What is Labor?

[Spiderman]

All this talk about labor and laborers has brought the question to my mind.

What is labor?

A commodity?

Something else?

I consider labor to be the property of the laborer. After all we equate labor with time and skill. Who owns these other than the laborer?

Now we add something else to the mix. Those that pay for another's labor.

If you were going to build a house you would call several contractors and inquire about such things as material and labor costs would you not?

You would then consider what you have as far as capital is concerned and choose the contractor that would give you the most value for your money.

Or you could tell a contractor that you have X dollars to build a house and would they be able to accomplish that for the money you have to spend. The contractors would either say yes or no. Then, you would make the choice from those saying yes.


Now why is it that when an owner of a business posts a job offering that he is not to hire his labor in the same way you would hire a man to build your house?

Each applicant is trying to sell his labor, time and skill, to the employer. The employer can either ask each applicant what their labor costs and then choose who he thinks would give him the best value or the employer can state what he is willing to pay for the labor and the applicants can decide whether or not to accept the position.

Obviously people with little skill are at a disadvantage just like a contractor that doesn't own tools or lacks the skill to use them is at a disadvantage.

These types of laborers usually can't command a price for their labor but rather have to take what is offered at least until their skills improve and their time is then worth more.

People who are highly skilled are in a better position to command a price for their labor. Just like a contractor with 30 years experience who is highly skilled can command more for a house he builds than one who has less experience and can only build a small basic home.

Now there is a good market for small simple homes even though that contractor may not be able to command a high price at first but with time, experience and improved skills he will eventually be able to demand a higher price or he might want to stay in the small home market and his increased skill will allow him to build homes more efficiently with less waste thereby allowing him to earn more.

Now my concept of labor has nothing to do with what a person is worth as a living being.

After all we do not buy people we buy their labor, time and skill.

Do you agree or disagree with this idea of labor?

 

[expat_panama]

...we do not buy people we buy their labor...

When human beings want to get something done, they need both capital and labor. If they say only labor counts and they only use labor, they won't get anything done. Saying labor is more important than capital is stupid. It's just as stupid as if there were someone saying capital is more important than labor. Nobody says that.

Nobody is a 'capitalist'. There are many who are 'laborists', but nobody is a capitalist.

 

[Spiderman]

...we do not buy people we buy their labor...

When human beings want to get something done, they need both capital and labor. If they say only labor counts and they only use labor, they won't get anything done. Saying labor is more important than capital is stupid. It's just as stupid as if there were someone saying capital is more important than labor. Nobody says that.

Nobody is a 'capitalist'. There are many who are 'laborists', but nobody is a capitalist.

So what is labor?

Is it a thing to be bought and paid for like equipment or capital expenditures or is it something else?

I do not believe that the price one's labor fetches is a measure of the person himself but of what his time and skills are worth to those willing to pay for them.

 

[expat_panama]

...do not believe that the price one's labor fetches is a measure of the person himself but of what his time and skills are worth to those willing to pay...

That's reality and it seems you and I are willing to accept reality. Marx couldn't; he argued that if all men are equal then they deserved equal incomes. Sadly, the income equality morons look like they're taking over.

 

[Kimura]

It unfortunate neoliberalism is the prevailing social-economic political theory. They tend to view capital over labor. Workers are just another input and labor is simply a commodity. This is kooky and off the reservation.

It's utterly impossible to treat labor soley as a pure commodity. For example, the ownership of commodities can be transferred and moved, but labor cannot since it's owned by the individual at all times.

 

[norwegen]

Yes, labor is bought and sold. The laborer owns the labor. The employer owns the job. They agree on the value of both.

 

[Kimura]

...we do not buy people we buy their labor...

When human beings want to get something done, they need both capital and labor. If they say only labor counts and they only use labor, they won't get anything done. Saying labor is more important than capital is stupid. It's just as stupid as if there were someone saying capital is more important than labor. Nobody says that.

Nobody is a 'capitalist'. There are many who are 'laborists', but nobody is a capitalist.

I have to disagree. Labor isn't quantifiable in terms of homogenous hours. What an orthopedic surgeon can with with an hour is vastly different than what a Walmart greeter can accomplish in the same time period.

 

[JakeStarkey]

What is labor? It takes precedence to capital.

 

[martybegan]

What is labor? It takes precedence to capital.

If labor takes presedence over captial, why do finished products not just appear from random works of labor?

Captial is not just the materials and money to make things happen, it is the organization and the will to create something.

 

[Spiderman]

It unfortunate neoliberalism is the prevailing social-economic political theory. They tend to view capital over labor. Workers are just another input and labor is simply a commodity. This is kooky and off the reservation.

It's utterly impossible to trade labor soley as a pure commodity. For example, the ownership of commodities can be transferred and moved, but labor cannot since it's owned by the individual at all times.

