This is not going to be an argument in favor of wage-slavery. Instead, it will explore some important considerations toward the proper compensation of labor, with regard to its relation to capital.
Marxists and their followers—communists of all stripes— make the mistake of arguing that the problem with capitalism is that workers sell their labor. This is not correct, and was probably an outright lie to forward the interests of banksters. This makes the assumption that labor is not something that should be sold, and it riles up the multitude to drive things to the lowest common denominator.
What actually happens in the wage-slavery of the common employer-employee relationship is that the worker is renting the employers’ capital and licensing from them, and paying the employer in interest on capital and profit on labor as the rent. In other words, the employer, who owns property in the form of capital and licensing, lets these out to their employees, for the employees’ occupancy and use, with the demand that the employees give him or her all of the interest on their capital and the profit on their labor. This comes at a loss for the employee, who must afford the profit from their natural wage and the interest from their own natural premium, as the actual occupiers and users of the capital and licensing. That is, they are occupying and using, but are failing to defend, their property (their attributes, that which comes from them) and their possessions (that which is in their hands and already under their control). In failing to defend their personal property and possessions, they submit themselves to the payment of tribute, this coming in the form of the interest on their employers’ capital and the profit on their employers’ license. This is a despicable state of affairs, owing both to the ignorance and pusillanimity of the employees and to the avarice and meanness of the employer. It was a relationship that was much more clear during certain times in history, particularly when there were jobs salesmen, similar to how there are agencies to help tenants find landlords.
Marxists equally make the mistake of assuming that capital itself is a problem. Again, a falsity. The real socialists before Marx were not of this view, but were aspiring to make of every worker a capitalist, so as to eliminate the capitalist class, the capitalist as distinct from the worker. When each worker is themself a capitalist, there is no capitalist class, because capital-ownership ceases to be a distinguishing feature that separates people.
Mutualists are not against investment, capital, premium, or selling labor. That’s Marxist, bankster garbage. Mutualists are opposed to letting property and distorting value. It is letting property that is at the heart of all economic exploitation, not the exchange of labor or its product, the sale of goods or services. Letting property is a relationship where one person needs something that another person can do without occupying or using for themselves, and so the second exploits the first. In the above examples, it has been capital and licensing, but it can also include land, in which case the surplus return to the landlord is not interest as it is to the capitalist employer or profit as it is to the overman employer, but rent. Josiah Warren uses the example of an individual thirsting direly for water, and another individual charging him the total use value of the water. This amounted to a rent totaling in the drinker’s life servitude.
When one makes an exchange for food, the seller does not maintain the title to the food as it passes through the body of the buyer, and then collect the humanure for his or her trees afterward. No, the seller, in making the sale, passes ownership to the buyer, at which point the buyer has the uncontested right to do with the food as he or she wishes, including to flush it down the toilet. This is based upon the premise that the buyer has compensated the seller for all of the costs involved in the production of the food, and so has given something of what should be equal value (but which usually includes interest, profit, rent, and taxes).
Yet, while a tenant’s rent will compensate the landlord, the debtor’s interest their usurer, and the employee’s profit their employer, there is no exchange of ownership. That which has been paid for is not claimed. It is not this way because claiming that which one has compensated another for is an injustice, but—quite the contrary—, because the injustice of accepting more than one’s due compensation—however pussilanimous and avaricious— has become popularly accepted, and even pursued and celebrated as a dream by the multitude who bear the burden of the vast majority of interest, profit, and rent. Interest, profit, and rent is not all, though. Taxes and conscription are the price paid directly for society not standing up for itself, being taken directly by the state. All of these come from the natural wages of the workers, whether paid directly or indirectly as reflected in the prices they pay for goods and services on the market, all of which include in them the profit, interest, rent, and taxes they themselves would otherwise be burdened by. The consumer pays the profit, interest, rent, and taxes in the goods and services they buy, and unless they are themselves a recipient of profit, interest, rent, or taxes, in which case another’s labor affords the loss, this must be afforded from out of one’s own wages, as paid atop the payment of what portion of wages are allowed after surplus is taken, to another for their honest production.
