I’m almost embarrassed to write this post, but I hear this argument made so often that I feel it has to be addressed. Among the most fundamental pillars of popular American support for capitalism is the belief that people should be rewarded for their labor (which, of course, is true). The idea usually goes something like this: the wealthy are wealthy because of their hard work. They have the massive wealth they have because of their strong worth ethic, their ingenuity, their intelligence, and all the rest. Therefore it would be an injustice and unfair punishment to tax them at a higher rate or place caps on what people earn. This is a core ideological argument for popular American support for unbridled capitalism. You will hear it at Thanksgiving dinner tables across the country, and ordinary Joe’s and Jackie’s will sagely state variations of this argument as they lean across the diner counter to refresh your coffee as you grumble about the latest Wall Street outrage.
Perhaps the first question to ask is the Nietzschean question of who sees the world this way. As Nietzsche taught us, every enunciation presupposes a point of view, a standpoint of seeing the world the world in a certain way. So who is it that sees massive accumulations of wealth as the result of hard work? The answer is that only the worker– the person who must sell their labor as a commodity to live –can see the world in this way. Us workers– and we should not assume that “worker” is a synonym for blue collar labor; it’s anyone who sells their labor to live –live in a universe where the only way we can live is by working for a wage. As a consequence, the vast majority cannot even begin to imagine a universe where money is made in some way other than through labor or work. As a result, we assume that this must be how capitalists make their money and that, if they have so much more money than we do, it is because they work harder, are more intelligent, have more ingenuity, and all the rest. They must deserve what they have. This is a fundamental illusion.
read on!
There is a certain sublime genius to Marx’s little equations C-M-C and M-C-M because they distill the difference between workers and capitalists to their most basic essence, revealing just how disparate these two worlds are. Us workers follow this basic logic:
C – M – C
Commodity – Money – Commodity
Commodity – Money / Money – Commodity
Us workers sell our labor as a commodity in return for money. We then use that money to buy the commodities that we need to live (shelter, food, clothing, transportation, etc). Ironically and unjustly, must of the commodities we buy are necessities we must have in order to work. This is the world of the worker.
The world of the capitalist is entirely different, and is the inverse of the world of the worker:
M – C – M
Money – Commodity – Money
Money – Commodity / Commodity – Money
The capitalist uses his money to buy a commodity, and then sells that commodity to make a profit on his investment. The commodities that the capitalist buys can be any number of things: labor, hotels, debt, stocks, etc. It matters little what the commodity is, so long as one can get a return on his investment. In other words, in the case of the capitalist, it is not his labor that makes his money, but rather his money that makes his money. In other words, it is not hard work that makes a capitalist money– which isn’t to say there aren’t hard working capitalists –but money that makes their money.
Let’s put this into perspective. Suppose you were a complete and utter moron, but were fortunate and won the lottery to the the tune of $480 million. Now as a moron and a working stiff that knows nothing about money beyond spending it to buy the commodities you need to live on a day to day basis, you decided to place your new found millions in a bank account, rather than spend it. You’re looking at about a 1.25% interest rate on your average savings account; a stupid way of investing money. However, concretely what will that stupid way of investing money yield annually? $6 million a year! Let me repeat. $6 million a year. That is, of course, before taxes.
Now no one, even the most grotesquely stupid person, would ever put such sums of money in a savings account. The point is that the person who has this sort of money doesn’t have to do anything to make more money. The money does all of the work for them. This is even more the case with various investment plans that get a far greater return on their investments. The capitalist is able to go about his business, doing nothing at all, thinking nothing at all, worrying about nothing at all, while their money makes money for them. Far from being the result of some special genius or hard work or ingenuity, it’s the money that does all the work. This is a fundamentally different world than the worker lives in and is certainly not the world of the Randian, entrepreneurial super-hero. It is a world that the worker can scarcely imagine, because the worker has only ever known the sale of his labor to buy the goods he needs to live. There is nothing deserved in such a world, and certainly not at the obscene levels of wealth we see in modern society.
Larval Subjects . 
October 18, 2017 at 12:06 pm
Very nicely said. Still, there is another, no less common lay explanation for wealth: the market has bestowed it. This is effectively Nozick’s famous Wilt Chamberlain argument. It’s not that I earn wealth owing to my work ethic; it’s that I have or find some talent, product or service that lots of people want and are happy to pay for. That is the sense in which I “deserve” the resulting wealth, and the reason why it is “fair” or legitimate for me to keep it: my wealth represents and even embodies the value I provide to others.
