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comment by rthomas6
rthomas6  ·  2928 days ago  ·  link  ·    ·  parent  ·  post: Undeserving Capital: In Defense of Taxation

I disagree with the conclusion that all profits are earned through a social product. This article does a decent job arguing that wealth is not solely created, and rely upon various social contracts, regulations, and laws which are funded through taxes. It makes a mistake, though, when it repeatedly views the economy as a fixed size, as a pie to be allocated. It even uses the pie analogy.

This particular point

    Second, the class inequality that results from making this social product is relational. Capitalists are able to accumulate large stores of wealth only because workers do not. All things being equal, firms can raise their profits in inverse proportion to the labor costs they bear.

falls prey to the same fixed-size fallacy. The economy is not a fixed size. It's possible for a single person working on their own to invent something and sell it, by themselves, for vast sums of money. This hypothetical single person did not exploit laborers to create that wealth. They took advantage of the social systems that were in place (and should have the portion of wealth created from those systems redistributed), but they didn't take advantage of laborers.

Because the economy is not a fixed size, it follows that some portion of wealth created is due to the individual or company alone creating value that did not exist before, and that this portion of wealth rightly belongs to its creator. What portion? Well, that's a more interesting debate, and the answer is certainly a larger portion than total wealth redistribution.