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This is the Human Action Podcast where we debunk the economic, political and even cultural myths of the days. Here's your host, Dr. Bob Murphy.
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Hey everybody. Welcome back to the Human Action Podcast. Today I'm going to be going solo and I'm going to walk through Eugen von Bambower's critique of the exploitation theory of interest. As I'll explain, it's very relevant to the commentary about Elon Musk in particular and billionaires in general and how they must not have earned their money because they just anything their company produces is on the backs of the workers. All right, so that's the particular economic fallacy I want to unpack. So that's what you're in store for. But before we get started, a quick note for listeners in or around Oklahoma or anyone interested in entrepreneurship in real world economic Solutions. On Saturday, February 21st, the Mises Institute is hosting a one day event in Oklahoma City called Entrepreneurship Beyond Politics. The event features Dr. Keith Smith, founder of the Oklahoma Surgery center and a national leader in innovative healthcare delivery, alongside Caitlin Long, founder of Custodia bank and a prominent voice in financial and monetary innovation. They'll be joined by Mises Institute scholars for a day of discussions focused on practical market driven solutions in health care, finance and business. You can find full details and registration info@mises.org ha hc that's mises.org hac for human action Health Care. Hope to see you there. Okay, so for today's discussion, like I say, we're going to be focusing on Bombavar critique of the exploitation theory of interest. So the the news hook. The reason this is on my radar again is that recently the media was announcing that Elon Musk is worth such and such $749 billion. And there's other estimates that be even higher. And there was a familiar backlash against billionaires per se. Now I want to be clear here. I'm not defending Elon Musk as a champion of laissez faire and the product of pure capitalism. That's not what I'm doing. I realize there's problems people have with, you know, how he made his money and whatnot, but the socialist critique that I saw going around social media was that a billionaire per se can only be wealthy because he siphoned his wealth away from the true creators of value in the economy, namely the workers. And so I saw lots of memes going around and people claiming that for any, you know, whether it's Tesla or SpaceX or whatever, that a company's value is produced 100% by its workers. Whereas the people on top in particular, you know, the big shareholder doesn't do anything, doesn't actually create any of the product. And so if that person's made wealthy by the labor of others, clearly there's just a massive amount of exploitation going on. And how can anybody be supporting this? And then they're also lamenting that, geez, how, how did the capitalists convince so many blue collar workers to endorse the very system, namely capitalism, that fuels their exploitation? Like this is just disgusting. They thought, okay, so in that context, then I posted an article I wrote for Mises.org back in 2022 called Bombard Critique of the Exploitation Theory of Interest. Right? And this was part of a series where I had been going through some of the critiques that Bombaver did in his magisterial treatise, which was titled in English, History and Critique of Interest Theories. All right, so that came out in 1884. So in case you don't know, Bambowerk is a second generation Austrian, right? So there's Carl Menger, the founder of the school. And then Bambowerk, you know, was like in the next wave. And we know him primarily for his work on capital and interest theory. Okay, so what he did before he offered his own positive theory to explain where did he think interest came from. He wrote a history and critique of interest theories that came out in 1884. He gives this taxonomy and just goes through and catalogs all the prior writings on where does interest come from, like the theories that have been offered. And then he goes through and critiques each one and says what the flaw is. All right, so if you look up my mises.org article and you can find it, I know some people might be driving around or something just listening to the audio of this. When you're at a computer, just type in Bombavar, that's B O H M B A W E R K Exploitation Theory of Interest and put Murphy in. I'm sure the search engine will find this because then in here, this was the third in the series. I also linked to my earlier expositions of Bombaver's critique of what's called the naive productivity theory and also the abstinence theory of interest. And the reason I'm saying you should go read this stuff, if you're into Austrian economics, it's not that, you know, oh geez, maybe you happen to believe in the abstinence theory of interest or the naive productivity theory, it's that these are plausible sounding explanations. When you first Hear them, right? So the naive productivity theory says, oh, the reason a capitalist can earn an interest return on his capital is that capital goods are productive, right? You know, you can, you can get more wheat with a tractor than without one. So it's not surprising that the farmer who invests in buying a tractor gets a return on that investment. And, but there's actually a fallacy involved