surplus labor value

At the end of the day, the worker now knows how to obtain the raw materials and construct the widget, so the profit depends entirely on patents. Entirely artificial but that's the way we roll in the shire.

 

I agree that labor gives value to everything, but it's just a start. Otherwise it's just valueless potential. Unfound 40ct. diamonds have no value. The value starts with the labor in digging them up. On the other hand, there has to be need/demand for that labor for there to be value.

 

I think, in the end, we're simply going to have to prepare for an economy where 30%, 40% or even 50% of the population is marginalized, because that is where we are headed. It's going to mean relatively higher wages and relatively higher taxes for those who aren't marginalized. It's going to take a change in the "get a job" attitude.

 

The value of labour is how much value labour adds to a given thing. The "surplus value of labour" is the difference between the value of labour and its cost. Surplus value is profit. The surplus value of labour is simply a polite name for the profit made off of workers whose wages have not increased with their productivity. In the US this would have grown far larger if top management compensation had not risen by orders of magnitude over the last decades, sucking up almost all of the surplus labour value generated by increased productivity and a stagnant wage curve.

The economy has already declined to a state where over half of all workers are marginalized. The median wage has not been sufficient to afford the typical middle class lifestyle since the 1980s and these days even a household with two median wage earners is hard pressed to maintain the middle class life that one wage earning household enjoyed two generations ago.

Productivity and median wage increases were fairly closely correlated in the US from the beginning of the industrial revolution until about the mid 1980s when productivity began to rise faster than wages. This coincides with the beginning of two long term trends, a decline in labour unions and a stagnation of the minimum wage. You can place the blame for the decline of the middle class in the US anywhere you want but this is not a coincidence. It is long term the result of a concerted political effort to destroy the ability of workers to have enough power to demand wages commensurate with their work.

There are many here who consider themselves pro free market and pro capitalism but are rabidly anti union. If the capitalist free market is the ability of people to pool their resources together in order to gain advantage in the marketplace, how is workers gathering together and creating a labour union not free market capitalism?

Employers are free to negotiate with the union or not, have a closed shop or not, enter into whatever contract they negotiate with them of their own free will. After all, it is a free market, or it was until a slew of legislation was passed, mostly over the last 30 years, that made it impossibly difficult for workers to organize to gain bargaining power in the marketplace.

So, we are basically sliding back to the beginnings of the industrial revolution because the means that workers used over the first hundred years to gain the bargaining power that eventually bought a few generations a decent life has now been made either outright illegal or practically impossible. If this trend continues only bad things can some from it. The US will decline into third world nation status, with a shrinking paranoid middle class, a small even more paranoid elite and an ever expanding population of disaffected poor, armed to the teeth and easily influenced by fanatical ideology from everywhere.

 

Unneeded labour has no value. Only labour put to use might have some value.

 

I disagree with the premise that the labor of the human employee is less. They work just as hard but produce more. A machine is just a tool. Knowing how to maximize production from that tool is what brings value to the labor. Without a number of human inputs, including but not limited to, maintenance, calibration, retooling, programming etc. The tool is useless.

 

I was a manager at my families firm. We paid our people generously and were rewarded with loyalty and excellent product. The race to the bottom for labor costs gets a firm exactly what they deserve. Low quality people who don't care about the company or it's future.

 

The question becomes- what to do with the rest of the population? How to create an economy where the vast majority can make a decent living and provide for their families? The "service" economy is a bust. Now what?

 

A semantic analysis of your statement's use of the word "generously" suggests either you don't really think that you got what you think you were paying for or you think the workers really are beneath you.

 

Or we paid a higher rate than our competition for the same positions. We ended up getting the best people because we were not racing for the bottom.

 

Free market competition works.

 

If businesses are all about the bottom-line, i.e. profits, why does top management get paid so well? If they aren't producing, wouldn't it be better to fire them all and save the money?

 

"Surplus Labor" - Unneeded labor? Those who are unemployed?
"Surplus Labor Value" - Extra cost applied to a product without improvement?

"Basic Economics" - Employees are paid relative to the value of the work they perform, not relative to the price of the product they are a participant in producing. Product prices are a result of supply and demand, which consumers of the product can have great effect on the profits to be made.

