The Instigator
db0
Pro (for)
Losing
22 Points
The Contender
RoyLatham
Con (against)
Winning
60 Points

Profit within Capitalism is a result of the exploitation of the workers

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Voting Style: Open Point System: 7 Point
Started: 7/10/2009 Category: Society
Updated: 5 years ago Status: Voting Period
Viewed: 6,345 times Debate No: 8925
Debate Rounds (4)
Comments (58)
Votes (15)

 

db0

Pro

I've been discussing this issue of the theory of profit lately, particularly with proponents of the Austrian School of Economics and I'm interested in having an actual debate on this subject. Particularly I'd like to see an consistent explanation of the profit within Capitalism that can avoid the exploitation problem, that is, the fact that the wage-worker retains less than he creates while the rest goes to the Capitalist.

To be upfront about this: I am also currently in an ongoing debate on the same issue over at convinceme.net but I am disappointed about the debate format possible there (not round based, no good enough voting system etc) but my opponent refused to be limited in the character length used here. Thus I am opening a challenge here instead for anyone who wants to argue another PoV about the origins of profit (Doesn't have to be the Austrian Economics position unless you wish to)

I will be arguing from the Libertarian Socialist perspective: That profit is the surplus value created through human labour that is not retained by its creator. This act, of a worker getting less than the value they add, is exploitation.
---
The only way that humans know how to create new value, that does not naturally occur in the earth environment, is to expend their labour to mix and modify available materials to create it. Since the creation of money and markets, people have hitherto been selling the commodities produced thus for an income (Artisans & Farmers).

The concept of profit however did not occur until the onset of the Capitalist mode of production, by which I mean the concept of someone working for a wage while owning neither the productive means (Capital) nor the end product (Wage worker).
Within this mode of production, the value that is created is still through the expenditure of human labour, much like it happened for ages, but the big difference is that the creator does not get to retain it.

For example, if a commodity is produced that is sold for net gain of 100$ (so 100$ are left once raw materials have been paid), an Artisan would retain the full amount and use it for whatever purpose he deems necessary. However a wage labourer creating the exact same commodity will get to keep (say) only 40$ of that (his wage), while the leftover 60$ will go to the owner of the productive means (Capitalist). This is profit.

So: Profit = Selling Price - Wages - Raw Material costs - Overhead (Maintenance etc)

My argument then is that Profit originates from the surplus value (ie what is added to naturally existing value) that human labour creates. It is the new value that workers create but do not get to retain.
RoyLatham

Con

Pro offers no definition of exploitation. In the context of the debate, the Stanford Dictionary of Philosophy offers "To exploit others is to take unfair advantage of them." http://plato.stanford.edu... "fair" is "Being in accordance with relative merit or significance." http://www.answers.com... Pro's theory is that the only things that have value are raw materials and labor, and that therefore anything earned as profit must come from a valueless contribution, and hence must be a product of exploitation. Pro's argument is incorrect because value is also derived from (1) the time value of money, (2) the assumption of risk, and what I will call (3) creative genius. Profits are merited from one or more of these sources of value and therefore are fully deserved. Separately, I will argue that there is no way to put a fair value on labor other than by supply and demand in a free market, therefore any value earned beyond labor costs is cannot be exploitation.

1. Time Value of Money

The time value of money, also known as the cost of capital, is not an invention of capitalism. It is an immutable law of nature that no society has ever diminished in the slightest. It means that money made available now is more valuable than money repaid later, and therefore it is fair to charge interest in return for the loan of the money. Anyone who does not agree with this assertion should send me all of their money right now, and I'll require that my estate repay it without interest. The offer is ridiculous precisely because the time value of money is self-evident.

"The time value of money is related to another concept called opportunity cost. The cost of any decision includes the cost of the best forgone opportunity. If you pay $10.00 for a movie ticket, your cost of attending the movie is not just the ticket price, but also the time and cost of what else you might have enjoyed doing instead of the movie." http://www.econedlink.org...

2. Assumption of Risk

Profit only comes at the risk of lost. If there is no risk of loss, then what we are not talking about profit, but a scam of some sort. The risk may be low, but there is never a guarantee the enterprise will not fail for unforeseen reasons. For example, thirty years ago stock in General Motors might have been considered a virtually risk-free investment. Investors put in their money and received the profits of General Motors. As it turned out, there was substantial risk in the long run. Investors who held on for the long run lost all of the value of a stock.

Small businesses, which supply half of the jobs in America, involve substantial risk. http://www.smallbusinessnotes.com... More than two-thirds fail within seven years. http://www.score.org... Even if the small business is incorporated, lenders generally demand personal liability from owners for money they put into the business. Few employees want to assume a share of the risks in return for a share of the profits. Those who do become partners in the enterprise, and deserve whatever profits there are in return for the risk they have assumed.

3. Creative genius

"Creative genius" is defined for the purposes of this debate as the value of a good idea independent of the labor it takes to implement the idea. Suppose I come up with a great idea for a computer game, and using my own time and money develop in into a product. In the beginning, I distribute the product myself. It catches on, and starts to bring in large sums of money. Since the labor is all mine, Pro's theory that all value lies in labor dictates that my labor is then worth quite a bit, lets say $500 per hour. I then incorporate and hire a low-wage worker to help package and distribute the disks. Under Pro's theory, nothing should count but the labor and materials in the product. Therefore, the profits ought to be equally distributed between me and the guy packaging the disks. That is manifestly unfair, because most of the value of the product came from my creative genius. One could bend Pro's theory of only labor counting and suppose that I ought to get paid a little more for my previous investment in time learning how to program video games. That still would not compensate for the value of the good idea.

So what is the fair valuation of a good idea? It is exactly what the market is willing to pay for it, no more and no less. An alleged "work of genius" might benefit from a silly fad, or something else beyond my control. No matter, the low wage guy putting product into envelopes would not have a job were it not for the good idea. He doesn't deserve the profits, I do. I also took the risk, and deserve the profits for that reason as well.

If we do not reward creative genius, people will not supply their skills and take the associated risks. Society is better off if they do.

===============

There is genuine exploitation of labor in the world. It happens whenever people are forced to work at less than the free market would pay for their labor. That happens in North Korea, China, and Vietnam, for example. However, in free market countries like the United States, anyone who believes that they are exploited can quit and start their own business. Of course, with that decision come not only the profits, but all of the costs and substantial risks. They also might not have what they consider to be a good idea for a business. In Pro's concept of profit, there is nothing but profit; there are no capital costs, risks, and ideas worthy of compensation. Thus if Pro's conception were true, everyone in a free country would have a financial incentive to start their own business, with no financial downside. Everyone knows that conception is false. Most employees favor being employees of their own choice. They know that profits are justly earned.