there. And Bobber explodes it and the abstinence theory of interest says, oh, interest is the reward to people who are willing to postpone consumption, right? Like it takes willpower to not consume right now and to wait. And so therefore you're being rewarded for your abstinence. And that's the source of interest income. Now that's very close to what Bombard's theory is, a time preference theory, but it's not quite the same thing. And so to see the razor sharp distinctions that Bombard makes, it's really interesting to go read these, his critiques of these other theories again, not because in your day to day life you're going to encounter someone who holds the abstinence theory of interest, but you will understand economics better having read these things. I used to assign these readings to my undergrad classes when I, when I was teaching at the college level. Okay. So again, if you're a fan of the Austrian school, I encourage you to do that. And also just to see the, the masterful presentation and case that Bamboo lays out that he first builds up the argument and he quotes from some of the leading proponents of a particular view and then sometimes they have weaknesses and he dresses it up, he says, no, no, no, that's really kind of an unforced error. They don't need to say that. They could say it this way. It still has the spirit of what their claim is. And then he says, but that's wrong and here's why. And he just absolutely dynamites it. And then he says, but maybe I haven't convinced you. And he builds it back up and comes up with, it's also wrong. For this reason has nothing to do with the first objection I brought up. And he blows it up again. Right. So anyway, I'm just saying it's, it's really impressive to see this guy when he's humming. And, and so I, I heartily recommend Bombav. He's, he's my favorite economist. I did my dissertation on, on his work. Okay. But as far as the exploitation theory, Bomber picks this guy Rod Burtis as the, the primary proponent of this. That he thinks in the hands of Rod Burtis, this is where the theory really achieves its. Its. Its most succinct expression. And so let's quote from him. So this is Rod Burtis. Since there can be no income except as it is a result of labor, an excess of proceeds over labor cost depends on two indispensable prerequisites. First, there can be no surplus proceeds unless the labor at least produces more then is required for the continuation of the labor. For it is impossible for anyone to draw an income regularly without himself doing any work unless there is such a margin. Second, there can be no surplus proceeds unless institutions exist which deprive the workers of this margin in whole or in part and divert it to others who do not work themselves. For the workers are, in the nature of things, in possession of their product at the outset. That this margin is wrested in whole or in part from the workers is and is diverted to others is the result of legalistic factors. Just as law has from the beginning been in coalition with power, so in this instance, this diversion takes place only by the continued exercise of compulsion. Okay, so I think you see there a good distillation of this idea. And it's. Of course, I hope you can see why I thought this was very relevant to the recent discussions about how billionaires as such only can exist because of the, you know, the. The police power being on their side is the workers go into the factories every day or the office buildings and actually make everything. And then when the, you know, the capitalist owners sell the produce of the workers and get the revenue, they skim off the top and keep some for themselves and only give, you know, in some expositions, the bare minimum to the workers that they need to survive and other ones they, you know, try to account for. Well, how come the workers standard of living goes up over time. But the point is, clearly there must be widespread exploitation going on because it's sort of a priority assumed that the workers are the ones who make everything. And so they justly deserve the full product of their labor. Okay, so Bombard approaches this from several angles. So the first thing he points out is like an empirical objection. And he says if this were true, if. If the source of the capitalist income, right. The idea that somebody who's just got a sum of financial capital and is able to, quote, put it out to work earning interest, and they don't have to lift a finger themselves. You know, they just go about, they consume, you know, they have lavish parties, sumptuous feasts, they go on exotic vacations and whatnot, go through a lot of you know, clothing and jewelry for their wives and whatnot. And then people say, how are they, how can they afford this lifestyle? Is it because they're such hard workers? No, they just have a bunch of financial capital and it earns, you know, whatever 12% a year on average. And so that allows them to consume this amount and they, they keep their capital sum intact. It's just out there deployed, kicking off this interest income that they consume annually and they don't have to work and they have this lavish lifestyle. So if the essential explanation for that phenomenon is the workers must be producing more than what the workers need to live, that's the only way this would work, right? Like if you had a slave plantation and the slaves only produced enough to maintain their own physical survival, well, then