Business The Boss Needs You, You Don’t Need Him: Job Creators, Wealth Producers, and the Path to American Prosperity
Lately a great deal has been said about ‘job creators’ and their vital importance to our renewed prosperity. We are urged to support employers to encourage the growth of business and the desperately awaited proliferation of job openings. If only companies could be emboldened to hire, we are assured, the economy could be set on the road to recovery.
There are two fundamental misconceptions at work here. The first is that employers create jobs; they do not. Jobs are created by human needs. I need to eat, and thus jobs are created for farmers, chefs, and refrigerator repairmen. I need to stay warm, and thus jobs are created for shepherds, weavers, tailors, construction workers, and the people who make sterno. I need to communicate with other human beings, and thus jobs are created for bookbinders, mail carriers, auto workers, and IT specialists. The needs which arise inescapably from our physical and intellectual existence mandate the quantity and the nature of work to be done. Barring the distorting effects of war, natural disaster, or inept central planning, any economy will naturally ensure that the necessary work is done, whether or not wage labor jobs to do that work are available—if they are not, it will be done by cottage industries, independent journeymen, workers’ cooperatives, and a host of other naturally occurring economic associations. Simply put, wage labor employers do not ‘create’ the jobs for which they hire any more than does a temp agency.
The second misconception is subtler and correspondingly more pernicious in its effects. We tend to treat jobs as a kind of renewable natural resource—a basic form of wealth. If a country ‘has jobs’ its people will prosper, and if it doesn’t poverty becomes an inescapable conclusion. But this simply isn’t true, either; people do not eat jobs, or live in them, or get entertained by them. The wealth of a country consists not in jobs for laborers but in the products of labor. America’s wealth has always consisted in wheat and steel, in haircuts and feature films and the whole panoply of real goods and services which human ingenuity has brought forth upon this continent. For most of the country’s history (including its pre-colonial history) salaried employees were not the ones to build its houses and barns, grow its crops, or raise its children. Jobs, as we understand them, did not produce America’s abundance, and they certainly did not constitute it. The distinction I draw is not one of mere semantics. If we believe the second misconception— that jobs are a form of wealth—and the first—that they are created by employers—the result will naturally be an attempt to increase prosperity by helping capitalists to ‘create’ jobs.
It is the case of the doctor who, believing body heat to be a form of health, endeavors to keep up the patient’s fever. The fact is that the primary obstacle to the creation of wealth by America’s workers is America’s employers; the greatest proponents of capitalism in this country admit as much. They tell us that the creation of wealth is driven by incentives and that chief among these is not merely the opportunity for, but the right of every individual to keep the products of his or her labor and dispose of them as he or she will. It is this point which forms the rationale for decrying corporate taxation not merely as poor policy but as an invasion of the property rights of sovereign citizens and hence as a mechanism which ‘punishes’ the ‘successful’. Ayn Rand, arguably the greatest apologist of American capitalism, made the right of producers to the products of labor the centerpiece of her system and took its supposed protection by the Constitution as the basis of her claim that the United States was the first, if not the only, moral country.
But what Rand, Reagan, and all their many disciples overlook is the fact that the corporate profits they seek to shelter from the taxman, claiming all the while that taxation is a form of theft that indefensibly deprives men of the products of their labor, are themselves the product of theft every bit as blatant. The lifestyles of the feudal lords of Europe and Asia were funded by the unremunerated surplus labor of their peasants. The serf would work a certain number of days per year for himself, producing the things he and his family needed from the land he worked. For the ‘privilege’ of using the lord’s land, he was compelled, by threat of violence, to work a certain number of additional days each year (called the corvée) for his lord, producing the crops and small craft products used or sold by the manor house. The lifestyles of the corporate executives of our global society are funded in precisely the same way. The efficiency of the market dictates that (barring artificial shortages, government interference, and other distortions) goods should sell for prices equivalent to their cost of capital plus their cost of labor. To take an example, wool yarn should sell to the wholesaler for a price equivalent to what the spinner paid for the wool and the value of the spinner’s labor which is, in essence, the value required to provide the spinner a livelihood that satisfies normal human needs and thus replenishes the energy and labor power expended by the spinner during the workday. This is the equivalent of the days the serf spent working for himself. Whence then does the spinner’s employer manage to make a profit? If he sells the yarn for the cost of the wool plus the cost of the spinner’s labor there will be nothing leftover to distribute to his shareholders (and to himself). He therefore extends the workday. It may take, for the sake of argument, four hours to reproduce his invested capital—the cost of the wool, the cost of heating and lighting the factory, the wear and tear on the spinning machine, and of course the spinner’s wages for her sustenance—and he will ask her to work six, or eight, keeping the wealth she produces in those extra hours as his profit. He is able to do this because the modern spinner has no wheel just as the medieval serf had no land and, unlike the medieval serf, she has no skills beyond the singular employment which our endlessly specialized industrial economy has provided her. She has no choice but to spin for whomever has a wheel, and if she is told she must spin six hours to have use of the wheel she must. If she is told she must spin eight hours to have use of the wheel she must. She must provide her employer a profit to provide herself merely a subsistence. This profit is the fruit of unremunerated labor on the part of the spinner and serves as the modern equivalent to the serf’s corvée; it is the reason that the !Kung Bushman works an average of sixteen hours a week to provide for himself while the first-world worker, his productivity increased a thousandfold by all the ingenious machinations of our science, works thirty hours in Samoa, thirty-five in France, forty or more in the United States.
The profit of the capitalist employing wage labor is no different from the corvée imposed by the lord on his serfs—both are a form of taxation that punishes wealth creators by alienating them from the products of their own labor. Both, in doing so, violate the fundamental property rights that Rand erroneously praised us for protecting and thus crush the entrepreneurial spirit that won the bounty of North America in the first place. The self-made man cannot survive in a system divided between those who make nothing themselves and those who cannot keep what they make for themselves.
The way to renewed American prosperity is thus not to aid the employers or to provide incentives for the so-called ‘job creators’—America’s chief unproductive class—but to aid workers in working for themselves and to provide incentives for them to create real wealth by allowing them to keep and trade the fruits of their own labor. The first rays of a new morning in America will not come from corporate headquarters in New York or LA, but must glow in a constellation of worker-owned shops and union-run factories from sea to shining sea.