Capitalists Do Not Take Risks.
Their only "risk" is becoming a worker.
Amongst the half-baked platitudes used to defend modern capitalism (“free market,” “personal responsibility,” “innovation,” etc., etc.), we’ll commonly hear the justification of capitalists’ “risk-taking.” Whenever someone says workers should receive more of a business’s profits, you can trust a capitalist or one of their lackeys to pop their head up and object. “But the capitalist is taking all the risks!” they say. “The owner funds this business. If it goes bankrupt, they lose everything, while the workers lose nothing! Therefore, the owner should get all the profit!”
I’m confident you’ve likely heard some variation of this defense, as it is as common as it is wrong.
You Took a Risk. So What?
Baked-in to the claim that the person taking a financial risk should receive the lion’s share of company profits is an unexplained belief that taking a risk is inherently more valuable than any other component of the production process. Saying financial risk is worth more than the human labor that creates profit is a bizarre assertion, as it isn’t used in any other aspect of society.
I could take a big risk by breaking into your house to steal your money. If caught, I would be arrested, sent to prison, forced to pay fines, or potentially killed. But if I accept that risk and complete my heist unscathed, should I get to keep your money? After all, I was the one taking a risk. My life and liberty were at stake, a wager of far more significance than the capitalist who “risks” losing money on a questionable business endeavor. If we’re applying the logic that risk is the greatest contribution one can make and therefore deserving the largest reward, shouldn’t I be allowed to keep the savings I snatched from your sock drawer? Of course not! The presence of risk does not supersede your possession or basic common sense. It’s your money; no amount of risk-taking will elevate my claim to the cash above yours. You probably find the thought of me keeping the stolen contraband ludicrous. You should. After all, taking a risk is not the end all capitalists claim it to be. The internet is brimming with videos of idiotic risks, from playing beer pong amongst wild buffaloes to the crazy fad of hanging off skyscrapers. The daredevils in the video below took extraordinary risks. No one thinks they should reap life-changing rewards, as the risk itself is of no value.
Those inclined to defend the capitalists will point out that the above example of a break-in is against the law and is, therefore, unrelated to the question of capitalist profits, which are legal in our current economic system. But that begs the question: who wrote those laws? The capitalists and their political allies, of course. I argue that this legal regime is unjust and violates a more natural principle, one that is equal to the crime of stealing your money while you sleep. While a capitalist “risks” capital, workers create value through their labor. I believe human labor, the source of all our great wealth and technologies, should be placed above the trivial notion of “whose name is on the business’ Certificate of Incorporation.” Not only is labor superior to capital, but when we closely examine what the capitalist is actually risking, it becomes clear the claim of “risk” is a childish argument. It only persists because of propaganda, not on the basis of fact.
“Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” — Abraham Lincoln, 1861
Risking What Exactly?
When a capitalist opens a new business, usually with capital created by workers at another enterprise, what exactly is the capitalist risking? Sure, they provide the capital — the workplace, the machinery, and the money to buy materials, advertise, and pay worker salaries during the pre-profitable period. If the business goes belly up, they will have lost every dollar they put in. When a business closes, most capitalists shrug, write an annoying LinkedIn post as if they’re the first person to learn from failure, and turn their attention back to their other businesses while living comfortably. The only thing they “risked” and lost was capital created by another set of workers. So there’s really no risk to their personhood. In a worst-case scenario, the capitalist could lose all his capital. This is more common for smaller capitalists, who go all in on one or a few businesses. If ruin befalls the smaller capitalist, he will be personally bankrupt. Broke, destitute, and no longer able to live off the profits created by workers, he will be forced to do something drastic to survive — he’ll have to get a job. The horror!
In this nightmare scenario, we see the folly of claiming capitalists take risks. The only thing the capitalist risks is becoming a worker. This is no different than a medieval king ordering conscripts into battle while lecturing them that he is the one taking a risk. Though hidden from blades and bolts by the castle walls and royal guard, if his army is vanquished, the king will lose his crown and be forced into peasantry. He might even be conscripted into an army and forced to fight!
That’s why this defense of capitalism is unable to withstand even the lightest scrutiny. The only thing the capitalist risks is seeing “his” business sold to another member of the ruling bourgeois, forcing him to clean out the corner office and join the workers on the factory floor. To those with common sense, this is no risk at all. But to capitalists and their sycophants, who believe the likes of Elon Musk and Mark Cuban are inherently superior to the rest of us, it’s a great tragedy, their own personal 9/11. As most capitalists feel they have pulled themselves to the heights of our society through ingenuity, hard work, and, more often than not, a million-dollar seed fund from their parents, what they are really risking is their ego; when the coffers run dry and they can’t pay their debts, they’ll be forced to accept the fact that their self-images as the conquerors of industry were nothing more than delusions. Because that’s precisely what it is. A delusion, a faux-accomplishment built upon a misconstructed legal, social, and economic order that gives the value created by laborers to whichever trust fund baby happens to be born at the right time and place.
They say billionaires became rich through hard work. That’s true. But not their own. Their wealth comes from the continuous labor of others who staffed their factories, plants, and storefronts, day after day, year after year, so that they could earn a wage to feed their families. While the workers were bettering society through their labor, a process that often involves actual risks — losing a hand on an assembly line, missing their children’s formative years, or catching COVID — the capitalists sat in distant offices, moving numbers between balance sheets, and patting themselves on the back for having the “guts” to profit off of work they will never do. Whatever myths people believe about “self-made” billionaires and millionaires, that’s not our reality. According to the Swiss bank UBS, in 2023, more people became billionaires through inheritance than any other way.1
Unlike workers, capitalists take no risks. It’s time to build a society that recognizes human labor as the paramount economic contribution, and rewards it as such.
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https://www.forbes.com/sites/maryroeloffs/2023/11/30/new-billionaires-inherited-more-than-they-earned-last-year-ubs-report-says/
I really like this. What especially sold me was the mention of Covid as a risk to workers. As someone who is now facing long term disability because of it, I don’t see people talking about it enough. Thank you
An illusion, even a delusion. The reference to Arthur and his knights was an allusion.