there'd be no margin, you know, for the owners to take from them, right? So it's got to be that the, the workers produce more than they themselves need to continue replenishing their body and, you know, going back to work each day fully charged up again for another day's toil. So given that that margin exists, well, somehow it gets wrested from the workers. And that's the explanation for how the capitalists, how are these guys, how is this parasitic class living without working? Right? So that's the explanation that the socialists give, and Rod Burtis in particular, okay, so one angle of attack that bombard levels against this, he says if that were true, then what you would see empirically is that in those industries or sectors that are relatively labor intensive, where when you're looking at like, what are the total costs of production for the good or the service, that most of it is absorbed by labor, and there's not too much in terms of like hiring land factors or, you know, capital equipment, machinery and things like that, or, or goods in process, then you would expect the rate of return on investment in that line to be very high because there'd be such a large scope of that amount, you're skimming off of the labor's contribution. Whereas in other sectors that are relatively capital intensive, where in terms of the upfront cost of production, most of it is absorbed by paying the owner of a mine or something to get their coal out, or if you have like an oil rig or something, where that's a lot of the expense is all the equipment, you know, building the machinery and whatnot up front and then hiring the guys to actually be on the oil rig pulling the, you know, the crude oil to the surface, their labor cost really isn't that big of a Component, as opposed to. The first example would be something like a hair salon where you just kind of need a room somewhere and get some chairs and some mirrors and some scissors. And mostly the cost of production there is the time, you know, the labor effort of the barbers cutting the people's hair, especially if it's like an old school, you know, barbershop. Right? So the point is, if you're an owner running businesses in these different sectors, if the exploitation theory is correct, you would expect the rate of return on your capital to be higher from owning barbershops than from owning oil rigs. Because, you know, like deep sea oil rigs or something. Because again, if the source of your return as a capitalist is that the workers are producing a product that can be sold for its full value, but the workers are only being paid a fraction of that, if that discrepancy is the full source that accounts for your return as a capitalist, well then obviously the labor intensive sector should have a higher rate of return because the degree of exploitation is higher in terms of a proportion of the factors of production that go into that good or service. But Bombard says empirically we know that's not true, that generally speaking, the rate of return on investment is roughly the same in various sectors. And it's not true that a capitalist can earn a 25% return on his investment investing in barbershops, but only an 8% return investing in, you know, deep sea oil rigs or something. Okay, so that's the point that Bimovic made. And this is related to some of you may have heard. There's this thing called the Problem of Surplus Value and just basic Marxist economics and Bombardment has a. A related volume called. The the Carl Marks and the Close of His System I think is the English title they gave to it. Okay, so we'll link to this stuff folks at the Show Notes page. Okay, but the idea there is that Marx raised the issue while he was still alive. And you know, in his first volume of Das Capitel of this problem, he might say, now given what I've written thus far, this, the reader might be puzzled. Like, like, shouldn't that mean that, you know, that the rates of return should be different in different sectors based on their capital or labor intensity? And then he promises to resolve it. Okay, so posthumously they publish what Marx's attempted solution to that conundrum was. And then in the volume Karl Marx in the Close of his System, Bobber goes through and explains why, no, I don't think this gets the job done. Okay, so that's admittedly fairly technical. So let's leave that aside. And Bob, in his own exposition, talking about Robertus, agrees. He says another problem is just the basic axiom to say that the workers alone are the ones who, you know, are entitled to the full value of the product. That he's saying that no, if there's land factors that get contributed, or just in general, other scarce means that contributes, you know, to the. To the output, then those people should be rewarded as well. Like. Like what? Why? Where do we get this notion from that really it's just the workers who ultimately are the source of all economic value? All right? And he. And he goes through and gives some good examples, like to say if somebody's just walking out in the woods, you know, and find some. Some tool on the ground that, you know, maybe nature produced. Like, I'm here tweaking the example a little bit, but like, let's say a freak bolt of lightning hits a branch and it makes, you know, a stick that's just perfectly designed as if it were like a nice tool, right? Such that somebody else might take a regular branch and perform some labor on it to transform it into the