There is no reasonable definition of "exploitation" other than forcing someone to work for less than the free market would pay. Thus the resolution can only be supported by adopting an unreasonable definition. Essential "exploitation" must somehow be defined as "profit." That can only succeed by ignoring the reality of capital costs, risk, and valuable ideas.

The resolution is negated.
Debate Round No. 1
db0

Pro

First I'll say that I got someone who seems well versed in this subject. It should make for an interesting debate for the audience if nothing else.
---

Con is right that I did not post a definition of "exploitation" which would be because I am using the word to denote something slightly different than what one most people would assume. I preferred to explain what I mean in full in the introduction to my argument. Nevertheless, someone can get an encyclopedic entry for the theory of exploitation as I will argue for it, within Wikipedia (http://en.wikipedia.org...).

Nevertheless, I believe that my opponent's definition of exploitation as not "being in accordance with relative merit of significance" is also appropriate. In fact, perhaps it is more appropriate than what Con would expect as it shines the light directly into the main aspect of the exploitation problem: Namely that the worker's contribution to the production process has _the only_ significance.

My opponent will try to argue that there is no way to assign a "fair value" on labour, but that is misdirection. We are not called to decide exactly how much the worker should receive per labour hour, but rather to show that whatever the full product will fetch _is_ the fair value of his labour. Adding a precise monetary value to his labour intensity/skill*time is not what is important.

I will now proceed to refute the arguments my opponent has put forth as an explanation of profit. Unfortunately all three of these arguments seem simple but require an extensive refutation. I only hope my space is enough.

1. RE: Time Value of Money

This is based on the Time Preference theory (1) which is attempts to put forth a descriptive theory on human psychology. Specifically, as Con put forth, an irrefutable "law of nature" that is built into all societies which use money (Only the ones which use money? Con does not deem to clarify).

I will show how the Time Preference and by extension the Time Value of Money theories is both logically inconsistent and based on shaky assertions.

First of all, the most glaring fault of the theory is its lack in scientific basis. As a descriptive theory (rather than a normative) we are justified to expect a scientific basis on it rather than an appeal to emotion as put forth in the "send me all your money" statement. In fact, this theory has no such thing. It is something that Austrian Economists would call an "a priori axiom", something which refutes you as soon as you try to argue against it.
But just because something seems "self-evident" is not an argument for its existence. In fact, it is exactly because of the flaws in human thinking that we have developed the scientific method in order to take a seemingly "self-evident" hypothesis and make sure it does indeed stand. Unfortunately the Time Preference theory has never moved past the original Hypothesis stage. Most importantly, it lacks falsification, from which, as I will prove in my next argument, we can conclude that it does not stand. As it is, the axiomatic status (2) that is attempted to be assigned to Time Preference, ensures that as a scientifically proven theory (3), it remained stillborn.

But what of logical consistency of the theory? Here's how one can refute it by the simple experiment of falsification. We can easily put forth the following argument:
* We do have people putting more value in future money. This is the act of saving. Historically it has been quite common that people would hide wealth in some random location instead of using it immediately. It is very conceivable that someone would wish to store value in the future as a security for potential mishaps, so as to ensure that he has the _same wealth_ in the future. In fact, people have been known to actually be willing to pay a premium to ensure the security of their wealth for the future, in effect trading current wealth for _less_ future wealth.
* If the time preference was true, we would not have people putting more value in the same future money than they do in current money.
* The Preference theory has been falsified and thus is wrong.

With these two faults I believe I have shown why argument 1 fails to account for profit. There are other criticisms against it of course which I will bring forward in case of further defence.

Unfortunately I do not have space to counter the second part of the argument which relies on the "Waiting theory" of interest. It is indeed also relatively easy to counter but for now I will beg your pardon and I will link you instead to a detailed refutation instead: http://tinyurl.com...

2. RE: Assumption of Risk

The argument from Risk is a far more known explanation for profit and Con has indeed stated it accurately. However the argument from Risk does not stand further than a very casual look.

The Risk theory of profit relies on the concept of investment, the act of someone putting his money in a new enterprise and expecting a return if his choice was wise. However where all actions have a modicum of risk. An artisan building a new product has the risk of losing his time. A worker going to a new job has the risk that he will be fired soon after and stay unemployed. However from all the risk taking actions, Entrepreneurship is the only one which expects and _infinite return of investment_.

Lets give the example of an entrepreneur using his funds to build a new factory. He now has the chance to sell it to people who wish to work in it or to use them as wage-labour. If he managed to sell it immediately, by the laws of Supply and Demand that Con certainly ascribes to, the factory would fetch its fair price. His "risk" of building it as a commodity would have been rewarded. However if the Entrepreneur prefers to take on the risk of running it, he suddenly gets to be rewarded, in the form of profit, theoretically forever. His reward in this case can be multiple times the cost he paid.

This is further complicated because the theory of risk does not reject exploitation but simply justifies it. It doesn't claim that workers are not earning less than their fair value, but explains why this must be so.

However there is no reason why entrepreneurial risk should get such a reward, compared to all other kinds of risk. Con needs to explain why the Return for entrepreneurial risk should be infinite rather than something sane. Would 2 times the cost of the investment be good? How about 10? How about 100? But in fact, nothing is enough for the Capitalist, no matter how much profit his investment returns and how many times the worker's exploitation pays it over.The workers will never own it as would any other buyer.

3. Re: Creative genius

The Con here attempts to muddle the waters by assuming that the capitalist himself does productive labour as well. The act of actually developing a product is the labour that the capitalist has put forward and as I mentioned from the start, this deserves a reward.

If the capitalist needs to add extra labour than what he himself can provide, then it follows that he would make more money by hiring it, otherwise he wouldn't. As such, I do not maintain that intellectual labour should not be rewarded. I claim that all labour should be rewarded equally.

In fact what my opponent though calls "creative genius" is again unproven and in fact, quite disproved by reality, where we often see the managers and owners of the company have far less "creative genius" than their workers who at times sustain the company by their own creative genius. If profit is a reward for such "genius", then we would expect all capitalist to act like it.

