Hiya!~In the previous post, we discussed that Nozick’s thought experiment could prove that the private ownership of the means of production does not lead to exploitation. But yeah, Nozick is a master after all. He further asks: Do workers really have no control over the means of production??? We know that today, many workers have substantial savings, especially highly-educated workers with a good amount of money saved up. They could easily invest in and purchase means of production and start their own businesses, thus avoiding exploitation. But why do most of them choose to work for others instead of starting their own businesses?

This brings us to Nozick’s critique of the labour theory of value. According to this theory, the value of a commodity is determined by the undifferentiated human labour embedded in it. So, where does a company’s profit come from? According to Marx, it comes from the surplus value created by workers that the capitalist has appropriated without paying them full wages. So, surplus value is the source of a company’s profit. But Nozick questions this: Is it really true that a company’s profit comes from the labour of its workers? Does that mean the more labour workers put in, the more valuable the products they produce? Suppose workers are employed at a factory that produces chairs with one leg missing. The harder they work, the more 996(the Chinese phrase I have mentioned in my first article) they put in, the more valuable these defective chairs become? The more profit the capitalist extracts from the workers? Is that how it works?

Or let’s say there’s a factory that produces a type of cell phone, a flip phone like the old brick phones, weighing several pounds. Manufacturing these phones is complex, with a lot of technical content. Even today, producing such a phone in a factory in Shenzhen would require a lot of socially necessary labour time, and the workers would be working in 996 mode, toiling day in and day out, and getting paid very little. Then the workers come to the owner and say, “Why are you paying us such low wages? We’re working days and nights, and according to the labour theory of value, the company’s profits should be rocket-high, and you should be paying me higher wages!”lol

But the owner would say, “At least you get a steady salary every month! I invested in producing these fucking brick in 2024, and I lost my grandma’s house(just kidding)! Hard work isn’t worth much; what matters is working in the right direction.” The workers’ labour is similar to “hard work”, and in Nozick’s view, it’s the entrepreneur who ensures that the workers’ hard work is directed in the right way. Figuring out the right direction involves great risk and uncertainty, which is literally gambling. So, the company’s profit doesn’t come from the workers’ labour but from the entrepreneur’s willingness to take the risk.

In simple terms, a company’s profit is like a gamble won by the entrepreneur. Yeah, the entrepreneur doesn’t need to physically participate in the labour of making the product, but they do need to decide what kind of products to invest in and which types to produce because they bear the consequences of those investments. If they win, they get a beautiful mansion near the sea; if they lose, they say goodbye from the rooftop lmao 🙂 . The market is unpredictable and full of uncertainty. Is it better to produce phones with physical buttons or full-screen phones? Is it better to stick to e-commerce or build your own logistics network? Will red hats or green hats be in fashion next year? Should you sell sweet tofu pudding or savory tofu pudding? Now, looking back, it all seems inevitable. But for entrepreneurs at the time, there were no textbooks to consult. It takes insight, vision, and courage to make these decisions. In many cases, luck plays a significant role in entrepreneurial success. Remember, the success rate for startups is in the single digits. Many statistics show that the five-year survival rate for startups is less than 5%, meaning over 95% of companies fail within five years of being founded.

Under these circumstances, there’s a survivorship bias effect, where you see successful entrepreneurs enjoying the fruits of their labour, but you don’t see the majority who fail, not only making no profit but losing their initial investments in machines, factories, etc. For workers, the worst-case scenario is losing their job, but for entrepreneurs, losing means going bankrupt. Some even borrow money to start their business, getting deeply into debt, or sell their home in Beijing, losing everything. In such a situation, since entrepreneurs bear so much risk, and risk is proportional to reward, when an entrepreneur wins, they naturally have the right to profit.

For employees, on the other hand, they don’t have the right to share in the company’s profits; they only get their steady salary. Conversely, the employee’s risk is also proportional to their reward. If the company loses money, the employee can still collect their money, while the entrepreneur doesn’t ask them to return the wages they received earlier in the year to help the company get through hard times. Then, when the company profits, the workers come running, saying, “The company’s profits were created by us; you should share them with us.” 😀

Then I believe Nozick is gonna ask: lose and do not bear the risk, win and then come to get a piece of the pie, why do you let you take advantage of all what benefits? You want both stability and high returns, right? How dare you are?!