquired it, having not made terms with you, the most logical legal result is to count the product as due payment for the obligation created. Problem solved and no magical claim that you painted your house through him.

So its not really a violation of property rights then to you? Would you extend the same courtesy to a man dumping toxic waste on my lawn? How about the graffiti artist/vandal? This sort of thing seems it can justify the payment of a host of "services" the state currently "provides" us with.

That's clearly not what I meant. Property violations are violations precisely because they weren't voluntarily exchanged. That doesn't mean something wasn't exchanged because you obviously think they are responsible for their actions. In other words, you want more than just to defend the property, you also want repayment for damage done to the property while using it. You have to admit responsibility is implicitly transferred to the user to claim damages. You wouldn't just say, "I'm going to shoot someone that comes near it, but if they happen to put a dent in it in the process, I won't hold them to the cost."

Again I dont understand how responsibility for the result plays in here. No where do I deny that a man is an actor and that all of the results of his labor are caused by himself. I do however, again, fail to see why this matters at all concerning the property of others.

Do you now that I've outlined it different ways?

"is fulfillable in fact?" I do not understand this. I do not understand why capital would need to be rented or sold to the laborer by some virtue of responsibililty. Honestly, it seems like this is contrived merely to defend your preference for 100% horizontal economic organization.

Because if the contract isn't designed to sell or rent it, then the owner of the capital is in effect claiming that the labor and the responsibility for using the capital was actually his in order to get "credit" towards the homesteading principle. Since that's not possible (as shown intuitively through many examples), it's unfulfillable, and claiming it is fulfilled is known as "fraud" and shouldn't be upheld.

[Cork]

What is the cost to the lender? Evidently the labor performed in conveying and receiving back the money lent, together with (in some cases) sacrifice and risk. Clearly these are the only elements in the transaction which may be legitimately considered. But interest, as ordinarily viewed, namely, as a sum of money paid to the lender in return for the benefit conferred upon the borrower, is based upon the false principle that value, in distinction from cost, is the limit of price; and it is therefore extortion. This principle that "a thing is worth what it will bring," which lies at the bottom of interest, dividends, rents, and profit, is the whole cause of the present unjust and inequitable (not unequal) distribution of wealth. Make cost the limit of price, and you have taken a long step—yes, in my opinion, the final step towards the long-sought solution of the social.

Very interesting. I was not aware that Tucker made any exception for time-preference. According to the 'Anarchist FAQ,' he rejected every conceivable nook and cranny of Austrian economics, including time preference. http://www.geocities.com/capitolHill/19 ... tml#secg35

Guess that's a bunch of bullshit, like much of the FAQ. It's no wonder that I agreed with most other ancaps in dismissing mutualists as economic cranks for so long. First I learn that (some) mutualists are not actually opposed to wage labor, then I learn that they are not actually opposed to entrepreneurial profit (that was seriously a shock--when Carson wrote that on my blog I was like, wtf?), and now this.

"In the production of a loaf of bread, the plough performs an important service, and equitably comes in for a share of the loaf." Absurd! A plough cannot own bread, and; if it could, would be unable to eat it. A plough is a What, one of those things above mentioned, to which no rights are attributable.

In other words, they "inject" the capital owner into the production equation when in fact it's only the capital itself, a thing, that is truly adding value. And things can't appropriate property. Capital must buy the product from Labor if it wants to share, i.e. through market transfer and not unowned appropriation.

See, now why couldn't you have written something more like this in the other thread? This is a far more compelling argument than all the contract gobbledegook, and it is really all I was asking for. I can't quite agree with it, but it helps me understand the perspective better.

[neverfox]

See, now why couldn't you have written something more like this in the other thread? This is a far more compelling argument than all the contract gobbledegook, and it is really all I was asking for. I can't quite agree with it, but it helps me understand the perspective better.

I know you stay up late reading about contract theory, double-entry property accounting methods and vector math. I just know it!

Is "gobbledegook" a technical term like "corktageous"?

[Cork]

I know you stay up late reading about contract theory, double-entry property accounting methods and vector math. I just know it!

As very right-brained person (rare for a libertarian, I know), math is my arch nemesis.

Is "gobbledegook" a technical term like "corktageous"?

I do tend to make up words, but I think that one is real. I think...