Unfortunately I am out of space so I will tackle the apologetics put forth in the end, in the next rounds.

(1) http://tinyurl.com...
(2) Mathematics - or Why Axioms cannot describe reality: http://tinyurl.com...
(3) http://tinyurl.com...
RoyLatham

Con

1. Pro claims that the hypothesis that money has time value is the type of assertion that demands scientific proof. If that is true, then the resolution that is the subject of this debate is also in the class of assertions requiring scientific proof. Both are economic theories having to do with wealth. Pro, however, bears the burden of proof in the debate. He has presented no scientific proof of any kind, therefore if his demand for scientific proof is correct, then then he has lost the debate.

Opportunity costs are observed in all societies at all times. One does A or B based upon which is perceived as the more valuable to the user. No one considers a fish caught a month from now to have the same value as a fish caught today. Pro claims that the fact that it is universally observed means that it cannot be falsified. By that standard, gravity is not a good theory because it is universally observed and cannot be shut off.

By way of example, consider the proposition "People who do not know how to swim are likely to drown in rip currents." To prove this scientifically, we would need to perform an experiment in which equal numbers of swimmers and non-swimmers are thrown into rip currents under equal conditions of current strength, sea state, and water temperature. Then trained scientists would keep statistics on how many drown and perform a statistical test to see if the ability to swim proves significant. Without such science, all the evidence and logic must be discarded as merely anecdotal and unscientific. Right?

No, we don't have to do the scientific experiment to come to a reasonable conclusion. "Self-evident" means there is ample evidence in everyday experience supported by sound logic to prove the point. Getting back to our current debate, there are virtually no examples that contradict the hypothesis that money has time value. People who do not know how to swim sometimes do not drown, but there are vanishing few examples of people not attributing time value to money. Moreover, Pro, bearing the burden of proof, must prove that money has no time value. If he does not prove that money has no time value, then it is not exploitation of workers to be compensated for the cost of capital.

The way to falsify the theory of the time value of money is by contradiction and by offering a better explanation of what is observed. To start with, Pro must contradict or give alternate explanations for the examples. If money has no time value, why exactly won't Pro give me all his money right now with no promise of interest? Why is it that people prefer to go to the movies now rather than to postpone movie-going until they are retired? Pro offers no contradiction or alternative explanation, he merely argues that there is no scientific proof. His logical burden is the same as if he were trying to disprove the existence of gravity. Everyone sees it and depends upon it, so if in fact it doesn't exist, there must be some extraordinary alternative theory that provides a better explanation. It's no good to just claim that the universal evidence is all anecdotal and therefore unscientific.

2. Pro offers as a single counter-example that people will save, or at least they did so in ancient times, even if they do not receive interest. The presumption behind Pro's assertion is that there is no alternative. Sure, if there is no alternative of earning interest, then people will save without earning interest. Under those circumstances, they do whatever they can to avoid risk, because that is all they can do.

If the situation is bad enough, people may even pay for security. That they pay for security contradicts Pro's theory that risk carries no value. Pro attempts to invalid Time Value by asserting that the value of risk may be greater. Operating under the constraint is no alternative is not a disproof. No one is going to put their retirement savings in a risky venture in the prospect that they may get their money back, but with no prospect for additional reward.

The time value of money is universally true. In societies that did not have "money" in the modern sense, there were capital analogues like salt that demonstrated the principle. In societies that are basically hand-to-mouth survival, there is much less investment than in modern prosperous societies. Consequently the examples are not as widespread. Pro's vision has a measure of idealizing hand-to-mouth survival, which is a natural consequence of discounting investment.

Pro invited me go read an ideological tract on "waiting theory," make up his argument from that, and then refute it. I'll decline that offer in favor of letting Pro make the arguments for himself.

Pro says, "Con needs to explain why the Return for entrepreneurial risk should be infinite rather than something sane. Would 2 times the cost of the investment be good? How about 10? How about 100?" I am unaware of anyone who has ever gotten infinitely rich. As they get richer it attracts competition which naturally prevents that from happening. There is no need whatsoever for anyone to decide what an investment ought to be worth. Free markets determine the worth. How, for example, could we ever say what the skills of a singer, actress, or professional athlete are worth? Pro claims that all labor is of equal value. I think it is fair that they receive whatever people are willing to give them. Any attempt by society to impose some other rule is an unjustified infringement of freedom of both the artist and the customer.

3. I have nothing against anyone forming a cooperative. All of the legal mechanisms are in place to do that in our society. One may organize informally as a partnership or as a non-profit corporation. There are no legal barriers to the formation, so the interesting question is why there are so few cooperatives. The answer, I think, is that most people do not want to take the risk. Moreover, then cannot raise capital from anyone other than ideological zealots, and there are too few of those. There are some examples of cooperatives that succeed, but those are generally for limited purposes like agricultural marketing. The few examples of employee-run companies, United Airlines comes to mind, are generally disasters due to employees failing to invest adequately and subject themselves to the discipline required for good management. But I have no problem at all with Pro getting people to put all of the money at risk without any promise of a return on investment beyond labor costs. If Pro's theory were true, it would be working right now. It is not.

I gave an example of a programmer inventing a successful computer game and later hiring a worker to help make the disks. What, I asked, would be a fair split of the earnings under Pro's theory? Should it be about a 50-50 split of the profits between the two employees? Pro failed to answer the question, preferring to blow ideological smoke as he avoided the issue. I think that the guy who came up with game deserves the profits in return for his idea and early investment. Pro's theory is that only the labor of production ought to count. If our hypothetical game company were very successful, there might be a couple dozen employees providing production labor. In that case the founders idea, investment, and risk taking are diluted to being worth almost nothing. Why does Pro think this is fair? Why would people undertake the risks and make the investment with the prospect of taking all the losses if the venture fails and getting 5% of the profits if it succeeds? Pro should provide straightforward answers to these questions.

"Libertarian socialism" is an oxymoron. Free markets determine opportunity costs, the value of risk, and the value of special skills. the evidence abounds. Low rated bonds must pay more to attract investors. Treasury's offer low risk with low rewards. Pro's idea is that the free markets should not prevail.
Debate Round No. 2
db0

Pro

1.1.Unfortunately Con does not seem to understand the scientific theory well enough to use it in an argument. First he claims that I have the burden of proof to show scientific evidence but does not deem to say what scientific evidence and for what he requires them. He is free to request falsification on anything or point it out himself, but he hasn't done so. In fact, the Labour Theory of Value is far more scientific and based on actually observed phenomena rather than imagined "axioms".