really appropriate tool. But for some reason, this freak bolt of lightning hit a thing and it's just perfect already. And. But Maverick's point is that item, which is physically indistinguishable from other tools that did take a bunch of labor input to get them into the proper shape, you know, for human use as that kind of a tool, clearly it has the same economic value. Like, if you put the one that was just purely, you know, you just found it walking around and it was just lying on the ground in the forest. If that thing really is indistinguishable as far as what the people who want to use it compared to the other ones, it's not like you'd have to remember mentally, oh, wait a minute, that third stick in the line, there was no labor hours that went into that. That was just purely from nature, whereas the other ones took a lot of labor. And so the one that's just from nature, that's not as valuable as these other ones, even if they're interchangeable. No, of course they have the same significance economically. So that they trade for the same price on the market, obviously. Right? So he just goes through and goes through examples like that to show this idea that the classical economists had, not just Karl Marx, but even like Ricardo and Adam Smith, that ultimately the value of products could be traced back just to the human labor input because that was really like the only break that they had this idea that, oh, nature gives her goods to us for free, whereas labor is onerous and requires, you know, effort on somebody's part. And so that's why they thought that labor was like the true source of all value ultimately. And Bum B just says no, you know, modern subjectivist economics that Carl Menger has, you know, pioneered. That's, that's just not true. Okay, but this is what I mean by saying Bombavrick is a rhetorical genius. He listen to what he says. Here's an exact quote. In order not to draw undue advantage from Rodbertus's first error, namely relying on a pure labor theory of value, I shall for the remaining pages of this investigation frame all my presuppositions in such a way as to eliminate completely all the consequences of that error. I shall assume that all goods are produced only by the cooperation of labor and free forces of nature without the intervention of natural material resources having exchange value. Okay, so what he's getting at there is he's saying, even though in general I've just shown that reverse theory doesn't work because his initial premises are wrong. Right. He's assuming that the workers are entitled to the full value just to make it practical. So like, you know, the workers go into a factory and there's a bunch of tools and equipment that they use to help produce cars. It clearly can't be the case. You can't argue that. Oh yeah, all the workers who worked at the various shifts for that car factory, if you go and count up all the revenue that those car sales brings in that the wages of those workers should exactly equal down to the cent all of the revenue from selling the cars. That's crazy, because the workers labor by itself could not have produced the cars they needed to have. Not just the tools and equipment inside the factory, but they also had to have all the raw materials coming in. Right. Did they, you know, had it as a starting point before they then use the tools to start working on these semi finished goods. You know what, maybe they had like the tires come in that somebody else made things like that. Right. So in any given actual enterprise, business enterprise, very rarely is it a worker working with his bare hands on free gifts of nature. And yet that's really what you would have to be for Rod Burtis theory to fully apply. Okay, but Bobberick is saying, even putting all that aside, there's still a more fundamental error with Roberta's whole approach where he thinks the worker workers right now are not being paid, quote, the full value or full product of their labor, okay? And it has to do with the time element. Okay, so here we go. This. I'll read one more quote from Bomber, then I'll just freestyle with you folks. Okay? So now, and you might be thinking Bombard is somehow going to try to shuck and jive and challenge the ethical claim, you know, Rod Burtis claim that the workers are entitled to the full value, the full product of their labor. And then Bhavaver is going to try to say, no, no, that's some, you know, socialist gobbledygo. That's not what he says. Listen to this move. The completely just prop. This is Bum B talking. The completely just proposition that the worker is to receive the entire value of his product can be reasonably interpreted to mean either that he is to receive the full present value of his product now or that he is to get the entire future value in the future. But Rodbertus and the socialists interpret it to mean that the worker is to receive the entire future value of his product now. Okay? And so that's the essential issue. So Bombavric stipulates, he says, yes, I agree, the worker is entitled to the full value of his product. And he's saying, but Robertus is wrong. By looking out at the world, seeing workers only getting a fraction of the revenue accruing to a business and saying, well, geez, the workers aren't getting 100% of the revenues from the sale of the products that, you know, their hands touched on the way out the door. So therefore the workers somehow are being exploited. And so Varga saying, no, you're