Labour and value-creation

Karl Marx once argued that all value comes from human labour and that capital owners should not be allowed to profit from their ownership of capital. Perhaps that was a time when labour is often needed to operate capital, to work the land in order for capital to be ‘productive’. To that extent, it is probably right that labour always had a disadvantage in bargaining against capital because capital is often more concentrated in the hands of certain owners. Or that the dictates of capital can easily be reassigned and concentrated to maximise bargaining power.

This is much harder with labour, and that’s why there were periods in history where labour unions were important. And there are still many societies today, especially in Europe that ensures significant participation of unions in industrial decisions and even policy-making.

The truth is, we’ve been using human labour as a way to distribute economic gains to the broader masses. And it has worked as far as the economy transits towards being more and more knowledge-based as equipment got better and capital starts being able to produce goods and services without as much labour inputs. Yet we might be moving to a point where there’s insufficient jobs for everyone, including knowledge-based ones, as capital come to be able to produce goods and services for our economies independently without labour. And yes, I’m thinking about more automation, more data-driven operations that only require periodic human interventions, and so on.

We must start considering how to distribute capital and wealth better; and to allow the strata of the society commonly contributing to ‘labour’ side of the economic equation to start owning capital and learning how to use the capital to generate the returns sufficient for them to continue surviving without utilising their labour as much. Or that labour can be channeled towards greater social needs such as caring for the old and young; some of these which may have to be funded more and more on the taxes on capital and wealth.