He also claims that falsification cannot be used as proof. This is unfortunately showing that he does not understand falsification. He claims that gravity does not need to be falsified, but in fact it has been. Might I remind my opponent that the theory of (Newtonian) gravity has been falsified and then rejected by Albert Einstein in favour of the General Theory of Relativity? Mere observation of an event is not enough to reach any conclusions on what is causing it.

So people could obviously observe gravitation occurring but could not explain why. Similarly looking at what most people do in the current society and claiming a "Law of Nature" is very bad methodology. It needs actual research to manage to find the actual cause instead of imagining it and deciding on it with correlation. Do most people save today in exchange of money because of the "Natural Law" or because there's always an interest rate? Would people save without interest?

He insists that me giving him all my money without interest would be a proof of anything. But he misses the reason why people save money and how it relates to the society around them. As if by me sending him all my money (charity?) he would forfeit the debate as having been "proven wrong". This is nonsense. I've already provided falsification which surprisingly my opponent accepted(!) but nevertheless preferred to stick to his theory.

1.2. My opponent's argument is that when there is no interest, then people will obviously save without interest in any way they can. So people would value future money more than current money. As such he's basically conceded the argument even though he may not have realized it. He's admitted that the only reason why we widely observe people saving for interest, is because interest is currently available. If it was a "natural law" people would simply not be saving when no interest was available, but obviously they did.

As such, the cause of saving today is not a "natural law", but the currently existing interest rates, which are often setup by market-external entities (ie the state).

In fact, it is precisely the external factors beyond individual preference that decide who does what choice in terms of saving. It is exactly because of social position that the wealthy are always willing to save and provide funds while the working class choose to get money upfront and get into debt.

1.3. Waiting theory: I'll let Proudhon speak for me:

[The loaning of capital] "does not involve an actual sacrifice on the part of the capitalist" and so "does not deprive himself. . . of the capital which be lends. He lends it, on the contrary, precisely because the loan is not a deprivation to him; he lends it because he has no use for it himself, being sufficiently provided with capital without it; be lends it, finally, because he neither intends nor is able to make it valuable to him personally, -- because, if he should keep it in his own hands, this capital, sterile by nature, would remain sterile, whereas, by its loan and the resulting interest, it yields a profit which enables the capitalist to live without working. Now, to live without working is, in political as well as moral economy, a contradictory proposition, an impossible thing." [Interest and Principal: A Loan is a Service]

Basically the waiting theory fails because it asks us to imagine absurdities. It asks us to imagine the large sacrifice of the multi-millionaire deciding _not_ to buy a jet-airplane or a 6th House and save the money instead. This we're told is a huge sacrifice that requires reward. I'll leave the audience to decide on the absurdity of this.

2. My opponent's argument appears to be one of confusion: "I am unaware of anyone who has ever gotten infinitely rich." This basically shows that he has not understood my argument. I am not saying that people will become rich (which is relative) but that risk makes them have an infinite return to investment. A ROI of multiple times per cost, a reward that no other kind of risk apparently deserves.

He claims that the market will arrange how much the original investment is worth in multiples of cost, but that only makes sense if the company at some indefinite part of the future goes under. Which may not even happen as a company incorporates and becomes larger. One only needs to look at corporations that survive for hundreds of years now to see that.

Again, on a theoretical level, the ROI of a capitalist investment risk approaches infinite while the ROI of any other, such as building a new commodity, or taking a new job in a new area, is always limited to some (at very best) small multitude of its cost. The con has not explain why Capitalist risk deserves such preferential treatment.

My original argument I believe still stands.

3. The pro seems to argue by bringing up an apparently easy target, the cooperative, but then goes ahead and argues for me by pointing that in fact the cooperatives do not get investment other than a few "ideological zealots", which amply shines the light on the actual cause for them not becoming the dominant company type within the current system.

The Con makes the mistake of circular reasoning. His argument can be summarized as such: The Capitalists are successful because they have the "creative genius". And we know they have the "creative genius" because otherwise they would have been driven out of business and be Capitalists no more.

One can defend a totalitarian dictator with the same argument.

Unfortunately it will take something more than begging the question to prove this "creative genius". Something such as actual research on the "genius" of management and owners.

The Con then asks me to explain why the programmer deserves only part of the reward when he received all the risk. He actually worded his example to make the programmer seem to be getting all the risk while only part of the reward. That is an intellectually dishonest tactic.

In fact, the Con example is especially complex as he selected a sector where duplicating the creative work is basically zero-cost and thus seemingly making the work of the programmer to be the most important. This example can be countered but requires as well a complex argument in order to clarify its variables.

But if we take the example and assume that no Internet exists and the act of copying the content to disks is a lengthy and complex procedure (and thus requiring the skills of someone to make the disks) then I would again argue for an equal share. In fact, in such situations it was the copying and distribution that took the lion's share of the profits and not the "creative genius" as can be seen from the record industry or even the video game industry where it's the publishers that are the most wealthy and not the developers.

Again, I will remind the audience that taking production of digital goods is an exceedingly complex subject and used explicitly to muddle the waters. The Con could have used a simpler one, such as of a person making the wine and another person bottling them, but he didn't. This was not on accident.

Finally, I am disappointed that my opponent cannot abstain from poisoning the well. His unfounded claims of "oxymoron", his vague calls of "evidence exists" when he has obviously failed to show even the smallest amount in the current discussion and his lengthy apologetics of the current system all avoid the current debate and appeal to emotion.
RoyLatham

Con

Profits are not exploitation of workers for three reasons (1) money has time value, (2) increased risk merits increased rewards, (3) and creative genius adds value that should be rewarded. All of Pro's contrary arguments are based upon abstract theory that have no confirmation in real world behavior.

1. Pro implies that paying interest, the explicit time value of money, is a recent social innovation of our society, and hence suspect as a fad of some sort. He says, "looking at what most people do in the current society and claiming a "Law of Nature" is very bad methodology." The book "The History of Interest Rates," http://www.amazon.com... documents the near-universality of the practice:

"[The book] places the rates and corresponding credit forms in context by summarizing the political and economic events and financial customs of particular times and places, including:

* Ancient Times: Mesopotamia, Greece, and Rome
* Medieval Times and Renaissance Europe: Italy, Spain, Germany, France, and more
* Modern Europe and North America to 1900: England, France, and other European countries, as well as the United States
* Europe and North America since 1900: England, France, Germany, and Italy, as well as Canada and the United States
* Other countries and regions in the 1900s: Japan, Russia, China, and Latin America"

There are a few cases of societies attempting to deny the time value of money. The Soviets attempted to undertake large projects without counting the cost of capital. The results were economically disastrous, because doing so ignores the fact that if you do one thing with capital, that means you cannot do something else with it. Islam has a religious prohibition against paying interest. Insofar as the prohibition is given lip-service, the prohibition is evaded by various in-kind trades and other schemes.

