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Comment by mr_toad | Hacker News Reader

> the capital owner is risking capital so should get to enjoy a disproportionate amount of their profits

Anyone who advanced that ‘defense’ has a poor understanding of economics.

Risk is not an essential element of capitalism. Some investments are effectively risk free. ‘Disproportionate’ return seems to be something you’ve just made up. There’s no mention of the proportionality of returns in any economic treatise I’ve ever read.

Lastly, there’s nothing to defend. There’s simply the observation that if there is no return on capital then there’s no reason at all to provide capital. Nobody has ever come up with a working alternative.

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Risk is absolutely, essentially part of capital investment. The only reason to invest in capital over bonds is higher returns, with corresponding increases in risk.

> Some investments are effectively risk free.

Yes, and the returns on those are close to inflation (that is: minimal). A high risk investment like an IPO might return 300% in its first quarter, but it is far more likely to falter or fail (-100%).

> There’s no mention of the proportionality of returns in any economic treatise I’ve ever read.

Time to read your first one, then.

> if there is no return on capital then there’s no reason at all to provide capital.

Untrue. Capital accumulates. People have desires for their world/society/community beyond their own wealth. They want to see certain things happen, and owning capital puts a person in a position to influence whether it does (or does not).

In that case most capitalists and owners don't understand capitalism, because there are only two standard arguments - one is the one about risk, and the other is that everyone should be grateful when a capitalist creates jobs at all.

As for defences - capital is just political power by other means. If the capitalist is wasting money on yachts while workers can't afford food and housing, the return is morally disproportionate, and the usual outcome is socially catastrophic, in various possible ways.

Capitalism reduces every transaction to personal opportunism, with no concept of broader consequences. That's a shockingly stupid way to run anything - as we're all about to find out.

> Capitalism reduces every transaction to personal opportunism, with no concept of broader consequences

It is people who ALWAYS reduce everything to personal opportunism (no matter capitalism or not). Capitalism is the smartest way to run anything exactly because it is build on concepts of broader consequences of that fact.

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