[Thank You]

Someone asked me if the labor of sending the capital (e.g writing the check, running an investment business) makes them laborers? The answer is no. That labor isn't a marginal contribution to the product. It's a separate production process, that of moving capital around. Instead, capital should do what anyone does for the product of their labor: charge a fee for it.

McDonald's fry cooks, for instance, are marginally 100% responsible for their productivity in making double cheeseburgers, even though they might attain a certain level of productivity because investors' money bought them a mroe efficient work station.

On the other hand, McDonald's cashiers are marginally 100% responsible for their productivity in bringing money to the company. Does this mean that the cashiers should get all of the money? I understand that it would not mean that the cashiers would get paid $100s/hr, because they'd have to pay the fry cooks for their labor, who would have to pay the managers, who would have to pay the investors. But it seems fairly apparent to me that this is still a rather ridiculous way to do things.

Beyond that, it denies people the potential to make certain kinds of arrangments of their companies. Why should cashiers, rather than investors or fry cooks, bear responsibility for starting the distribution of money at their companies? Shouldn't this responsibility go to whoever can fulfill it best, or to whoever is willing to pay the most for it (or some combination of the two)? Sure, it's legitimately possible that cashiers could best fulfill this responsbility, but people should be allowed to redistribute their legal responsibilities among themselves.

The person responsible for both using up inputs and for exerting labor appropriates the product. This much Locke knew. But what if the inputs are owned by someone else? Well, unless they in fact are the ones using them up, then they have actually loaned them out despite what the contract says.

Whether or not the agreement is really a loan depends on the terms of the agreement (i.e. the contract). So I do not think you can say that the agreement is really a loan by denying the contract, because the contract sets the terms of the agreement.

The responsibility of humans (which means that capitalist can't claim they used them as instruments) is is seen clearly if the action turns out to be criminal. The non-laboring capitalist would quickly acknowledge that all along the responsibility was the employee's and that he was indeed more than an instrument. The laborer appropriates the whole product which is both the positive output and the liability for used up inputs. In other words, all capital would be rationally sold or rented to labor knowing that responsibility isn't alienable otherwise you would be creating a contract that wouldn't be defensible if it were ever challenge in a free court that correctly recognizes that people can't be things (i.e. libertarian courts).

Instead, I think that it should be allowed for humans to sell their responsibilities, even their responsibilites not to commit crimes. Sure, this would be a horrible agreement for anyone to make, because no one would sell their responsibility not to commit crimes unless they were planning on committing crimes. But other sales of responsibility are potentially beneficial for both parties. In particular, selling of the responsibility for the product of one's labor to succesful investors is probably a good idea, as such investors are likely to spend this product more efficiently than you, so that they can be willing to pay a price for this responsibility beyond what you could expect to gain by retaining the responsibility for yourself.

[neverfox]

McDonald's fry cooks, for instance, are marginally 100% responsible for their productivity in making double cheeseburgers, even though they might attain a certain level of productivity because investors' money bought them a mroe efficient work station.

Investors bought them a more efficient work station as investors? If they made decisions about how money should be spent in the business then they are no acting as investors any longer but as active firm members and can be paid in proportion that their ideas contributed to the product. Don't confuse the different hats people wear. I'm talking about absentee capitalists who simply give money or materials in return for interest and a return of the principle.

On the other hand, McDonald's cashiers are marginally 100% responsible for their productivity in bringing money to the company. Does this mean that the cashiers should get all of the money?

You you being facetious because that is the most ignorant view of what it means to be marginal responsible that I've ever seen as if people were only giving the money to the cashier for the cashier's act and not because of the food etc. they want to purchase. Give me a break.

Whether or not the agreement is really a loan depends on the terms of the agreement (i.e. the contract). So I do not think you can say that the agreement is really a loan by denying the contract, because the contract sets the terms of the agreement.

I'm not denying valid non-fraudulent contracts. You can arrive at any end-result. But you can't say something in a contract that can't actually be true in the process of achieving that result. That's fraud. To say that you aren't in fact giving labor use of your capital so that from Locke's perspective you and not them created the product and they were never really anything more than non-human instruments simply isn't true. If labor wants to sell the result to you, fine. But up until then you have de facto loaned the inputs. You can loan or sell property. You can't vicariously use it through other people, ignoring their human will and volition. That's simply not metaphysically possible and contracts saying otherwise are not any more valid than any fraudulent contract. If people want to act as if it is the case then yes they are free to. But my point has always been from the perspective of a libertarian society should the contract come into dispute.

