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Businessman Dependent on Workers

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Kirota
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Okay, I've ran into an argument from altruists lately that really irritates me. I know it is wrong, but am not sure how to say it.

The argument is that people need others in order to create things. That the businessman cannot grow his business without hiring workers. So the businessman is dependent on the workers. It says that in order for a person to create, they must be a slave of the collective in a way.

So if anyone could clear this up for me, thanks.

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The argument is that people need others in order to create things. That the businessman cannot grow his business without hiring workers. So the businessman is dependent on the workers. It says that in order for a person to create, they must be a slave of the collective in a way.

It is true that to create any piece of complicated modern technology, many people are needed to participate in the effort. This is not contrary to the claims of Objectivism. Rather, what is important is how such creative groups are organized. Are they formed by voluntary agreement, or by coercion? Cooperative groups formed by voluntary agreement (such as businesses) certainly work together, but that does not make each member of the group fundamentally dependent on the others. Because each person has judged for himself that participation in the group is valuable, and has been judged by others to be a value (everyone is contributing something), everyone is relying on their own independent judgment to guide their participation in the group. This is certainly not the same kind of dependence that characterizes one person living by forcibly taking the money of others.

Your friend's statement is true, in a way, but very misleadingly worded. The important aspect to focus on is the nature of a businessman's dependence on his workers. Is it coercive dependence, or dependence stemming from a voluntary organization? It is simply ludicrous to claim that the latter situation is one of "slavery." If this were the case, I would be a slave to the other players on my IM basketball team. After all, I need them to win games.

Edited by Dante
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Ask them then how exactly a bunch of workers without (a) creative leader(s) can learn to assemble a car. Or a phone. Or a particle acclerator. This is the classic fallacy of the Labor Theory of Value.

Yes, labor is need to make products. Congratulations. You now understand one of the most fundamental facts of human existence. Now, ask how the ideas for these products came to be. Blankout. A human must first conceive of a tool before he can nicely ask people to help him make it. It is not a relationship of a slave to a cabal, or of an army of slaves to a Neitzchean superman, but of people, some with ideas, some with skills, and some with both, working together to make something.

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Technically you don't need others to create things, as it is certainly possible to live in self-sufficient isolation. But it is for these three facts (1) all men are not perfect clones, (2) all land area is not perfectly identical, and (3) there are some undertakings which require more than one person to accomplish, that the division of labor arises, as greater output, higher standard of living, and greater wealth is possible. The question is, as others have alluded, the nature of the cooperation involved, as it is immensely beneficial to associate and cooperate with other individuals, to trade and exchange and produce with them, rather than living in isolated self-sufficiency. It is in the rational self-interest of two individuals to cooperate and associate only on the basis of certain conditions (individual rights politically, the trader principle morally.) Any association of two or more individuals where each does not have recognized his right to life is slavery or expropriation.

Edited by 2046
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So basically I would have to be in agreement with them?

Here is my problem. These people justify the equalization of the profit. They say that because the businessman is dependent on workers, they deserve an equal profit as him. That the only reason the businessman has what he has, is because of them.

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Here is my problem. These people justify the equalization of the profit. They say that because the businessman is dependent on workers, they deserve an equal profit as him. That the only reason the businessman has what he has, is because of them.

Well that simply does not follow. The only thing that the worker "deserves" from the businessman is what the businessman agrees to give to the worker. Likewise, the only thing the businessman deserves is what the worker agrees to do. When both parties agree to a contract whereby the worker labors for a certain wage, the worker deserves no more than the agreed upon wage, and the businessman deserves no more than the work agreed to be done. That's what a contract is.

I'm going through a PhD program right now. I'm taking classes from many different professors. After I get my PhD, when I get a job, it will only be because of the people teaching me right now. They, and the institution I'm attending, will be the only reason I have that job. Does that entitle them all to shares of my wages?

What about my parents? I wouldn't even exist without them. Are they entitled to a share of everything I get in life?

Of course not. Contracts and agreements do not impose any obligations other than those enumerated in the contracts. I may not have been able to get a job without my professors, but they taught me for a specific reason: because I entered into an agreement with the university. The terms of that agreement are the only binding obligations I have to them.

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So basically I would have to be in agreement with them?

Here is my problem. These people justify the equalization of the profit. They say that because the businessman is dependent on workers, they deserve an equal profit as him. That the only reason the businessman has what he has, is because of them.

In addition to that not making any logical sense, as Dante pointed out, (there is no valid reason why because two people cooperate that it follows that either have a claim to the unearned wealth produced by the other) there is another economic reason why this is impossible. If all workers had to make an exactly equal profit as the capitalist, the job would simply not exist. Wages are the selling of money in exchange for employing labor services, and this is only possible because employing the worker increased output beyond what the capitalist was able to do by himself; and also the worker is paid more in wages than what he was able to do by himself, demonstrating the mutually beneficial nature of the trade. Otherwise there would be no point in hiring the worker nor the worker accepting the offer, and the capitalist wouldn't have created the job in the first place, or if he did continue to work on his own capital, the worker would be unemployed unless he takes the same steps as the capitalist: labored, created, underconsumed, taken risk, and purchased or homesteaded capital goods.

But wages are preferred by the worker because of time-preference, uncertainty, and creativity. He didn't have capital, he hadn't saved by reducing previous consumption sufficiently below his income to accumulate the capital necessary, he wanted money payment while he worked, he was not willing to wait, and he was unwilling to be saddled with the risk that the goods may not sell or sell at desired price, and he did not expend the necessary effort (mental and physical) to come up with the creative use of his mind in designing a plan of action for capital of his own. Thus, the capitalist and worker are conferring mutual benefits upon each other, which brings us back to the fact that mutual gain is only possible if both parties have recognized their right to life and are able to act accordingly.

Edited by 2046
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They say that because the businessman is dependent on workers, they deserve an equal profit as him. That the only reason the businessman has what he has, is because of them.
Even two businessmen who team up do not deserve equal profits. Suppose one guy comes up with a new idea but is terrible at selling it, and his buddy is great at selling it but cannot get very technical on production after some level of detail. How much profit does each deserve? The right answer is: whatever they agree to between each other. (In fact, even using the word "deserve" is inaccurate.) Edited by softwareNerd
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One way to open up your "friends'" eyes is to ask them how many men are there out there, that the creator might hire to do the labor, versus how many creators are there, for the laborers to sell there labor to?

Mindy

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