making a lot of mistakes there in the first place. There are other factors contributing and they need to get paid too. Like, you know, they're economically significant. So there's that mistake. But then again, he's saying, even on its own terms, even if we imagine a good or a service that is produced entirely just by raw human labor power, still there's. There's often a time element. And that I agree. In that case, the worker should be paid the full value of the product, but you need to keep account of the time element. And so in Bobber comes up with an example, and he says, imagine that workers are making a steam engine from scratch, okay? And it takes five years. And so in the first year, you know, someone's just going around grabbing free gifts of nature, you know, just stuff lying around that nobody cares about and works on it for a year and now has a pile of raw ingredients and then some Other worker comes along and then in year two works with his bare hands on that stuff, transforming it even more so and so on through year three, four and five. And at the end of that process, they have a brand new steam engine ready to be sold. And so Bombard point is that you might have thought then that the workers should all be getting paid one fifth of that final retail price of the steam engine. And he's saying, well, no, but that, that wouldn't be right. They'd be getting paid too much. Because if the steam engine has a certain value when it's sold, what is that? That's the value of a present steam engine. And so if you cut that 1/5 of that, like let's say it sells for $5,000, it can't be that the laborer in year one gets paid $1,000 in wages. And Mubarak's point is, because what is $1,000, that's 1/5 of, of a present steam engine, Right. If a steam engine is worth $5,000, then a worker who contributed 20% of that through his labor efforts should get $1,000. Right. But $1,000 is 1/5 of a presently available steam engine. However, he says, the worker in year one, what did he give us? He didn't give us one fifth of an engine available right now. He gave us 1/5 of an engine that won't be available for, you know, four and a half more years on average. Right. Depending on which part of his labor time you're clocking. Right. And since in general a present steam engine is more economically valuable than a future steam engine, of course that can't work. Right. And so don't just hang on, let me just establish that fact that present goods tend to be more valuable than future goods. So forget all the discussion up to now. Just point blank, wipe, you know, wipe your mind clear of the earlier discussion. Just in general, you go up to somebody and say, hey, I have two, two items that you might get. And you get to, you have to choose which one you want. Behind door number one is a steam engine, right now, brand new. Behind door number two is this claim ticket. It's airtight. You have no doubt this is going to be redeemed five years from now. You will get a brand new steam engine that's identical to the one that, you know that was behind door number one that you can have right now. Which of these two do you want? Right. Most people would pick the first one. Or you could flip it and say, you're not giving it away, but just Say, how much would you pay me right now? I'm auctioning these off. You can have a present steam engine that as soon as you pay me the money, you get it right now. Or I'm auctioning off a claim ticket on a steam engine that will be delivered in five years. So you give me the money right now, then you get this ticket, then you wait five years, then you turn the ticket in and you get the steam engine. Then which of those items being auctioned is going to fetch more dollars right now? Presumably the first one, because a present steam engine is more valuable to people than a steam engine that's not available for five more years. Okay, so Bombarik's point is, once, you know, once I've convinced you of that and you realize that, oh yeah, a present steam engine is not the same economic good in a very real sense, a present steam engine is more valuable than a future steam engine, then go back to the question that, you know, the scenario we imagined where workers or a worker spends a year just going and collecting raw gifts of nature that are free, that, you know, nobody's charging them for those things because they're, yeah, go ahead, take it. I don't care. Right. So it's his pure labor input that takes the raw things from nature, makes a pile of stuff. Then somebody in year two comes along, processes it further, and finally, after the fifth year of the raw labor power being poured into this, you have a finished steam engine. The point is, and it sells for $5,000. It can't possibly be that you think that first worker is entitled to a thousand dollars if, you know, if there were a capitalist hiring him, that said, you know, you're, you're going to, here's some, you know, grab some stuff from nature that nobody's charging for, make a pile of stuff. I'm going to pay you for your labor, and then you walk away. You have no more claim in this. I get to own this pile of stuff that you just made over the course of that first year. And then I'm going to pay somebody in year two to work on it further, but I retain ownership of the goods in process. Right? And so at the end, when all is said and done, the capitalist sells that thing for $5,000. And the way the capitalist has earned an interest return