Re: Don't Forget Mises -- and Dump the Third Way!

royls_at_telus.net
Date: 09/07/04 

Date: Tue, 07 Sep 2004 19:56:25 GMT

On Mon, 06 Sep 2004 21:31:19 -0400, Robert Vienneau
<rvien@see.sig.com> wrote:

>Notice that the capital goods with which we started
>were the result of workers' production in previous years.

Notice that those workers were paid for that production, and the
capital goods consequently belonged to their owners, not the workers.

>The workers, who have produced all the net product,

No, the owners' contribution of capital goods has also contributed to
the net product. Without it, the workers would have produced less.

>A diagram is useful for visualizing the money and real flows in
>this story:
>
>
> +--- Consumption goods ----- -- $ Total receipts -+
> | +- $ Workers consumption -> RETAIL |
> | | +- Consumption goods -- & <-- Net product -+ |
> | | | +-- $ Capitalist WHOLESALE | |
> | | | | consumption -> MARKETS - New capital | |
> | | | | +- $ investment -> goods -----+ | |
> | | | | | | | |
> | | | | | | | |
> | | \|/ | | \|/ | \|/
> | | Owners <------------ $ Profits ------------ INDUSTRY
> | | (inter-
> | +- Workers <------------ $ Wages -------------- industry
> +--> ------------- Labor ----------------> flows)
> HOUSEHOLDS
>
>
> FIGURE 1: ASCII VERSION OF NELL DIAGRAM
>
>Note the owners provide no direct inputs into production in the Nell
>diagram.

?? What about the investment flow that results in new capital goods??

>They are paid profits for no material inputs at all.

That is just stupidity. They contributed the capital that increased
the amount the workers could produce.

>Profits
>are not the result of some sort of exchange of goods or services for
>profit income.

This ignores the fact that capital owners pay workers to produce
capital goods, and are thereby entitled to some or all of the
additional production the capital goods make possible.

-- Roy L

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