Instead, I think that it should be allowed for humans to sell their responsibilities, even their responsibilites not to commit crimes. Sure, this would be a horrible agreement for anyone to make, because no one would sell their responsibility not to commit crimes unless they were planning on committing crimes. But other sales of responsibility are potentially beneficial for both parties.

If that's your belief, then you are welcome to it. In a free society you can endorse that outcome. I just don't think you are going to find many takers. Society seems to have naturally arrived at the idea that people aren't the best judge of their own guilt and responsibility in a just society. So selling responsibility may be something you can put on paper but it would never be seen as actually happening. That doesn't mean you can't arrange the same end result in a properly consistent contract that doesn't contain nonsense language like "selling responsibility". You can simply contract to be the buyer of the result if it can be sold. You can insure losses etc. If the judgment for a crime is say an $500 fine, you can agree to pay it for me. But the fine is mine. The criminal record is mine. If you told me to do it, then the criminal record is ours. My pulling out a piece of paper isn't going to convince anyone that I should be let off the hook. If you think it should, then you are after a different society than I am.

In particular, selling of the responsibility for the product of one's labor to succesful investors is probably a good idea, as such investors are likely to spend this product more efficiently than you, so that they can be willing to pay a price for this responsibility beyond what you could expect to gain by retaining the responsibility for yourself.

Also again you are confusing the hat of "investor" with the hat of "manager" or "organizer". Every time I talk about this stuff people do that as a way of confusing the issue. They would be specialized labor fully deserving of part of the product. It would also be a horrible agreement for someone to give up the property they appropriate just so they can submit to orders from someone instead of rationally delegating authority to a specialized project manager and sharing in a partnership with them. It will be rational not forced for people to do this when they realize that selling their responsibility is a fraud that needs to be exposed.

[Thank You]

Investors bought them a more efficient work station as investors?

Ok. Investors bought the company some more of itself, however the managers decided to implement the expanded resources granted by the investors. The point was that even the high-level decision to invest makes a difference in how profitable the company is for its members. If you accept the idea of economies of scale, then you implicitly agree that the amount invested in a company makes a difference in its profitability, even in consideration of the fact that deciding how much to invest does not tell anyone else at the company for what they should invest.

You you being facetious because that is the most ignorant view of what it means to be marginal responsible that I've ever seen as if people were only giving the money to the cashier for the cashier's act and not because of the food etc. they want to purchase. Give me a break.

Well, your reading of my analogy depends on whether you buy my argument that amount to invest decisions are part of what determines profits at a company. If so, then it's arbitrary to say that the step between investors and managers takes you outside the company (to some sort of capital lending firm).

A more important point that encapsules this, though, is that you shouldn't analyze workers' marginal effect on a company's profit based on the flow of goods within the company -- e.g. the difference between the value of goods before and after a worker applies their labor -- but based on how their labor has changed the overall profit/time of the company, relative to its value when they started. The reason for this is that the flow of goods within the company is only set after you've made a contract, thereby already setting wages (because you can't know that certain workers are going to do certain things -- or that the flow of goods is going to take a certain form -- until you've offered them a wage that gets them to agree to do this work).

On the evaluation side of things, I think that looking at things this way leads to correct evaluations of, e.g., whether it's a good idea to hire someone to do a specific job. Lets say two workers at a company work successively on the same capital, each improving its value. The capital has a value of 1 when it gets to them, 2 after it leaves the first worker, and 5 after it leaves the second. Now we want to know whether to hire a third worker to take the product of worker 1 (at value 2) and turn it into something of value 3, even though the second worker can still only take the value 3 product to a value 5. Would it be a good deal for the company to hire this worker and pay him .8? Of course not, the rest of the workers would have to take a collective loss of 0.8. But if you analyze things according to the workers' contribution within the flow of goods of the company, it seems like a good idea.

Now this is important because you are applying this second, flawed analysis in determining that workers are marginally responsible for the value goods attain after they apply their labor vs. the value the capital held before they applied their labor. Instead, that responsibility principle you mentioned would imply that workers should be responsible for the value they add to the company by joining it, not the value their labor adds to the product.