Importantly, there must be a distinction made between losses and costs. Costs are due to socially in-demand efforts, while losses are not due this. A laborer pays a cost when they pay a price, but a robber does not. Similarly, banksters, bosses, landlords, and politicians, when they lose any portion of their interest, profit, rent, or taxes do not face costs, but losses. The costs of their interest, profit, rent, and taxes were felt by their debtor-worker-tenants upon extraction from out of their wages. Because these costs were not duly compensated, they were not costs to the bankster, boss, landlord, or statesman (though they may have costs of their own), but are a surplus, which can be lost, but which cost them nothing.
There is an absurdity in the notion that a landlord, bankster, employer, or politician is of assistance to their prey, contributes thereto, and is compensated therefor. This is not at all the case. Another’s multiplier does not contribute to one’s total product except by benefits of collective force such as economies of scale or when usurped from them. While it is true that teamwork can increase the amount that is produced, this teamwork is owed to both parties, and is no claim upon the efforts of the newcomer. Rents of land, interest on capital, profits of employment, these are not compensation to the landlord, bankster, or employer, but are the vitals vampirically sucked from the tenant-debtor-employee.
Still, this is not the entire story, and that leads us to some important grey areas. Let’s get some things sorted out.
The above— excepting a few comments on premium (discussed later)— is generally described in the classical economic terms, where there are three factors of production and their returns. There is no issue with there being only three factors of production—land, labor, and capital—, as popular misconceptions have it (desiring to distinguish a fourth factor, such as entrepreneurship or social inheritance, which can be reduced to land and familial endowments), but the corresponding returns—rent for land, interest for capital, and wages for labor— have caused some confusion owing to some inconsistency in use. That is not to say that they are wrong, because they are not, but it is to say that we can be more precise and geometrical in our approach to these forms.
Ultimately, the problem is that rent and interest are terms for injustices, while wage is a just term. This creates an imbalance in the way these terms must be approached, and demands some special understanding. In particular, and firstly, it demands that we understand that marginal land and capital derives no rent and interest. Secondly, it leaves just returns to land and capital, which are duly owed to labor—or cost— not as a factor but as a force, unnamed and to be treated as wages more simply. Thirdly, it leaves us to recognize a surplus return on the labor factor of production as profit, a term that is quite often also used synonymously for surplus more generally so as to include rent and interest as well. Let’s graph this out.
Instead of this, I have acknowledged that there are other forms of cost, and syntaxically reduce profit purely to a surplus return on labor, as you can see below, making for a much more consistent and geometrically-balanced catalog of these forms.
We have explored interest, profit, and even rent—interest coming from monopolized capital such as a building and equipment, profit from monopolized labor such as by having a license, and rent from monopolized land—, but we have not yet explored in detail the wages, yield, or premium. This will be important to answer our questions about the seeming gray areas we are struggling with.
Wages are, of course, the return to labor as a factor of production. This includes not only contract wages, but also salaries and even the “profit of account” of employers. By profit of account, we do not necessarily, though we may, mean the economic profit here treated as a return to the factor or factors of production, but also a form of what amounts to being wages in substance. This is because the profit of account includes any economic profit, rent, or interest, but also the economic wages of the employer. These are not contract wages or wages of account, but they are economic wages, because they represent the amount of effort an employer is self-willing to put into the business. Economic wages are that amount that one is willing to accept in order to perform work (endure costs). If a business becomes too burdensome in terms of work for the employer, it will shut down because it will not be able to afford his or her wages, to incentivize him or her to keep working voluntarily.
The employee, too, receives wages. However, their contract wages are below their economic wages, and so it can be said that they do not receive their full or natural wage in their contract wages. Yet, it was just asserted that wages are that amount necessary to get one to keep working voluntarily. That is just it, this is a situation that occurs without voluntary participation, because it is a situation that occurs under the conditions of duress. If the tenant-employee-debtor-taxpayer does not pay their rent, profit, interest, and taxes, they will be landless, without work, without capital, and without defense. This is a dire situation which owes itself to the positive liberty of the individual, as otherwise a member of civil society, being forsaken. And this being forsaken is a condition which makes the individual submit themselves substantially involuntarily— because under duress—, though formally voluntarily, to contract rent, interest, and profit that usurps from them that amount of their natural wage which is not necessary for sustaining them for the performance of more labor under the conditions their landlord, capitalist, and overmen find acceptable for them.
