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Comment by maxaf | Hacker News Reader

Limbaugh is right about one thing: ongoing capitalism is predicated on labor’s willingness to operate within a framework designed to efficiently capture surplus value created by employees, and concentrate it at the top of a company’s hierarchy. In that particular sense Gravity is no longer an example of successful capitalist enterprise. Funny thing is, taxonomy matters not a little bit for those who are served by Gravity’s model: the owners, employees, and customers. If it works for them without harming anyone else, it’s not for us to judge.

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Going further, the employees should actually get paid some share of the profits that they generate, not just a fixed salary.

That’s how bonuses work. A good rule of thumb in finance is that you “deserve” 5% of the money you generate. You make 5m, you get 250k.

I’m sure there are rigorously sourced data of this across all labor positions. There should even be a public repository of those salaries. Mind providing a link?

Do you mean as base salary or as a bonus? Lots of tech companies report earnings per employee, and the I'm used to hearing that number be in the couple hundred thousand range. Apple is at $400k earnings per employee. That would mean Apple should be paying $20k as yearly salary or as a bonus on average at your 5% rule. Sounds like bonus territory.

Well, ideally, your base salary is pretty low and your bonus is big. This is the model used in finance because the returns are very unpredictable and the standard deviation between the worst and best employees is very large. Bonuses also provide good incentives to employees.

But to answer your question, total comp should be around 5% of the money you book for the firm. So salary + bonus.

Why do you conclude that money has stopped efficiently flowing upward? There's no real info in the article about profits before and after the change.

If Limbaugh said that (I didn't check), he is wrong. Capitalism simply means private ownership of capital, which admits a wide variety of ways to organize people, including partnerships, co-ops, profit-sharing, employee-owned corporations, employee pension plans invested in private companies, etc.

Does that mean that the market is simply devaluing capitalists?

I think that Gravity’s experiment is a sign of society waking up to other viable operating models. Capitalism is just one way to do business, but it comes with some downsides that are now well documented. I doubt anything of value would be lost if the goalposts got moved away from “capitalism by default”.

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