I don't see it as inseparable.

If I hired you to work on a framing crew at X per day and it takes us 14 days to finish and pass inspection I then Pay you 14X dollars.

You sold your labor to me. Now you have more labor to sell to me or someone else in the future.

Now I am all for ensuring the safety of people while they are working for me and I take great pains to make sure they don't get hurt. I am polite in my dealings and prompt with payment.

That is how you treat people but the labor, time and skill, is quantifiable.

 

[Spiderman]

What is labor? It takes precedence to capital.

Labor as I have defined it as time and skill is the capital of the laborer.

He is free to spend that capital or sell it as he sees fit.

Some people will spend their time and skill to make something they may or may not be able to sell for a profit.

Some people will sell their time and skill to someone who will tell them what to make.

 

[expat_panama]

...They tend to view capital over labor...

Yeah right. They also believe in "trickle down".

That's how the lies go. In real life nobody says they favor capital over labor and nobody likes trickle down, but virtually all the extreme mindless left says "they favor capital over labor" and "some people continue to defend trickle-down theories". If we want to consider ourselves honest then we've got to say that poeple believe what they say they believe and we've got to ignore the mindless slander from sworn enemies.

Please present a list of links and names of leaders and groups that say "we favor capital over labor" and "I'm a trickle-downer" or please admit you misspoke.

 

[expat_panama]

...do not believe that the price one's labor fetches is a measure of the person himself but of what his time and skills are worth to those willing to pay...

That's reality and it seems you and I are willing to accept reality. Marx couldn't; he argued that if all men are equal then they deserved equal incomes. Sadly, the income equality morons look like they're taking over.

What an orthopedic surgeon can with with an hour is vastly different than what a Walmart greeter can accomplish in the same time period..

Sounds like the three of us agree.

 

[martybegan]

...They tend to view capital over labor...

Yeah right. They also believe in "trickle down".

That's how the lies go. In real life nobody says they favor capital over labor and nobody likes trickle down, but virtually all the extreme mindless left says "they favor capital over labor" and "some people continue to defend trickle-down theories". If we want to consider ourselves honest then we've got to say that poeple believe what they say they believe and we've got to ignore the mindless slander from sworn enemies.

Please present a list of links and names of leaders and groups that say "we favor capital over labor" and "I'm a trickle-downer" or please admit you misspoke.

"Favoring" and taking "precedence" are two different things.

Capital, be it finanical, material, or intellectual is required for labor to produce anything. Sometimes the capital comes from the person producing the labor, sometimes not.

 

[Kimura]

It unfortunate neoliberalism is the prevailing social-economic political theory. They tend to view capital over labor. Workers are just another input and labor is simply a commodity. This is kooky and off the reservation.

It's utterly impossible to trade labor soley as a pure commodity. For example, the ownership of commodities can be transferred and moved, but labor cannot since it's owned by the individual at all times.

I don't see it as inseparable.

If I hired you to work on a framing crew at X per day and it takes us 14 days to finish and pass inspection I then Pay you 14X dollars.

You sold your labor to me. Now you have more labor to sell to me or someone else in the future.

Now I am all for ensuring the safety of people while they are working for me and I take great pains to make sure they don't get hurt. I am polite in my dealings and prompt with payment.

That is how you treat people but the labor, time and skill, is quantifiable.

Which is all fine and dandy....

All I said was that we can't treat labor as pure commodity since labor is owned by individuals at any and all times. Labor doesn't function like other commodities.

Under the current framework, and I don't meant to veer off into a tangent, we have no way to distinguish between wages and returns on human capital. If human capital is more important than other types of capital accumulation, and the efforts required to increase human capital are wage intensive, then the current way we tax wages as opposed to financial capital is rather sickening. Also, since physical capital increases through non-consumption, it seems pretty reasonable human capital increases are directly related its utilization. This also makes taxing wages very destructive from a practical standpoint.

We don’t have to be a bunch of hippies to realize human and institutional capital give us a return in the form of wages. It’s perfectly reasonable to assume we can reverse the roles of capital and labor if we pursue this logic. We can even argue further that the perfect amount of tax on labor should be zero since returns on financial capital and physical capital are increased and multiplied by human capital. This is why capitalists are better of paying a tax to steer things in a better direction.

 

[The Professor]

Having a baby ??

 

[expat_panama]

...present a list of links and names of leaders and groups that say "we favor capital over labor"...

"Favoring" and taking "precedence" are two different things...

That's nice; some economic areas are capital intensive and others are labor intensive --so now we can get back to whether there exists a "prevailing social-economic political theory" where many people explicitly "view capital over labor." Never having ever heard anyone publicly present that view means we've got to admit that no such theory prevails except as imagined in the distorted minds of the extreme left.

