Your example of a boss acquiring a new technology.

If a boss lets everyone work 20% less when a new tech is acquired, do the workers also earn 20% less? Thank you. I guess they could get a part time job if they needed one.

Official response from submitted

No, the point of the example was this: if a new machine enabled the same output with 20% less labor, the typical capitalist would fire 20% of workers, sell the same output as before the net machine at the same price yielding the same total revenue. But instead of paying the 20% fired workers' wages, he would now pocket that part of the total revenue for himself as expanded profits. The profits of the capitalist thus come NOT from the technology but rather from how the technology is used in the business. Now consider the alternative: no one is fired; instead the new machine enables all workers to do 20% less work (Fridays are now made par of the weekend) while getting the same pay. The capitalist gets the same revenue and the same profit as before the machine was installed. The winners in this alternative are the workers who all get a 20% reduction in labor. If worker coops replaced capitalist enterprises, the alternative would be far more likely how technology is used than the typical capitalist way.


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  • commented 2017-01-13 13:08:39 -0500
    This analysis does not acknowledge the employer’s cost or investment to acquire the tool that enables the same output with 20% less work by employees, as well as his contribution to the business in terms of his management and creativity in utilizing the new technology embodied in the tool. Surely the enplyer at least deserves — not only recovery of the cost of the tool, which the analysis does not even mention — but also some reward for making the investment in the tool (i.e., for the cost of his money, which he could have spent elsewhere, say, on a profitable investment, or even wine, women and song). Otherwise, why would he bother to invest in the tool when it will not bring him either increased production or profit? Surely the analysis is unfair — advocating as it does an expropriation of the employer’s rights — in saying that an optimal result, after deployment of the tool, would be for production to remain the same, and revenue to the employer to remain the same, but the employees get to work 20% less. So the employer loses the cost of the tool, and may even lose his company when his competitors start using the same tool without reducing employee time — and can therefore afford to undercut his prices and force him out of business.
  • tagged this with bad 2017-01-13 13:08:38 -0500
  • commented 2017-01-12 08:43:39 -0500
    Thank you Prof Wolff!
  • responded with submitted 2017-01-11 11:47:12 -0500
  • tagged this with Important 2017-01-10 09:24:47 -0500
  • published this page in Ask Prof. Wolff 2017-01-10 09:24:07 -0500

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