Pencil factory
Let's say you own a pencil factory. I'm a worker in that pencil factory. You can have all the machinery; you can buy all the raw materials you want. But without me and presumably many others like me to assemble the pencils, all you would have is a pile of wood, yellow paint, graphite, rubber, and aluminium. And that is worth less than the pencil when you try and sell it. And yet all that value added by labour, apart from the wages that you give me, goes to you. If you didn't have workers like me and your pencil factory, and you were just one man… If you are just one person trying to assemble pencils, you're not going to get very far. You need workers. Capital needs labour infinitely more than labour needs capital.
[BEN] But I do. I have millions of people who are willing to do that voluntarily for me. Fundamentally disagree on the distinction between capital and labour. Capital is just a term for money. If you're talking about money, money does not grow from the ground. Money only has value because it was traded for labour at one point or the product of labour. So, if I take my money and I buy machinery, I have invested my labour in doing that because I didn't get the money from nowhere. Even if I got it from my parents, my parents didn't get the money from nowhere. The people who built the machines required me to trade something of value to them in order for me to obtain the machines. The people who invented the machines required people to pay them in order to get the patent to that machine so they could build the machine. The problem that I'm seeing in what you're saying is you have still failed. If what you're talking about is a system of volunteerism, you still have not named any area in which we disagree. And yet you're telling me that you're a socialist and I'm a free marketer. So one of us has got this wildly wrong, and I'm pretty sure it's not me.
The differentiation I draw and I'm not alone in this I'm not one person trying to redefine anything. The differentiation I and many others like me draw between socialism and capitalism is that under capitalism, when you as the owner of the factory, you give me a wage. The wage could be $7.25, it could be $15, it could be whatever an hour, right? But you give me a wage, all the additional profit made from selling the pencils or whatever good you produce above what is reinvested into the company ultimately goes to you or the investors, those who own shares in the means of production. Under socialism, those people are the workers. And the example I give again is cooperative enterprise.
[BEN] No. Those are the people who are investing the risk. So if they carry the risk, then they get the benefit. The owner of the factory carries the risk, therefore he gets the benefit. The workers in the company you mentioned, if that company were to go bankrupt, they would carry the risk as well as the benefit. If the company goes bankrupt and this guy has to pay off all of his debt, the worker may lose his job, but he's not the one who's going to incur the debt of having gone bankrupt. If you incur risk, then you are the one who pays the downside. The worker does not pay the downside. Okay? It is the investor who is the downside, who invested in all the machinery, who sunk millions of dollars into making your labour productive. Because guess what? Your labour without that machinery is gunk! Nothing. You don't have a pencil to put together. You don't got the wood, you don't got the paint, you don't got the rubber, you don't got the metal. Got nothing. Right? You're sitting there standing outside, twiddling your thumbs. It required somebody to invest. Who do you think put more in? The guy who spent millions of dollars buying all the machinery, leasing the place, making sure there was a management structure, doing the LLC formation, making sure all the tax code was in compliance? Or you standing outside because you can stick a piece of graphite into a piece of wood.