Had the worker their own capital, acquired by the spending of their own wages or the ingenuity of their own hands and just yields of their own land in an open market, this capital would be a factor in their production. That is, it would multiply their labor. But this multiplication is not interest if it results from their own ingenuity or by compensating another’s from one’s own wages, because the title is owed to it being one’s property, one’s attribute, its existence being afforded by, and so being an extension of, one’s self, much as the color of one’s hair, and the hair itself, is the property, or attribute, of the individual. The word for value of capital beyond its principal investment amount, which is not interest, is premium. Considered in isolation or as an average producer, if you can run 8mph (a factor of 1) and bike (a factor of 2) 16 mph, 10 2/3 mph is your premium. If you can collect 10 apples by hand (a factor of 10), and sell them for $0.25 each, or 60 apples in a basket (a factor of 6) and sell them for $0.10, your basket premium is 22.5 apples or $2.25. Premium is a return to the cost of capital which is beyond the principal, investment amount, but which does not occur under monopoly conditions, and is often attributed to the risk involved in an investment undertaking.
The actual history is that modern socialism arose in connection with the worker cooperatives that were developing out of inspiration from the joint-stock companies. Worker cooperatives, that is, were an approach to put joint-stock capital in the hands of workers, thereby allowing each to capitalize on their own or their shared collective labor. In a cooperative, where each worker only has one share of equal market value, this equal share is dependent upon their own success, since they do not have employees. Returns on cooperative capital are not necessarily interest on capital, then, but premium, since the capital return is not a surplus or profit, but a reflection of costs. The difference between premium from capital investment and interest on capital is that premiums are more related to wages while interest is related to profits. This is because the interest results from artificial forces (privileges), whereas premiums result from natural forces (ingenuity). Thus, the Law of Interest does not apply, and there is a corollary Law of Premium, which dictates that capital investments free from monopolistic forces that result in competitive advantages are a reflection of the labor and not of the material or privilege, the property. That is, premium differs from interest on capital because the value of premium-bearing capital is valued according to the efforts behind it, whereas interest-bearing capital is valued according to the shortage of the capital in the market.
Employees essentially rent the capital or license of the employer, resulting in his or her interest on capital and profit on labor. The workers do not have their own capital or license, so they have to rent it from the employer, which takes the form of an employment contract where the employer allows them to use the equipment and license in exchange for the interest and profit. So the employment relationship is really a relationship of letting, with the rent being the interest and profit. This does not occur in a cooperative, because it is owner-operated, and so there is no letting that occurs, no surplus-bearing profit or interest. So the return is actually economic wages, because owing to their own labor, but comes in the form of interest. Yet this is not truly interest, and there is a word for a return on investment that is not a profit, but which is at cost, already, and that term is premium, so it is in substance premium, which is a wage from investment (forward-thinking labor, entrepreneurship, contributions).
Wages and premium themselves constitute at least a portion of the yields. The yield refers to that portion of one’s product that is not owed to the rent of the Earth. For instance, an individual who has wages, profit, premium, and interest (together, income) on a plot of land will have their labor and capital potentials multiplied by the potential rent of the land. So, if their potential wages and profit are 2, their premium and their interest is 3, and their potential yield is 10 while their potential rent is 20, they will have a total yield of 60 composed of 2/5 wages and profit and 3/5 premium and interest and a total rent of 120 composed of 2/5 wages and profit and 3/5 premium and interest. This results in Henry George’s observation that wages and interest tend to rise and fall together as rent is increased or decreased, for, as he also says,
Capital, as capital, cannot claim nor share in this. Indians using only sticks and stones might kill one buffalo a week. Yet with bows and arrows, they may kill one every day. But the tribe's weapon maker would not claim six out of seven buffaloes. Neither will capital invested in a woolen factory entitle the owner to the difference between the output of the factory and what could be made with a spinning wheel. The march of knowledge has made these advantages a common property and power of labor.
