Capital Can't Create Wealth Without Labor

The phrase on the shirt above (picture from Wisconsin AFL-CIO) contains a basic truth about capitalism -- a truth that the corporations and right-wing politicians refuse to acknowledge, and would rather you didn't know. They have been promoting the idea for decades now that wealth is created by capital, and since the Reagan administration they have been able to convince far too many Americans of that.

But that is a lie -- or at least only half of the truth. Capital is only half of what is needed to create more wealth. The equation for increasing wealth is capital + labor. Without labor (the workers who develop, make, market, and sell the products capital is funding), the capital is useless (because money alone will not do the work required to get a product to the consumer).

The opposite is also true -- that labor alone cannot produce a product, but needs capital to fund the research, production, and distribution. So, neither capital nor labor is the total answer to creating new wealth -- but both are needed before anything can be accomplished. Because of this, one might assume that the new wealth created would be shared by owners (who provide the capital) and workers (who provide the labor) -- and as productivity rises (creating more profit), that rise in profits would be shared between the owners and workers.

Unfortunately that is not the case in the United States. Since the recession, productivity has risen in this country -- but about 95% of that rise in productivity has been hogged by owners (and top corporate executives), while the tiny increase given workers does not even cover the rise in inflation (which means worker income has actually fallen).

The corporations, and their Republican representatives in Congress, will tell you that they deserve all of the rise in productivity (new profits) because it was their money that was risked to produce the product. They completely ignore the role that labor played in that rising productivity. They refuse to share the rising productivity, and in fact, would like to pay workers even less than they currently make (and congressional Republicans would like to eliminate the already inadequate minimum wage). This is nothing less than the theft of labor, and it must be stopped.

How can this be done? Well, there are two things that should be done. First is to raise the minimum wage and index it to the rate of inflation. No worker should have to work for a poverty wage. The second is to increase the power of unions, making it easier for workers to unionize and bargain with management. Individual workers, no matter how talented or creative, are no match for a corporation -- and cannot by themselves force that corporation to pay them a decent wage or share the rising productivity. It is just too easy for the corporation to simply replace them with someone else (someone desperate enough to be abused).

Unions have been demonized in the United States -- and this has been done deliberately. The corporations know that unions have the power to stand up to them and demand fair pay and a safe workplace, while individuals do not. This demonization has hurt all workers, whether unionized or not (since the rise in union wages tends to put an upward pressure on all wages).

But as long as the Republicans control either branch of Congress, the minimum wage will not be raised and unions (and all workers) will continue to suffer. This is just one more reason why the GOP must be voted out of power in November.