Two speakers debate what justifies profit. One says ownership of the means of production determines who gets the surplus. The other argues risk does: investors who fund machinery and infrastructure deserve the upside because they face bankruptcy if things fail, while workers don't bear that downside.
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So one of us got this wildly wrong, and I'm pretty sure it's not me. Differentiation I draw, and I'm not alone in this, I'm not one person trying to redefine anything. The differentiation I and many others like me draw between socialism and capitalism is that under capitalism, when you as the owner of the factory, you give me a wage. The wage could be $7.25, it could be $15, it could be whatever an hour, right? But you give me a wage. All the additional profit above the made from selling the pencils or whatever good you produce above what is reinvested into the company ultimately goes to you or the investors, those who own shares in the means of production. Right. Under socialism, those people are the workers. And the example I give again is cooperative enterprise.
No, those are the people who are investing the risk. So if they carry the risk, then they get the benefit. The owner of the factory carries the risk, therefore he gets the benefit. The workers in the company you mentioned, if that company were to go bankrupt, they would carry the risk as well as the benefit. If the company goes bankrupt and this guy has to pay off all of his debts, the worker may lose his job, but he's not the one who's going to incur the debt of having gone bankrupt. If you incur risk, then you're the one who pays the downside. The worker does not pay the downside, okay? It is the investor who pays the downside, who invested in all the machinery, who sunk millions of dollars into making your labor productive. Because guess what? Your labor is without that machinery— gunk, nothing. You don't have a pencil to put together. You don't got the wood, you don't got the paint, you don't got the rubber, you don't got the metal, got nothing, right? You're sitting there, standing outside twiddling your thumbs. It required somebody to invest. Who do you think put more in? The guy who spent millions of dollars buying all the machinery, leasing the place, making sure there was a management structure, doing the LLC formation, making sure all the tax code was in compliance, Or are you standing outside because you can stick a piece of graphite into a piece of wood? Now we're done.