My methodology was not merely to point to nearly-universal behavior, but to explain why it was so it logical terms. Pro offered no explanation beyond it being some unsupported modern creation.

Pro points out that if people are forbidden from collecting interest they will save anyway. I rebutted by saying that they will save, but not invest. If interest or profits are unavailable, then the only thing that savers can do is avoid risk. To avoid risk, they won't put money into anything that has no chance of gain, but retains a chance of loss. Losses occur because most ventures, even something as simple as opening a sandwich shop, require start up capital. There is a risk that the capital will be lost. Hence, the only potential for investment is to work essentially alone, where "profit" can be ideologically classified as "labor." Instead of building steel mills, people hoard commodities.

Pro argues that a universal observation does not make a theory sound. He cites the theory of gravitation being overthrown by the theory of general relativity. However, general relativity did not overthrow Newtonian gravitational theory in terms of overthrowing all the observations that supported it. Newtonian theory is still taught and used. General relativity showed that in extreme cases that had not previously been observed, classical theory was inadequate. General relativity certain did not demonstrate that something other than gravity was responsible for pulling objects down. Pro needs to establish that the reason that ancient Mesopotamians, and virtually everyone in every culture since, charged interest was something other than the time value of money.

I gave numerous examples of the time value of money. People value going to the movies now more than postponing it to retirement. No one gives up their present money without promise of greater return later. Pro will not do it, and he cannot point to any rational person who does. Pro's answer is that people will save anyway. That is inadequate because giving up money now in return for the money back without interest later is a pure form of savings. Pro cannot point to the risk of actually getting the money back, because Pro depends critically on the claim that risk should have no reward. Whatever Pro's theory, it must explain the simple examples I have posed. His theory leaves them as mysteries, while logical application of time value and compensation for risk explains them in readily understandable ways.

Pro asserted that people will pay for the security of their savings. I pointed out that this completely contradicts Pro's contention that risk has no associate value. Pro did not reply to this.

I challenged Pro to explain why cooperatives, fully enabled by present law, were so unpopular. Pro said that it is because the current system provides a better alternative. Sure, and if there were no alternative to living in caves and gathering roots and berries, we would all do that. The point is that if a person believes that the is no value in anything but labor, he is free to put that into practice and show that he accrues more value than capitalist alternatives. The current system is not stopping him from keeping his undiluted labor-derived wealth. People do not opt for that method of wealth generation.

Pro claims, the loaning of capital "does not involve an actual sacrifice on the part of the capitalist ... because the loan is not a deprivation to him; he lends it because he has no use for it himself." The statement assumes that capitalists are redundantly rich, so that they have lots of money beyond current needs. That fits Bill Gates and Warren Buffett, but "Pension funds continue to account for the largest block of institutional investor assets, with $10.4 trillion or 38.3 percent of total 2006 assets under management." http://www.conference-board.org... There are also 401K plan investments, annuities, and investments made by small investors either directly or through mutual funds. Perhaps half of the capital in the markets is from people who could use the money for other things. For most Americans, their major investment is in home ownership. The profits accrued in real estate do not result from labor, but from supply and demand. Presumably, Pro would wipe out all of that profit as well.

Rich or poor, disallowing investment income abolishes the reward for risk. Without reward, investors will not loan out money because there is a risk they won't get the money back. The alternative to taking risk without reward is hoarding, most likely commodities. Pro contends that investors, particularly rich successful investors, live without working. This is not true. Successful investing requires an enormous amount of work evaluating risks and their relative rewards. Not only does the investor benefit from the hard work, society benefits by having capital channeled into its best uses. Some people, especially retirees, do not work at investing and accept low returns with low risk. They deserve the income they get because they are placing their capital at risk rather than hoarding it or spending it.

Pro says that the potential return on investment from venture investment is virtually unlimited, and says "con has not explain why Capitalist risk deserves such preferential treatment." The historical average return from the stock market is 10.9%. Adjusting for inflation it is 6.9%. http://www.simplestockinvesting.com... The potential returns are irrelevant; it is the actual returns that count. The holder of a winning lottery ticket makes millions of times his investment in the ticket. The potential large return is fully justified by the expected return.

3. Burning DVDs and putting them in envelopes is trivial, so I don't understand Pro's point about it being complex. Pro did not explain while good ideas should be valueless. He should treat my simple example explicitly, because his theory must apply to all cases.
Debate Round No. 3
db0

Pro

And so we reach the final round of this very intense debate, I like to thank my opponent for being a tough challenger and providing arguments that will hopefully help the audience reach a conclusion. Instead of arguing individual points, I will now attempt to make a closing statement and hopefully this is proper netiquette in online debates. If I am misunderstanding or misusing the debating norms, please accept my apologies.

My opponent has put forth three arguments in opposition to the Exploitation theory of Profit which he listed succinctly in his first paragraph of the previous round. All of these arguments do not actually counter the fact that the surplus value that the capitalist appropriates from production is created by the worker's labour. This, the con has implicitly accepted. Rather, the arguments are an attempt at justification of this in order to prove that workers are not exploited, that the capitalist is worth part of the surplus value (profit) regardless of how much he personally adds to production. I will now summarize why the arguments put forward by Con are inefficient.

(1) RE: Money has time value:

In all the justification provided for this argument, my opponent has not actually proven the existence of Time Preference but has rather based his argument on shaky correlation. His argument can be summed up as follows:

1. If Interest exists then it means that money has Time Value (ie people have Time Preference)
2. Interest exists.
3. Therefore money has Time Value.

Even a cursory examination of this argument should be capable of pointing out its flaws. Particularly, the 1st premise is unargued for, and it is indeed this which I have been challenging Con to substantiate. True, my opponent has provided ample evidence to show that interest exists and has existed for the largest span of human civilization (ie all time after the replacement of communal property with private property) but mere observation is impossible to lead anyone to causation. This is the same reason why merely observing gravity is not enough to form a robust theory on its cause, and while *scientific research and rigor* might lead to good approximations, such as the Newtonian theory, events that falsify it are still grounds to rethink the theory.