 

[Kimura]

...They tend to view capital over labor...

Yeah right. They also believe in "trickle down".

That's how the lies go. In real life nobody says they favor capital over labor and nobody likes trickle down, but virtually all the extreme mindless left says "they favor capital over labor" and "some people continue to defend trickle-down theories". If we want to consider ourselves honest then we've got to say that poeple believe what they say they believe and we've got to ignore the mindless slander from sworn enemies.

Please present a list of links and names of leaders and groups that say "we favor capital over labor" and "I'm a trickle-downer" or please admit you misspoke.

It’s fairly obvious if we look at the cult of neoliberalism.

We have a situation where corporate profits, productivity, and margins are at historical highs. During this time period, roughly six years, ninety percent of national income growth went directly to corporate profits while wages increased a measly one percent. Wages are lagging behind the prices of real goods and services. What does this tell you?

A good portion of these problems are also related to economic rents. We have a situation where payments far exceed what is needed to mobilize the factors of production. This is very obvious in the financial sector where their activity adds economic rent to society as whole.

Let’s take a look at the income flowing to the the 1%. A vast majority of these activities are parasitical and serve no public purpose, such as being a CEO of a Wall Street investment bank and receiving massive stock dividends. What does this person produce? Or the wealthy who collect rents from speculation, stocks, and real estate? The very rich are basically idle while real wealth is being created by workers in schools, R&D facilities, factories, software companies, biotech, construction sites, and other sectors of the economy barely mentioned.

 

[oldfart]

All this talk about labor and laborers has brought the question to my mind.

What is labor?

A commodity?

Something else?

Labor economists usually identify two different concepts that are hired when you hire labor, and I would add a third.

The first is the time itself. You could consider this a base rate to which premiums are attached for other qualities of a certain person's employment, much as the pure rate of interest is increased by a liquidity premium, a risk premium, and so forth.

The second universally accepted component of labor is human capital. It is inseparable from the labor itself, but has many of the physical characteristics of physical capital and can be substituted for more raw labor or physical capital. It can be increased by investment and will depreciate over time and eventually be extinguished by death or retirement.

To take your house analogy, suppose you could build a frame house using a crew of six carpenter assistants, two laborers and one master framing carpenter. Alternatively you could use two master carpenters and two laborers. Or you could use pre-built units and use three carpenter assistants and two laborers. Each combination is substitutable for the others and each will build a house that is acceptable. Presumably the master framing carpenter is more skillful (and costs more) than the carpenter assistant, and the carpenter assistant is more skillful than the general construction laborer. The real market check on compensation or return to human capital is the degree to which skilled labor can be substituted for with less skilled labor or physical capital as in pre-build modules.

From a public policy standpoint, the development of human capital is crucial. If we are to produce more, in general increased human capital is usually a major way to increase production while lowering costs.

My third factor is analogous to social overhead capital. More effective labor is not always more educated or skilled labor. People bring to the job work habits, communication skills, and so forth. Generally employers want employees who dependably show up on time, need minimal direction and stay useful, can communicate with customers and other employees, and have a positive attitude toward the business, projecting confidence in the firm. In my business this is the basis I hire upon. I can teach people technical knowledge, but I really don't know how to change someone's personality. They have to bring those attitudes and life skills with them to the job. Maybe we should call them "intangible labor skills".

Anyway the raw labor may be a commodity, but in practice the other two are individualized and far more important to the employer. On both a macro and a micro level this is where I think effort needs to be concentrated!

 

[Bombur]

I think labor is pretty straight forward as a concept. It is really the nature of labor markets that matter.

One thing to consider is how various parties in a labor market can have little to no leverage where demand/supply becomes inelastic. This can be seen at the low end of the wage scale where people who are desperate to put food on the table will take low wages and dangerous conditions. It can also be seen at the high end of the wage scale where an NFL QB or a corporate CEO can demand extremely large salaries. These excessive salaries don't actually end up producing greater results and there is little to no economic gain from them.

The harm in these scenarios is generally done to those with inelastic demand.

The other issue with labor is how the price of labor for a wide range of laborers impacts demand of goods and services at a national or even global level while also impacting costs at the supply/production of goods and services. For example China's economic rise was greatly helped by their ability to sell to the US that had large demand due to the price of labor in the US and had a hard time competing with China in production due to that high price of labor. In order to remain competitive China tried to keep wages low relative to the increases they saw in productivity but in doing so they also reduced growth in demand. Less demand for production eventually builds up leading to stagnation (globally). If wages raced to fast ahead demand for Chinese production would have been less.

Difficult balance but an extremely important one. Increases in technology can have a similar impact on an economy as things like robots can increase productivity but demand does not support the existing level of employment. Decreases in employment would only decrease demand further.

There is a lot more concerning labor markets worth talking about but this post is too long as is.