“I can’t imagine that you’re seriously arguing that the economy would look exactly the same if everyone’s motive in participating were to seek the good of everyone else as it does today.”

#78 was about the return to capital. Not about if everyone where an altruist. If everybody were charitable like Christ, the world would look very different, under any economic system. But the employers and workers could, and probably should, still receive their marginal product for their services in such a world.

“Regarding paying marginal product for labor, I’d remind you that coerced labor is actually still widespread in the world, so this is also murky.”

I am opposed to coerced labor. But I am not sure what it has to do with the post other than, don’t do it. My point is that the optimal thing for employers is to aim to pay a worker his marginal product. Also, that for most labor markets the best guess is that we are within shouting distance of that outcome now. Obviously I am referring to labor markets, rather than forced labor (which is not a market).

As for the return to wages, where did you get the 80% number and why do you think Japan is higher? Let’s take that number and run with it. What it implies is that, outside of efficiency improvements, even entirely abolishing a return to capital and handing it to workers would only raise average labor income by 25%. Thus even if there were excess returns to capital, they can’t be all that huge, because 25% is obviously an overestimate. Second, those returns to capital are going to people who can then use that money to help the poor however they think best. There is no need to try to force welfare through the labor market. Although, as I said above, a well engineered wage subsidy could be a useful charitable initiative.

Your comment #78 seems quite a bit off track. I can’t imagine that you’re seriously arguing that the economy would look exactly the same if everyone’s motive in participating were to seek the good of everyone else as it does today. Your comments up to this point seem to have adopted an implicit strategy of raising details in order to obscure the obvious larger picture.

Even on the details, I’m not sure your comments are totally in focus. For example, in the U.S., the wage share of GDP ranges from about 75 to 80%. Is that “most”? It’s certainly a majority, but it’s far smaller than the equivalent ratio for Japan, for example. Regarding paying marginal product for labor, I’d remind you that coerced labor is actually still widespread in the world, so this is also murky.

A better way to think about it is as follows. You pay each good their marginal product so you give the right signals for future production of physical capital and human capital. Then you can donate the proceeds as you see fit. You talk in this example as if owners of businesses (or wage setters) own the capital, which is not really the right way to think about it. Capital is leased or rented and so demands its returns just like anyone else. In fact, it is how people save. And we are in favor of saving.

“To be clear: my argument on this point is simply that the current economic system provides ample evidence to conclude that most current businesspeople are not acting as if they had the Christian motive that sees a benefit to anyone as identically equal to an equivalent personal benefit.”

There is no need to condition on the word “businesspeople” when you can just as truthfully say “people”. The problem is not a business problem or a capitalism problem, it is a people problem. Focusing on it as a business problem is needless.

john f.,

“The implication is that this would remove the fundamental premise of self-interest from the equation. Since I am not an economist, I am not sure how the absence of this premise would affect the rest of the conclusions one can arrive at through economic theory, as persuasive as those conclusions always are to me.”

Models that include some form of altruism are pretty common in public economics. The biggest problems one encounters in them is, under some conditions, everybody sits around trying to shove food in each other’s mouths (Mathematically speaking). Think of the problem when you and your wife are trying to decide where to go out to eat and you both just want to do what makes the other person happy. It can be hard to make a decision. Now multiply that by every person thinking about every other person for every good in each time period. (6 billion * 6 billion * a few million * 70). That is unsolvable.

The welfare theorems in economics suggest that if at all possible you should run regular competitive markets, fixed up for externalities, and then redistribute outside those markets, not through them. This is probably impossible too, but orders of magnitude less impossible.

Having said that, I see JNS’s post as being extremely theoretical because of the following:

(1) we don’t live in a religiously homogeneous society so the type of voluntary socialism outlined in the original post isn’t workable in real terms;

(2) even awareness of the Restored Gospel does not seem to enable people to base life decisions, especially those relating to sustenance and survival, on anything other than self interest — survival — in the first instance. No matter how hard we try, we typically aren’t going to let our own kids starve to make sure someone else’s kids don’t (understanding, of course, there will be the rare exception to that). Despite this, after we pass the level of mere sustenance, I think that 2 Nephi and other LDS scriptures (i.e. including the scriptures we hold in common with creedal Christians in the Bible) place us under condemnation for spending £75K on a Land Rover or some other toy while kids in our ward, town, or Darfur are starving and experiencing deprivations of every kind.

I don’t think I said that. On the other hand, an employer who valued workers’ utility at the same rate as her own would likely come close to paying workers their entire marginal product. The existence of substantial returns on investments suggests that this isn’t happening.

To be clear: my argument on this point is simply that the current economic system provides ample evidence to conclude that most current businesspeople are not acting as if they had the Christian motive that sees a benefit to anyone as identically equal to an equivalent personal benefit.

On the employment point, I don’t see your point. I agree that most BCC readers aren’t doing much to increase employment outside the U.S. That ought, perhaps, to be cause for concern.

“No, I’m referring to your point that fictional frictionless markets with perfect information and competition solve this problem.”

By frictionless you mean perfect information and competition? What is your estimate of the search costs and lack of competition in the labor market? Given an estimate of those costs, one can calculate how much firms underpay workers and how much unemployment results. Why do you think they are large, aside from the regulatory burden I already discussed?

But let me also make a methodological point. saying that assumptions don’t hold exactly does not prove anything. What you need to do is show that your proffered model fits the data better. As of now, your model is…. what? And how does that model lead to the conclusion that employers should pay workers more than their marginal product?

On your point, the idea of “spiritual self-interest” is a neologism. But consider Luke 17:33. It’s a call to repentance to us all; we all seek our own interests too often.

No. (Or, umm, yes, your “no?” is correct…) The scriptures say that it is in our spiritual self interest to love God and love one another and I know of no scriptures that indicate we should forget to do those things. You are apparently conflating material/temporal comfort and self-interest with spiritual self interest. The scriptures do tell us to not let our personal desires for earthly comfort get in the way of loving and serving each other.

This is an important distinction that I sense you would like to ignore here. (I notice that others in this thread are taking issue with you equating the nebulous term self-interest with greed as well.)

You are referring here to my point that markets deal with this problem and regulation messes it up? That seems like it would be very helpful to a voter.

No, I’m referring to your point that fictional frictionless markets with perfect information and competition solve this problem.