Con, I believe, has failed to go further than observation and the forming of a hypothesis in deciding on the Time Value of Money. As the burden of proof falls on my opponent to prove that money has Time Value (And merely saying "What else is it then?" is just an argument from incredulity, a fallacy), I find this to be a fatal flaw in the assertion of this hypothesis as a "Law of Nature", especially when I presented falsifications which at the least should cause any hypothesis which aspires to be called a theory, to be modified in order to take account for the exemption.

(2) RE: Increased risk merits increased rewards

The flaw here is that by "Increased Risks" the Con merely means "More money invested" as this is what really gets rewarded. The more money one invests, the more "risk" he is taking, regardless of how much other money he has available. Thus my example of the capitalist taking the "sacrifice" of not building a 6th mansion. Even through marginalism, which I'm certain Con espouses, one can see that 1000$ of investment for someone who has 10.000$ is more risky than a $1 mil investment by one who has $1 billion in other assets. And yet, the later will be rewarded far more, even on the same risk of failure. There is no direct relationship between interest received and the "sacrifice" involved. If anything, it is an inverse relationship.

(Here I also want to point out the source of Con on Pension funds, taken to its logical conclusion would show that Pension funds are only 27% of total investment - And that is in the US only, which has a large middle-class.)

Then there's my argument on why Capitalist risk is worth so much more reward than anything else. This is still to be countered. The confused example of bringing up the average return of the stock market did not counter this in the least as we're talking about the return of a particular investment, not the return any particular stockholder might make in dividends. While a company might give low dividends or even not at all, this does not mean that profit is not collected. It simply means that it is reinvested or given out as management pay and bonuses. Unfortunately such examples are nothing more than misdirection.

This means that the return for the investment itself still theoretically gives an infinite return to its cost. No matter how many times over the cost of the investment has been repaid by the surplus value created by the workers, they are never one step closer in owning it. The only difference is that instead of an individual capitalist, it's the Corporation as an entity that is actually the one exploiting the workers in this case (possible due to the Corporation's status as a legal human - "Despite not being natural persons, corporations are recognized by the law to have rights and responsibilities like actual people." - Source: Wikipedia)

The Con has thus still failed to explain why Capitalist risk deserves preferential treatment over any other kind of risk, such as the risk of building a commodity or the risk of looking and taking a new job. Both of which subjectively are far riskier than a capitalist (or corporation) investing a small percentage of their assets.

Just to note that there are other counters to the Risk theory of Profit as well but I lack the space to put them forth. Perhaps I will open a debate on this particular subject.

(3) RE: Creative genius adds value that should be rewarded

The Con is still yet to argue for this with anything other than circular reasoning. His example of the programmer is unconvincing to say the least as it's especially tailored to his point and I even displayed how with a slight modification in the variables (such as changing the cost of duplication and distribution) the current system rewards someone other than the "Creative Genius". Contrary to what Con believes, the burden of proof falls on him to prove the validity of "Creative Genius" in all cases, not on me to prove the negative.

To clarify: I do not actually dispute that Creative Genius might occasionally be the basis behind a successful enterprise but there are many other things that can be the cause as well, such as greed, crass disregard for other humans or the environment and raw cunning. Do those deserve reward in the form of profit? Most would disagree.

Not only that but common experience tells us that it's more often *not* creative genius that succeeds in the Capitalist market but a number of other things. As such, basing the justification of exploitation on something that may or may not be something we want to reward is a weak argument.

---
I hope I have shown how Con's arguments do not counter the theory of exploitation as they are either based on unargued premises or circular reasoning. The fact of the matter is that workers are the ones doing the actual productive, hard and dangerous work, but it's the capitalist - who may or may not work at all (such as in the case of hiring someone to manage his funds) - that gets the lion's share of the reward. The classic apology in various forms, is that the capitalist is necessary to keep the capitalist system working. Well...obviously. But this is not a convincing argument unless one accepts a false dilemma.

I await eagerly Con's final statement and I hope that he will avoid mentioning subjects outside of the topic of this debate (which I'm glad to say he honoured in his last post). There are logical extensions if one accepts the theory of exploitation but they do not invalidate it and I believe it's unfair to jump to conclusions on what I would suggest.

Thank you all for reading this debate and I hope to challenge you in the future.
RoyLatham

Con

Pro's theory is that all profit derives from the exploitation of labor. To prove his theory he must show that no value accrues from the time value of money, the assumption of risk, or the creative genius of the entrepreneur. The arguments in favor of the value of each of these factors include historical evidence, explanatory reasoning, and thought experiments in the form of simple problems in which circumstances are offered up for explanation by Pro's theory and the alternative offered.

1.1 Pro initially contended that payment of interest, the explicit time value of money, was an aberration of "our society" dreamed up, more or less, by capitalist exploiters in the 19th century. In fact, the historical record shows interest to be a universal phenomenon of virtually all cultures dating back at least to ancient Mesopotamia. I contend that the ubiquitous nature of interest shows it is the economic equivalent of a law of nature. If it is not a law of nature, and not a recent fad of our society, then Pro is obliged to offer an alternative explanation of why it appears universally. Pro offered no such explanation, but rather argued that something universally observed carries with it no logical implication that it is a universal law. By analogy, one must suppose that just because gravity is universally observed, it is not a law. In fact, the way that laws are discovered is precisely by observing that they operate everywhere and at all times.

1.2 In the first round of the debate, I presented the concept of "opportunity cost" that explains why money has time value. Having money now is worth more than the promise of money later, because money in hand gives you the opportunity to do things now, and that opportunity has inherent value. Even in a society without money, a fish now is worth more than the promise of a fish a year from now, because it provides the opportunity of fulfilling present needs.

Pro was given an opportunity to present alternate rationale as to why opportunity cost did not exist, but he consistently ignored the explanation. In his final summary, he gave no clue that theory behind time value had ever been presented.

1.3 I offered a thought experiment to prove that money has time value. If money has no time value, Pro should be willing to give me all his money now in return for a promise to return it later. This fits Pro's definition of savings, which he espoused as logical. He could not point to the risk that I wouldn't return the money, because he separately argued that risk had no value and hence was not a consideration. Quite obviously, the proposition I offered up was ridiculous. The reason it is ridiculous is that money has time value. The challenge to Pro was to provide an alternate explanation, not using time value or the underlying logic of opportunity cost, as to why the proposition was ridiculous. He refused to provide any logical explanation, but agreed the proposition was ridiculous. when tested acutely, neither Pro nor anyone else in his right mind will act as if money has no time value.