is that all along the way the wages he paid to the workers did not add up to a thousand to $5,000. Right? So each year he paid less than 5,000 or, sorry, $1,000 to each worker. And so that's the source of his, of his interest income, his interest return that Rodbertus thinks must be due to exploitation because like the capitalist didn't build that steam engine, the five workers did. And so at the end of year five, if the capitalist is selling the engine for $5,000, that $5,000 should be distributed to all the workers. So the capitalist is left with nothing because he didn't lift a finger. They're the ones who made the steam engine. Okay? And so Bombavik's point again is you, you normally might have thought that the first guy should get a thousand, but clearly he can, because what he did was he made not one fifth of the present steam engine, but he made one fifth of a steam engine that will be available in four and a half years on average. Right? And so clearly that's not as valuable. And so that's the essence of bombardment things. That's what's happening in the market economy, that when workers sell their labor and participate in a process that won't yield its ultimate fruit for a long time, that in a sense they're being paid in advance, they're getting paid up front for the product that really won't come to fruition until well down the road. And that's partly, or that's. That's the main element in Bover's view, to explain why is it that they, quote, get paid less than the full value of their product? It's because of the time element, not because of exploitation. And then Bavik has a very clever way of illustrating this and is to say, if you doubt the fairness of what I'm saying, that it's completely reasonable and just that a worker, when being paid, shouldn't be paid today the future value of his product, but should be paid the present discounted value. He said, well, whatever. They end up giving the worker in wages based on the discount rate in the marketplace, like how present dollars are worth more than future dollars. And so that's why the worker would not be paid a full thousand dollars for that year. One labor input. He's saying the worker doesn't have to go spend the money. He could take it and go lend it out at interest and then that would roll over and accumulate such that that would completely undo the discounting effect, right? So if the employer, in other words, at the start of the process, looks ahead and says, oh yeah, this person's labor contributes such and such of the final product that I can sell five years from now for $5,000, so I'm only going to pay the spot wage of such and such you know, discounted by whatever the, you know, interest rates, 10% a year, 8% a year, whatever it is, the worker can just take those funds and go buy bonds with them and earn the market rate of interest. And then after the five years have passed, his wage will have grown to be the value that the employer originally had in mind when he was calculating and saying, you know, how much does this worker boost my future revenues once I do the final sale to the ultimate consumer. Okay, so, but Marvin's point is there's no question that once you take into account the time element that the worker's being treated justly, or at least the mere fact that the worker isn't being paid, quote, the full value of his product isn't evidence that some skullduggery is afoot that they couldn't possibly be paid such that, you know, the sum of the workers wages all add up to exactly the full revenue. Even in, in a, in a business where labor is the only expense, if there's a, if there's a significant delay. Okay, all right, so that's the, that's Bombavik's, the essence of his response to the exploitation theory. Let me now just quickly deal with. I, I posted that on social media. My, you know, the article that I just summarized for you guys. And then I got two objections and it's interesting just to handle that and make sure people aren't misunderstanding. So one objection was people said, oh, okay, yeah, sure, Murphy, maybe in some cases workers get paid up front before they do any labor. But for most occupations, for most jobs that I'm familiar with, the worker does the work first and then gets paid. Right. Like when you get your paycheck that's not in anticipation of work that you're going to do that month. You're getting paid for the work you did last month or the last two weeks, if you get paid twice, twice a month. So what are you talking about? There's no delay. What do you mean? So that's just misunderstanding the time element. In Bombard's example, the worker does do the work in year one and gets paid for it. Right. It's not an issue of the worker getting paid first and then the employer has to wait around for the worker to come and actually do something. That's not the issue. The issue is the worker works in year one and now there's a pile of stuff there that is not yet a steam engine. The, the owner can't sell that stuff to anybody. Right? It's going to take Four more years of labor input to finally get, put the finishing touches on the finished steam engine and then sell that for $5,000. So that's where the time elements coming in. It's not about does the worker do the work first or not. It's about whether the product is sold. Okay, so then after I made that clarification, some people came back and they said, okay, yeah, there's some industries where maybe there's a significant time lag. But