December 24, 2011

  • Labour, Capital, and Christmas

    Spending time in one of the centres of world finance on Christmas Day leaves me a great moment to reflect on some matters on which I've been pondering for some time.  In a couple hours, I'll be off for Christmas service at Island Evangelical Christian Church.  It'll be good to be back, despite the fact that Christmas services are frequently the most theologically dilute services of the year. 

    So, Capital and Labour.

    Let's start with money.

    Defining money is like defining love - you could write books, and still not be done.  On the surface, money is what we use to abstract value from products, services and influence.  It is a neutral conceptual asset that can be used to relate the relative value of things one does or has or can be done; two people with different subjective views can attach a quantitative assessment to exchange things.

    Because of its central position in transactional relationships, money ends up being used as a proxy for valuation of many things that shouldn't be intrinsically assigned value - like romantic relationships, self worth... and more.

    Storing money allows one to leverage present work for future gain, at risk that inflation devalues the stored valuation unit.

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    In general, Labour is the part of the economy that works for money, leveraging their time and skills for money, with which they can purchase/barter for what they want or need.  Capital is the part of the economy that possesses (or borrows) enough money so that they can pay labour for their services, leveraging their knowledge of the market/economy, wagering that they can accrue greater amounts of money by investing that capital into an enterprise.

    Labour and Capital may be framed as adversarial with conflicting interests.  By diminishing payment to labour, Capital can increase their relative gain of money.  The major risk from a Marxist perspective (eventuality?) is when Labour is sufficiently incensed from being taken advantage of, Labour can overthrow capital.

    This is, in some ways, oversimplified, but they are the general definitions with which I'm going to discuss the next portions.

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    " 4 Do not muzzle an ox while it is treading out the grain."  Deuteronomy 25:4

    " For the Scripture says, "Do not muzzle the ox while it is treading out the grain," and "The worker deserves his wages." 1 Timothy 5:18

    I think the Scripture teaches us that the relationship between Labour and Capital shouldn't be adversarial...  It is possible to maximize profits by reducing wages to subsistence levels - but this is ultimately temporary.  In a sense, for the aggregate business community, the long term best environment is one where consumer assets are plentiful.  The Consumer ranges between the reasonably poor all the way to the possessor of capital themself - and when there's plenty of money in their hands, there's a lot of economic activity that can occur.

    You starve the ox, it works less, and produces less, although in the short term, it appears that you're producing more grain, by disallowing it from eating.  Similarly, you can produce longer term gains by feeding your workers, and paying them something reasonable from your margins.

    While Marxism loosely portrays capital and labour to be in conflict, and Adam Smith seems to assert that capital, by doing what it does, eventually benefits labour, I think the Christian prospective of business should encourage cooperatively - they don't have to be in conflict.  Capital can serve labour, and thereby, over multiple quarters or years, result in a much more active economy.

    I'm going to stay away from the topic of finance for now...

    Okay, so Christmas and capital...

    Jesus was born in a place where the government was oppressive, and amenities minimal...  as we celebrate his birth, what is the point of emphasis?  Christmas celebrates Christ - who is God's gift to men - he brings eternal life and peace with God, for those who choose to believe in him.  It's a powerful message, though often forgotten in modern materialism.  It would be good to remember, from Labour and Capital, that Jesus sees both sides - he is management, and he is born with the lowest of the low.

    We humans really ought to be a lot more humble, don't you think - we don't nearly deserve as much as we think we ought to receive...

    I grew up sympathetic to Capital, believing that efficient allocation of assets would benefit man most, whatever Labour believed.  While I still believe the former to be true, the question is what is efficient, and how do we get there?  Screwing labour is not the way to go.

    One added complexity is the abstraction of capital into the finance industry.  Now you have investment grade capital run by people that have no direct interest in the welfare of labour.  I think a founder-CEO of a company frequently is more sympathetic to the affairs of the labour.  The company goes under, the labour goes out of a job... you should feel responsible for putting food on your worker's table.

    This has been increasingly loss in the US CEO/equity market perspective.  Companies are entities, and the workforce is part of that entity - not merely a resource.  Too bad, sometimes the only perspective modern capital has is that of maximizing "shareholder" value.  I think there is a place for subsistent business models, so long as the provide steady revenue to the entire group.  What law of business requires all businesses to have explosive growth?

    As Christmas in HK draws to a close with a beautiful sunset out my window, I ask this - Jesus, help me remember your birth and your purpose.  Help me be a gift to others as you have been a gift for me.  Should you allow me to ever run a business, may I allow the oxen to graze upon the grain fairly.

    Amen.