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Comment by downrightmike | Hacker News Reader

Company profits are just unpaid wages.

That is a really unhelpful way to think about business. Envision this scenario, you want to build a mine and have just enough money to build and operate the mine for a year. All goes.well and you hire miners and the mine makes a profit for the year. That profit is what you eat on for the next year while you're waiting for the next year's profit. Since the mine is profitable it is now worth more than when it first started, and you realize a return on your investment.

The miners benifit because they have jobs in their field, you benefit because you get to eat, and increase your net worth.

In the world where profit is unpaid wages, the mine never gets built because you don't sign up to starve.

You don't even have to envision this next scenario: Matchgroup owns 45 different dating apps. Does your logic still apply?

[Edit]

In theory all profits could be split amongst the owner and the workers, without any leftover profits. Like pirates and their captain split a bounty.

It does, but it looks wierd because the product of match group isn't apps, it's money. Essentially match group is a holding company whose workers aquire other companies. Since they are public their owners are you and me who invest our limited assets in the hope the profits grow them.

Regarding your split: Essentially that's what happens in real life. Profits that are not spent(paying wages is one way to spend them) or paid as tax get added to the balance sheet of the business. That increases the "book value" of the business so the value of the business increases and hence the return on investment increases.

It's a bit more complicated because hoarding cash isn't usually a great use of profit (inflation) so owners would typically like to hire more people and grow the business if they can.

Thus reaffirming profits are unpaid wages.

Replying twice, but you might be interested in the history of joint stock companies (what we call corporations). They started to deal with losses at sea, so a lot of your maritime piracy analogies are strangely fitting. This is the first o e https://en.m.wikipedia.org/wiki/Dutch_East_India_Company

The fundamental thing I think silicon valley got right is to make the employees shareholders and owners. Co-ops get that right too.

It's hilarious the first example is also, in the first paragraph, a monopoly. I don't have a problem with theoretical capitalism, but people would much rather use their resources to squash a competitor, or in this case, legally prevent, competition on talent.

[Edit]

People love to espouse the free market, but I'm not sure it ever existed.

I would say that the monopoly granted to EIC was more like the monopoly granted to patent holders. The risks to life and capital of the venture were extreme.

I don't think things would work as well as they do now if everything was a non-profit.

I can't imagine trying to raise capital for my ideas if I had to tell investors that they would not get their money back. And I would not be able to do what I'm doing now without investors.

What if instead of a few founders and the investors getting crazy paydays, those proceeds were paid to those who do the work, workers wouldn't need investors to buy into their ideas unless they provided a lot more value than cash. The current system is flawed in that that small group of investors drain the company of all its value and then dump it on the stock market hoping retail and index funds will pick it up. The value proposition currently sucks.

Not really. Lots of business that can run profitably have obscenely high startup costs, and hence need investors.

This is because workers aren’t pooling their own money and agreeing to accept a full share of any losses. (Historically a few have done this; sometimes it works.)

A company shouldn’t blow all its revenue on labor for the same reason I don’t blow all my wages on pizza. I have many other needs, including the building I live in.

Especially in tech, this is impossible. Raise $10m, hire 20 people is a common scenario for instance. Where are you going to find 20 people willing to put in and probably lose $500k for your idea? What if you need to raise $100m later on, where are you going to find that many people?

It's just not gonna happen.

There is absolutely nothing today preventing workers from operating the way you want them to.

If your system is so successful, why aren't most companies running like that?

What a silly way to look at it.

Are losses overpaid wages too?

"Losses" are unpaid wages too. Profit only exists if you do not fully distribute revenue, it seems to me.

"Silly" - avoid swipes please.

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