My knee jerk reaction is to disagree, but on second thought, I’m open to hearing the argument.
What would that look like in practice?
What would that look like in practice?
That being said, it's clear that in the current system, rich people can get richer faster than poor people.
We have a two class system a) workers who get paid per unit of work b) owners who capture any surplus income, who decide hiring/firing/salaries, who can sell the company and whose wealth keeps increasing (assuming the company does well) whether they do any work themselves.
Note: I see very few things which have inherent value - natural resources (plus land?) and human time. Everything else (with monetary value) is built from natural resources using human time.
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If a company starts with 1 guy in a shed, he does 100% of the work, owns 100% of the company and ... it gets muddy here ... gets 100% of the income / decides where 100% of the revenue goes - if it's a grocery shop he can just pocket any surplus, if he's making stuff, he'll probably reinvest into better tooling or to hire more workers.
A year later, he hires 9 workers. Now he does only 10% but still owns 100% of the company.[0]
There's a couple issues here:
- He owns 100% of the future value of the company despite being created only 10% by him. Well, not exactly, he was creating 100% for the first year and 10% from then on.
- He still gets to decide who gets paid what. He has more information when negotiating.
- He can sell the company to whoever and the workers have no say in it. He can pass it on to his children (who performed 0 work there) when he dies.
The solution I'd like to see tested is ownership being automatically and periodically (each month) redistributed according to the amount and skill level of work performed.[1]
So at the end of year 2, the original founder has done 2 man-years of work, while the other 9 people have done 1 man-year of work each. This means the founder owns 2/11ths of the company while everyone else owns 1/11th. This could further be skewed by skill levels. I am sure starting and running a company for a year takes more skill than doing only some tasks. OTOH there are specialized tasks which only very few people can perform and the founder is not one of them.
The skill level involved would be part of the negotiations about compensation.
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This is complex. I am sure somebody is prone to rejecting it based solely on that. But open a wiki page about e.g. bonds[2] and see how many blue words just the initial sentence has and ask yourself whether you could explain all of them (and then transitively all the linked concepts on their wiki pages).
Slavery is very simple but very unfair. Employment is more complex and less unfair. I have a theory that the more fair a system is, the more complex it is because it needs to capture more nuances of the real world.
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[0]: Some people think this is right because owners take all the risk and employees take 0 risk. That is misrepresenting what really happens - sane investors/owners don't risk losing so much they would go homeless/starve if they lose it all. They can also optimize their risk by spreading it across many companies. Meanwhile workers get 100% of their income from one company and drop down to no income if the company goes bankrupt. They can also be fired at any time.
This was argued here: https://news.ycombinator.com/item?id=45731811 in the comment by kristov and the reply by me. I also have other comments there with relevant ideas.
[1]: What happens to monetary compensation? I don't know, I see multiple options:
a) Everybody gets paid monetary wages like today, plus (newly) a part of their reward is the growing share of the company they own. If we allow selling it to anyone, it has high monetary value but then ownership gets diluted to outside investors. If we allow selling it only back to the company, it has value only relative to the decision-making power it gave. If we don't allow selling it, its monetary value only comes from the ability to vote on dividends.
b) Everybody gets paid a portion of the income divided according to their share. This sounds simple but likely wouldn't give enough money to newly joined workers to survive. There could be a floor. (Or, because hard cutoffs suck, a smooth mathematical function from owned percentage to monthly compensation which would have a floor at minimum wage.)
> - He owns 100% of the future value of the company despite being created only 10% by him. Well, not exactly, he was creating 100% for the first year and 10% from then on.
1) If you believe this, then you have a massively simplistic view of employee value. The distribution of actual value provided by employees is probably log normal, and certainly not normal (gaussian).
2) This is basically the labor theory of value. That is an economic theory that was discarded as wrong about 150 years ago. If it was true, the value of a newly discovered gold mine would be 0.
That's why I talk about skill levels later, but briefly because this is a comment, not a book.
There's also a difference between how much value is provided can be attributed to a particular person vs a particular position. Some positions allow a much wider range of possible outcomes. How much extra wealth does a 90th percentile carpenter produce over and average carpenter? What about programmer, fashion designer, manager, salesman, doctor?
Does this mean the value of life of different people is based on how productive they are?
Because each person has roughly the same amount of time available to them and if they are spending an equal amount of it building a company, does one deserve to own more of it? Should this distribution be the same or different from the (monthly) monetary compensation?
These are rhetorical questions (mostly) but they are questions society should be discussing IMO.
Tangent: a carpenter who has no salesman and is so shit at selling his furniture that he gives it away for free is still producing value for society, even if he goes broke doing it. OTOH a salesman who has no carpenter and is so shit at making furniture that nobody wants it even for free is not producing any value at all.
> This is basically the labor theory of value
Ok, I need to read up on LVT. Seems like I am finally getting somewhere because I can't believe I am the only one saying things like this but at the same time I have not found anybody else with similar opinions. At best, I've seen people try to pattern match my opinions onto something similar they were familiar with but actually different.
> If it was true, the value of a newly discovered gold mine would be 0.
I don't know how this results from LVT yet but it seems what I am proposing must then be fundamentally different depending on how you meant it:
a) You meant gold as a natural resource with inherent value. It is necessary for making e.g. some electronics. The only question remains how to distribute the reward for discovering and mining it.
b) You meant gold as a substitute for money, ignoring its value as a natural resource. In that case, yes, money is a medium of exchange, you can't eat it or make anything out of it (maybe a fire?). Having more money in circulation does not bring any extra value for society, it just multiplies all monetary values by a number slightly larger than 1. (OTOH for the person discovering and mining it, it would be beneficial but only because he now has more relative to others. The same way as if he printed more money.)