This is a much trickier argument to refute, and Marx is of little help with it. Sure, I *might have to rely on the labor of others to provide this value, but I might also be the inventor, singer or athlete who performs the work—in a distinctively valued way. Odds are, the average entrepreneur will endorse some version of this account. “I had the idea. I mortgaged my home. I took the risk. Any of my workers could have done the same. And my customers derive great value from my service/product. That is why I deserve the profits I generate. Go forth and do likewise.”
The answer to *this argument will have to go beyond the labor theory of value and ideology critique.
October 18, 2017 at 12:23 pm
Yup. You know I’ve heard or have read in at least one article somewhere in some newspaper I forget but it stuck with me – that to refer to people as “capital list quote is an anachronism and it really doesn’t mean anything anymore. I thought that was such BS.
I think it’s more that human beings have beenlulled into a sense of complacency by easily distributed decadent luck Sharee, to put it in 19th-century terms.
Thx
October 18, 2017 at 12:23 pm
Luxury. Not luck Sharee. Lol.
October 18, 2017 at 12:35 pm
That is a more difficult argument to refute, but look at the theology behind it. Basically the argument works on the premise that the worker is infinitely indebted to the inventor by virtue of the genius of their idea and the risk they took to implement it. However, at some point the workers completely pay back the capitalist that took the risk through their labor and the profit it creates and they reward the inventor in excess of what they invested to implement their idea. When is enough enough? What is it that creates this strange scenario of infinite debt that can never be repaid?
October 20, 2017 at 8:49 pm
A distinction is not being made here. Money that makes money is circulating money detached from labor yes. But these people do worry about it. They are serious about getting the best return. Their everyday concern is on it. They do not go about their lives just letting it pour into their bank account. At one time they did. They just clipped the coupons on their bonds. But capital metastasizes. Money is just a “floating signifier” detached from the signified. As DeLillo works it over in his Cosmopolis, one doesn’t display wealth by having commodities so much as the display is “how much” those commodities are worth in monetary numbers. The number is the display of wealth, not the commodity itself. I don’t think I said that very clearly. Read DeLillo he says it perfectly.
October 20, 2017 at 10:28 pm
Two comments. One is about winning the lottery. A lot of people go broke after winning the lottery- everybody knows this. However (I’m not an investor) let’s say you actually decide to put it in the bank. Not some American bank, but like a Swiss bank that caters to millionaires. That actually wouldn’t be the worst decision in the world in my mind, because what do you get when you automatically spend it like most lottery winners do? You either fall prey to some investment scheme, or you buy a huge property that you think is going to be a sound investment, but it actually doesn’t work.
My point is this- you point out that money makes money easily for the rich (if you do it wildly). But that means that you have to go all the way and realize that barring lottery winners, there is a certain game that has to be played wisely when it comes to investment. Think of someone like Warren Buffet. Where people go wrong is calling him some sort of genius. Its not that- Buffet knows the rules of the game, but the table is only open to the rich. There are a different set of rules for the rich, like Trump being able to go bankrupt 10 times and never pay the price, but it does take a certain level of “savvy”, or rather, knowing the loopholes that are available to you, to be able to play the game. Trump was able to play because his daddy was a player in the game. \
That brings me to my second point- what I don’t understand is not the fact that people justify millionaires as hard workers (some of them, Bill Gates for example, did actually work hard relatively, there are enough examples to fool you), its the fact that they justify their kids and grandkids being ultra-wealthy. There is no logical way to justify it, they didn’t lift a finger. All I can say is there is some sort of Christian ethos there, where the person says “if I was them, I would spoil my kids too”. I don’t understand why the worker, white or blue collar, is so unselfish. But I think it ties back to the lottery. I think that’s the missing key to this analysis. Most American think, secretly, “maybe I’ll be the winner- maybe I’ll hit it big someday”. ergo, American Idol, etc.
October 20, 2017 at 10:35 pm
Great post though!
October 21, 2017 at 11:07 am
I think it’s important to not get lost in the weeds here. First, I’m talking about display, I take it you’re referring to a cultural issue or identity surrounding wealth. That’s fine, but it’s not what is at issue here. There’s a fundamental difference in how money is made in these two instances. My reference to savings accounts is designed to underline that in the starkest terms. Of course, no one does that. However, let’s recall that Trump is largely unaware of what his money is doing or how much he even has. I suspect that’s quite common. At any rate, class is not a cultural category pertaining to identities— as it’s so often mistakenly characterized in the States —it’s a structural category.