what about something like, you know, the owner of a restaurant, then he hires busboys to come in, you know, and the customers come in and they eat, and then the busboy comes and cleans off the dishes and wipes down the table and stuff that there, there's not, you know, a significant lag that the service he's providing and you know, to clean the table to get ready for the next customers. Like whether you book it as he's doing the tail end of the prior customers expense, or he's getting the table ready so that they can do a future sale for the next people that want to sit down at a clean table. Either way, the time element is at most a day, right? Like if it's, if it's the end of a shift and he's cleaning up to open up the next day and you know, and typically for most of his shift, if somebody else sits down at the table five minutes later, you know, there's not much of a lag. So how do you explain that? So on that one, I would say, right? And that's why I don't think the capitalist is earning a big interest return just on that. Okay? So yes, I think if you, you know, tried to construct a scenario where workers can just go around in nature, because the other element with the bus boy thing is there's lots of capital equipment, right? You need to have the diner, you got to have the, you know, the, the ovens and stuff in places, right? It's not just like a bunch of busboys on their own can say, this is crazy. Why are we, you know, giving away 20% of our output to the owner of the diner? Let's just go down the street and do busboy services ourselves and sell that directly to the public. And the point is, well, because to be useful as a busboy, you have to have all the other infrastructure in place of the diner, otherwise your labor's not helping anybody, right? So. So I think that's part of the element. But if you did come up with a scenario where there are workers who don't require any other capital equipment and who can just directly sell to the public without any other inputs and there's no lag. Well, then, yeah, so like, if you're talking about, you know, some, some guy who just gets up and does magic tricks, okay, and you know, maybe like using little ping pong balls or there's not much of a capital investment, or he just has people come up and he, you know, takes their wallet and makes it disappear and then it pulls it out of their ear and, you know, does lots of stuff like that. So really, just about all of the expense involved in putting on this service for the public is the guy's labor, this magician's labor, okay? And there's not much of a lag, right? He's. He performs the magic show and it is consumed by the public in the act of him doing it. And so he, maybe he sells tickets or maybe he has a hat and people throw in money. And so, yes, in a scenario like that where there's no time lag and there's no contribution from other factors, the magician is going to get paid the full value of his product, right? Because if some manager tried to hire, you know, to take him under his wing and say, hey, here's the deal, you go up, you do your show, and then I'll take 10% of the gate and give you the rest. And if the manager really isn't doing anything, he's not helping to get more customers in the door or anything like that, promoting it, if he really is just purely exploiting him, the magician would just say, no, I'll just sell it to the public directly, okay? So that, so that's what I'm saying. In these examples people are coming up with. Typically when you do see an example where you're sure that the worker is not, you know, if you just added up the wages of all the workers, you know, they're not getting paid all of the revenue coming into that business enterprise to try to pinpoint, you know, where's the leakage, it's typically because there are other factors that need to be compensated that they really are contributing to. It's not just the raw labor power, but also if there's a time lag, then that also is a factor, right? Because present goods are more valuable than future goods, okay? So I'm saying if you come up with a contrived scenario, like I did with the magician, one, where all those other possible things aren't at play, well, then the result pops out that, yeah, workers do get paid the full value of their product. Now, if, if somebody's able to, you know, if you need permission from the government to be a magician and it's very arbitrary, then, okay, there could be a margin there where the guy who has the permits or who knows somebody in city hall can, you know, can get some margin that way. Sure. The worker's not being paid the full values property. That's not the fault of capitalism. That's the fault of, you know, bureaucratic government regulation of labor markets. Right. So, you know, that's, that's not, that's not embarrassing for defenders of pure laissez faire. Okay, so I think that's a good place to wrap up. Again, if you like this stuff and you want to see my exposition of the exploitation theory critique and also two other related ones, I encourage you to go look it up. It'll be. I'll be at the Show Notes page here at the Human Action Podcast. But again, if you're listening on the audio, just go Google Robert Murphy Exploitation Theory of interest and I'm sure you'll find it. It's@mises.org and then that has links to the earlier ones I did in that series. Okay, folks, thanks for your attention. See you next time.
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