2.1 There is a trade off of risk for reward. This is why low-rated high-risk bonds carry a much higher interest payment than Treasury Bills. It is also why a lottery ticket having a one in a hundred million chance of winning has to have a very large prize to attract buyers. Pro contends that all risks are equivalent, that, for example, a worker faces a risk of being laid off and that is equivalent to the risk of an entrepreneur who may lose his entire life savings in a failed venture. I analyzed the risk versus reward relationship in terms of expected return, the probability of a certain profit times the amount of the profit. I gave data showing the very high rate of new business failure, and the inflation corrected average return of 6.9% from the stock market. The bottom line is that the rewards are appropriate to the risks.

Having explained the theory of expected return and illustrated it, Pro persists in claiming "Then there's my argument on why Capitalist risk is worth so much more reward than anything else. This is still to be countered."

2.2 Pro argued that because people will save anyway there is no point in rewarding investment risk. I rebutted that people will indeed save, but they will not invest. With no prospect of reward, rather than invest they attempt to minimize risk. The traditional way of doing that is to hoard commodities. Pro did not make a counter argument.

2.3 Pro pointed out that people will sometimes actually pay to secure savings, rather than demand interest. This practice shows that risk has value associated with it, so if risk is high enough it dominates any possible reward. If risk had no value or always the same value, as Pro supposes, then it would never happen. Pro did not rebut.

2.4 Pro argued that redundantly rich capitalists have no other use for their money, so rather than let it sit around they will invest it. That's not true. Denied reward, they will put all their attention into avoiding risk. They will hoard commodities. However it is worth refuting the basic idea that capitalists are typically redundantly rich. The data shows that roughly half the equity in the stock market is from small investors; Pro claims it is more like 30%, but the 50% figure is widely used. Besides, the primary investment mechanism of Americans is home ownership, where value is gained over time from increased demand. Pro would like to wipe that out completely, because it is not attributable to labor.

The point is that Pro's whole theory is derived from a 19th century stereotype of capitalist robber barons. There are no economic laws that apply even to stereotypes. Note that in the 19th century over 90% of the population worked in agriculture; people left agriculture only because industry paid better. That's not exploitation.

2.5 In Pro's summary, the concept of risk versus reward reward, expected return, and savings versus investment were ignored, as if they were never presented. Instead pulled from nowhere, "The flaw here is that by 'Increased Risks' the Con merely means 'More money invested' as this is what really gets rewarded." I never made any such argument. That doesn't even fit the lottery ticket example: if you buy two tickets, the prize does not double, but rather the probability of winning doubles. The interest rate on junk bonds does not increase or decrease with the number of bonds purchased. An entrepreneur starting a business faces and enormous risk that is independent of the size of the investment. Venture capitalists who put in large investments expect half of their investments to lose every penny, 30% to break even, and 20% to make profits. Remove the profits, and no risks will ever be taken.

3.1 Regarding the value of creative genius, Pro concludes "common experience tells us that it's more often *not* creative genius that succeeds in the Capitalist market but a number of other things." Pro's theory is that all of profits are due to exploitation of risk, and none due to any other cause. He then concedes that sometimes it's due to creative genius, so we'll just have to decide whether or not we want to reward that. Aside from the concession voiding his theory, he makes the assumption that "we" meaning Pro and his allies, have a right to determine what to reward and what not to reward. If a person writes a hit song or a makes an innovative best-selling computer program, someone will contravene the free market to determine whether or not it gets any reward. that is an unjustifiable violation of individual rights, and a great harm to society because it has the potential of destroying the incentive to create risky works.

The purpose of a theory is to describe and explain how the world works. Pro's theory fails miserably. It is unable to account for the time value of money, the need to reward increased risk, and the value of ideas.

The resolution is negated.
Debate Round No. 4
58 comments have been posted on this debate. Showing 1 through 10 records.
Posted by db0 5 years ago
db0
"yet you feel the authority to tell people what "they should" do with their own lives. "

While my sentence wording might have been a bit ambiguous,I would expect the following sentence "t's an clear problem of the system that it forces people make choices they might not want to make."should have clarified it. What I was trying to say is that just because desperate people might take jobs they might not want, does not immediately justify the existence of such jobs or the pressure put on people to accept them.

"Who decides who is most in need? And when? And how much to allocate?"

We don't have to. We simply need to arrange a system where firstly the basic needs of all are met (food, shelter, human interaction and medical care) which will then give them the capability to fulfill the rest of their desires.
Posted by USAPitBull63 5 years ago
USAPitBull63
This will likely be the last comment I leave for this debate.

That said, I'll keep this brief.

You said: "As an anarchist, I am in fact advocating anarchy for its own sake."

You then said, just two sentences later: "Wether [sic] people want to work in their current job is irrelevant on wether [sic] they should."

So you're a self-proclaimed anarchist---yet you feel the authority to tell people what "they should" do with their own lives. Good luck with that marriage.

Similarly, you advocate socialism based on need; but you seem to neglect the crux of the problem: Who decides who is most in need? And when? And how much to allocate? Etc., etc., etc. (These are just some of the same questions that have marred socialism, and which have often led to communism, since its inception.)

Good luck with your debate. Thanks for the gab.
Posted by db0 5 years ago
db0
With all due respect, if there's anyone misunderstanding capitalism, that is you. You have managed to conflate capitalism with both merchantilism and artisanship. Needless to say, the contemporary or historical meaning of capitalism is not this.

"Okay, now it sounds like you're just advocating anarchy or employee mutiny for its own sake. "

As an anarchist, I am in fact advocating anarchy for its own sake. That is, because anarchy is a better system than capitalism.

1) Wether people want to work in their current job is irrelevant on wether they should. It's an clear problem of the system that it forces people make choices they might not want to make.

As for workers being most qualified, well, that is probably right yes.

2) If they are wage-workers then they are not capitalists.

3) If executive decisions are necessary, they can be taken democratically. If totalitarianism does not work well in society, I don't see why it would work better in production.