Of course, this is not the whole picture, because, while the aforementioned examples (2/5 wages and profit and 3/5 premium and interest) are real returns, they are only the real contributory returns. That is, these are only the amounts and proportions that they contribute to the economy, without consideration toward other real factors such as security costs or margins of production. If the individual is to secure their land, such as by contributing toward a socially-satisfactory amount to secure their claim, the outcome will slightly differ. This is because their production does not occur in a vacuum, but within a social ecosystem. As such, that which they contribute might be offset by the costs of securing the ability to contribute that amount (which will have reference to the margin). This is not to be confused for a purely nominal rent, however, if it occurs through a process of honest collective assessment, especially by way of a bidding contest where bidders bid on the amount they are willing to secure it at, because the real, individual rents are as they are and because price realization at equilibrium tends to occur.
For instance, if the individuals have a potential wage and premium of 3, 2, and 1 and potential yields and rents of 3, 2, 1, individual A contributes 50% of the potential wages and premium, B 33.3%, and C 16.7%. With A using plot A, B using B, and C using C, the total production equals 9, 4, and 1. A contributes 4.5 rent and 4.5 yield, B 2 of each, and C 0.5 of each. However, 50% (the amount A contributed) of the total contributed collective yield of 7 is 3.5 (3 times that of the margin of yield’s 1.67), not 4.5. So, the relative, social yield differs from what might otherwise be considered an absolute or real, individual yield, as well as from the real, proportionl yield that we are after. It must be remembered that this yield is not an entitlement by nature, but that it requires the blessing of one’s competitors to secure the right to it.
The real, proportional yield, is 3, 0, and -1, while the real proportional rent is 6, 4, and 2, when the margin of production (the average producer's yield on the worst land) is considered objectively. However, this cannot be done in the real world, because of the subjectivity involved in value and the difficulties involved in assessing the relative inputs of land and labor as factors of production, their relative values. This results in degrees of nominality.
The truth of the matter, then, appears to be that the nominal, individual yield must be considered to be superpositional, and so is subject to quantum probabilities and amplitudes, or, to shine light on the matter, retrocausal, syntropic processes that make their appearance by way of the human conatus, itself showing up in the form of bids that appear subject to quantum uncertainty but which, in actuality, allow the bidder to feel their way to the equilibrium level, approximating and quantum collapsing to an increasingly maximal rate (an equilibrium at the real, proportional level of rent). By this process, contract rents become consistent with, and in fact collapse the nominal into the real, proportional rents (although rent at the margin will have to be set according to calculation and deducted from the rent dividend, so as to prevent free riding). That is, all of the nominal bid rates are virtually in effect until one of them is finally realized by the actor, whose bid constitutes a measurement and phenomenally results in collapse and realization.
A yield composed of wages and premium only is entirely just, and, as such, when adjustments are made, this yield is able to be reduced entirely to wages, owing to the fact that premiums are themselves an extension of the value of the cost of labor.
Mutualists are supporters of highly-individualist contractor economy, which might take the form of what looks like employers and employees to some extent. In this arrangement, a contractor will bid to manage a job and will subcontract the work out, with each owning their own means of production, or capital. While this has potential for abuses if the state steps in, on its own it is a competitive market wherein subcontractors can become contractors themselves. It might be expected that in a mutualist economy, contractors and subcontractors might have some degree of fluctuation, trading off with one another as contracts become available. So long as competition is preserved, the contract wages of subcontractors in a mutualist economy will generally tend to their natural level. But because these individuals are holders of capital, they might be considered “capitalists” in a small-c sense, but only in the awkward sense in which one might similarly say “landist,” suggesting that capital-holder is a more appropriate term, particularly since -ist is often used to imply ideology or orientation (and because capitalism has been historically, and so most objectively, defined as a system wherein the capital-holder is put about national and social interests). Mutualists are also supporters of competitive cooperativism, and, as such, their members are likely to consider the premiums of their shares. In this sense—the sense of holding capital—, and with the awkwardness described, they are capitalists, but because the return to their capital can be reduced to economic wages, even when considering for premiums, this is not their economic essence. Instead, they are fundamentally mutualists, or mutualists in substance, and are only capitalists in that secondary sense which does not contradict mutualism, and which is arguably poor, colloquial English or pure rhetoric.