[neverfox]

Ok. Investors bought the company some more of itself, however the managers decided to implement the expanded resources granted by the investors. The point was that even the high-level decision to invest makes a difference in how profitable the company is for its members. If you accept the idea of economies of scale, then you implicitly agree that the amount invested in a company makes a difference in its profitability, even in consideration of the fact that deciding how much to invest does not tell anyone else at the company for what they should invest.

No, buyers for the company bought some stuff with investor money. Did the investors run down to Office Depot? Again I think you are trying to play the card of the investor/employee as opposed to the absentee investor (someone buying a bond or giving a loan) Yeah money makes a difference as does a plough to a farmer. But can money and ploughs appropriate property? I wasn't aware that things, however valuable, could appropriate other things. Was there some part of Locke's writing that I missed?

Well, your reading of my analogy depends on whether you buy my argument that amount to invest decisions are part of what determines profits at a company. If so, then it's arbitrary to say that the step between investors and managers takes you outside the company (to some sort of capital lending firm).

First, when you loan money you are giving value under determination that it's fully accounted for by credit and likely to be returned or it would be a poor decision. A lending decision is simply an adjustment via interest to your preference to use the capital now or later. You are accepting payment (time-preference) for the delay in using your own capital. If labor wasn't likely to return it, you wouldn't be lending it. That credit decision and the rate of interest is driven purely by the firms capability and your capital is risk-adjusted to be for all intents and purposes "safe" as if it never left. It's the charge you need to "convince yourself" that the capital is the same as in your pocket. You make it sound like it's this immaculate conception born out of your capital as opposed to the capital being matched to the value of labor so that it is risk-adjusted "safe".

So when you ask the question "How do I make a car?" the answer is "Capital + Labor + Land" not "Capital + Investor Decisions + Labor + Land". Your definition of things would imply that every connection in the world would get sucked into the production equation because it's connected somehow. Every restaurant that sold food to the workers perhaps...

Investment decisions are labor in the product called "investing".

On the evaluation side of things, I think that looking at things this way leads to correct evaluations of, e.g., whether it's a good idea to hire someone to do a specific job. Lets say two workers at a company work successively on the same capital, each improving its value. The capital has a value of 1 when it gets to them, 2 after it leaves the first worker, and 5 after it leaves the second. Now we want to know whether to hire a third worker to take the product of worker 1 (at value 2) and turn it into something of value 3, even though the second worker can still only take the value 3 product to a value 5. Would it be a good deal for the company to hire this worker and pay him .8? Of course not, the rest of the workers would have to take a collective loss of 0.8. But if you analyze things according to the workers' contribution within the flow of goods of the company, it seems like a good idea.

You are trying to analyze the situation from the perspective of whether it was a "good idea" to hire someone or not. But that's up to the firm members to decide if they make a poor decision to hire unnecessary labor. But I've never said that someone had to be positively marginal as an individual to the final value of the company. I agree with your method and never intended the flow version. But it only serves to determine if a wage is a good investment. My point is that labor as a whole factor is marginal. That's as far as marginal value discussions go. After that it's about how many people are responsible. Poor decisions about how to distribute labor contractually are that: poor decisions. But that doesn't remove the responsibility from the third worker. Responsibility is not marginal.

When a group of people act jointly, they are de facto responsible for the total difference they make. That difference may be more than the sum of the "marginal effects" of the individual participants. The excess of the whole over the sum of the parts is not a natural event; it is the result of their joint effort.

This can be illustrated with the case of the "marginal murderer." Two people co-operate together to murder a third person. Each empties his gun into the victim who expires. The actions of each by himself would have been sufficient to kill the victim. The marginal productivity of labor was zero. The two are caught and are charged with murder. The marginal murderer contends that the victim would still have been murdered even if he had done nothing so he cannot be guilty of murder. The other person notes that labor is homogeneous; he also is the marginal killer. Thus neither one is guilty of murder; the victim must have expired of natural causes.

The flaw in their reasoning is the assumption that their only responsibility is their marginal effect. Suppose an
abundance of homogeneous workers produce a product so that the same product would be produced if one person withdrew. The marginal productivity of labor would be zero, but the product would not be the result of natural
causes. The workers would jointly be responsible for the (whole) product.