October 21, 2017 at 11:09 am
The inheritance thing is definitely huge.
October 21, 2017 at 11:10 am
I wonder how much people like Buffet are really responsible for their wealth? I suspect they hire an entire team of people to manage their wealth.
October 21, 2017 at 5:03 pm
Thanks for your reply.
October 23, 2017 at 1:06 am
They definitely have other people handle their money. I’m not debating the premises of your argument (I am a Marxist)- I’m just trying to say there’s some nuance there, because the way investing is sold to the public is “you can make it big too”. But most of it is done through a kind of legalized insider trading. So definitely, they have a team of people they hire, but they also personally know the people in the upper echelon who make the decisions, so its easier to know where to put their money. Sociological has shown that classes reproduce themselves through nepotism, inheritance, etc. In short my point is- money makes money, but its possible to be stupid with it too (Trump), and its also about who you know
October 23, 2017 at 4:32 pm
Oh yes, absolutely.
October 23, 2017 at 5:58 pm
I suggest you read #Armstrong’s blog on finance. I have followed him since 1982 and his computer has never been wrong. At present he is offering free his advice – via his computer – to the average person to way more than level the field against the pros. He HATES the pros and the govt with good reason. He refused to give the govt his code so they imprisoned him for years, many in solitary. So he is out for revenge. He was a millionaire at age 17 and has IDK how much now. But he is out to break their backs He refused to hand over the code he developed and had to learn law to get himself out as his lawyers were intimidated by the govt and couldn’t help him. He realized he was going to did there if he did not do it himself. So if you have money to play with or invest, my advice is to follow him. His psychological analyses are often at odds with my thinking, he is not a literary informed person but if you can ignore all that understand that he is a great financial genius and learn from him.I push him so that more and more people will follow him.At the rate he has been going it is getting to where I want him to be, and that is to make betting against him an idiot choice. Now if the big numbers follow him what do you think will happen. I read it through Nietzsche and Baudrillard. The big guns on Wall Street have recently closed shop on their own research and all those fake pushers set up to ruin people are now maybe flipping hamburgers at McD’s.And strangely enuf it was Scalia whose vote got him out as he was never charged and his Constitutional Rights were violated.
November 19, 2017 at 5:58 am
hi
thanks for pointing out so clear one of the most common mis-understandings. You relate money to work and\or commodities. Perhaps this was adequate in those ancient societies that really were tied to the matter of matter, some 2 million years ago, or so, perhaps even far more back.
The misunderstanding that money – more accurate: differential flow of money – is related to work and commodities – was, rather recently in comparison, theorized by Marx. (differential here in the sense of plain differences)
I am not going to blame Marx, or anyone else, for the blindness. At the time of Marx it was perhaps difficult to see, even more than nowadays, that differential money has nothing to do with work or commodities. The issue goes much deeper. It has to do with the fact that there is still no theory of money and its flow, or if so, only very rudimentary and partial; it has to do with information and the subtle relationship between information and causality.
If one carefully studies (difference-based) differential money, more practically, the fact of different incomes, one can see that differences are due to differences in potential. More precise, the potential to act as a causation. of course, in the de-facto setup of economic organizations (companies) the philosophical concept of potential is not reflected by an explicit role (would be funny indeed). Yet we find actualizations of it.
Now, how could the potential be thought of? Quite simply, it is an aspect of money itself.
Differences in the flow of money can not only be observed in individuals, organizations are subject to it as well. I do not want to step in into micro-economics here, not talking about liquidity and free cash-flows. But it is mind-blowing that the market value of Apple, Alibaba are of the same almost unimaginable size. The company with Amazon.
If we return to the difference in money flow across individuals, a pattern emerges.
– the more people are dependent in their salary on your decisions, the more you earn
– the more people you affect in their decisions in terms of market reach, the more you earn.
Hence, nurses usually earn little, as little almost as gardeners. Night managers and barkeepers earn little. Michael Jackson and Sony earn a lot. Philosophers earn little, life-style bloggers earn more. Of course, a lot of differentiating forces act on the basic pattern.
Currently, those affections are perceived as real and actual only insofar as they can be measured, usually at the end of the month. Whether positive or negative differential money, labeled as costs, if it unfolds in the more distant future it does not get associated with potential. Not because the participants are evil, yet because the uncertainty related with the future.
Here I stop. Yet the point should be have become clear.
cheers