4) Items once produced do not have to do all these. In a socialist system (the only way you can have worker run production), they only need to be assigned according to need. Profit needs not enter the picture. Even in a Free Market non-capitalist system such as mutualism, the act of selling and the like can be done by merchants. Marketing is not required.

"it is still insufficient because it is not true. It may be true sometimes, but not always."

Please show me a productive process result which can be sold (ie there's a demand for it) which does not create more value over the raw materials.
Posted by USAPitBull63 5 years ago
USAPitBull63
Lastly, you said: "And yes, in actual production (not in provision of services) workers always create more value. That is the whole point of production."

While you may have "explained and defined" this as best you could, it is still insufficient because it is not true. It may be true sometimes, but not always. Just because I make a profit on something doesn't mean it was worth that much; nor does it mean that whatever employees earn (in wages) from the production thereof is unfair reimbursement for such services.
Posted by USAPitBull63 5 years ago
USAPitBull63
With all due respect, you are misunderstanding capitalism. If buying cheap and selling "dear" maximizes profitability, it's a strong capitalist strategy. And if commodities happen to be that profit-maker, and it's marketed for profit—and the distributor/manufacturer isn't forced to share equally with those not equally qualified to receive the benefits/profits—it's capitalism. Perhaps the basis of your fallacious thinking is some notion that every subjugated employee is always equally qualified as his or her higher-ranking employers.

(That said, artisans and farmers make great capitalists.)

You said, "The actual production, the creation of new value, happens by those wage-workers, not by the capitalist who only takes decisions that the workers could make themselves anyway." You also said: "It's the ones who actually produce the items that do the productive work. A factory with no managers can work just fine, as displayed many times with takeovers and cooperatives. A factory owner without workers, cannot produce anything with his ‘work'."

Okay, now it sounds like you're just advocating anarchy or employee mutiny for its own sake. You poorly presume several things with these statements, including (but not limited to): (1) that "those wage-workers" are always the ones best qualified to run whatever business in which they're engaged (and keep in mind, unless they're slaves, they wanted to work there in the first place); (2) that employees are not capitalists themselves; (3) that executive decision-making is worthless and unnecessary to run a business effectively; and (4) that produced goods, once produced, will magically market, sell, distribute, and maintain profitability by themselves.
Posted by db0 5 years ago
db0
You are misunderstanding the capitalist mode of production. Capitalism is not about buying cheap and selling dear (that's simply merchantilism) nor about people creating their own commodities (Artisans or Farmers). It's about someone controlling the means of production (capital) and hiring others to work it. The actual production, the creation of new value, happens by those wage-workers, not by the capitalist who only takes decisions that the workers could make themselves anyway.

And yes, in actual production (not in provision of services) workers always create more value. That is the whole point of production. All of this I explained and defined in the introduction to the debate.

Exploitation thus, is indeed automatic as long as you have wage-workers. Wether you are in good terms with your workers or not is irrelevant to the question. As long as they do not receive the full value of the surplus value they create, then they are being exploited.

"Quite often, those controlling the profit "do the actual work" as well. In fact, controlling the profit (even alone) is work. Ergo, it sounds like your resolution is based on a faulty overgeneralization of most capitalist businesses."

Not really. It's the ones who actually produce the items that do the productive work. A factory with no managers can work just fine, as displayed many times with takeovers and cooperatives. A factory owner without workers, cannot produce anything with his "work"
Posted by USAPitBull63 5 years ago
USAPitBull63
Your definition—coupled with this resolution—presupposes that workers always create more (in worth) than they keep (in worth) in capitalist systems, which is faulty.

My example would exist even if I had people working for me. For example: I have a friend working for me who enjoys the work, and we achieve our goal and split the difference of profit—or even if I keep it all; whether or not that is exploitation, as you define it, depends on different factors. But it is certainly not inherent, automatic, inevitable that either of us produced more than the worth of the produced item(s) it/themsel(f/ves). Therefore, the resolution is faulty.

Any business owner can control the consumption and distribution of profit, regardless to whom it's intended. This is a wage. If I'm part of a two-person team, and I control the money, and I pay both my friend and myself from a measured percentage of the financial consumption, I receive a wage. I have conscious aforethought and awareness of both salaries, earning potential, etc.

You say: "Exploitation does not apply for people working themselves to produce goods. This is not the capitalist mode of production."

If that's true, then no one would create a small business. There currently exist professional e-bay sellers (for example) who single-handedly manage their own small businesses—and the process still fits the capitalist system: produce service; market service; profit from your service/its benefit to others.

You say: "Exploitation only applies to a capitalst hiring workers to do the actual work while he controls the profit."

Well, then don't presuppose that's how capitalism always operates because it's certainly not the case. Quite often, those controlling the profit "do the actual work" as well. In fact, controlling the profit (even alone) is work. Ergo, it sounds like your resolution is based on a faulty overgeneralization of most capitalist businesses.
Posted by db0 5 years ago
db0
USAPitBull, your refutation does not stand. I've alrady defined exploitation as the surplus value that the workers create but do not keep (and by extension control). In your example, you are the only one working and thus you keep all the surplus value you create. Ergo, not profit as you do not pay wages. You have an income but you cannot truly separate your costs. You may say that you pay wages to yourself, but this is again something you control. You've just set a limit in your own consumption and called it "wage" even though it does not have the same nature (ie you can modify it at will).

Exploitation does not apply for people working themselves to produce goods. This is not the capitalist mode of production. Exploitation only applies to a capitalst hiring workers to do the actual work while he controls the profit.
Posted by USAPitBull63 5 years ago
USAPitBull63
TYPO: "I pocket the extra $50" is, obviously, what I meant to say.
Posted by USAPitBull63 5 years ago
USAPitBull63
This argument is a semantics game. It hinges on whether or not the denotation of "exploit" or its common connotation is emphasized within the resolution. To assume it's the latter renders the resolution easily refutable.

The resolution implies all profit (within capitalism) at all times. Therefore, one example to show otherwise would refute the resolution and win the argument.

Here is one (based on the connotation of "exploit"): I create my own business where I am my sole employee and employer. I create something (and enjoy the process of doing so, as a hobby) and market it for others, who purchase it. I make profit. Everyone is happy and I'm not exploited.

In fact, here's an example to refute the denotation argument: I set a goal to raise $100 for charity, and then set out making and selling goods to raise that money. I raise $150 in the time frame/manner I had set aside to raise $100, and my goal never changed. I pocket the extra $150. Workers not exploited; capitalism a convenient side-effect; argument refuted.
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