If the average cost of raw materials and overhead per widget is $10 and the employee is paid $3 per widget produced, the employer must be able to sell each widget for more than $13 to make any profit at all. If the demand is high, the employer may be able to sell the widgets for much more than the cost of producing them, and if the demand is very low the employer may make very little profit or even take a loss. While the employee may may not immediately benefit when profits are high, he/she does not lose anything when profits are low unless it is so bad that the job is eliminated.

If you don't like being an employee, become an employer.

 

Can you fathom what happens in the long term if ALL profits are given to labor?

 

In the short term, the guy who owns that factory would liquidate it ... or automate it.



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Or just connect their pay to corporate performance. Problem is, research has found a negative relationship between top executives' pay and corporate performance. This is mainly because their "performance" pay is based on the stock price, not the company's actual condition. The stock price is mostly due to the market trend (and to a lesser extent the sector trend), not anything that is happening at the company. At a minimum, executive pay should be based on corporate performance relative to the sector average, not stock price increases that are mostly due to share buyback schemes and the Fed propping up asset markets.

 

It's not up to people or government how executives or any workers are compensated. Companies must compensate all employees, including the CEO, in order to hire and sustain employees who will allow the company to satisfy it's consumer demands. Since all companies are competing with each other for employees, including CEO's, companies will simply provide higher and higher performance incentives which means CEO pay in this case will always be as high as the supply and demand of labor provides...

 

Surplus labour value?

Surplus - excess, unused.
Labour - work, exertion, effort.
Value - worth, usefulness, profit.

I'm still trying to extract some sense from the OP, which presents a situation which could easily be resolved by the employee ceasing to work for his boss and becoming self employed producing the widgets at home and taking all the profits from the sales. And said employee would probably do so if it were not for the fact that the boss serves a need beyond his/her capacity such as providing the raw materials needed to produce the widgets as well as the machinery which is performing most of the labour, not to mention distribution of the widgets to a broader market, and other benefits such as paid vacation, sick pay, a pension, health insurance, etc.

To me, the term 'surplus labour' is more meaningful as a reference to those who are unemployed. That which has no market or use is of little or no value, which most rationally and sustainably would result in the compassion of individuals in each society providing some charitable assistance with expectation of those being provided assistance become self sustaining and productive members of their society as quickly as possible.

 

In this scenario, the employee can produce the units at home and will need to charge the business a fixed price which is acceptable to the business. In theory this is but in reality becomes quite complicated.

I agree that most government welfare recipients should be like a revolving door in which in an emergency they can receive government assistance but this assistance is temporary. Except for those Americans who have such mental and/or physical limitations that they cannot provide for themselves, all government assistance should be temporary.

I fully know the job and economic world is not easy for many people but this is not an excuse to have ongoing government assistance...

 

That is completely aside from the point. You say pay "should be". Why should it be? Is it more efficient? What economic or financial problem does your idea solve?

 

Because it would be fairer, and align executives' financial incentives with corporate goals.

It could hardly be less efficient than paying execs to destroy companies.

The perverse incentives of typical top executives' compensation packages.

 

Sure it is. It is up to government -- in a democracy, the people's representative -- to make sure private entities do not align their incentives in opposition to the public interest. That's why employers are not allowed to pay employees to get married, smoke, etc.

The point is that the "performance incentives" do not actually have any such effect, and in fact have the opposite effect. They are just a way for the CEO clique to rob shareholders at the expense of damaging the economy. Only the most benighted libertards claim that whatever a rich, amoral greed robot manages to extract in return for no contribution, they must nevertheless somehow have earned.

 

Above is all diatribe nonsense void of reality and conspiratorial...therefore I cannot respond...

 

No it's not. It identifies the fact that your claim of an infallibly fair and efficient market in CEOs is what is really nonsense and devoid of reality.

LOL! Facts are stubborn things, old man. The FACT is, CEO pay is not associated with corporate performance, but IS associated with personal connections with the compensation committee.

So as soon as someone challenges your libertard talking points with actual facts and analysis, you wisely retire from the field. Makes sense.

 

Exactly. You are a hammer...a tool. The boss has no loyalty to you and you have none to the boss. When the hammer breaks or wears out, it goes into the dumpster.