Reply #80: "Labor is the one thing that can produce more value than it costs. "

[gmoney]

Not exactly. It's the mark-up on labor, materials, and other components that leads to profit.

Oversimplified, if you have a chunk of a metal that costs $10 to buy, a worker who costs $10 an hour (wages+benefits+overhead) works on it for an hour, and it takes $3 worth of energy to power the tools, and causes $2 worth of wear on the tools, the finished product's cost is $25, more or less. Then there's the cost of packaging, warehousing, shipping, administration, etc. that adds say another $10 to the item. So if it's sold to the customer at $35, the producer breaks even, and everyone gets paid. It's when the owner of the operation decides to charge $40, or $50 or $200, or $2000 for it is where profit comes in, and basically where capitalism happens.

It would be possible to run any business as a not-for-profit enterprise, especially if the competition were also not-for-profit. I believe most credit unions are run that way. They find the balance of expenses and fees, and if there's excess profit, they return it to the customer/shareholders -- at least mine does this. Or they can stash the excess until they have enough to build a new location and expand their services.

But yes, the problem isn't capitalism. It's when the drive for profits leads to unethical behavior in the name of satisfying shareholders, and generally that the majority of shareholders are either executives or entities outside the company who have no interest in the long-term viability of the company, working conditions, effect on the community, or deceptive business practices.

Maybe I'm wrong, but I think investors in the past were satisfied with "reasonable" profits and more modest gains than today. Crazy stuff like real-estate bubbles, the .com bubbles, etc. have investors acting as if 20% return is some sort of slow boat compromise, because there are cases where returns were more like 50% or 200%.

Meh... I'm just babbling.