AOC Nods

“Capitalism is an ideology of capital – the most important thing is the concentration of capital and to seek and maximize profit…so to me capitalism is irredeemable.”

(I found the quotation at ZeroHedge, but it is widely reported elsewhere.)

One thought on “AOC Nods

  1. I used to think this way. Specifically, I had heartburn with the concept of profits. It seemed to me that profits tack on a small increase in the natural price of goods and services. The effect, I reasoned, was inflationary in ways that eventually make increases in the money supply necessary. But expanding the supply of money is itself inflationary. Profits thus initiate a destructive bad-money-drives-out-good spiral that starts out small but expands out of control. Worse, the first-receivers of newly created money make out like bandits while everyone else suffers.

    Can you spot any of the many fallacies in my reasoning?

    I have since come to appreciate that profits do not, in fact, inflate the “natural price” of goods and services. To the extent that natural prices can be said to exist at all, profits are built right in.

    Small business owners know the story: What you pay an employee is less than what you charge a customer for the employee’s services. A typical formula is:

    wages + non-wage compensation + overhead/taxes + profit = market price

    AOC would say, “But employees don’t share in the profit.” In fact they do, and inevitably.

    A business literally cannot operate without profit because it must have the wherewithal to implement sound management decisions such as investments which improve productivity or responding to unforeseen expenses without outside help. This is where the employee’s share in the business profits comes in.

    To get the highest possible wages, an employee must work for the best managed company, roughly defined as the company that offers the most productive work environment. To get such a job, the employee offers a “profit discount” on the wages he is willing to work for. Doing so ensures that the company can remain a going concern, which is of immense value to the employee.

    Looking at capital transactions this way helps to explain why there is no such thing as a “natural price” for goods and services. There is nothing, really, for AOC, to complain about.


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