So step one: decide what factors are marginal.
Step two: all participants in labor (the only human factor) are jointly responsible to the degree that their actions would have resulted in the same outcome alone. What this is would be is determined by the group of people affected by their involvement (the "victims"), i.e. the rest of the firm's labor., when contracting with them. It becomes a negotiation decision (a "judgment"). The market at work.

Now this is important because you are applying this second, flawed analysis in determining that workers are marginally responsible for the value goods attain after they apply their labor vs. the value the capital held before they applied their labor. Instead, that responsibility principle you mentioned would imply that workers should be responsible for the value they add to the company by joining it, not the value their labor adds to the product.

Here you demonstrate that you are mixing marginal value and responsibility at the individual level. Marginal value isn't the same as responsibility. Capital and land also have marginal value. By responsibility, I mean that actions are performed by humans and a result occurred, including the altering and using up of inputs and the creation of something new. So they are "to blame" (to use the negative phrasing for emphasis). We don't hold things "to blame" and we don't consider marginal value when assessing blame.

[Thank You]

No, buyers for the company bought some stuff with investor money. Did the investors run down to Office Depot?

That's why I described the investor's actions as "buying the company some more of itself". They're deciding that the company should have more capital overall, but not what form that capital should take. On the other hand, the purchasers and other managers of the company do not make this decision by deciding how to spend the investors' money.

First, when you loan money you are giving value under determination that it's fully accounted for by credit and likely to be returned or it would be a poor decision.

Sure, that's what happens with a loan. An investment is a different kind of thing. Essentially, I'm claiming that investors offer more service to companies. For one, investors invest when they think a company would be more profitable if it had more money, whereas as lenders only make loans whenever they think they can get their money back. In other words, getting a loan only informs a company that others think they can at least break even; getting investment informs them that someone thinks they can do better with more capital. Furthermore, investors also agree to "take responsibility" for the firm's potential losses, e.g. by levying no claim against the company if it doesn't "repay" their "loan". Now I put the "take responsibility" in parantheses because, as you've argued, the investors certainly couldn't pass themselves off as good mechanics, or even as good managers. However, they can agree to bear the financial burden of losses, which is something they would not do as lenders.

So when you ask the question "How do I make a car?" the answer is "Capital + Labor + Land" not "Capital + Investor Decisions + Labor + Land". Your definition of things would imply that every connection in the world would get sucked into the production equation because it's connected somehow.

You're still analying things the wrong way. It's not at all about flow of goods. So you can't count out investors as part of the firm based on the fact that they're about as far away from the product, in the flow of resources, as a restaraunt that serves the company's workers. Their relationship with the company depends on their contract with the company, not on how their input (of an investment decision) fits into the flow of resources surrounding the company. And for the most part, investor contracts fairly clearly state that investors may lose their money if the company loses money (which is clearly a broader service than that offered by lenders), and they may gain part of the company's profits.

That's as far as marginal value discussions go. After that it's about how many people are responsible. Poor decisions about how to distribute labor contractually are that: poor decisions. But that doesn't remove the responsibility from the third worker. Responsibility is not marginal.

But if you agree to analyze the hiring and payment decisions that way, then you lose the claimed effect of the imputation principle on wages. Instead, it becomes fair to pay people some amount different from that for which they were responsible, if the marginal effect of adding their labor to a firm is different from their marginal effect in the flow of resources.

More importantly, if current members of a company should analyze adding new members based on the profitability of such hires to them, then someone owning capital may continue to accrue income on that capital indefinitely, even though others are working on it. As long as they own the capital, they are giving up the opportunity to make whatever money they could make for themselves by applying their labor to it.

Here you demonstrate that you are mixing marginal value and responsibility at the individual level. Marginal value isn't the same as responsibility. Capital and land also have marginal value. By responsibility, I mean that actions are performed by humans and a result occurred, including the altering and using up of inputs and the creation of something new. So they are "to blame" (to use the negative phrasing for emphasis). We don't hold things "to blame" and we don't consider marginal value when assessing blame.

Again, if you want to analyze things this way, I agree, and so do current investors' contracts. McDonald's investors, for instance, cannot trade their stock for a truck-load of double cheeseburgers or for the social approval of having made those double cheeseburgers. IOW, the contract gives them no claim to the product itself; they have a purely monetary arrangement with the company.