If the owners of land and labor factors receive all the income (e.g., 100 ounces) when they own the product jointly, why do their owners consent to sell their services for a total of five ounces less than their “full worth”? Is this not some form of “exploitation” by the capitalists? The answer again is that the capitalists do not earn income from their possession of capital goods or because capital goods generate any sort of monetary income. The capitalists earn income in their capacity as purchasers of future goods in exchange for supplying present goods to owners of factors. It is this time element, the result of the various individuals’ time preferences, and not the alleged independent productivity of capital goods, from which the interest rate and interest income arise....says Rothbard, in Man, Economy and State (chapter 5). This is a very useful quote since it addresses the whole socialist-agenda of "capitalist exploitation" of workers. Are workers getting less than they deserve if they, combined, earn less than the price paid for the products they worked on and made? No. Why not? See above quotation.
Wednesday, February 09, 2011
Capitalists and income
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